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Mark McLaughlin warns of a potential trap concerning the late notification of overdrawn director-shareholders’ loan accounts to HMRC, where the overdrawn balance was repaid. Introduction There are statutory time limits for notifying chargeability to various taxes, including the tax charge that can arise when a company director-shareholder’s loan account becomes overdrawn. Don’t Be Late! The general time limit for a company to notify chargeability to tax (where HM Revenue and ... Continue Reading

Mark McLaughlin warns about HMRC’s response to tax ‘schemes’ that could affect company sales. Introduction A targeted anti-avoidance rule (TAAR) was introduced (from 6 April 2016) to prevent ‘phoenixism’. In broad terms, this practice involves company owners winding up their ‘old’ companies and extracting profit reserves as capital (instead of income) and repeating the exercise in one or more successive businesses.     The effect of the TAAR ... Continue Reading

Mark McLaughlin highlights an important distinction between the incorporation of an ‘ordinary’ partnership of individuals and a limited liability partnership into a company. Introduction A limited liability partnership (LLP) is treated like an ‘ordinary’ partnership in many respects. However, an important distinction arises where a business incorporates into a company. Separate Legal Entities Like a company, an LLP is a separate legal entity. When (for example) a business ... Continue Reading

 Mark McLaughlin highlights a potential Inheritance Tax trap when owner-managed company shares are gifted between family members. Introduction It is common for shares in a family company to be passed down the generations. However, anti-avoidance rules dealing with ‘Gifts With Reservation’ (GWR) are a potentially nasty Inheritance Tax (IHT) trap. Cake and eat it The GWR provisions (FA 1986 ss 102-102C; Sch 20) are broadly designed to prevent an individual seeking to reduce their ... Continue Reading

Mark McLaughlin, co-author of ‘Incorporating and Disincorporating a Business’ looks at some important considerations for company owners when disincorporating their business. Introduction Disincorporating a business has potential tax implications for the company and its shareholders. The first part of this article looked at tax implications for the company. In this second part, the tax implications for individual shareholders are considered.  Business owner(s) may well perceive ... Continue Reading

Mark McLaughlin, co-author of ‘Incorporating and Disincorporating a Business’ (Bloomsbury Professional) looks at some important considerations for company owners when disincorporating their business. Part one of this article looks at tax implications for the company.  Introduction These are difficult and worrying times, including for business owners. It was reported in the Financial Times last week that an extra 21,000 companies were dissolved in March 2020, compared to March ... Continue Reading

Mark McLaughlin, co-author of ‘Ray & McLaughlin’s Practical IHT Planning’ (Bloomsbury Professional) highlights some key considerations when valuing assets for inheritance tax purposes.  Introduction The COVID-19 pandemic is having a huge impact on the UK economy. The Institute of Fiscal Studies recently reported that the FTSE all-share index fell by 35% between 2 January and 23 March (www.ifs.org.uk/publications/14773). Furthermore, the Express reported that experts ... Continue Reading

The Coronavirus Job Retention Scheme (CJRS) has been extended from its initial period of 3 months to 30 June, now to 31 October – a total of 7 months. However, while the 4-month extension carries on largely as before, some important changes have been made to “Phase 2”, taking effect from 1 July. Encouraging Return to Work Phase 2 seeks to encourage an overall return to work, by Permitting employees to return to work on a part-time basis during a period of furlough, whereas ... Continue Reading

Mark McLaughlin asks whether some discovery assessments are really made using HMRC’s best judgment.    Introduction HMRC’s discovery powers are an important and valuable weapon in its tax compliance armory. There are separate discovery provisions for individuals and companies. This article focuses on the former (TMA 1970 s 29). The discovery legislation broadly provides for an HMRC officer (or HMRC) to make an assessment of income tax or capital gains tax which, in their ... Continue Reading

This article was written by Jennifer Adams for Tax Insider. The question as to whether the letting of property is a trade or an investment has particular relevance currently because if deemed a 'trade' then a claim under the Self-employment Income Support Scheme (SEISS) whereby a taxable grant worth 80% of trading profits up to a maximum of £2,500 per month for the next three months.  The tests for trading in property are much the same as for any other trade. There is no definition in ... Continue Reading