Category Archives: Articles

Child’s income: Or is it?

Parents sometimes wish to gift income-bearing assets (e.g. company shares) directly to their unmarried minor children, to take advantage of the child’s personal allowance (and dividend allowance) and possibly also their basic rate income tax band, to reduce the family’s overall tax burden on dividend payments. Unfortunately, this tax planning idea is generally blocked by… Read More »

Business asset disposal relief: A ‘personal’ issue

Most trading company owners wishing to claim capital gains tax business asset disposal relief (BADR) (formerly known as entrepreneurs’ relief (ER)) on an eventual sale of their shares need to satisfy certain conditions throughout a two-year period ending with the disposal. Make it ‘personal’ One of those conditions is that the company is the individual’s… Read More »

It’s a trust – but not as we know it!

Some individuals might assume that the creation of a trust necessarily involves a written document (commonly a ‘trust deed’ in England and Wales), which appoints the trustees, states the terms of the trust and identifies the beneficiaries and the trust property that will be subject to the trust. Bare trusts However, it is well established… Read More »

Can HMRC ‘spread’ out?

HM Revenue and Customs (HMRC) can open an enquiry into any self-assessment return within certain time limits. A tax return enquiry for one period could extend to other periods, such as where HMRC considers that a self-employed individual’s income for one tax year has also been understated in other tax years. HMRC’s ‘presumption’ This HMRC… Read More »

HMRC being unfair? What next?!

Taxpayers sometimes have grievances about HM Revenue and Customs (HMRC), such as mistakes or unreasonable delays. What can be done? Some possible actions to consider are outlined below. You have rights! Disgruntled taxpayers could consider referring HMRC to ‘Your charter’ (www.gov.uk/government/publications/your-charter/your-charter). It applies to the conduct of HMRC officers when interacting with taxpayers (e.g. during… Read More »

Partnership expenses: Panic over?

Individual partners in a partnership sometimes incur business expenses personally. It has been widely accepted that tax relief can be claimed for such expenses. This could be achieved by adjusting for the expenses in the tax computation in the partnership tax return, provided any adjustment was made before the net profit was allocated between the… Read More »

Property expenses: Don’t ask HMRC?

This is generally sensible, particularly if the taxpayer does not have a professional adviser. However, things can sometimes go wrong, and caution is needed. Misunderstandings can easily arise. Pre-letting expenses For example, in Negka v Revenue and Customs [2019] UKFTT 0082 (TC), the taxpayer bought a residential property on 12 July 2013. She lived there… Read More »

Gifting shares – Don’t make a ‘reservation’!

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 »

Incorporating a buy-to-let property LLP into a company

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 »