JOOI have HMRC "clarified" that s.7 requires notification if gains are less than the annual exemption? I ask as there was doubt about the construction of s.7. As the LITRG put it in 2022 (in their response to the call for evidence on Income Tax Self Assessment registration for the self-employed and landlords)
“Our understanding of Section 1K TCGA 1992 is that the annual exempt amount operates to reduce an individual’s chargeable gains. It is therefore not entirely clear whether an individual with a capital gain of, say, £5,000 would have chargeable gains of £5,000 or £nil. Consequently, it is unclear whether this person would satisfy Section 7(3)(b) TMA 1970, which requires that they have ‘no chargeable gains’. Also, Section 7(1) speaks of a person being ‘chargeable to capital gains tax’ – does HMRC interpret this broadly (i.e. as a person potentially chargeable if they were to have chargeable gains), narrowly (i.e. a person with some amount of capital gains tax to pay), or perhaps somewhere in between (e.g. a person with some amount of capital gains but with no capital gains tax to pay because they are within the annual exempt amount)?”
SALF210 is to my eye not suggestive as to the answer:
"There are exceptions to this requirement. These are where the taxpayer has no chargeable gains (or such gains as there are do not exceed the annual exempt amount), and either:
has no net liability to income tax for the year, or
has had sufficient tax deducted at source to meet the net income tax liability for the year."
Some may just possibly be interested (but probably not happy) to see this discussion on STEPS's trust forum of who is liable for CGT on a disposal of estate property.
I have little doubt it is legal for HMRC to make the request. Section 9 of the Commissioners for Revenue and Customs Act 2005 (Ancillary powers) provides they
"may do anything which they think—
(a) necessary or expedient in connection with the exercise of their functions, or
(b) incidental or conducive to the exercise of their functions."
I submit it is clearly conducive to their functions to seek to minimise the amount of hissing in response to the increased deductions.
As for the fact that neither NI nor the new charges will hypothecated, the text merely asserts that the increased revenue will "fund" certain increases in expenditure. That is a form of words which has a long history. I don't recall anyone previosuly arguing that Chancellors should merely state that a tax increase will "tend to increase total government receipts out of which central government expendituire will be made".
It's way past time that HMRC consolidated the regulations *and* aligned law and practice. But successive governments wanted a more businesslike Civil Service so no one should be surprised if HMRC's view is that the details of legislation can be ignored where nobody's going to enforce them. And if the Treasury worries about the integrity of the system the evidence has escaped me.
I'll get back to me drooling and trouser-rolling now.
I agree the use of "rogue" for all the employers is wrong. But I think the language may well come from Ministers/SPADs rather than HMRC: the press releases come from BEIS (who have NMW policy & legislation). So I'd favour calling BEIS and their Ministers "rogue" every time they FU.
And FWIW the threshold was reviewed and increased only in 2020 when naming & shaming was resumed so I doubt they'll even look at it again for a while.
If the contract is drawn properly it seems to me merely the converse of employees who have a right to a sum net of all deductions, leaving the employer to "gross up" for tax and NICs.
Looked at that way, I think it is unhelpful (not to say wrong) to state that "The issue is, is that he has been deducted out of the gross pay the employers NIC value of ~£9k". He was never entitled to the gross amount. He was entitled to pay of X where X + (taxes and social security contributions payable by the employer on X) = the gross prize.
"A hairdresser requires workers to wear a uniform consisting of any black trousers and any white tee shirt. Workers can purchase these from any shop. The cost of purchasing these items will reduce national minimum wage pay, since it is a specific requirement imposed on the worker by the employer."
It seems to me they could delete "a uniform consisting of" from that and so reduce the risk of confusion with the position for tax but what do I know.
AIUI Wagamama's failure was that they did *not* pay a uniform allowance over and above the minimum wage. They just required employees to wear certain clothing. After deducting reasonable costs of such clothing from the pay the employees were left with a net rate of pay below the NMW. The employer could have avoided that NMW failure by (a) paying a specific allowance for clothing or (b) a rate of pay with sufficient headroom to cover the clothing. Either way as far as I can see there's no implication for tax.
I find it helpful to bear in mind that what is and isn't pay for NMW purposes is not and never was based on tax definitions.
My answers
reporting disposals ≠ s.7 notification
I thought the £50,000 threshhold was only relevant if you are already required to make a return.
And that reporting outside a return was only needed if there was tax to pay.
The gov.uk pages point that way BUT I've no idea if those dumbed down summaries are up to date and accurate
"If your total taxable gains are above your allowance, you’ll need to report and pay Capital Gains Tax."
https://www.gov.uk/capital-gains-tax/reporting-and-paying-capital-gains-tax
JOOI have HMRC "clarified" that s.7 requires notification if gains are less than the annual exemption? I ask as there was doubt about the construction of s.7. As the LITRG put it in 2022 (in their response to the call for evidence on Income Tax Self Assessment registration for the self-employed and landlords)
“Our understanding of Section 1K TCGA 1992 is that the annual exempt amount operates to reduce an individual’s chargeable gains. It is therefore not entirely clear whether an individual with a capital gain of, say, £5,000 would have chargeable gains of £5,000 or £nil. Consequently, it is unclear whether this person would satisfy Section 7(3)(b) TMA 1970, which requires that they have ‘no chargeable gains’. Also, Section 7(1) speaks of a person being ‘chargeable to capital gains tax’ – does HMRC interpret this broadly (i.e. as a person potentially chargeable if they were to have chargeable gains), narrowly (i.e. a person with some amount of capital gains tax to pay), or perhaps somewhere in between (e.g. a person with some amount of capital gains but with no capital gains tax to pay because they are within the annual exempt amount)?”
SALF210 is to my eye not suggestive as to the answer:
"There are exceptions to this requirement. These are where the taxpayer has no chargeable gains (or such gains as there are do not exceed the annual exempt amount), and either:
has no net liability to income tax for the year, or
has had sufficient tax deducted at source to meet the net income tax liability for the year."
Some may just possibly be interested (but probably not happy) to see this discussion on STEPS's trust forum of who is liable for CGT on a disposal of estate property.
https://trustsdiscussionforum.co.uk/t/capital-gains-tax-query/15034/18
I tend to agree with the thrust of the comments that the basis in law of the CGT manual is somewhat less than clear and unambiguous.
I have little doubt it is legal for HMRC to make the request. Section 9 of the Commissioners for Revenue and Customs Act 2005 (Ancillary powers) provides they
"may do anything which they think—
(a) necessary or expedient in connection with the exercise of their functions, or
(b) incidental or conducive to the exercise of their functions."
I submit it is clearly conducive to their functions to seek to minimise the amount of hissing in response to the increased deductions.
As for the fact that neither NI nor the new charges will hypothecated, the text merely asserts that the increased revenue will "fund" certain increases in expenditure. That is a form of words which has a long history. I don't recall anyone previosuly arguing that Chancellors should merely state that a tax increase will "tend to increase total government receipts out of which central government expendituire will be made".
Well if rants are the order of the day...
It's way past time that HMRC consolidated the regulations *and* aligned law and practice. But successive governments wanted a more businesslike Civil Service so no one should be surprised if HMRC's view is that the details of legislation can be ignored where nobody's going to enforce them. And if the Treasury worries about the integrity of the system the evidence has escaped me.
I'll get back to me drooling and trouser-rolling now.
I agree the use of "rogue" for all the employers is wrong. But I think the language may well come from Ministers/SPADs rather than HMRC: the press releases come from BEIS (who have NMW policy & legislation). So I'd favour calling BEIS and their Ministers "rogue" every time they FU.
And FWIW the threshold was reviewed and increased only in 2020 when naming & shaming was resumed so I doubt they'll even look at it again for a while.
https://www.gov.uk/government/news/naming-employers-who-fail-to-pay-mini...
If the contract is drawn properly it seems to me merely the converse of employees who have a right to a sum net of all deductions, leaving the employer to "gross up" for tax and NICs.
Looked at that way, I think it is unhelpful (not to say wrong) to state that "The issue is, is that he has been deducted out of the gross pay the employers NIC value of ~£9k". He was never entitled to the gross amount. He was entitled to pay of X where X + (taxes and social security contributions payable by the employer on X) = the gross prize.
Just out of interest, do accountants no longer have tax return software that allows them to do "what if?" IT/NI and CT calculations?
I'm many years away from the details but personally always thought it better for NMW to think in terms of "dress requirements" rather than "uniform". That said, HMRC probably agree with you given their example 3 in https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nm...
"A hairdresser requires workers to wear a uniform consisting of any black trousers and any white tee shirt. Workers can purchase these from any shop. The cost of purchasing these items will reduce national minimum wage pay, since it is a specific requirement imposed on the worker by the employer."
It seems to me they could delete "a uniform consisting of" from that and so reduce the risk of confusion with the position for tax but what do I know.
AIUI Wagamama's failure was that they did *not* pay a uniform allowance over and above the minimum wage. They just required employees to wear certain clothing. After deducting reasonable costs of such clothing from the pay the employees were left with a net rate of pay below the NMW. The employer could have avoided that NMW failure by (a) paying a specific allowance for clothing or (b) a rate of pay with sufficient headroom to cover the clothing. Either way as far as I can see there's no implication for tax.
I find it helpful to bear in mind that what is and isn't pay for NMW purposes is not and never was based on tax definitions.