HMRC’s views were originally published in Tax Bulletin 1G in November 1991:
There is some uncertainty whether the cost of proprietors of a business attending a training course, directly related to the business activity, is deductible in arriving at the [trade] profits chargeable to tax.
Where attendance at a course is intended to give business proprietors new expertise, knowledge or skills, which they lack, it brings into existence an advantage that is of enduring benefit to the business. We take the view that the expenditure is therefore of a capital nature, and deduction is prohibited by [S33 Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005)].
On the other hand, where attendance is merely to update expertise etc. which proprietors already possess, the expenditure is normally regarded as revenue expenditure and will be deductible if it satisfies the “wholly and exclusively for the purposes of the trade” test in [S34(1)(a) ITTOIA 2005]’ – see BIM42105.
Their guidance to Tax Inspectors is:
You should therefore allow proprietors a deduction for expenditure that merely updates existing expertise or knowledge but disallow any expenditure that provides new expertise or knowledge (particularly where it brings into existence a recognised qualification like a Master of Business Administration).
When the IT is calculated, part of the gain is taxed at 45%.
So in round figures, in this case the proceeds was £ 300k, gain is approx £ 100k, with approx 10 k of the gain taxed at 45%, and then an allowance for top slicing coming off the total tax due leaving about 30K due on the IT return.
So the net IHT account needs to be reduced by £ 30k if i am understanding you correctly?
i am having the same problem, the error message appears when i log in to my asa account, and try to copy across VAT clients form old gateway account. any solutions anyone? thanks
i am having the same problem, the error message appears when i log in to my asa account, and try to copy across VAT clients form old gateway account. any solutions anyone? thanks
ok, thanks for the replies to date.
Lets say for arguments sake that the partner was admitted in March 2018, and the accounts to 30 June 2018 were not finalised until after 31 January 2019:
then i suppose HMRC's attitude would be that a 2017 / 2018 tax return was due by 31 1 2019 and penalties would apply:
to avoid penalties, the client should have submitted an estimated return by 31 January 2019 and amend afterwards when the June 2018 accounts were finalised?
hmrc are still issuing tax calculations and omitting the class 2 nic that is due. why is this still the case. do we need to do anything at our end to rectify? thanks
My answers
said it was a compliance check for 19/20 year
How is the vehicle insured? for commercial activities? What does the log book say, and what is its gross weight?
so is the dentist updating an existing skill or acquiring a new one?
the case Dass v Special commissioner may also be relevant
HMRC’s views were originally published in Tax Bulletin 1G in November 1991:
There is some uncertainty whether the cost of proprietors of a business attending a training course, directly related to the business activity, is deductible in arriving at the [trade] profits chargeable to tax.
Where attendance at a course is intended to give business proprietors new expertise, knowledge or skills, which they lack, it brings into existence an advantage that is of enduring benefit to the business. We take the view that the expenditure is therefore of a capital nature, and deduction is prohibited by [S33 Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005)].
On the other hand, where attendance is merely to update expertise etc. which proprietors already possess, the expenditure is normally regarded as revenue expenditure and will be deductible if it satisfies the “wholly and exclusively for the purposes of the trade” test in [S34(1)(a) ITTOIA 2005]’ – see BIM42105.
Their guidance to Tax Inspectors is:
You should therefore allow proprietors a deduction for expenditure that merely updates existing expertise or knowledge but disallow any expenditure that provides new expertise or knowledge (particularly where it brings into existence a recognised qualification like a Master of Business Administration).
Thanks CJaneH
The policy was not written in trust.
When the IT is calculated, part of the gain is taxed at 45%.
So in round figures, in this case the proceeds was £ 300k, gain is approx £ 100k, with approx 10 k of the gain taxed at 45%, and then an allowance for top slicing coming off the total tax due leaving about 30K due on the IT return.
So the net IHT account needs to be reduced by £ 30k if i am understanding you correctly?
i am having the same problem, the error message appears when i log in to my asa account, and try to copy across VAT clients form old gateway account. any solutions anyone? thanks
i am having the same problem, the error message appears when i log in to my asa account, and try to copy across VAT clients form old gateway account. any solutions anyone? thanks
ok, thanks for the replies to date.
Lets say for arguments sake that the partner was admitted in March 2018, and the accounts to 30 June 2018 were not finalised until after 31 January 2019:
then i suppose HMRC's attitude would be that a 2017 / 2018 tax return was due by 31 1 2019 and penalties would apply:
to avoid penalties, the client should have submitted an estimated return by 31 January 2019 and amend afterwards when the June 2018 accounts were finalised?
have to say that i tried to use sage for irish payroll and was an absolute nightmare, am not trying simplepay.ie, seems ok at the minute
hmrc are still issuing tax calculations and omitting the class 2 nic that is due. why is this still the case. do we need to do anything at our end to rectify? thanks