If you have clients who have made carry back loss claims only to find that HMRC have withheld repayment, then you might be interested in the outcome of the Cotter case before the Supreme Court. The judgment came with its own Press Release whereby Lord Hodge helpfully provided his own "top tips" on how to ensure that you obtain a refund before any enquiry is completed. I've prepared a case summary for you.

I have also been summarising a new CGT case where PRR was denied on the basis that the client was developing the property for a gain: we don't see too many of those. This is therefore quite an interesting case to talk over with clients.

I was confused in reading a tax magazine the other day to see that someone was suggesting that you can get capital allowances on the cost of integral features in a letting property. I then Googled this point and found it springing up in another tax publication and many other places online which made me wonder if I was the one who was wrong. I have created a mini-guide to explain the rules, and also found new guidance from HMRC with confirms my views. So, a few more points to talk over with clients who may well have the rules wrong.

We also have quite a few short news items this time (all freeview) so you can have a quick top up on those. Check out also my the piece on Associated Companies: getting the new rules wrong. For subscribers - we have been working behind the scenes maintaining and updating the guides - scroll on down for more news, toolkits, briefings, and updates on Finance Act 2013.

Best wishes


Nichola Ross Martin FCA
Tax Director

Your online Virtual Tax Partner: practical support for accountants, tax advisers and their clients

Quick news

Cotter v HMRC
In Cotter v HMRC [2013] UKSC 69 the Supreme Court has found that HMRC was correct to withhold repayment of tax pending an enquiry following a claim made for a carry back of loss relief. The judge provided some tips on making claims going forward.

Main residence: no CGT relief when acquired for a gain
We have not seen one of these for a while. A house was demolished and rebuilt. PRR was denied on disposal because a lack of evidence that the new home had been occupied as a residence, and uncertainty about the financing of the property.

Let property, capital allowances & integral features
Top tips: no capital allowances on plant and machinery for use in a dwelling house - that includes integral features. We note errors in several tax publications which advise that capital allowances are available to property letting landlords. Best to chat this over with clients as there seems to be wide confusion.

Associated companies: what's new?
Top tips: in two recent cases a company's previous advisers have failed to notice that UK companies have foreign associated companies: make sure you investigate foreign assets.

Topical tips: avoiding negligence claims
Top tips: many clients may be keen to agree low cost fixed fees, but ensure that leaves you with sufficient leeway when it comes to tax: you may want to bring in external assistance if necessary.

ERS: paying shares as bonus spotlighted
HMRC has highlighted a couple of share based bonus schemes that the Tribunal finds don't work. The schemes were set up under the pre 2003 rules which have now been amended. Many schemes involving the creation and award of new shares were created after that date and it seems quite likely that many will fail under the Ramsay principle.

Entertainers to be self employed for NICS
Following consultation the Government has decided that entertainers who are engaged under a contract for services (a self-employed contract) should be treated as self-employed for tax, NICs and student loan purposes from 6 April 2014.

Executors: use the right form
An interesting one to note: an executor completed Form 27, in order to claim a tax refund for the deceased. He was unable appeal against HMRC's calculation of the refund, as it was not an assessment.

Our Subscriber Toolbox

Surplus cash: CGT & IHT relief
UPDATE: when and how too much cash is too much to obtain business reliefs

IHT Agricultural Property Relief & Land
NEW: agricultural land values are shooting up again which raises some particular problems in estate planning.

2013-14 Tax Planning Toolkit for directors
UPDATE: essential planning tips and pitfalls.

Property profits and losses
Covering all key angles of property taxation

Research & Development Relief
UPDATE: SME guide to R & D reports. Is your client developing an API?

Special relief
A special relief applies under s3A TMA 1970 in cases where it would be unconscionable for HMRC to seek to recover an amount of tax or refuse repayment (if already paid). This is the statutory version of the old equitable liability concession.

Directors' service contracts - top tips
Company law requires that a director has a service contract with his company. 

Property & letting: CGT and IHT issues
Three contrasting cases involving business asset CGT relief and residential properties.

Tax planning for income at marginal tax rates 
Strategies for avoiding higher rates of tax, in general, for the self employed and for employees and directors.

Directors: tax planning toolkit 2013/14
Our a rolling ESSENTIAL tax planner, so we continue to update this all year as tax law evolves. The 2013 Finance Act made some significant changes to the tax rules affecting directors, our toolkit provides you and your adviser with a heads up on "what's hot and what's not" in 2013/14.

Directors' loan accounts: toolkit (freeview)
A checklist that details the main tax issues surrounding directors' loans.

Close company loans toolkit
Essential reading with a focus on new rules for "bed and breakfasting" loans to participators and measures affecting loans to LLPs. Review of latest consultation for reforming the loans to participator rules.


NEW: a whole new area on the site covering the Statutory Residence Test and your FAQs

Shares and employees

Employee Shareholder Status - tax & planning
UPDATE: a new type of employee and a new type of employee share scheme.

Employment Related Securities
This explains what happens when you give an employee or director shares outside of an approved share scheme or EMI option scheme.

ABC or alphabet shares: directors & employees
This links you to guides for directors, family companies and employers.

Close Company guides and updates for advisers

Will I pay less tax if I trade via an LLP?
An overview and comparison of key points

Running an LLP in tandem with a company
Tax planning suggestions for alternative structures

Do I pay a salary or dividend?
The tax-planning points and pitfalls of using dividends to create a tax-efficient pay package.

Capital reduction: index
Capital reduction is the process by which share capital or other capital reserves, including the share premium account of a company are repaid to shareholders. We now have a full range of guides on this topic for shareholders and directors.

Still coming to terms with the new Finance Act and other recent changes?

Limit (cap) on income tax reliefs
UPDATE: yet more examples of situations which are affected by this cap (from our Virtual Tax Partner helpline), surely this measure needs to be amended?

Disincorporation Relief
The new relief applies from 1 April 2013. It may be useful for small companies which decide that it is administratively easier to scale down and become sole trades or partnerships.

IR35: changes from 2013
From April 2013 under measures introduced in the 2013 Finance Act office holders will become within the scope of IR35.

When an inspector calls

Health & Wellbeing professionals NEW disclosure opportunity. Notify HMRC by 31 December 2013.

Let Property Campaign Aimed at property landlords who have failed to disclose rental income. Unlike other fixed term opportunities this one has apparently no deadlines for registration: it will be open for at least 18 months.

Disclosure Opportunities: Top Tips NEW: advisers make sure that you understand how the different rules all interact. 


IHT: non-domiciled spouses
From 6 April 2013 a non-dom spouse may elect to be treated as UK domiciled, this might be a dangerous election to make without some careful consideration.

IHT: restrictions on liabilities against the estate
Provisions were introduced by the Finance Act 2013 that restrict to what extent certain liabilities may be deducted against an estate on death. HMRC has now updated its manuals to reflect the changes which may catch out advisers and taxpayers alike.

'Simpler' Accounting for tax

Accounting: Simpler Income tax (cash basis) / fixed expenses Start here (self-employed taxpayers) to decide which of (or both) the new measures to adopt.

Board and lodging adjustments All change from 5 April 2013.

Cash or accruals accounting toolkit At a glance summaries with planning points and examples for all advisers in this new guide.

Flat rate expenses or actual cost toolkit Essential briefing for advisers and clients.

Land and Property

Furnished Holiday Letting
UPDATE: our detailed guide contains a summary of all the recent changes which is useful for talking over with clients.

Wear and tear allowance and the renewals basis
The rules changed on 6 April 2011 and then again on 6 April 2013: this updated guide explains the different tax treatments year by year.

Annual Tax on Enveloped Dwellings (ATED)
The first self-assessment return for ARPT will be due in 2013/14 and made by 1 October 2013. 

Joint property: legal v beneficial ownership This guide provides you with a concise summary of the differences between legal title and beneficial ownership and explains what elections or actions are necessary to ensure that tax treatment matches your intentions.

Free-view guides

Travel and tax UPDATE: this is our sign-post to our guides in this area. If you are ever short of something to say to a client start here - the new rules for simplification of accounts make this whole topic quite fun.

Tax-free benefits and perks UPDATE: can you spot the changes? (scroll to the bottom to find the answers).

Staff parties and annual functions UPDATE for 2013.

Directors' loan accounts: toolkit An essential guide for directors and companies on the income tax and NICs treatment of overdrawn loan accounts.

Editor's choice

Schedule 36 information notices
Mini guide to HMRC's power's with topical tips and case law

Purchase (repurchase) of own shares Step by step guide to ensure Companies Act and tax compliance is met to allow a repayment to be treated as capital in the hands of the outgoing shareholder.

 Top Tips for directors

Converting part of a home into an office 
 How to create a tax-efficient home office.

Can I charge my company rent for use of my home?

  • Recharging the company, on the same basis as a conventional home working employee for a proportion of your bills and running costs. This is explained in Working from home (directors) or
  • Formalising a licence agreement with your company in order to allow it to occupy part of your property. It then pays you rent and service charges and you then claim all your expenses under self-assessment...More

Working from home (directors)
UPDATE: the same rules apply to home working directors as other employees. However, a director is more likely to be able to charge rent and there may be some additional issues and complications by virtue of their office.

Tax masterclass: running an LLP & Co structure 
A guide is for trading companies and professional practices: we see many different structures and so we are constantly updating this guidance.

Annual Investment Allowance 
Update: a handy summary with planning points.

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