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How and why HMRC might challenge claims for tax relief on management charges, by Mark McLaughlin. Introduction Management or service charges between related businesses are fairly common. Such charges are sometimes applied as part of a tax planning exercise, e.g., between associated companies where a trading company falls within the marginal rate of corporation tax, but the service company falls well within the small profits rate. A management charge by the service company can sometimes ... Continue Reading

Beware HMRC Attacks on Employment Status TWEd worries that the new government proposals for forcing high-earning contractors onto the payroll will have unwelcome broader consequences. Well, I hope this editorial finds readers well rested and in suitably convivial mood after the Jubilee Weekend. The last week has of course been eventful from a tax perspective as well: first we had the climb down on the "pasty tax" and VAT on caravans - at least in part - ( "Pasty Tax": Government ... Continue Reading

The Chancellor has confirmed that he is scrapping proposals, originally announced in the 2012 Budget, to limit tax relief for charitable donations. Should this be called "another U-turn", or "The Consultation that Never Was"? Both labels are unfair: these were, after all, simply proposals for consultation. The more general cap on tax reliefs is, at least as I write this - and I shall be checking again before posting just to make sure - still to go ahead for consultation in the not too ... Continue Reading

Tax Enquiry deadlocked? VAT dispute? Try the Alternative Dispute Resolution service, says Guy Smith of Abbey Tax Protection. Background HM Revenue & Customs (HMRC) has announced an extension to phase 2 of its Alternative Dispute Resolution (ADR) pilot scheme today. For the first time, the ADR will now include individuals who are in dispute with HMRC, as well as Small and Medium Enterprises (SMEs). The geographical scope of the ADR has been widened too, to cover the whole of the UK. The ... Continue Reading

VAT Measures Curtailed News has just broken that the 2012 Budget proposals to charge 20% VAT on freshly cooked produce have been curtailed. The so-called “pasty tax” would originally have applied to most freshly cooked foods that were sold above ambient temperature but reports indicate that it will now apply only to food that is served, or advertised, as hot to order, or kept warm in cabinets or supplied in heat-retaining packaging. It follows that food which is served hot ... Continue Reading

The Patent Box tax regime presents a real tax-saving opportunity for many companies, say Sarah Brock of Ward Williams Accountants. What is Patent Box? In essence Patent Box is a new tax regime that will allow UK companies to apply a reduced rate of Corporation Tax to profits attributable to patents and certain other intellectual property (‘IP’).   The scheme mirrors others already in place in Europe, and is intended to encourage companies to locate high value jobs and ... Continue Reading

Tax Insider outlines tax saving strategies for higher earners, by  Tony Granger. Introduction The personal allowance is a valuable benefit as it reduces your taxable income.  However, if you earn in excess of £100,000, then the personal allowance reduces as follows: If your adjusted net income is over £100,000 you lose £1 for every £2 above the limit.  At £116,210 earnings you are left with no personal allowance.   As you are losing your personal allowance on ... Continue Reading

TaxationWeb says HM Revenue & Customs is not always to blame for complexities in tax Last week I was accused of being a little bit critical of the new IR35 guidance in HMRC Publishes New IR35 Guidance - Whom does it Really Help? It's probably true, although I'd happily repeat, to anyone who'd listen, that the new guidance was pretty non-committal, and fought shy of comprehensively tackling the underlying issue(s) of/with status. And then of course we also gave HMRC a bit of a hard time ... Continue Reading

The International Monetary Fund (IMF) is reported to have suggested yesterday that the UK should consider a cut in VAT or payroll taxes (NIC) if the economic situation in the UK fails to improve. It is perhaps ironic that, alongside many other EC territories, the UK has increased its VAT rate (albeit after a temporary cut) whilst the cumulative takeup of its flagship Regional NIC Holiday for New Businesses was a woeful 11,000 to 12,000 at last count - see Peter Arrowsmith's NIC Update - February ... Continue Reading

Although we are in the new 2012/13 tax year there are certain tax matters to complete for the previous tax year, 2011/12. Introduction: You may need to take action in one or more of the following areas: Tax Have your PAYE tax deductions changed since 6 April? Tax returns for 2011/12 – have you received one? No tax return? You should still gather together 2011/12 tax papers Late payment penalties for 2010/11 Tax on bank interest Do you sell ... Continue Reading