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Tax Insider

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Here are just some of the strategies our tax experts are sharing with you this month:                         
  • Not Clear! ‘Business’ And Incorporation Relief 
    Unsurprisingly, HMRC will not ‘approve’ tax planning arrangements or give advice on the tax treatment of transactions which HMRC considers are for tax avoidance purposes. However, the non-statutory clearance service can be helpful in terms of obtaining certainty about HMRC’s view on proposed transactions. It is therefore unhelpful that HMRC announced in April 2018 further circumstances in which it will not give assistance. Mark McLaughlin points out a change of HMRC practice that may cause uncertainty for some taxpayers and many landlords in particular.
  • Offsetting Rules Governing Capital Gains Losses
    The disposal of assets may precipitate both capital gains and capital losses. In principle, the rule is that capital losses can be offset against capital gains. However, capital losses are not transferable and therefore cannot, for example, be transferred from one spouse or civil partner to the other (and thus the capital gains of one spouse cannot be offset against the capital losses of the other). Sarah Laing looks at how the offsetting rules governing capital gains losses can be efficiently utilised to minimise capital gains tax.
  • Buying A Commercial Property At Auction 
    If a commercial property owner has opted to tax a property they will normally have to charge VAT on any supplies they make of it, including its sale at auction. When selling an opted property in (say) London, the stamp duty land tax (SDLT) is added on top of the VAT inclusive price. Andrew Needham looks at the VAT consequences of buying a commercial property at auction.
  • Entrepreneurs’ Relief And Fundraising – The New ‘Dilution’ Rules
    Entrepreneurs' relief is a capital gains tax relief designed to encourage individuals to set up and grow their own businesses. If the relevant conditions are satisfied, any capital gains arising on the sale of the business are taxed at a rate of 10%. Satwaki Chanda discusses the proposed ‘dilution’ rules, which are intended to preserve entrepreneurs’ relief for business owners seeking to raise new capital.
  • Key Person And Shareholder Combination Arrangements
    The scenario envisaged in this takes into account ‘key person’ insurance for a company or limited liability partnership where premiums are payable by the business, and then shareholder protection where the shareholders take out life assurance on each other’s lives to provide cash for the sale of their shares on death (or certain disabilities). Tony Granger examines possible savings that can be made from having combined insurance policies for businesses and shareholders. 
  • A Change Of Emphasis For Venture Capital Schemes?
    The tax reliefs available for enterprise investment scheme (EIS), seed EIS (SEIS) and venture capital trust (VCT) investments are generous and are obviously not intended to be used for tax avoidance purposes. Ken Moody looks at recent changes which potentially affect the availability of tax relief for certain categories of investment.    
  • The Transferable Residence Nil Rate Band: Extra IHT Savings?
    Two major allowances for inheritance tax purposes (IHT) are the nil rate band (NRB) and the residence nil rate band (RNRB). Malcolm Finney outlines the requirements for transferability of the inheritance tax residence nil rate band.      
  • IHT On Death: An Unfortunate Tale
    When someone dies, family members or friends may have the responsibility of dealing with the deceased’s estate. This may involve (among other things) applying for a grant of representation (in England and Wales), reporting the value of the deceased’s estate, and paying any inheritance tax (IHT) liability. Mark McLaughlin points out that a ‘do it yourself’ approach without professional assistance can be an expensive error when it comes to dealing with inheritance tax on a deceased person’s estate. 
  • Benefits-In-Kind: Changes Afoot?
    Under the government’s new timetable, draft Finance Bill 2018-19 clauses were published in July 2018. The Finance Bill, when published, will eventually become Finance Act 2019, when it receives Royal Assent in March 2019, so the new law can take effect from April 2019 or a later date. Of course, the draft provisions could be subject to changes announced in the Budget in November 2018, or as a result of representations made during the consultation period.  Sarah Laing looks at some proposals in the draft Finance Bill 2018-19 clauses which, if enacted, may affect many employers and employees.    
  • Factoring Debts: The VAT Consequences 
    The term ‘factoring’ covers a variety of services involving debt assignment in which the factor provides clients with finance in respect of debts owing from their trade debtors. Andrew Needham looks at the VAT consequences of debt factoring and how it affects tax points and bad debt relief.    
  • Will Your Training Costs Qualify For Tax Relief?
    Is tax relief available for training costs? Currently, it depends on whether the individual is self-employed or an employee. For the latter, it also depends on whether the employee or employer incurs the costs. Kevin Read discusses the current tax relief available for work-related training and looks at proposals to extend it to encourage self-funded training, particularly where ‘upskilling’.   
  • Gifting Investment Properties To Your Children 
    The benefits of someone gifting an investment property to their children can include spreading rental income and reducing inheritance tax (IHT). However, the tax implications of making such gifts should not be overlooked. Tony Granger outlines some important tax implications of a parent gifting an investment property to adult children.
  • Wind Up Woes?
    Getting money out of a company without paying income tax, short of winding up, has always been difficult, but even the automatic capital treatment of distributions in winding up may now be problematic in some situations. Ken Moody looks at the anti-avoidance rules potentially affecting the tax treatment upon the winding up of a company.   
  • Pilot Trusts: Dead Or Alive??
    Malcolm Finney checks out the current position on the use and implications of pilot trusts for inheritance tax purposes. The answer to the question posed in the title of this article is perhaps ‘slowly dying but by no means dead’! 
  • IHT Planning? HMRC Want To Know!
    Mark McLaughlin highlights the tightening of requirements for the disclosure of IHT planning arrangements to HMRC, which is aimed at requiring more planning schemes and arrangements to be disclosed to HMRC than before.
  • Divorce And Some Tax Issues To Note
    At the time of divorce it is probably fair to say that, the very wealthy apart, taxation issues are not usually at the forefront of either spouse’s mind. However, whilst understandable, a little thought and advice may often reduce tax liabilities quite significantly. Malcolm Finney looks at tax issues often overlooked. According to the Office for National Statistics, the estimated percentage of marriages ending in divorce is around 42%, nearly one-half of all marriages. 
  • Company Distributions In Specie – Important Considerations
    A company may distribute assets to its shareholders ‘in specie’ if its articles of association permit and the tax consequences for the shareholders are similar in principle to those applicable to a cash dividend. But there are a few ‘twists’ that need to be considered both from company law and tax perspectives, as Ken Moody explains.
  • Bad Debt Relief Record Keeping 
    When a business claims VAT Bad Debt Relief it has to fulfil certain record-keeping criteria – what are they and how long do you have to keep them? Andrew Needham looks at what records a business needs to keep when claiming Bad Debt Relief.  
  • Landlords Finance Costs Restrictions - What's The Latest?
    Until 5 April 2017, individual landlords could deduct their costs, including mortgage interest relief, without restriction, from their profits for tax purposes. Sarah Laing looks at the changes to tax relief on loan relief and the impact they may have on landlords over the coming years. 
  • New Risk-To-Capital Conditions For Businesses Raising EIS Funds
    What is the new risk-to-capital condition about? The risk-to-capital condition (‘RTC condition’) is a new condition designed to ensure that companies raising finance under the EIS and other venture capital schemes are involved in activities which carry a genuine risk to investors. If the error is only discovered sometime later, what can be done? Satwaki Chanda discusses the new risk-to-capital rules introduced by Finance Act 2018.               
  • Getting To Grips With 3% SDLT Surcharge – Part 2
    In the second of a two-part article, Peter Rayney examines some more thorny issues with the 3% SDLT surcharge. 
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