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Tolley's Practical Tax by Andrew HubbardAndrew Hubbard, Director of Tax, Tenon Group, ponders over the demise of the non-corporate distribution rate and the future of small business taxation.When I am commissioned to write a tax article my immediate reaction is usually: “how on earth can I deal with such a complex topic in so few words?” But for once I have the opposite problem. When your editor asked me for an article on the abolition of the non- corporate distribution rate my initial draft ... Continue Reading

Capital Tax Review by Matthew HuttonMatthew Hutton MA, CTA (fellow), AIIT, TEP reports on an interaction between ‘old’ A&M trusts and the discretionary trust regime that requires clarification from HMRC.ContextAssume a pre-22 March 2006 accumulation and maintenance settlement which enters the mainstream trust regime from 6 April 2006. Let’s say it was made on 26 December 1986. Apart from ascertaining the settlor’s seven year chargeable transfer total up to 25 December 1986 and whether there ... Continue Reading

Tottel’s VAT Annual 2006/07 by John Price FCAJohn Price examines the mechanics of an important VAT relief.You can claim bad debt relief for VAT charged to your customers, which they have not paid to you. The law is in s 36 and VAT Regulations (SI 1995/2518), Regs 165–172J. For sales after 1/1/03, you no longer tell a customer that you are claiming relief. However, see Chapter 13, What Can I Recover Input Tax on? for the rule, which requires you to repay input tax on any invoice you have not ... Continue Reading

Busy Practitioner by Mark McLaughlin CTA (Fellow) ATT TEPMark McLaughlin CTA (Fellow) ATT TEP, General Editor of TaxationWeb, considers lawful and unlawful dividends and their tax consequences.For many private company owners, extracting income by dividends rather than salary or bonus will often be more tax-efficient. However, before dividends can be considered as a strategy for extracting profits from the family trading company, the Companies Act requirements for lawful dividends must be addressed. ... Continue Reading

Capital Tax Review by Matthew Hutton MA, CTA (fellow), AIIT, TEPMatthew Hutton MA, CTA (fellow), AIIT, TEP author of Capital Tax Review, comments on the withdrawal of a proposed trust residence rule, and points out cases where action may be required before 6 April 2007 due to the new residence rulesContextThe draft Finance Bill legislation issued on 2 February 2006 provided that, for both income tax and capital gains tax (CGT) purposes, trustees of a settlement who act as trustees in the course of ... Continue Reading

VAT Voice by Andrew NeedhamAndrew Needham, Director of VAT Solutions (UK) Ltd, reports on the recent VAT Tribunal case Anjun Suhail & REBA Textiles Ltd (VTD 19,448), in which the Chairman found in favour of the taxpayer and brought up a number of issues that are important to businesses.BackgroundMr Suhail was the MD of REBA Textiles, which was suffering cashflow problems. He fell into arrears with HMRC, and failed to send in some VAT returns on time. As a result, HMRC issued a central assessment ... Continue Reading

The UK Tax System: An Introduction by Malcolm JamesMalcolm James, author of ‘The UK Tax System: An Introduction’ provides an overview of the HMRC enquiry process.Reasons for Initiating Tax InvestigationsIf HM Revenue & Customs wish to instigate an investigation (as distinct from initiating an enquiry under the self-assessment regime) a taxpayer will normally be sent a letter indicating that HMRC believe that his tax affairs are not in order and inviting him to make full disclosure immediately. ... Continue Reading

Monthly Tax Review by Matthew Hutton MA, CTA (fellow), AIIT, TEPMatthew Hutton MA, CTA (fellow), AIIT, TEP author and presenter of Monthly Tax Review, reports on a recent Special Commissioners decision involving CGT main residence relief issues.ContextThe matters for consideration in this case involved both the validity of assessments made by HMRC and the substantive issues of deductible expenses, the size and location of the ‘permitted area’ and whether an apportionment was required to exclude ... Continue Reading

Tottel's VAT Annual 2006/07 by A St John PriceJohn Price, author of ‘Tottel’s VAT Annual 2006/07’, considers an often-asked VAT question.IntroductionThis article explains the information which must be shown on a tax invoice, together with various other points about them. In theory, tax invoices, which are mostly produced by computer nowadays, should all comply with the law and should be easily recognisable. In practice, the infinite variety of layout on invoices complicates matters. If your ... Continue Reading

Tolley's Practical Tax by Louise Pinfold CTA (Fellow) ATT TEPLouise Pinfold CTA (Fellow) looks at the new regime.Following the creation of HMRC last year, a number of new names and acronyms have appeared in the world of tax investigations. This article looks not at self-assessment enquiries carried out by local offices, but at some of the ‘big guns’ in HMRC that deal with investigations of the more serious kind. IntroductionSpecial Civil Investigations is one of the new names that has cropped ... Continue Reading