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Peter Vaines of Squire Sanders comments on HMRC's approach to the valuation of goodwill, and warns that a taxpayer's recent successful claim for costs against HMRC may actually hinder, rather than help. Goodwill Valuation For some time, HMRC have taken the view that any goodwill attributable to the personal skills of a proprietor of a business cannot be transferred - for example to a company on incorporation. They say that a company cannot carry on a profession and therefore ... Continue Reading

When an individual sells his only or main residence, generally the gain is exempt from CGT due to principal private residence (PPR) relief. However two conditions need to be fulfilled in that the property must: • not have been purchased ‘wholly or partly’ for the reason of making a gain; and • be the individual's only or main residence at some point of ownership.    The last 36 months of ownership of a property that has been the individual’s only or ... Continue Reading

The LITRG has expressed concern that proposals by the Ministry of Justice will put judicial review even further beyond the reach of the ordinary citizen than it is already.  Introduction The Group takes the view that judicial review is sometimes the only effective remedy available to ordinary taxpayers against HMRC when the tax authorities act in such a way as to adversely affect their lives and financial wellbeing.   LITRG’s interest in this proposal is from the ... Continue Reading

If your employer has become insolvent any redundancy payment you receive may only have basic tax deducted. This means that you may pay too much tax on your redundancy payment. Background When an employer becomes insolvent, the Redundancy Payments Office (RPO) may make a payment to employees of the employer under the insolvency provisions of the Employment Rights Act. As the RPO is not an employer they do not operate a tax code on the payment. This means they just deduct basic rate ... Continue Reading

Tax planning possibility: •    Disposals between spouses/civil partners are deemed to occur on a ‘no gain/no loss’ basis. •    If one spouse/civil partner owns an asset which on sale has produced a capital gain in excess of the annual exempt amount and the other spouse/civil partner has an asset standing at a potential negligible-value loss, the negligible value asset can be transferred to the spouse/civil partner, the loss offset and capital gain reduced. Example: Fred ... Continue Reading

After the decision has been made to sell a rental property, expenses incurred cannot be deducted from the rental income that has been received. Although there is no specific legal requirement for written confirmation of the date of the decision, it would be advisable to make a note. If you have a portfolio of properties, expenses such as stationery, petrol, phone bill, etc. are allowable because, even after a particular property has been sold, you will still be running a business receiving ... Continue Reading

TaxationWeb's Mark McLaughlin points out that tax legislation can produce some unintended - and grossly unfair - results. The statement in the title of this editorial probably won't come as a great shock (in fact, some would say it was axiomatic!), particularly after all the controversy in recent months about celebrities and multinational companies paying less than their 'fair share' of tax. But fairness in tax works both ways. I was saddened to read a recent tax ... Continue Reading

If a business rents a commercial property and under the terms of the lease is required to incur the cost of repairing part of the property, the expense is allowed against the profits of the tenant’s business in full as the cost is required to enable the business to continue. ‘Repair’ in this context means ‘restoration’ of an asset by replacing subsidiary parts of the whole property. If there is a significant improvement of the asset beyond its original condition ... Continue Reading

TW Ed thinks that HMRC should play fair when it comes to repaying money to taxpayers. I read recently that Mr. David Cameron is contemplating a change in the law to encourage large businesses to pay smaller firms on time.  Perhaps unsurprisingly, the chairman of one of those large firms has since written in to the Financial Times, suggesting that HMRC might like to take note. According to reports, the letter complained that HMRC had been 20 days late with a VAT repayment of around £300,000, ... Continue Reading

TaxationWeb's Mark McLaughlin considers HMRC's publication of the Tax Gap. HM Revenue & Customs published estimated figures in respect of the tax gap for 2011-12 the other day. For the record, the tax gap for that year is £35 billion, or 7% of tax due. The publication of these figures will no doubt trigger seemingly endless debate on their validity. This has become something of a regular event - I seem to remember a series of articles on the tax gap in 'Taxation' ... Continue Reading