I am preparing a 2017/18 tax return for a deceased client. There are chargeable event gains of £66,000 and other income of £41,000, resulting in a reduction to the personal allowance. Using the calculations in Tim Good's Taxation article of 27 September 2017, top slicing relief would be due but I am aware that HMRC have rejected this analysis and it appears that no relief would be due using their calculation.
I would be grateful for any views on whether to recommend to the executors that we follow Tim Good's advice and submit the return using his calculation method or to follow the HMRC calculation and not claim TSR. A further option would be to submit the return without the Tax Calculation pages.
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I have had a similar situation on my late father's estate. I submitted the TR with no calculation and HMRC gave no relief. I have queried their calculation and submitted my own figures following a course run by Tim Good but HMRC maintain their figures are correct. My own software (TaxCalc) agrees with HMRC.
I haven't yet responded to HMRC . Any guidance as to the wording would be appreciated
HMRC will reject calculations based on my analysis. I have this week instructed Counsel to give a written Opinion and anticipate that this will support my analysis. I know of one agent whose client is prepared to take this to Tribunal and I shall support such a case. In the meantime agents should identify clients for whom protective claims should be made and ask HMRC to keeps such claims open pending a hearing.
HMRC's reply to my article is posted on https://www.absolutetax.co.uk/products/topslicer-tool where you can also access my topslicer calculator.
Thanks for your response Tim. Can you say when functionality for 2017-18 on the topslicer calculator is likely to be available please?
I am working on it now and aiming to make available shortly after Easter (together with 2014-15 onwards).
Note that overpayment relief claims for 2013-14 can only be made up to 5 April 2018 so action may be needed imminently for some clients.
I feel I might be a bit late to the party with this question.
But I am similarly administering my late fathers estate.
There are some bonds eligible for top slicing relief, and HMRC appear to have done this and looking at the tax slice calculator the relief is the same as described as the taxpert calculations. It appears that HMRC has changed its policy on calculations.
However, i have noticed another anomaly, with respects to the personal allowance. This seems to have completely disappeared. Total incomes prior to any reliefs are in excess of 150k.
However, if you used 1 slice of the investment, and calculated a notional total income, this would be below the higher rate threshold.
It seems rather punitive to remove the personal allowance when top slicing relief appears to be intended to take you back to a position akin to taking the gain each year.
Because my father died very early in the tax year, the majority of his personal allowance was untouched.
If anyone has experience of this, I would be grateful for their insights.
Put the details into https://www.absolutetax.co.uk/account/top-slicer-tool-trial and email me if you have any questions.