As of 6 April 2020, disposals of residential property and the Capital Gains Tax (“CGT”) charged must be reported and paid within 30 days of the completion date. This will be completed through the new CGT on UK property service, which will be accessible through www.gov.uk from today. The new rules apply to individuals, personal representatives and trustees (i.e. not companies). Prior to 6 April 2020, if a taxable gain arose when a UK resident disposed of an interest in UK residential property, this had to be reported through a Self-Assessment tax return. This meant that the disposal and Capital Gains Tax (“CGT”) had to be reported and paid by 31 January following the tax year in which the disposal took place. Under the new ru...

Measures implemented in countries around the world to combat coronavirus will impact the UK residence status of many taxpayers. Many of the tests set out in the Statutory Residence Test (SRT) are based on day counting, with a day in the UK generally being a day on which you are in the UK at midnight. For some of the tests it is possible to ignore days attributable to exceptional circumstances – up to a cap of 60 days per tax year. HMRC typically views exceptional circumstances as being an event outside of the taxpayer's control that prevents them from leaving the UK (although rarely HMRC may accept that a taxpayer outside the UK may return for exceptional circumstances – such as the death/serious illness of a spouse or child). ...

The rules regarding the administration of Capital Gains Tax ("CGT") have been overhauled, with significant changes to the reporting and payment requirements coming in from 6 April 2020. These changes represent a significant acceleration of the tax payment and reporting requirements that currently apply. Current Position Under the current rules, on the disposal of residential property UK residents are required to report the gain/loss and pay the tax due by 31 January following the end of the tax year in which the disposal took place. For example, where a property was sold in the 2019/20 tax year, the gain must be reported and tax paid by 31 January 2021. With this in mind, CGT can become due anywhere between 10 and 22 months f...

If a sole trader makes a loss from their business, it may be possible for them to offset this loss against their other income in the same year. This would lead to a reduction in their taxable income and therefore less tax payable. A reduced tax bill is obviously a very appealing prospect. However, as David Cliff (“DC”) (in the case of D Cliff v HMRC [2019]) recently found out in his appeal to the First Tier Tribunal, there are strict rules in place that dictate when a sole trader is allowed to offset their losses against other income; failure to adhere to these rules may result in a discovery assessment by HMRC and hefty penalties. Loss Relief Rules The legislation states that in order for loss relief to be claimed against the...

The case of Reneaux and Another v HMRC (2019) provides guidance on the level of business activity required to be treated as “trading” for Entrepreneurs’ Relief (“ER”) purposes. In this case, the First-Tier Tribunal (“FTT”) held that the occasional use of business premises and the letting of those premises were not sufficient to amount to a trade. Entrepreneurs' Relief  ER is a valuable relief which can reduce the rate of Capital Gains Tax (“CGT”) on the sale of business assets to 10%. In brief, in order for sole traders or partners of partnerships to qualify for relief they must have sold whole or part of their business, or disposed of an asset used in a business at the time the business ceases to be carried on ....

The long-awaited independent review of the controversial loan charge has now been published, along with the government's response. These documents provide some much-needed clarity for taxpayers caught up with the charge. Background The 2019 Loan Charge broadly imposes a tax charge on disguised remuneration loans from 1999 that remain outstanding at 5 April 2019, effectively bringing years of disguised remuneration into charge in 2018/19. Therefore, the loan charge had the punitive effect of up to 20 years' tax becoming payable in one year. HMRC argued this was justified as a strong stance needed to be taken against tax avoidance schemes. However, MPs and various action groups have stated the charge was retrospective in nature and ...

Now that 2019 has been brought to a close, the 31 January 2020 deadline for 2018/19 tax returns will soon be upon us. If you have not already submitted your 2018/19 self assessment tax return, you may want to get this underway soon. A £100 late filing penalty will apply where your tax return is up to 3 months late, and further penalties can apply if the tax return remains outstanding after this date. Any tax due should be paid by 31 January 2020 as well, and interest will begin to run on any tax outstanding from this date. A penalty of 5% of the unpaid tax will apply where the payment is not made within 30 days of the above date. If you need assistance with filing your tax return for 2018/19, please contact a member of our team...

Liquidation Liquidation or the winding up of a company is a process whereby the assets of a company are realised and distributed to creditors in satisfaction of any debt owned in the order of priority set out in the Insolvency Act 1986. Following this, the company is dissolved. In the case of a members’ voluntary liquidation (“MVL”), a company is likely to have surplus assets to be distributed to its shareholders. Tax Treatment Generally, when undergoing an MVL, distributions to shareholders (who have last priority in liquidation) will be treated as capital distributions and therefore will attract the more generous capital gains tax rates (10% for gains falling within your basic rate band, and 20% on the excess). Furthermo...

Private residence relief (“PRR”) was first introduced over 50 years ago and is one of the more widely known tax reliefs, providing relief from capital gains tax ("CGT") on the sale of your home. That said, there has been contention over the definition of the terms “period of ownership” and “periods of occupation”, both of which are crucial for determining if PRR can be applied. Last year we wrote a blog on the case of Higgins v HMRC where the Upper Tribunal held that the period of ownership for PRR purposes starts from the date the contract for purchase was signed, even though the property in question had not yet been built. Mr Higgins has appealed his case to the Court of Appeal who has now reversed the Upper Tribunal�...

As discussed in our blog Government Announces Review of the Loan Charge (12 September 2019) it was announced that an independent review was to be held into the April 2019 Loan Charge, with results due in mid-November 2019. As a result of the upcoming general election, the report will now be delayed until the new government is formed. With the government's response unlikely to be published before the end of the year, this will cause uncertainty for those who are due to report the loan charge on their tax returns before the 31 January 2020 deadline. In light of this, HMRC has published guidance setting out what those affected by the loan charge will need to do: Those who have already reached a settlement with HMRC and paid the am...