Member Since: 23rd May 2013
A tax lawyer with more than 15 years of tax experience, having worked for City law firms and a Big Four accountancy practice.
Tax lawyer and writer Tax Notes
19th Oct 2015
Ninian - EIS reinvestment relief is different
The idea with reinvestment relief is to shelter a CGT charge on the property and reinvesting the proceeds in an EIS-type investment.
I think your question assumes that you have to somehow sell the property into a company which will then qualify for the relief, but this is not the case.
One needs to make the distinction between two types of asset:
1. The asset which is being sold; and
2. The EIS company into which the proceeds of the sale in 1 are being reinvested.
The asset in 1 can be almost anything - that is, capital assets that give rise to a CGT charge. The investment in 2 - is the one with the EIS-type conditions.
Property letting doesn't qualify for these types of company but it doesn't matter - the property letting activity relates to the asset in 1, not the asset in 2.
However, my concern about this type of relief is that one is exchanging a well earned gain on a relatively safe investment - the property let - for an investment that is really quite high risk, which could lose all your money. Not only that, when the EIS company does go bust you'd still have a CGT charge to pay but no funds.
7th Oct 2015
Apologies to those who are trying to read this post
As you can see, the subheadings have just run into the main text. This was certainly not the way it appeared when I first posted it. I shall try and get this sorted.
25th Sep 2015
Bureaucracy - the legacy of Mesopotamia
We know that they were amongst the first farmers, but bureaucracy was the other legacy of Ancient Mesopotamia. Surplus produce went to the temples for storage, and so records were kept. Tributes coming from other kings/princes - again, it was all recorded.
Some of the ancient seals produce fascinating glimpses of what life was like, and we can also see that as people, they were no different to us.
If anyone gets a chance to go to the British Museum, I would recommend having a look at the various cylinder seals on display - I think there is one set on the top floor where the restaurant is. They come in all sizes, and are works of art in themselves.
3rd Aug 2015
Comments on gearing should be read with what I said afterwards
"Investors are never at risk for the amount of the loan - for the funds are never used in the business they are investing in, but locked in the bank's own account."
The fault is mine for not expressing this more clearly.
But it really is clear from reading the case that one asks "How did they every imagine that relief could be granted?
As moneymanager says - its "the delierate obfuscation as to the purpose of the arangement. E.g.
Why spend time and effort getting quotes as to the cost of the R&D for approx 100 when you're going to use a process that costs a miniscule fraction of the amount?
What were the members doing, that could consitute a trading activity?
I agree that if the loan is on a full recourse basis this should not be a problem. Though I had understood that all these LLPs were on the basis that the members would never be at risk for the amount. So it is interesting to find out that there have been cases where the full recourse method was followed.
Indeed, when I was working on an R&D Fund, my intention was that no loan would be offered. It would have been a straight investment of 100 in return for tax relief of 40 on the R&D allowance. Though it compares unfavorably to putting in 20 and getting out 40, it would have been a nice complement to the then EIS/VCT schemes for those people who've used up their annual VC scheme allowance and were looking for something ellse.
Unfortunately my idea never got off the ground. Partner too busy with other matters.
2nd Aug 2015
Putting in £20 and claiming back 40 - a money printing machine?
All these R&D/film cases are set up so that the investor gets out more than he puts in.
It is the level of gearing to inflate the value of the claim that is the real mischief here. Investors are never at risk for the amount of the loan - for the funds are never used in the business they are investing in, but locked in the bank's own account.
In this case about 96-99 was "invested" but only 6 was actually spent on the R&D.
So even if the LLP were regarded as trading, the claim to allowances - and therefore sideways loss relief - would have been severely limited.
8th Jul 2015
Well it looks as if that entrepreneurs relief article will have to wait a bit, because now they've abolished tax relief for purchased goodwill alltogether!
5th Jul 2015
Link to case
Thank you very much, very well explained.
You can access the judgment at this link. Should be interesting to read this.
5th Jul 2015
How much did George Lucas make from the Star Wars merchandise?
Would be interested to know what proportion of the money came from the toys and the tee shirts compared to the actual film itself.
I remember reading the Star Wars story a while ago - the story of how the film was made, that is. It seems that from Day One, Lucas had arranged business deals for the IP rights to the spin-offs - as I mentioned - toys, tee shirts, comic strips, Star Wars mugs etc. Very canny businessman. He'd probably seen what Disney did
If only David Prowse's agent had claimed some rights to the little Darth Vader toys and light sabre...
4th Jul 2015
Thank you Francois
Very kind of you indeed. Well, it seems that I'm going to be posting something about entrpreneurs relief and goodwill soon.
I shall aim to post something for Tuesday. And then, no doubt entrepreneurs relief will be abolished on Wednesday!
3rd Jul 2015
Thank you for the kind welcome
I have to say I'm surprised that anyone noticed my posting!
Funnily enough I actually started some work on that goodwill article the other day. I'm in the process of converting the Tax Notes articles to pdf format, to make them easier to read. You can of course download them anyway using the print button but they look so horrible that I thought I'd rather provide my own hard copies.
I can post that article here if you like. My only concern is that it might appear too long to read online. But if people don't mind that, then I'm happy to post it here.