This time we feature our new and improved guide to RTI and penalties, an update on all things tax avoidance, together with latest news and practical tax guides.
RTI: as some of those with large payrolls may appreciate, HMRC has further relaxed the late filing deadline from October 2014 by giving employers an extra three days' grace. Small employers are subject to late filing penalties for RTI submissions made after 5 March 2015 however, there are now 11 (or 12, depending on which HMRC table you use) exceptions in respect of the "on or before" rule for the filing of a Full Payment Submission (FPS). My challenge to you, without looking this up, how many filing exceptions can you guess? In case you get stuck there is a table in the RTI penalty guide below.
Tax avoidance has been in the news headlines all week. For a little light relief and for wider information I have summarised the key stories; this is not essential reading but it might open an eye or two. I was quite curious to note that a tax anti-avoidance protest group has picked up on the issue of "Carried interests" and private equity. Broadly, under the terms of a "gentleman's agreement" with the British Venture Capital Association (BVCA), if you are a private equity/collective investment manager you don't have to pay income tax on your profits. Instead they are taxed as capital gains and you obtain all the reliefs that CGT can offer, such as Entrepreneurs' Relief. What is surprising in this treatment is that if any other UK taxpayer tries this one on, HMRC will say "you are trading, the badges of trade are quite obviously present" (actually we have a round up of trading vs investment cases next week) and will apply income tax and NICs to your profits. Changes are afoot however. In the Finance Bill HMRC is now taking some measures to tax those aspects of carried interest profits which it labels as "disguised remuneration" (a term that those in share planning and employment intermediaries know well). Quite whether this will work, is another matter because there still remain exemptions for the carried interests that don't represent disguised remuneration.
While I am only slightly amazed that it has taken people so long to have protested about the BVCA's agreement (I only knew of it because of my long-running interest in share schemes) I wonder firstly whether it has any statutory footing and secondly why it is that one group of people have been allowed such stunning tax breaks for so long. Food for thought before an election.
Nichola Ross Martin FCA Tax Director
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Tax Avoidance: What's On?
A summary of the top stories on tax avoidance to have hit the headlines recently.
- PAC and large accountancy firms
- Diverted Profits Tax
- Accelerated payment notice challenge by film schemers
- HSBC’s leaked Swiss banking list
- What about the General Anti Abuse Rule?
- Private Equity, Disguised Fees and Carried Interests...Read more
Tax penalties: when an error in a tax return is attributable to another person
In case you missed this one - the first case of a penalty of this kind. A son's failure to disclose a lifetime gift made by his father (from an undeclared Swiss bank account) landed him with an £87k penalty, even though the relevant tax return was filed by his father's executors.
RTI: update and guide and penalties
This is exactly what it says, and we also summarise the 11 (or is it 12?) times on which you can file your FPS late.
Capital Gains Tax reliefs
Start here for an a glance guide to the key capital gains tax reliefs available to individuals and companies, with links to detailed guides and examples.
- Do you know your roll over relief, from your hold over relief?
- What are the limits to Entrepreneurs' Relief?
- What reliefs can you use on incorporation or disincorporation?
- Who can claim a main residence relief and when do you need to make an election.
- What happens now if you are a non resident with a UK residential property?
Essential reading - subscription (paid) content
Employers' NICs allowance
UPDATE: new 2015/16 rates and salary tables to show what salary to pay to maximise your allowances.
Joint property masterclass
UPDATE Changing beneficial interests and severing joint tenancies: when income tax planning may have unforeseen IHT consequences.
How to appeal a tax penalty
UPDATE: increasingly we note that tribunals reducing penalties on appeal because HMRC has failed to consider whether any special circumstances exist.
Finance Bill 2015: tax update and rolling planner
Visit this regularly in order to avoid feeling overwhelmed by the huge volume of new tax rules and regulations: our rolling tax update and planner sets out all the key measures, dates and deadlines for you. Budget 2015: will take place on Wednesday 18 March 2015.
Pensions: what's new?
One of our latest subscriber guide tracks the key changes in the pensions' rules for individual over the last three years. We also include planning points and links for small employers planning their auto-enrolment.
Incorporating a business
It is proposed that CGT Entrepreneurs' Relief will not apply to transfers of goodwill on incorporations made on or after 3 December 2014, so what are the alternative options? This practical tax guide takes you, asset by asset, through the steps of incorporation with worked examples to illustrate the interactions of different CGT and income tax relief.
CGT: different ways of taxing UK residential property
Companies will be subject to two CGT regimes from 1 April 2015, this guide summarises the new tax regimes for UK and off-shore companies and individuals from 1 / 6 April 2015.
Higher Income Child Benefit charge
A guide to the charge and making elections
Practical tax notes on the legal formalities and tax treatment of dividends:
Legal or unlawful dividends: Companies Act 2006
Summary of the requirements of the Companies Act 2006 to be followed on paying dividends.
Unlawful or illegal dividends: tax
A guide summarising the different tax charges depending on outcomes following an illegal dividend.
Dividends: formalities for companies
A briefing and overview for discussion with directors.
See also our Directors' loan accounts: toolkit and Close companies: tax planning and pitfalls for details of the section 455 tax charge and way that Chapter 6, Part 4 ITTOIA 2005 treats certain benefits and expenses to participators as dividends.
Employee share schemes
Giving shares to a new director or employee? The shares are very likely to be "Employment Related" and there are important income tax and reporting considerations. This practical guide provides an outline of the tax consequences when a company gives shares to an employee or director.
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