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Sarah Bradford of Tax Insider gives useful advice on the best choice of accounting date for an unincorporated business. Introduction The law allows a business to choose its accounting date each year. Most businesses use the tax year (i.e., 6 April to 5 April) for their accounting year too, although some people find it convenient to use 31 March as the end date for their business year (known as fiscal accounting). Under the 'current year basis', the taxable profit for a particular tax ... Continue Reading

Julie Butler warns that Agricultural Property Relief for farmland has its limitations and may not cover the full value of the land. Introduction Farmland can benefit from both Agricultural Property Relief (APR) and Business Property Relief (BPR) for Inheritance Tax (IHT) purposes. APR is however restricted to “Agricultural Value”. The APR on farmland is therefore restricted to agricultural value. The principle of agricultural value is considered in relation to the farmhouse. IHTA ... Continue Reading

The Low Incomes Tax Reform Group (LITRG) is warning that some employees risk being chased by the tax authorities - or losing benefits - because of their employers’ tax avoidance strategies. Tax-Free Payments? Employers frequently reimburse employees for business travelling and subsistence costs, incurred in moving from one temporary place of work to another. As it is basically a reimbursement of an employee’s expense on behalf of the business, it is not treated as earnings: ... Continue Reading

Mark McLaughlin CTA (Fellow) ATT TEP considers how the new disincorporation tax relief may work. What is Disincorporation? 'Disincorporation' is broadly the process of a business changing its legal form from a limited company to a sole trader or partnership. This process generally involves a transfer of the business as a going concern, including assets and liabilities, from the company to its shareholders, who then carry on the business on a self-employed basis. It is generally ... Continue Reading

Peter Vaines of Squire Sanders LLP comments on a couple of recent cases, both won by the taxpayer. Delivery by Post The Tribunal case of Browns CTP Limited v HMRC TC 2244 sounds seriously boring. It concerns a penalty for late payment of PAYE which is enough to put anybody off, but it raises some interesting points. I hasten to add that my attention was drawn to this case because, sad as I may be, I try not to spend all the hours of darkness reading tax cases about PAYE penalties - and ... Continue Reading

Money Well Spent? Mark McLaughlin asks if HMRC should spend so much of taxpayers' precious resources on working out "The Tax Gap". HMRC published the 'tax gap' figures for 2010/11 recently (see 2010/11 Tax Gap Figures Published). The 'tax gap' is described by HMRC as the difference between the total revenues collected by HMRC, and the total revenues that it is estimated the tax system should generate. In other words, it is broadly the difference between the amount that HMRC thinks ... Continue Reading

How a couple can make more tax-efficient use of the allowances and exemptions available to them, by Tony Granger for Tax Insider. General Rule The following tax strategies apply to you if you have a spouse or civil partner. To a lesser extent, there are some tax strategies that may apply for unmarried persons who are cohabiting. The general rule is that there is no Income Tax, Capital Gains Tax or Inheritance Tax payable when passing assets to a spouse or civil partner. The spouse ... Continue Reading

Mark McLaughlin looks at when HMRC can treat unidentified receipts as additional taxable income. Introduction Enquiries by HM Revenue & Customs (HMRC) into tax returns will often involve a review of all monies received, with a view to establishing whether taxpayers have declared all taxable income and gains. Unless those amounts can be satisfactorily identified, HMRC will probably infer that the receipts are additional taxable income. For example, the accounts of self-employed individuals ... Continue Reading

HM Revenue & Customs is developing a "Tracker" system that will help taxpayers and agents to monitor turnaround times for post, claims, and the like. The Tracker, which can be found on HMRC's website at Where's My Reply? allows the querist to select the nature of the communication with HMRC (claim a refund, order stationery, make a general enquiry, etc.), the method used (telephone, claim form, letter or visit to an Enquiry Centre, etc.) and the date the communication was made, whereupon ... Continue Reading

Thousands of Higher Rate taxpayers who have failed to submit tax returns will receive letters from HM Revenue & Customs (HMRC) this month, reminding them that they have only one month left to take up a special opportunity being offered by the tax authority. The Tax Return Initiative is aimed at people liable to pay tax at rates of 40 per cent and above and who have been told to submit a Self Assessment tax return for 2009/10 or earlier, but have not done so. The campaign is also available ... Continue Reading