Your legislation is not out of date, but you are not reading it properly. You quote the condition in s55C(2). You first need to read when that condition is relevant – for which refer to s55C(1)(d), quoted by jholm above.
That's really interesting. So the condition to have income under PA only applies if you are non-resident.
So H&W directors/shareholders with minimal salary and BR dividends can save £150ish of tax.
It's quite amazing how much guidance out there is wrong.
Unless I'm reading out of date legislation, s55C(2) ITA 2007 says:
"The condition is that the individual's hypothetical net income for the tax year concerned is less than the amount of the personal allowance to which the individual is entitled for that tax year under section 35"
The second payment on account would have been due 31 July 2018. However I thought there was only interest on payments on account, not penalties.
Have you called the SA helpline to understand how these arose?
SAM61250 states that:
Late payment penalties are imposed when tax and NIC liabilities (referred to throughout as tax) are paid late. These penalties are applied to balancing payments, determinations, amendments and revenue assessments but not interest, late filing penalties or payments on account. The balancing payment liable to late payment penalty will include any part of a payment on account outstanding at the balancing payment due date.
It is that last sentence which is important here - so an unpaid POA will be caught by a penalty.
But it has been coded out. Balancing Payments which are coded are not subject to a penalty - so why should a POA?
In the case of 2012/13 then, do you think it would be possible to merely claim enough allowances (AIA) to reduce the profit to zero, then carry the balance of expenditure forward and claim WDA in the 2013/14 year (under the same principle)?
Any WDV still left over in 2014/15 would then not be allowable as it is SA and thus "out of time"?
As others have mentioned, there is no balancing allowance - not all the time the business continues.
Why was AIA not claimed on purchase? OK you would have subsequently got a balancing charge - but it at least you wouldn't have ended up with a pool balance to carry forward ad infinitum.
In my opinion the guidance does not restrict the relief anyway.
Fair point. But I thought that is why the ICAEW were seeking clarification -as two pieces of guidance say the opposite thing.
Anyhow, looking at the law (s34 ITTOIA 2005), I assume we are arguing that the expense IS incurred W&E for the rental business as it is interest on a loan on a let property, as opposed to not being W&E because it is interest on a loan which has been taken out for private purposes. Is that right?
My answers
So, how would you go about apportioning it? OMV of each part?
That's really interesting. So the condition to have income under PA only applies if you are non-resident.
So H&W directors/shareholders with minimal salary and BR dividends can save £150ish of tax.
It's quite amazing how much guidance out there is wrong.
Unless I'm reading out of date legislation, s55C(2) ITA 2007 says:
"The condition is that the individual's hypothetical net income for the tax year concerned is less than the amount of the personal allowance to which the individual is entitled for that tax year under section 35"
....which would imply that you can't transfer.
Definitely 6.4.18 to 5.4.19
BINGO! Yes, that's the one.
Call subsequently put into HMRC who will refer on to review.
Thanks for your help.
SAM61250 states that:
Late payment penalties are imposed when tax and NIC liabilities (referred to throughout as tax) are paid late. These penalties are applied to balancing payments, determinations, amendments and revenue assessments but not interest, late filing penalties or payments on account. The balancing payment liable to late payment penalty will include any part of a payment on account outstanding at the balancing payment due date.
It is that last sentence which is important here - so an unpaid POA will be caught by a penalty.
But it has been coded out. Balancing Payments which are coded are not subject to a penalty - so why should a POA?
Sorry, I didn't make that clear.
He has none - so reducing to PA is obviously better then zero.
It's the principle of creating a smaller profit, rather than a loss, that I am more concerned with, in light of Portia's comment.
In the case of 2012/13 then, do you think it would be possible to merely claim enough allowances (AIA) to reduce the profit to zero, then carry the balance of expenditure forward and claim WDA in the 2013/14 year (under the same principle)?
Any WDV still left over in 2014/15 would then not be allowable as it is SA and thus "out of time"?
As others have mentioned, there is no balancing allowance - not all the time the business continues.
Why was AIA not claimed on purchase? OK you would have subsequently got a balancing charge - but it at least you wouldn't have ended up with a pool balance to carry forward ad infinitum.
Fair point. But I thought that is why the ICAEW were seeking clarification -as two pieces of guidance say the opposite thing.
Anyhow, looking at the law (s34 ITTOIA 2005), I assume we are arguing that the expense IS incurred W&E for the rental business as it is interest on a loan on a let property, as opposed to not being W&E because it is interest on a loan which has been taken out for private purposes. Is that right?