The loan relationships provisions for companies have been around since 1996, and it is fair to say that the legislation overall is complex. However, it is not normally difficult to identify a loan relationship for these purposes, although a recent case indicates that even this task may not be without its problems. The loan relationship legislation in FA 1996 was rewritten and is now contained in CTA 2009. It states that a company has a ‘loan relationship’ for corporation tax purposes if it is either a debtor or a creditor in respect of a money debt, and the debt arises… Read more…
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Thursday,
January
19th,
2012
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Categories : Uncategorized
By natalie_meehan · Comments (0)
Thursday,
January
19th,
2012
Married couples (and civil partners) benefit from favourable treatment for certain tax purposes. A common example is the ‘no gain, no loss’ capital gains tax (CGT) treatment for inter-spouse transfers (TCGA 1992, s 58). In addition, the inheritance tax spouse exemption is unlimited for transfers between UK domiciled spouses (although it is restricted to £55,000 if the transferee spouse is non-UK domiciled).
Living together
The principal private residence (PPR) rules for CGT purposes include a provision for married couples. It states that there can only be one sole or main residence for both spouses (or civil partners) so long as… Read more…
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Categories : Capital Gains Tax, General Taxation
By natalie_meehan · Comments (0)
Thursday,
December
22nd,
2011
It is straightforward in most cases to establish an individual’s income entitlement for tax purposes. However, there are exceptions. HM Revenue andCustoms (HMRC) recently issued new guidance in its Trusts Settlements and Estates manual on the concepts of ‘resulting trust’ and ‘constructive trust’ for income tax purposes. These are ‘implied trusts’, which are created by operation of law, as opposed to ‘express trusts’ which a settlor normally creates expressly by trust deed.
Resulting trusts
A ‘resulting trust’ is a legal concept. It basically means that property reverts back to the settlor. HMRC guidance provides various examples of a resulting trust,… Read more…
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By natalie_meehan · Comments (0)
Thursday,
December
22nd,
2011
Taxpayers have recently been successful in a number of appeals before the tax tribunal on the grounds of ‘reasonable excuse’, mainly in respect of late filing penalties. One such case is highlighted below. In addition, the approach of HM Revenue and Customs (HMRC) in a case involving a discovery assessment was criticised by the tribunal, which awarded costs against HMRC. Perhaps a pattern is developing here – the taxpayer strikes back!
In The Executors of David Atkins (deceased) v Revenue and Customs [2011] UKFTT 468 (TC), HMRC had withdrawn a discovery assessment at a very late stage before an appeal… Read more…
Taxpayers can be required to provide HM Revenue and Customs (HMRC) with certain information and/or documents, if HMRC issues a written notice to that effect (FA 2008, Sch 36, para 1; previously TMA 1970 s 20(1)). The question arises: what information and documents are considered to be within the taxpayer’s remit to provide?
Reasonably required
Under HMRC’s recently introduced information powers (in FA 2008, Sch 36), taxpayers must provide such information or documentation as is ‘reasonably required’ to check the taxpayer’s tax position. The previous legislation (in TMA 1970, s 20) required the taxpayer to provide such documents and particulars… Read more…
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Thursday,
November
17th,
2011
It is normally straightforward to tell when HM Revenue and Customs (HMRC) have raised an assessment in respect of a taxpayer. However, what constitutes an ‘assessment’? This is an important question because assessments are generally subject to a right of appeal. But is there a right of appeal against an HMRC tax calculation notice?
Right of appeal?
In Clark v CRC [2011] UKFTT 302 (TC), the taxpayer received a tax calculation notice (Form P800) from HMRC, indicating that tax had been under-collected for 2009-10, amounting to £806.60. The taxpayer appealed to the tribunal. HMRC said that the taxpayer had no… Read more…
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When a HMRC enquiry notice into a tax return arrives, it is perhaps natural to anticipate a long, drawn out process to completion. This is particularly the case with full (as opposed to aspect) enquiries. However, an enquiry does not need to be unduly protracted. The taxpayer (or his agent) can apply to the tribunal for a closure notice in appropriate circumstances. This facility can be particularly helpful in curtailing ‘fishing expeditions’ by HMRC officers, and preventing the enquiry from straying outside the boundaries of the tax return itself.
The taxpayer company used the closure notice facility to good effect… Read more…
An important potential advantage of trading through a limited company (as opposed to a partnership or sole trader) is the availability of tax relief for the amortisation of goodwill under the intangible fixed asset legislation (CTA 2009, Part 8), where certain conditions are satisfied.
The intangible fixed asset rules were originally introduced in Finance Act 2002. Previously, intangible assets fell within the chargeable gains regime. The current provisions broadly take specified intangible assets of companies out of that regime and into the normal trading rules.
Business incorporations
The most common form of intangible fixed asset for small and family companies… Read more…
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Categories : General Taxation, News
By natalie_meehan · Comments (0)
Thursday,
September
22nd,
2011
It ought to be straightforward enough to identify who has made a disposal for Capital Gains Tax (CGT) purposes. Of courses, tax is seldom black and white. The tax legislation offers little help. It simply states: “Tax shall be charged… in respect of capital gains, that is to say chargeable gains… accruing to a person on the disposal of assets” (TCGA 1992, s 1(1)).
Some tax advisers will no doubt be familiar with clients who have “taken their name off the deed” of property they own (e.g. transferring their legal interest to a spouse), in the hope or expectation that… Read more…
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Categories : Accountancy, Capital Gains Tax
Tags : Capital Gains Tax
HMRC caused a stir on 31 May 2011, with the issue of the consultation document ‘Establishing the future relationship between the tax agent community and HMRC’. HMRC’s proposed strategy includes “providing additional support to agents whose standards are below those expected in the professional community.”
The document requests comments on appropriate actions by HMRC to deal with agents who “…knowingly or unknowingly fall below the high professional standards expected by the tax agent community”. These include:
- “What actions/sanctions could be applied to those who act unprofessionally other than HMRC refusing to deal with them?
- In the most serious… Read more…
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