Can HMRC ‘spread’ out?
HM Revenue and Customs (HMRC) can open an enquiry into any self-assessment return within certain time limits. A tax return enquiry for one period could extend to other periods, such as where HMRC considers that a self-employed individual’s income for one tax year has also been understated in other tax years. HMRC’s ‘presumption’ This HMRC […]
HMRC being unfair? What next?!
Taxpayers sometimes have grievances about HM Revenue and Customs (HMRC), such as mistakes or unreasonable delays. What can be done? Some possible actions to consider are outlined below. You have rights! Disgruntled taxpayers could consider referring HMRC to ‘Your charter’ (www.gov.uk/government/publications/your-charter/your-charter). It applies to the conduct of HMRC officers when interacting with taxpayers (e.g. during […]
Partnership expenses: Panic over?
Individual partners in a partnership sometimes incur business expenses personally. It has been widely accepted that tax relief can be claimed for such expenses. This could be achieved by adjusting for the expenses in the tax computation in the partnership tax return, provided any adjustment was made before the net profit was allocated between the […]
Are capital gains tax rates about to increase?
Simply put, capital gains tax (“CGT”) is paid when an asset, other than your main residence, is sold at a profit. Currently there are four rates of CGT being 18% and 28% on UK residential property and 10% and 20% on all other assets (the rates depending on whether the taxpayer pays basic or higher […]
Property expenses: Don’t ask HMRC?
Taxpayers such as buy-to-let landlords often seek advice from HM Revenue and Customs (HMRC). This is generally sensible, particularly if the taxpayer does not have a professional adviser. However, things can sometimes go wrong, and caution is needed. Misunderstandings can easily arise. Pre-letting expenses For example, in Negka v Revenue and Customs [2019] UKFTT 0082 […]
Gifting shares – Don’t make a ‘reservation’!
It is common for shares in a family company to be passed down the generations. However, anti-avoidance rules dealing with ‘gifts with reservation’ (GWR) are a potentially nasty inheritance tax (IHT) trap. Cake and eat it The GWR provisions (FA 1986, ss 102-102C; Sch 20) are broadly designed to prevent an individual seeking to reduce […]
Incorporating a buy-to-let property LLP into a company
A limited liability partnership (LLP) is treated like an ‘ordinary’ partnership in many respects. However, an important distinction arises where a business incorporates into a company. Separate legal entities Like a company, an LLP is a separate legal entity. When (for example) a business carried on by an ordinary partnership of individuals is incorporated into […]
Selling your company? How dare you!
A targeted anti-avoidance rule (TAAR) was introduced (from 6 April 2016) to prevent ‘phoenixism’. In broad terms, this practice involves company owners winding up their ‘old’ companies and extracting profit reserves as capital (instead of income) and repeating the exercise in one or more successive businesses. The effect of the TAAR applying is that an […]
Overdrawn director’s loan accounts: A penalty problem
There are statutory time limits for notifying chargeability to various taxes, including the tax charge that can arise when a company director shareholder’s loan account becomes overdrawn. Don’t be late! The general time limit for a company to notify chargeability to tax (where HM Revenue and Customs (HMRC) has not given a notice to file […]