Member Since: 4th Jan 2002
21st Sep 2020
Actually, that's inaccurate as the following extract from the Case report makes it clear that the taxpayer DID take professional advice:
"The Claimant explains that although the donation was made in the 2017/2018 tax year he was aware from his limited knowledge of tax, and as confirmed by his financial adviser, that he would be able to treat the payment as made in 2016/2017 for Gift Aid purposes."
My bet is that he will by now have already made a negligence claim against his financial adviser. If so, no doubt the firm's PI insurers are currently fully engaged with this!
21st Sep 2020
"Claiming the costs to Birmingham and back really wasn't a great idea for that amount of time."
As the tax at stake was c£10k pa it seems pretty clear that it wouldn't have been the travelling costs, per se, that were the biggest factor here. Rather, it would have been the London accommodation costs, which are notoriously expensive compared to most of the UK.
I'm really not surprised at the FT decision. It is entirely consistent with the Booklet 490 examples at paras 4.6 to 4.9. These paras set out HMRC's take on what is meant by the expression "substantial change" (the guidance uses the word "significant", actually, but let's not split hairs). And, in response to Brian Gooch's point, para 4.9 makes it clear that a similar before and after cost but traveling in an entirely different direction will still qualify, subject to the 24 month rule, of course.
7th Sep 2020
(Replying to DS)
A one-man company with an employment contract with his own PSC? Are you quite sure? Never seen one of those in over 40 years working in tax! Might be a contract with the Agency or end client perhaps but between him and his own company?? Surely not.
When a director decides to close down a company he will normally be doing that for commercial reasons, maybe because the work has dried up, he has decided to retire, work offshore or maybe take up an employment instead. Although, by dint of being a director, this brings his directorship (and hence his "employment") to an end that doesn't, of itself, make it sufficient to justify effectively giving himself a termination award. On any objective basis, that's simply self-enrichment and an inevitable consequence of his own commercial decision to wind up the company.
I know that there have been one or two voices on here over the years who have expressed the opposite view but, personally, as an employment taxes specialist, I'm on the side of the two accountants you've spoken to. Certainly HMRC will be!
26th Aug 2020
To Anonymous FD
Sarah's brief but excellent summary of the termination rules applies whether there is a settlement Agreement (SAg)or not. Typically an SAg will break down the payments between the three main elements, namely contractual, non-contractual and PENP. But even if not so broken down in an SAg, the tax treatment will in effect apply that split anyway. This is (or should be) the case both for PAYE/NI purposes and for the employee's SA return in due course.
There haven't been any recent rule changes overriding this but what you may, perhaps, be thinking of is when the PENP rules came in two or three years ago. Prior to that, to establish the tax position, one had to to look at the employment contract to ascertain whether a payment was contractual or not. Broadly speaking, a clause which gave the employer the absolute discretion as to whether to give notice or make a payment in lieu thereof (a PILON) was held by the Courts to be a contractual entitlement and hence taxable in full. Where the contract was silent on this the PILON was akin to a breach of contract payment and so qualified for the £30k tax-free slice. Since the introduction of the PENP rules, however, this distinction has been pretty well rendered redundant (pun intended!)
It was a great pity (though no great surprise) that, during the consultation process and in the subsequent legislation, the opportunity was not taken to increase the £30k limit, which has been around for donkeys years now. Even before it was increased to £30k, the limit was £25k (and I believe that this went back to the 1970s, at least) when the SRP element would have typically used up no more than about 10% of the tax exemption. As Sarah's article says, the maximum SRP nowadays is well over £16k and so uses up over the half of the £30k. Another instance of, I'm sure, wholly intentional fiscal drag.
27th Jul 2020
Replying to Lisa Knowles
It was "listed" (whatever that means, exactly) two weeks after purchase but wasn't actually sold until 9 months later. The SP presumably reflected the work undertaken in that period; but that's yet another sign of trading, is it not?!
27th Jul 2020
I think the taxpayer got off extremely lightly here. Given the evidence HMRC presented then, surely, if PPR wasn't available then it must have been trading. What else would explain it? And the FTT said the same thing. HMRC might have thought they would be pushing their luck but they only had to establish trading on the balance of probabilities.
I reckon they missed a trick here. And it looks like it's now too late to raise trading assessments for the years in question. Pity!!
10th Mar 2020
Quite right, Lone Wolf. Furthermore, under Sec99 TMA:
"Any person who assists in or induces the making or delivery for any purposes of tax of any return or accounts which he knows to be incorrect shall be liable to a penalty not exceeding £500."
That would include any accountant, partner or even (strictly speaking) anyone acting in accordance with a partner's instructions. Sec99 Notices are, true to say, very rare but whenever they are issued to an accountant/accountancy practice you can bet your bottom dollar that HMRC will scrutinise every single return submitted by said firm/individual!
9th Jan 2020
My money is on this being a pre-cursor to a 12 month implementation delay. There's no other explanation, given the very short timescale and the fact that the new CEST tool was only wheeled last month. HMRC have form in this sort of thing. Off the top of my head I can recall the "new" CIS scheme, the SRT rules and MTD, for all of which the roll-out was delayed by at least 12 months.
The reason is invariably because HMRC "over-promise" delivery timetables to their Treasury masters, only for it to dawn on them very late in the day that they are simply not ready. And they will then claim that the delay is because their "customers" are ill-prepared and need more time.
20th Nov 2019
I would also endorse the comments of AndyC555. Everything these days seems to be a matter of perception; one might even say political correctness. It's no longer good enough to say "It was acceptable in the Eighties!"
The source of the trouble, in my view, lies in the provocative tax avoidance schemes used a decade or two ago, typically using offshore companies and loans that were not really loans, but there were dozens of variants. This led to the inevitable Government-led crackdown by HMRC, the introduction of DOTAS, the anti-Abusive Avoidance legislation, APNs and the contractor loan rules. If you keep poking the lion with a stick it will eventually attack you! The problem when you cast your net this wide, though, is that you then catch a lot of "small fry" in your net.
HMRC also played a blinder (depending on your view!) in what was blatantly a PR campaign against Avoidance (with a capital A) by co-operating with TV companies and, for example, allowing covert footage of presentations to be broadcast and the unconscionable (and illegal) release of the names of prominent footballers and other celebs, such as Jimmy Carr. Such has been the success of this "naming and shaming"campaign that these days being labelled a tax avoider is one notch above being an alleged paedophile! And we have all seen where that road leads to.
A few years ago I was involved in the planning and implementation of a plain vanilla salary sacrifice arrangement involving lorry drivers benchmark scale rates. We provided full details of the arrangements to HMRC's Clearance team and they issued formal clearance. A couple of years later, following a PAYE inspection the essential P11d dispensation was cancelled on the grounds that the haulage firm did not require receipts for lunches etc.
To cut a long story short our howls of protest eventually went right up to the Head of some part of HMRC's Counter-Avoidance division and she said to me "Well, it's avoidance, isn't it?" Clearance - what Clearance? (The irony is that HMRC's self-imposed requirement for receipts for benchmark scale rates has now been dropped!)
So here we are in 2019 where the shadow Chancellor, no less, seems unable to differentiate (or chooses not to) between aggressive tax avoidance and mere tax mitigation/planning of the kind listed in this thread. Some would say that's just reaping the whirlwind. But a sad state of affairs, nonetheless.
12th Jun 2019
I think what the majority of respondents are saying (and certainly that goes for me) is that we are not opposed to PTAs, per se. Indeed, I have one myself and so I am entirely unsurprised that 80% of ATT delegates have one, too.
A PTA can be of (limited) use where the taxpayer is NOT within the SA system. But where they are, the PTA really adds nothing to the sum of human knowledge, certainly as far as the tax agent is concerned.
Worse still, a PTA is entirely unintelligible to the lay person. In fact, as I stated in my first posting, they are unintelligible to me and I spent over 20 years as a senior Revenue Inspector and even longer than that as a specialist tax consultant.
I remain of the view that if a client is prepared to go to the expense of hiring an accountant/tax agent they are, by inclination, not going to want to spend time trying to decipher their PTA. You don't get a dog and bark yourself! But, even if they did, they could either misunderstand the info or ask the agent to clarify it, which defeats the object and increases their fees (or the agent's write-off time).
This is basically why we have an agent-only SA portal. By all means open up the PTA to agent view but encouraging clients to use it is, frankly, wrong-headed at best and downright dangerous at worst.