The Upper Tax Tribunal has overturned the previous decision in the case of HMRC v Julian Blackwell, and decided that costs of £17.5m incurred to enable the taxpayer to sell his shares were not deductible for capital gains tax purposes. The Facts  The taxpayer held shares in BP Holdings which entitled him to veto special resolutions, such as a takeover offer. Following an unsuccessful takeover attempt, Taylor & Francis paid the taxpayer £1m in 2003 for his undertaking not use his veto against Taylor & Francis and not to incite a takeover offer from another firm. Some years later, John Wiley & Sons made a substantial takeover offer, which the taxpayer wished to accept. However, he believed that 2003 agreement would prevent ...

From the 6 April 2015, non-UK residents who dispose of a UK residential property may be liable to pay Capital Gains Tax (CGT) on any gains made on the disposal. The rules apply to individuals, members of partnerships, personal representatives of deceased estates and trustees.  Existing rules already bring non resident companies within the scope of capital gains tax on UK residential properties. Prior to this date, non UK-residents were not subject to UK capital gains tax on the disposal of assets. However, under the new rules non-UK residents will be taxed on the disposal of UK residential properties, harmonising the UK tax system with other jurisdictions that normally charge tax on the basis of where the asset is located. UK resident...

We present a list of some changes and points of interest for the tax year commencing 6 April 2015 The threshold of turnover for VAT registration is now £82,000 The main rate of corporation tax is now in line with the small company's rate, 20%.  Therefore the marginal rate of corporation tax is 20% The personal allowance for income tax is £10,600 Earnings above £8,060 per year will attract National Insurance Marriage Allowance comes into effect.  Spouse can transfer £1,060 of unused personal allowance to a basic rate taxpayer spouse Significant changes come into effect for pensions and their accessibility (subject to the terms of your pension scheme) The annual allowance for pension contributions remains at £40,000 The A...

The case of Trevor Anthony Hartland v HMRC examined whether various properties were the taxpayer’s principal private residence (PPR), or whether the sale of the properties amounted to trading assets. It illustrates how the Tribunal are prepared to consider events outside the years of assessment in order to ascertain the nature of the various transactions. Facts - Mr Hartland was self-employed, running a plant hire business - He acquired, renovated and sold four properties at a gain, claiming them all to be his PPR. These were: Property A, 1996 - 2000 Property B, 2000 - 2002 Property C, 2002 - 2004 Property D, 2004 - 2005 - The case only concerned the gains made on Property B and C, although it was asserted that the Tribunal must ...

Case Update HMRC have been denied leave to appeal to the Supreme Court against the 2014 decision by the Court of Appeal in the case of HMRC v The Executors of Lord Howard of Henderskelfe in which it was held that  the sale of an 'Old Master’ painting by Sir Joshua Reynolds was exempt from capital gains tax. The essence of the case rests upon why a substantial gain made on an iconic painting should be exempt from capital gains tax (CGT)?  The answer takes us back to some very basic principles of CGT and in particular the meaning of plant and machinery in the context of the chattels exemption. Leading precedent in the consideration of whether an asset is plant and machinery is found in the case of Yarmouth v France. For more back...

A roundup of the latest news from the world of tax including changes to pensions, a summary of the Autumn Statement and recent tax cases of interest. Click on the links below to view the full articles Spotlight on Pension Flexibility Changes to pensions have increased flexibility and brought pension contributions firmly back into the spotlight, making them a much more attractive option for directors/owners. Autumn Statement 2014 Update The highlights of some of the recent changes announced in the Autumn Statement, including changes to Stamp Duty Land Tax, the transfer of personal allowances between spouses and putting a stop to incorporation reliefs for goodwill. Can You Claim Tax Relief for Repaid Bonus? The Upper-Tier Tribunal...

Here is a brief note of some of the changes announced by the Treasury on 3 December 2014 and a reminder of some other things that will come into force on 5 April 2014. Stamp Duty Land Tax – The rates for SDLT will be restructured so that they apply on an incremental basis rather than as a “slab” charge.  Houses purchased under £937,000 will have a lower SDLT charge, those above this figure will have a higher charge. Non-residents CGT on sale of UK residential property – From 5 April 2015 non-UK residents will be subject to capital gains tax on the sale of UK residential property.  The CGT base cost of properties owned by Non-residents as at 5/4/15 will be rebased to that date. Incorporation Reliefs for Goodwill Denied �...

The recent case of Alison Clarke v HMRC illustrates the kind of factors that the tribunal will consider when assessing whether or not the taxpayer was using a property as their sole or main residence for the purpose of claiming Private Residence Relief on Capital Gains Tax. The Tribunal also helpfully made a number of suggestions of the kind of documents that could be provided to support a claim for Private Residence Relief (see bottom of article). Facts In 2003 the taxpayer purchased a flat. She retained ownership of the flat throughout subsequent events and currently resides there. It is the address given on her application to the Tribunal. In 2004 the taxpayer purchased Property A for £138,000 plus fee and stamp duty. During ...

Paul Davison discusses the case of HMRC v The Executors of Lord Howard of Henderskelfe (deceased) in a Q&A session for Tax Journal magazine. The essence of the case rests upon why a substantial gain made on an iconic painting should be exempt from capital gains tax (CGT)?  The answer takes us back to some very basic principles of CGT. Download the full article here: Tax Journal Article - April 14 Article published April 2014.  

A key criteria for the application of Entrepreneurs' Relief for the sale of shares in a trading company, is that the vendor must be an officer or employee of that company for the whole year prior to sale. In the recent first tier tribunal case of Susan Corbett v HMRC, Mrs Corbett had sold a > 5% holding of ordinary shares in a trading company on 7 October 2009.  However, she had been taken off the payroll of that company at the end of February 2009.  Therefore HMRC determined that she could not have been an employee for the period of a whole year prior to the date of sale and Entrepreneurs' Relief was not available to her. What Happened Mrs Corbett had been working for the company as an administrative assistant to her husband ...