HMRC Targets Electricians in New Disclosure

On 14 February 2012 HMRC launched a tax amnesty aimed at electricians called the Electricians’ Tax Safe Plan (ETSP). Initially around 50,000 individuals will be sent letters inviting them to report previously undisclosed earnings.

Individuals who disclose using the ESTP will only have to report undeclared income from the last six tax years and will suffer a reduced penalty of between 10% and 20% of the tax due.

To disclose using the ETSP, the individual must notify HMRC of their intention by 15 May 2012, with the deadline for finalising the disclosure and payment being 14 August 2012.

HMRC have warned that electricians who have undisclosed income and do not come forward may face criminal investigation and prosecution.

If you would like assistance in making a disclosure, Eaves and Co would be happy to assist.  Please call our Leeds office on 0113 2443502.

Business Property Relief (BPR) on Holiday Rental Property

Important Update: See details of Upper-tier Tribunal ruling here

The taxpayers, challenged an HMRC decision to deny business property relief (BPR) on their late mother’s share of a property. The property was let fully furnished as a holiday home.

The case (N V Pawson (deceased) (TC1748)) was heard by the First-tier Tribunal, who accepted the property had been run as a business for the requisite two years before the taxpayer’s death.   It had been profitable for two of the three years before the mother died and the tribunal was therefore satisfied that the business was being run with a view to gain.

It was then necessary for the tribunal to decide whether the business was one that consisted wholly or mainly of the holding of an investment, with the judge concluding that, “an intelligent businessman would not regard the ownership of a holiday letting property as an investment as such and would regard it as involving far too active an operation for it to come under that heading”.

The property was a business asset being used to provide a service and was not equivalent to holding an investment; the taxpayer’s appeal was therefore allowed.

The case will be of interest to taxpayers operating holiday rentals where the activities can be shown to constitute a business.

Late Payment Surcharges

The tribunal case of Sarah Cornes and HMRC considered whether there was reasonable excuse for late payment of income tax.

The appellant’s business was struggling and her husband had suffered through 3 employment terminations and ensuing personal problems.

The tax payer made a request for “time to pay” on 23 February 2011.  Because of difficulties in managing paperwork etc a time to pay arrangement was finally agreed on 2 June 2011.

The tribunal found that the taxpayer had been diligent and prudent, in attempting to agree a time to pay arrangement prior to the surcharge trigger date (28 February 2011). Therefore she had reasonable excuse and the surcharge was not to be applied.