Mark McLaughlin Associates

As a general rule, the travel expenses of a self-employed individual from home to a workplace is not allowable under the ‘wholly and exclusively’ rule (in ITTOIA 2005, s 34(1)). However, if the individual’s trade is exercised from home, a deduction is potentially available (see Horton v Young [1971] 47 TC 60). However, HMRC does [...]

It is not uncommon in owner-managed companies for directors’ overdrawn loan accounts to be waived. For income tax purposes, the write-off of a loan falls to be treated as earnings (ITEPA 2003, s 188). However, where loans to participators of close companies are waived, tax is chargeable on the participator under ITTOIA 2005, s 415). [...]

The distinction between property trading and property investing is an important one. For example, individuals trading in properties may be eligible to claim entrepreneurs’ relief on a disposal of the business. In addition, if the trade incurs losses, the individual may be able to offset those losses against general income. On the other hand, a [...]

The difference between the main rate of corporation tax and the small companies’ rate is narrowing over time, and the rates will eventually be 23% and 20% respectively under Government proposals. Nevertheless, entitlement to the small companies’ rate of corporation tax is an important issue for many business owners. A ‘Close Investment Holding Company’ (CIHC) [...]

ESC C16 is a very useful concession for taxpayers. By way of a brief reminder, ESC C16 broadly allows distributions to shareholders by a company that has ceased business and is awaiting dissolution to be treated as made in a formal winding up for tax purposes, if certain conditions are satisfied and assurances given to [...]

Taxpayers (and advisers) strive for certainty when dealing with tax issues. The legislation is often unclear, and taxpayers may therefore resort to seeking comfort from guidance published by HM Revenue and Customs (HMRC), such as booklets or its manuals. This guidance does not carry the force of the law, but can it be relied upon, [...]

The number of capital loss claims in respect of irrecoverable loans to businesses (or loan guarantee payments) has probably increased significantly during the economic downturn. Claiming relief seems straightforward enough on the face of it, but there are some potentially difficult obstacles to overcome. For example, the relief applies to qualifying loans (TCGA 1992, s [...]

The distinction between income and capital assumed greater importance following the introduction of a 50% income tax rate. The subsequent introduction of a 28% capital gains tax rate has narrowed the differential between the tax rates, but the gap is still significant. The treatment of an activity as a trade (as opposed to, say, an [...]

It will normally be straightforward to identify the existence of a partnership; the parties will invariably deliberately join together to form one. However, in practice life is not always so simple. For example, a joint venture may take on some characteristics of a partnership. HM Revenue & Customs (HMRC) may contend that a business is [...]

When it comes to HMRC commencing enquiries into the tax returns of self-employed individuals, it would not be surprising if cash businesses were seen by HMRC as something of a ‘soft target’. The record keeping standards expected by many HMRC officers appears to be very high, and even the smallest discrepancy can result in proposed [...]