Wikileaks Offshore Bank Details

The news that WikiLeaks has been provided with details of Swiss bank accounts by a former bank employee may be of concern to UK taxpayers who have foreign banking undisclosed to HMRC.

The fact that information can be leaked from banks coupled together with mutual agreements between governments, highlights the importance of voluntary disclosure before being “caught” by HMRC. 

The Liechtenstein Disclosure Facility (LDF) currently represents an excellent way to make a voluntary disclosure.  Individuals with assets in any other offshore location may be able to participate in the LDF by moving some assets into Liechtenstein.

The LDF can provide a significant reduction in the level of penalties and a reduced window of reporting requirement: usually unreported income from 20 years ago must be disclosed, however this is reduced to 10 years under the LDF.

Eaves and Co Specialist Tax Advisers have successfully completed robust disclosures under the LDF and are in the process of preparing a number of other disclosures.  If you require advice in confidence regarding such matters call our Leeds office on 0113 244 3502, asking for Paul Davison.

Update: Tax Residence, HMRC6

HM Revenue and Customs have updated the guidance on residence, domicile and the remittance basis contained in HMRC6.

Since 6 April 2008, in determining how many days a person has spent in the UK for the purposes of the 183 day test and 91 day test, taxpayers have been able to exclude days in which they were not present at midnight.

However, the new guidance in HMRC6 suggests that where a person spends substantial time travelling to and from the UK, HM Revenue and Customs may seek to look at all the days in which a person was in the UK even where they were not present at midnight.   This appears to build on the recent case of Mr Gaines-Cooper.

The 91 day test is now discussed comprehensively in the coming to the UK section and rather limitedly in the leaving the UK section (in fact it is only referred to here where a person leaves to work abroad full-time), thus the implication is that HM Revenue and Customs now see the 91 day test as a way of bringing people within the UK tax net rather than a way of letting people out of it.

Please call Eaves & Co, Specialist Tax Advisors if you have any UK tax residence issues.

Double Tax?

Eaves & Co Leeds, have advised recently on two areas where tax might have been paid twice on the same income:-

  1. A FURBS which paid tax on its income and the trustees suffered PAYE on the same income. Tax credit relief and ESC A68 may be available.
  2. Two cases where profits have been taxed in the US and our UK client wishes to avoid double tax by also paying UK tax.

If you have a case where tax may be payable twice we would be pleased to discuss how relief may be available.

Happy New VAT Rate!

With the new year almost upon us, there is one thing no one is looking forward to – an increase in the rate of VAT. As of the 4 January 2011 the rate of VAT will increase by 2.5% to 20%.

This was the preferred route by the new coalition Government to raise public funds, as opposed to the alternative – a hike in income tax.

The increase in VAT may have a noted impact in the difference between a company’s input and output tax. This is often a primary consideration when a business decides whether or not to become VAT registered. Advice should be taken, especially if your customers are the general public.

Care should also be taken if you invoice for goods or services prior to 4 January 2011 and deliver them afterwards.  Services provided prior to 4 January 2011 should be taxable at 17.5%, but again if you bill after 4 January 2011 for these services you should take advice.

Merry Christmas to all from Eaves & Co Specialist Tax Advisors

Missing Trader Intra Community (MTIC)

Eaves & Co, Leeds, have recently been appointed as tax advisor to a business in a chain of suppliers to prove their case as an innocent trader, in relation to an alleged VAT carousel fraud by another party.

HMRC say that a supplier, some way up the chain from our client, has fraudulently avoided paying VAT over to the authorities. Our client states that they knew nothing of the fraud and have asked us to prove that they are an innocent trader.

The matter continues.

Eaves & Co, Specialist Tax Advisors, Leeds

Changes to penalties for late CIS contractor returns

Penalties for late Construction Industry Scheme (CIS) contractor monthly returns are due to change from October 2011 onwards.

The new penalty regime could produce lower penalties than those under the current rules. A key change will be for new CIS contractors who will now have an upper limit to some of the penalties that are charged.

The upper limit will apply when new contractors first send a monthly return, where that return and any other late monthly returns that are submitted at the same time.

The new penalties do not start until October 2011, however, any contractor who is liable to penalties for filing a late monthly return prior to October 2011 is entitled to request that HMRC calculate the level of penalties under the new rules.  If this is less than the amount already charged, HMRC should agree to reduce the penalties to the lesser amount.

Eaves and Co Specialist Tax Advisors in Leeds are experienced in the construction industry scheme penalties and enquiries can assist in corresponding with HMRC to ensure the best position for our clients.

Liechenstein Disclosure Facility (LDF) – Update

The  Liechtenstein Government and HM Revenue and Customs have recently issued a second joint declaration in relation to the Liechtenstein Disclosure Facility (LDF).

In order to qualify for the terms of the LDF, it is not necessary for assets to have been held in Liechtenstein historically.  Instead a taxpayer could invest in relevant Liechtenstein property now so as to be able to utilise the favourable terms of the LDF for undisclosed UK tax liabilities in past years.

The original memorandum of understanding merely noted that relevant property must be part of a meaningful relationship, however the second joint declaration expands on this to say that any new relevant property must not only be meaningful but also of sufficient value and permanence to reflect the spirit of the LDF.

It is unclear at this point as to what level of investment is likely to be considered as ‘sufficient value’, however further clarification is to be provided by HM Revenue and Customs in due course.

Employer Financed Retirement Benefit Schemes: Going Down?

An Employer Financed Retirement Benefit Schemes (EFRBS) is a pension scheme that is unqualified.

Contributions into EFRBS are tax neutral, between employer and employee.

In recent times they have become increasingly popular with footballers and bank staff. They are routinely offered as part of contract negotiations. The trusts’ funds can be used to buy assets such as property and can for example, be very attractive to foreign players who intend to leave the UK when they finish their football careers.

An EFRBS can be used as part of a tax strategy for owner managed businesses also. However, the Treasury and HMRC has announced that they intend to shut the opportunity, and limit contributions to EFRBS to the same level of contributions that will be permitted to qualifying pension schemes.

For alternative tax planning methods or to talk about EFRBS why not give our Leeds office a call?

Replacing Integral Features

In dealing with a recent project in Leeds, we came across one of the many quirks of the tax system regarding Capital Allowances.

Certain capital expenditure is deemed to be an ‘Integral Feature’ which receives writing-down allowances at a low rate.  Such items include electrical systems, lighting systems and cold water systems.

Key here is that when an ‘integral feature’ is repaired, in certain situations, the cost may be treated as capital rather than as revenue thus causing a problem as relief is deferred.

In general, this rule will apply where the expenditure is more than 50% of the cost of replacing the whole asset, however tax advice should be taken on a specific case by case basis, to understand if the problem can be avoided.

Liechtenstein Disclosure Facility (LDF) – Eaves & Co Success

Eaves & Co are proud to announce that HM Revenue & Customs have agreed our offer for settlement under the LDF for our first client project under the facility.

The offer was made using the marginal rate of tax route and was agreed by HMRC with only some minor amendments required.  We are pleased to report that HMRC did not raise any in-depth questions into our client’s tax affairs as a result of the disclosure.

The smooth passage of the LDF process in this case is largely down to the hard and detailed work put in by our professional team in preparing the calculations in a robust and timely manner.  This is an exceptional result, especially given the complexity of the client’s offshore banking and investment affairs.

We are now working hard on our 2nd and 3rd client projects, with the objective being a similar successful outcome for their Liechtenstein Disclosure Facility disclosures.