The complexities of Double Taxation loom gain in our multinational global economy.
Has every investor in a foreign entity thought through the implications of the case of Anson v Revenue and Customs Commissioners?
Historically, HMRC have treated entities such as Delaware LLC’s as legal entities separate and distinct for tax from the identity of investors in it. Bearing in mind ‘LLC’ stands for ‘Limited Liability Company’, this was perhaps unsurprising! However, the Supreme Court has now decided, in the Anson case, that in fact such entities are more akin to Partnerships. This means Mr Anson was entitled to double tax relief on the tax paid by the LLC. Significantly though, it also means, logically, that he should suffer UK income tax on the proportion of profits which would be ‘attributed’ to him. Bearing in mind such investors may have historically followed what they thought to be UK HM Revenue and Customs guidelines, and only declared income for tax when ‘distributed’, where does that leave them now?
A review of individual circumstances would seem sensible ~ so as to come up with a strategy on how best to move forward.
When HMRC win they (obviously) say – well that was the ‘correct’ view of the law all along. If (as here) they lose though, presumably no-one should be punished for following their original views?
Both US and UK advisors need to think about how best to report matters from now on.
Following the recent criticism of HMRC’s service standards (see ‘HMRC Criticised Again For Poor Service‘ – http://eavesandco.co.uk/blog/2015/11/04/hmrc-criticised-again-for-poor-service/) it appears that further reorganisations over the next few years are planned.
HMRC have announced that 137 local tax offices are to be closed with 13 new ‘regional centres’ set to replace them.
It appears unlikely that such large scale upheavals will do anything to improve HMRC’s performance, certainly in the short-term, with the tax office closures set to take place over the next few years until 2027.
The new plans are proposed to save HMRC £100m by 2025.
With the recent comments in the Yorkshire Post about the potential risk for a ‘2 tier economy’ with Northern prosperity lagging behind that of the South East, clients may still have difficulty raising finance. Jonathan Smith is now involved in raising finance for all sorts of different purposes. Jonathan qualified as a Chartered Accountant with Arthur Andersen but now works solely in raising finance. He is a man I have worked with over many years, and as a former partner of mine, a man who I trust and can recommend highly.
Whatever weird and wonderful schemes your clients wish to consider – talk to Jonathan on (Tel: 07778 523499) or (email firstname.lastname@example.org) quoting reference EVL. His website is www.jgsfinance.co.uk/asset-leasing-contract-hire-sale-leaseback.
HMRC have come in for renewed criticism from a group of MPs, who are members of the Public Accounts Committee (PAC).
They were concerned over falling levels of service, and in particular HMRC’s inability to answer phone calls. At the start of 2015 HMRC’s standards had fallen such that they only answered around 50% of calls from the public, down from 74% in 2011/12, which was already an unacceptably low figure.
Our recent experiences with HMRC match these reports and it appears that resources are becoming more and more stretched. In our recent experience, HMRC have ignored numerous letters, changed their mind on agreed valuations and rescinded a letter which had been sent out by a junior member of staff in error. Managing to talk to a properly trained Inspector is becoming increasingly difficult.
If you are having problems dealing with HMRC, please give us a call to see how we can help, because we answer our phone calls!