The ability of companies to reduce share capital has been simplified following changes introduced in Companies Act 2006 from 1 October 2008. The capital reduction procedure (in CA 2006, ss 641-657) was discussed in my article ‘Don’t wind me up’ (Taxation, 5 February 2009), in the context of winding up companies using Extra Statutory Concession… Read More »
It is not uncommon for assets to be transferred to pension schemes instead of cash. However, are assets an acceptable form of pension contribution to a registered scheme for tax relief purposes? HMRC guidance categorically states in the context of employer contributions: “In-specie contributions are not allowed. The legislation only permits monetary contributions” (RPSM05102035). However,… Read More »
Retrospective tax planning would be a wonderful thing in many cases. For example, it would potentially be very useful if partnership profit shares could be adjusted after the year end based on the personal circumstances of the individual partners, particularly in the context of partnerships involving family members. However, is retrospective tax planning involving the… Read More »
The introduction of the Inheritance Tax (IHT) transferable nil rate band facility in Finance Act 2008 has made life much easier for married couples (and civil partners) in terms of enabling the nil rate band to be utilised on the first death. In certain circumstances, up to four nil rate bands may be available. For… Read More »
Recent changes Accountants and tax advisers who were familiar with the concept that a dividend paid by one UK company to another UK company was not generally liable to corporation tax will need to think again, following legislation introduced in Finance Act 2009. Bad news or good news? Under the new rules, the basic position… Read More »
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… Read More »
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… Read More »
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… Read More »
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… Read More »
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… Read More »