Mark McLaughlin Associates

What is a ‘renewal’? It is well known that a deduction is generally available from trading profits for expenditure on repairs to fixed assets. However, the position is perhaps less clear in relation to the cost of renewing assets, or so it would seem in HMRC’s view. When dealing with renewals expenditure, a distinction needs to be [...]

Recent guidance Penalties under the new regime can be avoided for inaccuracies in tax returns, provided that ‘reasonable care’ has been taken. An area of possible contention in tax returns is asset valuations. How far must a taxpayer (or agent) go in order to demonstrate that reasonable care has been taken, where HMRC considers that an [...]

Normal expenditure out of income Many advisers, and some taxpayers, are aware of the Inheritance Tax (IHT) exemption for ‘normal expenditure out of income’ (IHTA 1984, s 21). Yet anecdotal evidence suggests that the exemption is not being fully utilised. Whilst most forms of tax relief or exemption have an upper limit (e.g. the income tax [...]

Laws of Property and IHT The rule regarding commorientes is concerned with determining survivorship where two or more people have died. The legislation is in the Law of Property Act 1925, s 184. It broadly states that where two or more people have died and it is unclear if one of them has survived the other, [...]

Property valuation The new penalty regime for inaccuracies in tax returns etc has arguably increased the stakes and made it even more important that all possible steps are taken to ensure tax returns are complete and correct. Incorrect tax returns resulting from careless (previously negligent) behaviour are subject to penalties under the new regime. But what [...]

Nature of Payment An unfortunate consequence of the economic climate is that more people will find themselves out of work. At least there is an income tax exemption for statutory redundancy payments (ITEPA 2003, s 309). Non-statutory redundancy payments are charged to tax under ITEPA 2003, s 401, subject to various potential exceptions including the first £30,000 [...]

A tax planning opportunity in the recession Tax relief for losses has obviously become a much more important issue for taxpayers since the recession started. However, as in many other areas of tax, securing loss relief is not always as straightforward as it should be. Fortunately, a recent tax case offers some assistance in some cases. Capital Gains Tax (CGT) [...]

How many people genuinely thought that they would see the day when business taxpayers with cash flow problems could spread or defer tax liabilities simply by picking up the telephone and having a quick chat with a friendly HMRC representative? If someone had told me a couple of years ago that an HMRC service would exist [...]

Goodwill valuation   Business sales and incorporations may be on the decline in the present economic climate, but goodwill valuation is very much a ‘live’ issue. HMRCs guidance on goodwill changed in September 2008. Previously (following case law) HMRC likened the behaviour of business customers to certain types of animal (i.e. dogs, cats, rabbits and rats). Developing [...]

Good news and bad news The Budget in April included some good news and bad news for owners of furnished holiday lettings (FHLs). Property letting is not a trade for tax purposes, but owners of FHLs that meet certain conditions can enjoy a number of potential tax benefits associated with trading activities, including: entrepreneurs’ relief; rollover and holdover relief; IHT [...]