It is common for shares in a family company to be passed down the generations. However, anti-avoidance rules dealing with ‘gifts with reservation’ (GWR) are a potentially nasty inheritance tax (IHT) trap. Cake and eat it The GWR provisions (FA 1986, ss 102-102C; Sch 20) are broadly designed to prevent an individual seeking to reduce… Read More »
A limited liability partnership (LLP) is treated like an ‘ordinary’ partnership in many respects. However, an important distinction arises where a business incorporates into a company. Separate legal entities Like a company, an LLP is a separate legal entity. When (for example) a business carried on by an ordinary partnership of individuals is incorporated into… Read More »
A targeted anti-avoidance rule (TAAR) was introduced (from 6 April 2016) to prevent ‘phoenixism’. In broad terms, this practice involves company owners winding up their ‘old’ companies and extracting profit reserves as capital (instead of income) and repeating the exercise in one or more successive businesses. The effect of the TAAR applying is that an… Read More »
There are statutory time limits for notifying chargeability to various taxes, including the tax charge that can arise when a company director shareholder’s loan account becomes overdrawn. Don’t be late! The general time limit for a company to notify chargeability to tax (where HM Revenue and Customs (HMRC) has not given a notice to file… Read More »
It is common in many occupations and professions (e.g. law, medicine) for individuals to be engaged as self-employed consultants. Some consultants will build up their own practices before eventually selling them. From a tax perspective, the question arises how the practice disposal proceeds should be treated. For example, is it an income or capital receipt?… Read More »
Where a taxpayer is unfortunate enough to be subjected to an enquiry into their tax return, it is not uncommon for HM Revenue and Customs (HMRC) to issue a formal notice requiring the taxpayer to provide information or produce documents which HMRC considers is ‘reasonably required’ to check the return (FA 2008, Sch 36, para… Read More »
A change in personal circumstances can have tax implications, such as affecting the availability of capital gains tax principal private residence (PPR) relief. For example, a house might be occupied for only a short time before sale, due to a change of plans following a relationship breakdown. ‘Safe’ occupation? A common question asked by house… Read More »
The penalty regime for errors in tax returns etc. (FA 2007, Sch 24) provides an escape from penalties if an error has arisen despite ‘reasonable care’ having been taken. Otherwise, the maximum penalty (i.e. 30% to 100% of ‘potential lost revenue’; or possibly higher if the error involves an offshore matter) depends on the type… Read More »
This two-part article looks at some important considerations for company owners when disincorporating their business. Part one looks at tax implications for the company. These are difficult and worrying times, including for business owners. It was reported in the Financial Times last week that an extra 21,000 companies were dissolved in March 2020, compared… Read More »
Disincorporating a business has potential tax implications for the company and its shareholders. The first part of this article looked at tax implications for the company. In part two, tax implications for individual shareholders are considered. Business owner(s) may well perceive there to be a ‘double tax charge’ on the basis that the company is… Read More »