Director’s Tax Returns: Don’t Believe Everything You Read!

The majority of owner-managed or family company directors receive a notice to file a tax return from HM Revenue and Customs (HMRC) each year. Most of those directors will regularly extract profits from the company (e.g. as salary and/or dividends). However, in some cases a director may not have received anything from the company, and […]

Is HMRC Being Un-‘Reasonable’?

Taxpayers are under threat of penalties if they fail to comply with their various tax obligations. This article focuses on penalties for filing tax returns late. There is an important exception from late filing penalties, which applies if the taxpayer satisfies HM Revenue and Customs (HMRC) (or the tribunals) that there is a ‘reasonable excuse’ […]

Private Residence Relief: When ‘Quality Trumped Quantity’!

Most individuals who dispose of their dwelling-house expect that any capital gain will be subject to private residence relief. Many of them are correct, but unfortunately some are left disappointed. Private residence relief broadly applies to gains accruing to individuals on the disposal of (or of an interest in) all or part of a dwelling […]

Do As We Say – Not As We Do!

The UK tax system can seem harsh, hostile and unforgiving if taxpayers make mistakes when dealing with their tax affairs, such as where tax return errors result in penalties. HM Revenue and Customs (HMRC) also makes mistakes. For example, procedural and administration errors sometimes occur when HMRC opens an enquiry into tax returns. Of course, […]

Don’t Let HMRC Reject You!

Tax returns can be difficult and complicated. Mistakes often happen when completing returns. Can HM Revenue and Customs (HMRC) reject an incomplete or incorrect tax return, send it back to the taxpayer for correction and treat it as never having been received, possibly resulting in late filing penalties? HMRC seem to think so. However, that […]

Loans To Traders: They Think It’s All Over…

An individual who makes a loan to a company they own will probably expect to obtain tax relief if the loan subsequently has to be written off. Capital gains tax relief on the loan write-off is potentially available if certain conditions are satisfied. One such condition is that the loan has become irrecoverable. This might […]

Penalties For Tax Return Errors – All Is Not Lost!

The penalty rules for errors in tax returns etc potentially apply if a tax return contains an inaccuracy that results in a tax liability being understated. In addition, a penalty can apply if an error gives rise to a false or inflated loss (FA 2007, Sch 24, para 1). Errors involving losses The amount of […]

Spouses’ Wages – Legitimate Expense Or Tax Dodge?

A common element in the accounts of many self-employed individuals (and partnerships) is a deduction for the wages of family members, particularly a spouse (or civil partner). For example, in over 30 years as a tax practitioner I have seen countless claims for ‘wife’s wages’. Most claims for deductions of this nature are valid and […]

Share Disposals And Anti-Avoidance – Decisions, Decisions!

When an individual shareholder sells shares in a ‘close’ family or owner-managed trading company, he or she will probably expect the proceeds to be treated as a capital receipt. If the individual is liable to capital gains tax (CGT) on the share sale, in many cases the tax rate will be 20% (for 2018/19), although […]