It’s a trust – but not as we know it!
Some individuals might assume that the creation of a trust necessarily involves a written document (commonly a ‘trust deed’ in England and Wales), which appoints the trustees, states the terms of the trust and identifies the beneficiaries and the trust property that will be subject to the trust. Bare trusts However, it is well established […]
Child’s income: Or is it?
Parents sometimes wish to gift income-bearing assets (e.g. company shares) directly to their unmarried minor children, to take advantage of the child’s personal allowance (and dividend allowance) and possibly also their basic rate income tax band, to reduce the family’s overall tax burden on dividend payments. Unfortunately, this tax planning idea is generally blocked by […]
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 […]
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 […]
Sale of goodwill: income or capital?
It is common in many occupations and professions (e.g. law, medicine) for individuals to be engaged as self-employed consultants. Some consultants will build up their own practices before eventually selling them. From a tax perspective, the question arises how the practice disposal proceeds should be treated. For example, is it an income or capital receipt? […]
No suspicion needed!
Where a taxpayer is unfortunate enough to be subjected to an enquiry into their tax return, it is not uncommon for HM Revenue and Customs (HMRC) to issue a formal notice requiring the taxpayer to provide information or produce documents which HMRC considers is ‘reasonably required’ to check the return (FA 2008, Sch 36, para […]
Penalties: Don’t take too long!
The penalty regime for errors in tax returns etc. (FA 2007, Sch 24) provides an escape from penalties if an error has arisen despite ‘reasonable care’ having been taken. Otherwise, the maximum penalty (i.e. 30% to 100% of ‘potential lost revenue’; or possibly higher if the error involves an offshore matter) depends on the type […]
HMRC enquiries: How to keep private records private!
Any taxpayer who submits a tax return can be selected for an HM Revenue and Customs (HMRC) enquiry at random. Those taxpayers unfortunate enough to be selected may find HMRC’s tax return enquiries rather intrusive. For example, HMRC sometimes request a taxpayer’s private records. A controversial topic in enquiries is whether HMRC is entitled to […]
Suspicious minds!
Information notices have been an important and valuable weapon in HMRC’s armoury of compliance powers since the information and inspection provisions were introduced more than ten years ago (all references in this article are to those rules in FA 2008, Sch 36, unless otherwise stated). The general rule The most common situation in which HMRC […]