Core and Others v HMRC

Core and Others v HMRC

This was a case where the appellant had contested HMRC’s decision to charge Capital Gains Tax. The Appellant disagreed with the decision saying that they qualified for principal private residence relief. The Appellant had bought the house, whilst previously renting and had intended to refurbish the property and then move in with his family. However, another buyer came along and offered a price, more than the Appellant had paid for the house. HMRC viewed this as a Capital Gain, but the Appellant was able to show that he actually moved into the house, albeit briefly, and that his original intention in buying was as a family home.

This case highlights that if you can show your intention and exactly what happened then HMRC will have to accept the PPR relief will be applicable.

Core and Others v HMRC

Office Of Tax Simplification (OTS) Publishes First Capital Gains Tax (CGT) Report

The Office of Tax Simplification (OTS) has published its first report as part of the capital gains tax (CGT) review shown at the chancellor’s request.   This to help ‘identify opportunities relating to administrative and technical issues as well as areas where the present rules can distort behaviour or do not meet their policy intent’.

The report shows 4 areas that recommends the following 11 simplifications.  These will be used to smooth out distortions, improve administrative efficiency and make the tax easier to understand and predict.

1. Rates and boundaries:

  • Consideration should be given to more closely aligning CGT rates with income tax rates, and the boundaries between the two taxes should be analysed (particularly looking at the interaction of taxes in relation to share-based remuneration and the accumulation of retained earnings in smaller owner-managed companies).
  • If the rates are to be more closely aligned, the government should consider reintroducing a form of relief for inflationary gains, address any interactions with the tax position of companies, and consider allowing a more flexible use of capital losses.
  • If there remains a disparity between CGT and income tax rates, and the government wishes to make tax liabilities easier to understand and predict, it should consider reducing the number of CGT rates and the extent to which liabilities depend on the level of a taxpayer’s income.
  • In relation to CGT/IT boundary issues, the government should look closely at whether employees and owner managers are treated consistently in terms of remuneration from personal labour, and should consider taxing share-based rewards arising from employment and accumulated retained earnings in smaller companies at income tax rates.

2. Annual exempt amount:

  • If the intention is to operate the AEA as an administrative de minimis, the government should consider reducing its level.
  • Any reduction should be considered together with reform of the chattels exemption (introducing a broader exemption for personal effects), formalising the real-time CGT service (linking returns up with the personal tax account), and potentially requiring investment managers to report CGT information to taxpayers and HMRC to make compliance easier for individuals.

3. Interaction with lifetime gifts and inheritance tax:

  • Where an IHT exemption or relief applies, the government should consider removing the CGT uplift on death, and treat the recipient as acquiring the asset at the historic base cost of the person who has died.
  • Consideration should be given to applying the above principle more widely (replacing capital gains uplift on death with base cost).
  • If the capital gains uplift were to be removed more widely, the government should also consider a rebasing of all assets (the OTS suggests to the year 2000) and extending gift holdover to a broader range of assets.

4. Business reliefs:

  • The OTS suggests the Government should consider replacing business asset disposal relief (formerly entrepreneurs’ relief) with a relief more focused on retirement; and abolish investors’ relief.
  • This is the first of two reports on CGT by the OTS. The second will follow in early 2021 and will focus on technical and administrative issues.

 

Former Owner Of BHS Has Been Jailed For 6 Years For Tax Fraud

Former Owner Of BHS Has Been Jailed For 6 Years For Tax Fraud

The former owner of BHS, Dominic Chappell, has been sentenced to 6 years in prison for tax evasion.

He was found guilty by a jury at Southwark Crown Court of failing to pay tax on £2.2 million of income totalling £584,000 after buying BHS for £1.

Chappell, 53, enjoyed a lavish lifestyle buying yachts, a Bentley car and luxury holidays.

BHS had a pension problem in 2015 that left Chappell “utterly broke”, claimed his lawyer.

Mr Chappell had bought the BHS franchise from Sir Phillip Green that year but the chain collapsed a year later which led to the loss of 11,000 jobs and a pension deficit of £571 million.

 

BHS Problems

Chappell’s consortium, Retail Acquisitions, bought BHS in 2015 but they was losing £1 million per week with masive pension deficits.

In his year of ownership Mr Chappell received £2.5m in payments from BHS , largely for consultancy fees provided by another of his companies, the bankrupt finance firm Swiss Rock Limited.

Sir Philip Green later agreed a £363 million cash settlement, after being criticised for agreeing to the deal, for the Pensions Regulator to plug the gap in the pension scheme.

The HMRC repeatedly tried to chase down the missing funds, but Chappell ignored their requests, at one point going on a skiing break before asking for more time to pay the money when he returned home.

In his defence, Chappell argued he was too busy resolving issues with BHS to deal with the outstanding taxes that were due.

He had denied three charges of tax fraud.

Chappell was ordered to pay £9.5m into BHS pension schemes this year, after losing an appeal.

And in 2019 the Government’s Insolvency Service banned him from running a company for 10 years, saying he had carried out “reckless financial transactions” and “failed to maintain adequate company records”.

Deadlines for The EU Settlement Scheme

Deadlines for The EU Settlement Scheme

Free movement for European nationals will come to an end on 31 December 2020 and
from 1 January 2021, EU/EEA/Swiss citizens who wish to move to the UK to work and study will have to meet the requirements of the new points-based immigration system, unless they have already established UK residency and/or have acquired status under the EU
Settlement Scheme.

– EU nationals currently outside the UK, whose usual place of residence is in the UK, can make an application under the EU Settlement Scheme for indefinite leave to enter, or limited leave to enter, providing they meet the eligibility requirements and satisfy the genuine residence requirement in the UK.

– The deadline for making pre-settled or settled status applications under the EU
Settlement Scheme is 30 June 2021, however, EU nationals and their relevant family members, have to be lawfully and genuinely resident in the UK by 11pm on 31 December 2020, in order to be eligible to apply.

– From 1 January 2021 to 30 June 2021, an EU national can enter the UK with their EU
passport and EU ID card, however, they may be asked to prove their residency in the UK (prior to 31 December 2020) in order to still be eligible to apply under the EU Settlement Scheme. If they cannot prove this residency or their status under the EU Settlement Scheme, the new Rules will apply to them, and they may then need to make an application under the new points-based immigration system.

© Statham Gill Davies, November 2020
NB: This guidance is of a general nature only and is subject to change and further clarification. It should therefore not be relied on in the absence of specific advice which Statham Gill Davies will be happy to provide once formally instructed and retained to do so.

For further information and specific advice regarding this area or any other UK immigration or Nationality application, please contact: –
Mark Barnett
Head of Immigration and Notary Public
Statham Gill Davies Solicitors
0207 317 3228
Mark.Barnett@sgdlaw.com

Working From Home Tax Relief Claims Spike Since CoVid

Working From Home Tax Relief Claims Spike Since CoVid

On 14 October 2020, HMRC boasted that in the space of 11 days almost 55,000 individuals made a claim for tax relief on expenses incurred as a result of being required to work from home during the Covid-19 pandemic. These claims could well rise in the coming weeks as more people are required to work from home again due to the current lockdown.

An online portal was set up on 1st October to process tax relief on additional expenses for employed workers who have been asked to work from home by their employer to help stop the spread of coronavirus.

Employers have been able to pay employees up to £6 a week tax-free to cover additional costs since the 6th April, if they have had to work from home. Employees can apply to receive the tax relief from HMRC.

If you are eligible, 20% basic rate tax payers, can claim tax relief on £6 a week meaning they would receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills.

Higher rate taxpayers can also receive £2.40 a week (40% of £6 a week). Over the course of the year, this could mean taxpayers can reduce the tax they pay by £62.40 or £124.80 respectively.

If your application is approved, the online portal will adjust an individual’s tax code for the 2020 to 2021 tax year.  You will receive the tax relief directly through their salary and will continue to receive the adjustment until March 2021. If you apply once the 2020/21 tax year has ended you can apply for a lump sum.

You do not need to prove your bills have increased unless you are claiming above the flat rate of £6 per week, in which case evidence of the increased costs may be required.

Core and Others v HMRC

Self Assessment Deadline Is 31st January 2021

Every year, approximately 11 million people complete a self assessment tax return. Taxpayers can complete their 2019-20 tax return at any time up to the deadline but HMRC recommends completing it early to allow them time to pay their tax bill or set up a payment plan.

The majority of people choose to complete their tax return online, which provides an immediate calculation of any tax owed.

If you are completing a paper tax return have until 31 October 2020 to send their completed form to HMRC.

Taxpayers must complete a self assessment return if:

  • they have earned more than £2,500 from renting out property;
  • they have received, or their partner has received, Child Benefit and either of them had an annual income of more than £50,000;
  • they have received more than £2,500 in other untaxed income, for example from tips or commission;
  • they are a self-employed sole trader whose annual turnover is over £1,000;
  • they are an employee claiming expenses in excess of £2,500;
  • they have an annual income of over £100,000; or
  • they have earned income from abroad that they need to pay tax on.