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 […]

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 […]

How’s The Family? Penalties And ‘Reasonable Excuse’

Does HMRC properly consider whether penalties are appropriate when taxpayers file their tax returns late due to serious illness? Every year, numerous appeals by taxpayers against penalties from HM Revenue and Customs (HMRC) for the late submission of tax returns reach the First-tier Tribunal. Excuses, excuses… Those taxpayers are normally appealing to the tribunal for […]

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’ […]

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 […]

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 […]

Private Residence Relief: Tables Turned On HMRC!

Individuals who dispose of a dwelling house sometimes find themselves in disputes with HM Revenue and Customs (HMRC) over whether private residence relief (PRR) is due on the disposal of the property for capital gains tax (CGT) purposes (under TCGA 1992, s 222). Numerous cases have reached the courts and tribunal over the years. Burden […]