It is common for business/financial decisions to be guided by the tax treatment of the transaction. However, in light of the tax legislation's complexity taxpayers may seek advance assurance before the event takes place to guarantee that the expected tax implications will indeed apply. In light of this, it is possible to write to HMRC to request advance clearance of the tax treatment of certain transactions. The tax legislation provides for clearances for certain arrangements (i.e. statutory clearances), and HMRC also provides a non-statutory clearance service for areas where the rules do not otherwise provide for it. The most common transactions that we as a firm seek clearance from HMRC include: Share-for-share exchanges Pu...

If you build yourself a new home or if you convert a non-residential building into a home for you or your relative to live in as a main residence, you may be able to claim a VAT refund on building materials and services. In order to be eligible for a refund, you must make a claim with HM Revenue & Customs (HMRC) no later than 3 months after the "completion" of the building. P Wedgbury & S Wedgbury v HMRC - The Definition of "Completion" The term "completion" is unfortunately not clearly defined in the legislation. However, in the recent case of P Wedgbury & S Wedgbury v HMRC (2020) the First-Tier Tribunal (FTT) considered the meaning of "completion" and therefore provides a useful guide for taxpayers who are looking to...

In this ‘pause from normality’ it is important to keep your tax compliance guard up. The period we are going through is not a ‘tax holiday.’ If the quality of your tax compliance drops, then the existence of Covid-19 will be no excuse for inaccuracies or negligence later down the line when faced with an HMRC enquiry, nor is it likely to be an excuse for late returns unless you become seriously ill. The reality of this is exemplified by the fact that people are still receiving loan charge settlement letters (which require a response in 30 days) during this time. Our advice: Understand the specific tax payment holidays and reliefs that exist through Covid-19 and apply them to the best of your ability. Prepare cash-...

Restrictions imposed in light of the coronavirus pandemic have resulted in widespread disruption to travel and business operations. Due to individuals being unable to leave the UK to carry out certain business duties, overseas companies could inadvertently find themselves taxable in the UK. To provide some clarity, HMRC has provided new guidance on how the residence and taxable presence rules will apply to companies with a specific focus on the impact of COVID-19. Company Residence When is a Company UK-Resident? As discussed in our blog Home or Away? Company Residence and CMC (23 October 2019), a company will be resident in the UK if either of these conditions are met: The company was incorporated in the UK; or The centr...

From today (4 May 2020), businesses that have been affected by the coronavirus pandemic can apply for a loan under the Bounce Back Loan Scheme (BBLS). As noted in our previous blog, the BBLS was introduced to help smaller businesses that were struggling to obtain finance under the previously announced Coronavirus Business Interruption Loan Scheme (CBILS). The key features of the BBLS are as follows: Small and medium sized businesses can apply for a loan from £2,000, up to 25% of the business' turnover (capped at £50,000). The loan will be guaranteed 100% by the government (as opposed to 80% guaranteed under the CBILS). The government will pay interest and fees for the first 12 months, and the interest rate for the facility i...

Betting and gambling does not constitute a trading activity, and as such, any winnings are not taxable profits for income tax purposes. Nevertheless, if you make substantial sums of money in betting then care should be taken to ensure that you are able to prove the source of these funds. If betting activities cannot be evidenced, then you run the risk of having these winnings treated as trading profits by HMRC. This is what happened to a successful gambler in the case of Simon McMillan v HMRC (2019). In this case, the cards were stacked in McMillan's favour as he had several credible witnesses who could attest to his gambling activities.  The First-Tier Tribunal accepted his explanations, holding that based on the evidence his substa...

Discussions regarding the development of the HS2 train line have been plagued by controversy and uncertainty. However, with phase 1 of the HS2 line seemingly ploughing full steam ahead from London to Birmingham, one thing is certain: it’s going to be a bumpy ride for the HS2 developers. With homes, businesses, and nature reserves located along the entire proposed line, HS2 has already caused a large amount of disruption. Those who are affected should receive compensation from HS2 for their loss; indeed, some have already received payments of over £1million. The receipt of this HS2 compensation is taxable on the recipient (albeit reliefs may be available). This is something that many of those affected may not be aware of. The tax...

On 18 June 2019, PD Tax travelled to The Hollies for a day of volunteering in partnership with Leeds City Council. A favoured walking destination of Lord of the Rings author JRR Tolkien during his time in Leeds and the rumoured inspiration for Middle Earth, the Hollies is a Victorian villa with extensive grounds and woodland. The house and its 30 acres of land were given to Leeds City Council in 1921 by George Brown, in memory of his son who was killed in the First World War. The grounds then became a public park. Equipped with our wellies, gloves, shears and tree poppers, we cleared paths, chopped down trees and generally made the park a more enjoyable place to spend time. We even managed to dodge the rainy weather of the previ...

From 1 April 2019, the National Living Wage (i.e. the statutory minimum for workers aged 25 and above) was increased by 4.9% from £7.83 to £8.21 per hour. Likewise, the National Minimum Wage for younger workers and apprentices also increased above inflation. The minimum wage was introduced in April 1999 to guarantee minimum standard for pay for workers. However, the National Minimum Wage Regulations ("NMWR") can be complex and care should be taken to ensure that your business does not unintentionally breach the rules. In particular, additional consideration should be made where employees are required to be at their workplace before their shift starts, where staff purchase their own workwear, or where you facilitate a salary sacrific...

The government has published the second Finance Bill of 2017, which contains a number of policies that were dropped from the first Finance Act 2017. The original Finance Bill 2017 was streamlined in order to pass the Bill into Law as a result of the decision to call a snap election in June 2017. The following legislative changes are included in the latest Finance Bill: a reduction of the dividend allowance from £5,000 to £2,000 from April 2018; measures to tighten and clarify the income tax treatment on termination payments (see our blog for more information); regarding pensions, a reduction in the money purchase annual allowance from £10,000 to £4,000 from April 2017; significant changes to the rules on non-...