Following the change to the CGT rate in June 2010, the rules for claiming Entrepreneurs’ Relief (ER) were changed so that relief is now given as a 10% tax rate, rather than the previous subtly different mechanism of reducing the gain but applying the normal rate of CGT.
In certain circumstances it may be possible to achieve an effective tax rate of 5.6% on cashing the loan notes or to receive additional ER where the lifetime limit was previously breached (but there is now some available due to the increase of lifetime gains to £10million).
If you or your clients have QCBs issued between April 2008 and June 2010, please get in contact with Eaves and Co Specialist Tax Advisors, Leeds and Southport to see if we can help.
In their quest to collect more tax, HMRC are to use “Web bots”.
“Web-bots” refer to a script or software programme that is set up to trace words in internet pages or chatter.
HMRC believe that if they collate data on certain companies within specific trading areas they will be able to extrapolate turnover and/or expected profitability.
A general search on the internet for each client might be useful as a general check regarding profits declared.
A recent tribunal case (A Ryan-Munden v HMRC) demonstrated the importance of ensuring that suitable evidence is kept to prove the taxpayer’s position.
The taxpayer was a director of a company and was provided with the use of a Mercedes. It was claimed by the company that it was a pool car and was kept at the premises of the company in a garage. There was no log of the journeys made in the vehicle.
HMRC argued that the car was for the exclusive use of the taxpayer and was therefore assessable as a benefit in kind. The director was provided with a different company car as well as owning a car privately.
The tribunal were not satisfied with the evidence presented, which included diaries of the journeys made in the car but not a log which was kept in the car, the company claimed this has disappeared. They stated that the diaries did not appear to have been maintained on a regular timely basis and were therefore not a ‘contemporary record’ of the journeys made in the car.
As there was no evidence to prove otherwise, the car was assessed on the taxpayer as a benefit, the tribunal finding it was used solely by the director.
This case shows that it is important to keep sufficient records for any claim made where tax could be at stake. It is generally the responsibility of the taxpayer to prove what actually happened. As this case shows, where such evidence cannot be produced it could be costly.
HM Revenue and Customs have announced that they are going to launch a VAT amnesty aimed at businesses whose turnover is above the VAT registration threshold (currently set at £73,000) but are not VAT registered.
The terms of the amnesty are yet to be released however recent amnesties for other taxes have included reduced penalties where the disclosure is made under the terms of the amnesty.
If you believe that you may have undisclosed VAT liabilities please contact Eaves & Co on 0113 244 3502