Budget 2021 – COVID-19 support extended
The Chancellor has confirmed the extension of a number of measures designed to assist taxpayers to weather the economic and administrative problems caused by the extended COVID-19 lockdown. These measures are welcome but sadly reflect the fact that the impact of the virus has gone on far longer than the Government initially estimated. Furlough As […]
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 […]
Wages for the children – What’s the ‘purpose’?
Many business owners employ family members such as adult children. The business owner will normally seek to claim a deduction for wages paid to them. For example, a self-employed individual might employ his adult son. How much can father reasonably pay his son? There is no specific tax rule dealing with wages payments to family […]
Trading income – An unfair assumption
Business owners whose tax returns are subject to enquiry by HM Revenue and Customs (HMRC) may be asked to provide evidence about the source of unidentified bank receipts into a ‘mixed’ account (i.e. an account used for business and private purposes) or sometimes even a personal account. Prove it! If the receipts cannot be identified […]
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 […]
Incorporation: A Borrowing Trap
Many landlords introduce properties into their rental businesses, which may have already been held for some time (e.g. gifted or inherited property). Those landlords are, in effect, introducing capital into the business, broadly equal to the market value of the property when it was introduced, less any outstanding mortgage, etc. Allowable borrowings HM Revenue and […]
Incorporation: A Borrowing Trap
Many landlords introduce properties into their rental businesses, which may have already been held for some time (e.g. gifted or inherited property). Those landlords are, in effect, introducing capital into the business, broadly equal to the market value of the property when it was introduced, less any outstanding mortgage, etc. Allowable borrowings HM Revenue and […]