November 2013

Monthly Tax Review

Gabelle LLP

A Periodic Update

for Professional Advisers

November 2013 (Copy Date 28 October 2013)

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CONTENTS 1. CAPITAL GAINS TAX 1.1 Payment by Company Chairman for

Misrepresentation not Contingent Liability on Share Sale (Morrisons)

1.2 New HMRC Practice Note on the Valuation of Goodwill

1.3 New HMRC Guidance on ER for EMI Option Shares

2. INHERITANCE TAX 2.1 Clarifying the IHT Treatment of a

Deceased's Liabilities 2.2 Designation of The GXG Main Quote as a

Recognised Stock Exchange 3. STAMP TAXES 3.1 SDLT 15% Rate: When Is Good Occupation,

Bad Occupation? 4. PERSONAL INCOME TAX 4.1 PM Announces Marriage Tax Break for 2015 4.2 IHT form R27: No right of appeal (Taylor) 4.3 New HMRC Guidance Limits on Income Tax

Reliefs 5. BUSINESS TAX 5.1 Ability to claim Group Relief (Glapwell

Football Club) 5.2 Draft HMRC Guidance on R&D Expenditure

Credit Scheme published 5.3 Unclaimed Capital Allowances may be Lost

Forever 5.4 Loans to Participators – Responses to

Consultation 5.5 New HMRC SEIS Guidance 6. EMPLOYMENT 6.1 EBT Planning Fails (Aberdeen Asset

Management) 6.2 Employment Related Securities Manual

Updated 6.3 Unused PAYE Schemes to Close 6.4 RTI for Employers With Expatriate

Employees 7. NATIONAL INSURANCE 7.1 HMRC Brief on ITV Services Case 7.2 Employment Allowance in New NI

Contributions Bill 7.3 Treatment of Class 2 NICs Recovered

through PAYE 7.4 NICs Disclosure Regime: New HMRC

Powers 8. VAT & CUSTOMS DUTIES 8.1 Filing VAT Returns Online (Bishop) 8.2 House Renovation - Appropriate Rate of

VAT (Bhachu) 8.3 Conversion of Hairdressing Salon into Café

(Cinnamon) 8.4 New Standard EU VAT Return

9. COMPLIANCE 9.1 Discovery - Tribunal Success for Taxpayers

(Nijjair Dairies & Michael Freeman) 9.2 Penalties – Allocation of Payments (Francis) 9.3 Penalties – Appropriate Rate? (Kohal) 9.4 HMRC Ordered to Pay Taxpayers‘ Costs

(Roden) 10. ADMINISTRATION 10.1 Voluntary Disclosure Opportunity for Health

and Well-being Professions 10.2 New HMRC Approach to Business Records

Checks 10.3 Concession on DOTAS Disclosure

Deadlines 10.4 Draft Guidance on DOTAS for ATED 10.5 OTS Reviews Tax Definitions 10.6 Reducing Tax Gap 10.7 Adjudicator Upholds Most Taxpayers‘

Complaints about HMRC 11. EUROPEAN AND INTERNATIONAL 11.1 Crown Dependencies Sign IGAs with UK 11.2 Both Sides of the Story on Eurobonds 11.3 Hastings-Bass Rule Back in Force in Jersey 11.4 USA – The Growing Imposition Of State

Death Taxes 12. RESIDUE 12.1 RDR1: New HMRC Guidance Note on

Residence, Domicile and the Remittance Basis

12.2 Pitfalls when Paying ATED 12.3 Government Drops Plan to Extend 1975 Act

Jurisdiction 12.4 LPA Donor Cannot Appoint Successive

Replacement Attorneys 12.5 Updated Charity Guidance

APPENDIX

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1. CAPITAL GAINS TAX 1.1 Payment by Company Chairman

for Misrepresentation not Contingent Liability on Share Sale (Morrisons)

The facts The taxpayer, an individual, was a major shareholder in, and the chairman and chief executive of, Morrison plc (Morrison). In June 2000, AWG Group Ltd (formerly called Anglian Water plc) (AWG) expressed an interest in acquiring Morrison. Morrison made certain information available to AWG. In the following months:

The taxpayer authorised AWG to receive Morrison's five-year plan and represented to AWG that he had an honest belief in its accuracy.

On 24 August 2000, AWG made an offer for all of Morrison's ordinary shares, shareholders being entitled to take 50% of the consideration in AWG shares (with there also being a loan note alternative). The offer document provided additional information about Morrison and intimated that the taxpayer and other directors accepted responsibility for the information, stating that "to the best of the knowledge and belief of the directors of [Morrison] (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they take responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information".

The taxpayer accepted the offer in relation to all of his shares.

The offer was declared unconditional on 21 September 2000 and AWG acquired Morrison.

The taxpayer received approximately £33.4 million for his shares, in the form of AWG shares and loan notes.

AWG was subsequently acquired by awg plc with the result that the taxpayer stopped being a shareholder in AWG and instead became a shareholder in awg plc. In 2002, the shares and loan notes were transferred into a trust. In 2002, AGW began proceedings against the taxpayer and another director of Morrison in relation to the acquisition, alleging that AWG had overpaid for Morrison due to a number of allegedly false representations and misstatements. The recompense sought was £132 million (being the alleged difference between the price paid for Morrison and its actual value). In the same action, Morrison sought damages from the taxpayer for breach of fiduciary duty and duties owed by him as

its director and employee. In February 2006, shortly before the trial, the parties entered into a settlement agreement, under which the taxpayer (without accepting liability) was required to pay £12 million to AWG (settlement payment). The taxpayer's disposal of awg plc shares and AWG loan notes into the trust gave rise to a capital gains tax charge. In August 2006, the taxpayer claimed an adjustment to that liability under section 49, contending that the settlement payment was the enforcement of a contingent liability in respect of representations made on the disposal of the taxpayer's shares in Morrison. HMRC refused the claim and the taxpayer appealed to the First-tier Tribunal. It was common ground between the taxpayer and HMRC that if the claim were accepted, it would lead ESC D52 to apply so that any relief would apply on the disposal to the trust. The First-tier Tribunal held that, in principle, the settlement payment fell within section 49 (although it stopped short of holding that the whole of the payment did so) but that the taxpayer's costs of defending the action by AWG and Morrison (legal costs) did not do so. HMRC appealed to the Upper Tribunal (tribunal) on the first point and the taxpayer appealed to the tribunal on the second point. The decision In its decision released on 11 October 2013, the tribunal held that neither the settlement payment nor the legal costs fell within section 49. The tribunal began with the general observation that TCGA 1992 is not to be interpreted mechanistically but that, rather, what is a capital gain or an allowable loss is to be determined on "normal business principles". Bearing this in mind, the key question was whether the liability was directly related to the value of the consideration given for the shares and, therefore, whether the settlement payment was of a character requiring it to be taken into account in determining the taxpayer's chargeable gain on his shares. At the heart of this was the fact that the taxpayer made the relevant representations in his capacity as the chairman of Morrison (in relation to all of the shares being sold by all shareholders) and not in his capacity as a shareholder (in relation to the shares that he was selling). The taxpayer's liability was not incurred as a seller of shares and did not reduce the price that the taxpayer received for his shares (which was the same price that other shareholders received for their shares). The deal had not been structured such that any misrepresentation or misstatement led to a reduction in the price paid to the taxpayer for his shares (although the tribunal did not determine whether it would have been legitimate for the taxpayer to be paid less than other shareholders). Therefore, the settlement payment was "wholly distinct" from the consideration for the taxpayer's shares. Although the capacity of someone making a representation would not always be determinative,

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each case turning on its own facts, in this case, the question of capacity helped to show the absence of a direct relationship between the settlement payment and the consideration for the shares. Given this decision, it followed that the taxpayer's legal costs could not reduce the share consideration under section 49. Even if the taxpayer had succeeded in relation to the settlement payment, the tribunal doubted that the legal costs would necessarily have fallen within section 49. The tribunal drew a comparison with section 38 of TCGA 1992, under which certain costs are deductible from consideration if they are incurred "wholly and exclusively" on the disposal of an asset. The tribunal opined that it would be "odd" if legal costs that, as here, concerned multiple issues (including, in this case, claims against people other than the taxpayer) could fall within section 49 and, in doing so, circumvent the "wholly and exclusively" test in section 38 (even though no such test was explicitly included in section 49). Comment This decision may be contrasted with the decision of the First-tier Tribunal in Ben Nevis (Mr) v HMRC [2012] UKFTT 377 (TC) (as to which, see Tax case tracker: Ben Nevis (Mr) v HMRC). In that case, the First-tier Tribunal gave little weight to the capacity in which the relevant representations were made. However, in the present case, the tribunal made it clear that capacity is not necessarily determinative but that, on the facts of the case, it was a useful factor in determining whether there was a direct relationship between the settlement payment and the share consideration. It would appear that the tribunal in the present case might have reached a different conclusion in Nevis to that actually reached by the First-tier Tribunal, so it will be interesting to see how the (differently-constituted) tribunal in that case reconciles these two decisions. Given the significant increase in recent years in the number of share deals that are structured using a profits warranty in preference to an earnout arrangement, this judgment could prove significant. Lawyers currently involved in drafting such an agreement should pay particular attention to ensuring, if at all possible, that the profits warranty is specifically given by the selling shareholders in their capacity as such and that it is (and is documented as) a significant factor in fixing the price of the shares. (HMRC v Sir Alexander Fraser Morrison [2013] UKUT 0497 (TCC),reported on Practical Law website 22.10.13)

1.2 New HMRC Practice Note on the Valuation of Goodwill

On 30 September HMRC published a Practice Note looking at the apportionment to goodwill of the price paid for a business transferred as a going concern – particularly those that comprises premises that are

integral to the trade, for example care homes, restaurants, and hotels. This has been subject of debate for several years, and was brought to practitioners‘ attention when the case of Balloon Promotions Ltd v Wilson (SpC 524 STC (SCD) 167), which concerned the disposal of Pizza Express franchises, was considered by the Special Commissioners. What is goodwill for tax purposes? The Practice Note starts by looking at the types of transaction where an apportionment is required; at the statutory provisions which consider how an apportionment should be addressed; and, in particular, how goodwill is to be identified for tax purposes. For capital gains tax, SDLT, and also capital allowances purposes, a just and reasonable approach is adopted to arrive at an apportionment of the consideration to identify the amount on which a particular tax charge arises. However, statute does not define a method for arriving at a just and reasonable apportionment. Part 8 of the Corporation Tax Act 2009 considers the identification of goodwill for the purposes of the intangibles legislation, and provides that goodwill has the meaning it has for accounting purposes. FRS 10 provides that ―purchased goodwill‖ should be taken to be the difference between the cost of an acquired entity and the aggregate of the fair values of the entity‘s identifiable assets and liabilities‖. The Practice Note then quotes a number of sources to provide a definition of goodwill. Halsbury‘s Laws of England defines goodwill as the value of the attraction to customers which the name and reputation possesses. The crux of the issue for HMRC is set out in the final paragraph of this section: Traditionally goodwill has been subdivided into different types such as ‘inherent goodwill’, ‘adherent goodwill’ and ‘free goodwill’. These subdivisions are no longer considered helpful as they tend to cause confusion. ‘Inherent’ and ‘adherent’ goodwill are not really goodwill at all as they form part of the value of the property asset and are properly reflected within such. Trade related properties A trade related property is a property that has been designed or adapted for use in a particular trade and where the property value is closely linked to the returns the owner or occupier can generate from such use. This is the ―trading potential‖ which is defined by the RICS as: The future profit, in the context of a valuation of the property, that a reasonably efficient operator would expect to be able to realise from occupation of the property. This could be above or below the recent trading history of the property. It reflects a range of factors such as the location, design and character,

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level of adaptation and trading history of the property within the market conditions prevailing that are inherent to the property asset.

Valuing goodwill in trade related properties It is generally accepted that the value of goodwill is the difference between the price paid and the value of the separable assets purchased. However, the difficult is in arriving at the value of property when it is trade related. The Practice Note outlines some of the difficulties that arise in connection with such valuations.

The established approach to valuation of this type of property typically relies on ‗the profits method‘. In applying this valuation method there can sometimes be confusion in distinguishing the income and trading potential that runs with the operational property from any additional income arising from the actual operator‘s business.

The value of such properties is often significantly reduced if the property ceases to be occupied for any length of time because customers go elsewhere and the purchaser has to rebuild the level of trade. The enhanced value that arises as a result of the property having been occupied by the vendor and any predecessors for the particular use (ie. the property‘s trading history) is part of what was previously described as ‗adherent‘ goodwill but is properly part of the property value and is reflected in the property‘s ‗trading potential‘.

The property value is often significantly reduced if the property is stripped of chattels because the purchaser has to re-fit the premises before being ready to trade.

It can sometimes be difficult to obtain new licences where these have been lost.

The Practice Note emphasises that the value of the tangible assets must reflect the facts at the valuation date. The valuation of the property should have regard to any established use or trading history up to the valuation date. A property that has been operational up to the valuation date is likely to have a higher value than one that has been empty for six months because there is an expectation of continuing trade. The Practice Note then looks at two approaches to the valuation of an operational trade related property, the Profits Approach and the Investment Method. HMRC views the Investment Method as an approach where there are difficulties in applying the Profits Approach. The objective, however, is to value the tangible assets as an ―operational entity‖ in accordance with the RICS guidance on Valuation of Individual Trade Related Properties.

Apportionment for CGT and SDLT The apportionment of the price paid for a business as a going concern should be approached by first identifying the value of any goodwill, bearing in mind the comments in the Practice Note that have been summarised above. This will, according to the Practice Note involve the following steps: Step 1 Estimate the market value of all the tangible assets, together as an operational entity having regard to the guidance above. Step 2 Identify the sum attributable to goodwill and any other intangible assets included in the sale by deducting the value of the property, licences and chattels (Step 1 value) from the sale price (or market value) of the business as a going concern. Step 3 Identify the sum attributable to the chattels by estimating their ‗in-situ‘ value (i.e. the value to an incoming purchaser. Step 4 Identify the sum attributable to the property by deducting the value of the chattels (Step 3 value) from the Step 1 value. Step 5 Stand back and consider whether the answer produced is reasonable in the particular circumstances of the case. Conclusion The Practice Note gives a number of examples showing the methodology HMRC favour in valuing goodwill in relation to trade related properties. The purpose of the Note, as illustrated by the examples, is to ensure that goodwill is restricted to the excess of the price paid for the going concern over the value of all the tangible assets as an operational entity. This means that there is likely to be less value attributable to goodwill and more to the value of the property. This will have an impact for SDLT, and also for companies seeking to amortise goodwill under the intangible asset regime. The Practice Note does not have the status of law, but practitioners will need to refer to the methodology and approach adopted by HMRC. Property valuers should be familiar with the concepts as they are drawn heavily from existing RICS guidance. (Reported at http://www.gabelletax.com/tax-news 11.10.13)

1.3 New HMRC Guidance on ER for EMI Option Shares

On 2 October 2013, HMRC updated their capital gains manual. Amongst other amendments, guidance on the special entrepreneurs' relief (ER) provisions for shares acquired on exercise of EMI options on or after 6 April 2013 was included in the manual. This guidance makes clear HMRC's view of the effect of the transitional provisions for shares acquired under EMI options in tax year 2012-13. HMRC consider these apply only to disposals of shares on or after 6 April 2013, even if disposals of

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shares of the same class took place in 2012-13 and an election is made to apply the transitional provisions to shares acquired in that year. As a result, the benefit of the relaxed requirements will only be available in respect of shares acquired in 2012-13 to the extent that a taxpayer holds shares of the same class at 5 April 2013 and subsequently makes a disposal. (Reported on Practical Law website 2.10.13)

2. INHERITANCE TAX 2.1 Clarifying the IHT Treatment of a

Deceased's Liabilities HMRC have produced a general response to queries about Schedule 36 of the Finance Act 2013, which restricts the eligibility of an estate's debts for inheritance tax relief. Intended as a supplement to IHTM28010, the guidance clarifies the treatment of liabilities in particular situations. (STEP UK News Digest 24 October 2013)

2.2 Designation of The GXG Main Quote as a Recognised Stock Exchange

With effect from 23 September 2013, GXG Main Quote will be regarded as a recognised stock exchange for Inheritance Tax purposes. (Reported onHMRCwebsitehttp://www.hmrc.gov.uk/fid/rse-new.htm)

3. STAMP TAXES 3.1 SDLT 15% Rate: When Is Good

Occupation, Bad Occupation? FA 2013 Sch 40 introduces some additional reliefs to the 15% rate of SDLT. It does so by introducing additional paragraphs into FA 2003 Sch 4A. Broadly speaking, these reliefs are dealt with under separate paragraphs in that schedule, and comprise:

exemption for property rental businesses, development or redevelopment and resale, resale as part of property development, and resale as trading stock (para 5);

making a dwelling available to the public (para 5B);

financial institutions acquiring dwellings in the course of lending (para 5C);

dwellings for occupation by certain employees (para 5D); and

farmhouses (para 5F).

Since SDLT is charged by reference to the circumstances that exist at the effective date of a land transaction (completion or substantial performance), there are clawback provisions within Sch 4A if the qualifying criteria which relieves a purchaser under the foregoing paragraphs does not subsist for (broadly speaking) three continuous years after the effective date. But what is clear is that the use or occupation which qualifies a purchaser for relief, under whichever paragraph, seem to be good use or occupation. So you would expect that provided such good use or occupation subsists for three years post the effective date, it doesn‘t matter precisely which paragraph the relief falls into. So if, for example, relief is claimed under para 5 on the acquisition of a property (on the basis it is going to be used for a qualifying rental business), but within that three-year period the property is actually used for a trade involving making a dwelling available to the public (para 5B), or as a qualifying farmhouse (para 5F), there will be no clawback of relief. Both the initial rental use and the subsequent use comprises good use. Nothing could be further from the truth. Whether this is intended, or is simply a glitch which arises because of the way in which the legislation has been drafted is unclear. But the legislation provides for a clawback unless the dwelling is used or occupied for the paragraph specific purposes mentioned above. If the use or occupation falls outside those criteria within the relevant three-year period, there is a clawback. It is irrelevant if the reason for those criteria not subsisting is because the property is used or occupied for an alternative good use or occupation. So in the above example, use or occupation, which would otherwise be good use under para 5B or 5F, is bad use if the relief originally claimed is under another paragraph (e.g. para 5 in my example). (Nigel Popplewell, Burges Salmon, In brief, Tax Journal 25.10.13)

4. PERSONAL INCOME TAX 4.1 PM Announces Marriage Tax

Break for 2015

Prime minister David Cameron has announced that from April 2015, married couples and civil partners will be eligible for a new transferable tax allowance, commonly referred to as the ‗marriage tax break‘, which will see more than 4m couples (including 15,000 in civil partnerships) benefit from summer 2016.

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The transferable tax allowance for married couples will enable spouses and civil partners to transfer a fixed amount of their personal allowance to their spouse, and the option to transfer will be available to couples where neither partner is a higher rate taxpayer. For a couple choosing to use the transferable tax allowance, one individual will be able to transfer £1,000 of their personal allowance to their spouse or civil partner. It will mean that the higher earner will be able to earn £1,000 more before they start paying income tax. The policy benefits married couples, including same-sex married couples and civil partners, where one is a basic rate taxpayer (earning below £42,285 in 2015 to 2016) and one has unused personal allowance. The claim will be made online and entitlement will be from the 2015 to 2016 tax year. Couples will be entitled to the full benefit in their first year of marriage. For those couples where one person does not use all of their personal allowance at the moment, the tax benefit will be up to £200. (Reported in Tax Journal 4.10.13, p.2)

4.2 IHT form R27: No right of appeal (Taylor)

The facts The executor of an accountant Mr Taylor opted to use the form R27 procedure rather than to submit a tax return giving details of Mr Taylor‘s income. After receiving the completed form R27, HMRC issued a calculation showing a small repayment due, which they duly made. Mr Taylor‘s executor sought to lodge an appeal, contending that the repayment was inadequate. HMRC applied for the appeal to be struck out on the grounds that the calculation was not an assessment and there was no right of appeal against it. The First-tier Tribunal accepted this contention and struck out the appeal, applying Judge Bishopp‘s decision in Prince v HMRC (2012 SFTD 786). Judge Porter observed that the executor would have a statutory right of appeal if he filed a self-assessment return. Why it matters The First-tier Tribunal upheld HMRC‘s contention that there is no right of appeal against a tax calculation issued following the submission of a form R27. This is in line with the earlier decision in Prince v HMRC, where the First-tier Tribunal had upheld HMRC‘s contention that there is no right of appeal against a form P800. Judge Porter observed that, if the executor wished to have a right of appeal, he would need to submit a tax return rather than to use the informal non-statutory procedure. (In JG Taylor (Executor of J Taylor deceased) v HMRC (TC 2866), reported in Tax Journal 4.10.13, p.5)

4.3 New HMRC Guidance Limits on Income Tax Reliefs

HMRC have published guidance on the limits on Income Tax reliefs enacted in the Finance Act 2013 and having effect from the tax year 2013-14. (HMRC website What’s New? 23.10.13)

5. BUSINESS TAX 5.1 Ability to Claim Group Relief

(Glapwell Football Club) The facts A company (Glapwell) which operated a football club submitted returns claiming losses, which it claimed to surrender to its holding company. HMRC issued discovery determinations refusing the claims on the grounds that Glapwell‘s business had not been carried on ‗so as to afford a reasonable expectation of gain‘, within what is now CTA 2010 s 44. The First-tier Tribunal reviewed the evidence in detail and dismissed Glapwell‘s appeal. Judge Walters observed that the directors‘ report had ‗indicated that the accounts had been prepared on a going concern basis only by reference to the directors‘ and shareholders‘ indication of their intention to continue to support the club‘. Why it matters CTA 2010 s 44 provides that relief under CTA 2010 s 37 is not available for a trading loss unless ‗the trade is carried on on a commercial basis, and with a view to the making of a profit in the trade or so as to afford a reasonable expectation of making such a profit‘. The First-tier Tribunal upheld HMRC‘s contention that the company‘s trade had not been carried on in such a way as to afford a reasonable expectation of making a profit, so that its holding company was unable to claim relief for the losses which the football club had incurred.

(Glapwell Football Club Ltd v HMRC, First Tier Tribunal (TC2904), reported in Tax Journal 29.10.13)

5.2 Draft HMRC Guidance on R&D Expenditure Credit Scheme published

Overview FA 13 introduced an ‗above the line‘ credit for large companies for research and development (R&D) expenditure incurred on or after 1 April 2013. The expenditure credit scheme will run along side the current large company scheme until 31 March 2016 when the large scheme will cease. The new legislation is contained at CTA 2009 Chapter 6A with consequential amendments to FA 1998, FA2007 and CTA 2010.

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SME‘s will also be able to claim the RDEC in the same circumstances as under the large scheme but as with loss making large companies will now be able to claim a payable credit subject to certain restrictions and set offs. Guidance The guidance provides a summary of the rules and various examples. The rules for identifying qualifying activity and calculating qualifying expenditure remain unchanged. It is only the way relief is given that is different. Relief is now given as a taxable credit calculated as a percentage of the qualifying expenditure (currently 10%). The payable credit element is however subject to certain restrictions:

The credit is first used to discharge the CT liability of the claimant company for the same accounting period.

The balance is subject to an adjustment which is available to discharge future CT liability.

Any balance remaining is capped by the PAYE/NIC of the R&D staff (with no restriction for time spent on qualifying R&D activity) and R&D group provided externally provided workers.( restricted to time spent on qualifying R&D activity) Any capped amount is carried forward and treated as an expenditure credit for the next accounting period.

The amount remaining discharges corporation tax liability for any other period.

If the company is a member of a group it may surrender any amount remaining for a corresponding accounting period.

The payable credit element remaining is applied in discharging any other outstanding liability of the company to HMRC.

Claims are subject to a ‗going concern‘ test. Claims will be made in the Company Tax Return or amended return and subject to the normal time limit for submitting a return or an amended return i.e. 2 years from the end of the accounting period. (HMRC website What's new 22.10.13)

5.3 Unclaimed Capital Allowances may be Lost Forever

An obscure provision of the 2012 Finance Act that comes into force in April next year could cost commercial property investors hundreds of millions

of pounds in lost relief, according to a recent analysis. The provision restricts the ability of property owners to claim capital allowances. At the moment, tax relief on expenditure on the fixtures and fittings of a commercial building can be claimed retrospectively as capital allowances. But from April 2014, this relief cannot be claimed after the property is sold unless the capital allowance is identified, valued and reported at the point when the property changes hands. The seller and buyer must follow a procedure under which they agree to pool the capital expenditure and notify HM Revenue & Customs of the apportionment – the purpose being to prevent buyer and seller both claiming relief on the same cost. Because of the huge potential effect on the property industry, a two-year transition period was written into the Act before the new rules in s43 takes effect. But Catax, a tax advisory firm specialising in capital allowance, believes that many property firms are still unaware of the changes. It has calculated that they could sacrifice about GBP785 million in lost relief by failing to follow the new procedures. The result could be that legal advisors to commercial property investors could be at risk of professional negligence litigation if they fail to keep a careful watch on valuations. Moreover it is very difficult for them to do so, since the allowances are not easy to value without special expertise. The Law Society's head of business development, Matt Sullivan, warned lawyers that they need to be aware of their obligations under the new regime, as failure to do so could cost their clients sizeable amounts in lost tax relief. (STEP Industry News Thursday, 10 October 2013)

5.4 Loans to Participators – Responses to Consultation

The government is consulting on the structure and operation of the tax charge on loans from close companies to their participators. The following options have been suggested for the future reform of the rules on close company loans to participators and the s 455 regime:

maintaining the current regime;

increasing the tax rate, but retaining the structure and operation of the current regime;

replacing the current repayable charging system with a lower rated but permanent charge which arises annually on amounts outstanding at the end of each accounting period until the extraction is repaid to the close company; and

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replacing the current repayable charging system with a lower rated but permanent charge which arises annually on average amounts outstanding during the accounting period.

(Reported in Taxation 10.10.13) The consultation ended on 2 October. Most respondents were not in favour of a change to the regime, as summarised below: ICAEW comments The ICAEW does not believe the current rules on close company loans to participators need changing, although it suggests the regime could be improved by a commercial purpose exemption for genuine commercial funding transactions.‖ (ICAEW website 02.10.13) CIOT comments Whilst we agree in principle with proposals that seek to deter the avoidance of personal income tax, it is not our view nor are we aware of any view that the rules on loans to participators have been routinely used as a mechanism to avoid income tax. Loans to participators are indeed taxed, and taxed heavily. We are therefore not convinced that any further changes to the existing legislation are required or desirable, particularly as in our experience the rules work well in practice and have done so for many years.

(CIOT website 30.09.13) AAT comments We believe that option 1 (no change to the current regime) is most appropriate in that it:

Is the most proportionate,

Does not impose further pressure on what is already likely to be a company with tight cashflows, and

Does not result in an increased administrative burden.

(AAT website) IOD comments Rather than viewing the loans to participators as 'tax avoidance legislation' as such, I have always viewed the legislation as a mechanism for collecting taxation upon such loans prior to a bonus or dividend being paid or the loan being repaid. In essence, most loans have seen are driven by short term financial considerations rather than any desire to avoid taxation. We consider the legislation ought not to treat a loan made for business purposes as being within the ambit of the legislation and tax charge. I accept that

the taxpayer would need to be able to demonstrate that this is the purpose of then loan rather than any desire to avoid taxation. I consider that maintaining the current regime would be satisfactory on the basis that the Company-to-LLP (or Partnership) Business Loan aspect is removed from the charge. Introduction of a permanent annual tax charge upon the year-end balance is very undesirable. The rate would either be punitive as an additional tax burden (for many businesses) or attractive as an acceptable cost of securing finance (for some but fewer businesses); indeed, I cannot imagine that HMT would wish, on reflection, to encourage a situation which led to a comparison of the cost borrowing from a bank or, in effect, from HMRC. (IoD website 02.10.13)

5.5 New HMRC SEISGuidance The SEIS Guidance has been updated to include details of the extension to 2013-14 for capital gains tax reinvestment relief at half the rate and details of the amendment to the independence condition for companies in respect of any on-the-shelf-period.

(HMRC website What's new 23.10.13)

6. EMPLOYMENT 6.1 EBT Planning Fails (Aberdeen

Asset Management) The facts AAM's scheme involved payments being made to offshore employee benefit trusts and then to a series of "money box companies", incorporated offshore for each of the beneficiaries. The assets of these companies were effectively at the disposal of the employees concerned, who held the shares in them. The upper tribunal had accepted AAM's argument that the employees only received the shares, which could not constitute "payment" under the regulations, but the Lord President (Lord Gill), Lord Drummond Young and Lord Glennie ruled that payment could, in context, include the equivalent of cash, and the tribunal should have looked at the "obvious and inescapable reality", in Lord Gill's words, rather than the formal legal rights. That was sufficient to hold that the PAYE system applied; but in any event the tribunal had correctly decided that AAM were liable under the "readily convertible assets" rule, because the assets of the money box companies consisted of cash and were effectively at the disposal of the employees, and could be realised accordingly. "The critical point", Lord Drummond Young said, "is that the employee-shareholders were able to convert their shares into

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cash and that cash was, ultimately, equivalent to the sums of money that the appellants had paid through the scheme into the money box companies." On either basis, the relevant amounts received by the employees were subject to PAYE. Why it matters Employers who attempted to pay senior employees and directors large sums of money tax free through employee benefit trusts, which sums were now accepted to be emoluments for the purposes of the income tax legislation, have been held liable to account to HM Revenue & Customs for the tax due under the PAYE regime. (First Division, Inner House, Court of Session (2013) CSIH 84 XA100/12 reported in The Journal of The Law Society of Scotland 24.10.13)

6.2 Employment Related Securities Manual Updated

HMRC have updated theirEmployment Related Securities Manual to reflect changes introduced by FA 2013, including: a new page on residence and split-year treatment; guidance on former and prospective employment and split-year treatment; and an expanded description of partly-paid shares and updating of residence aspects of application of ITEPA 2003 Chapter 3C. (Reported in Tax Journal 3.10.13)

6.3 Unused PAYE Schemes to Close From 28 October 2013 HMRC will be issuing letters (RTI206) to employers to advise that, because their records indicate that they have not operated PAYE or paid any subcontractors, they have automatically closed the PAYE scheme due to inactivity. The letters are generated following an automated review of HMRC records. The benefit of this approach is that:

HMRC identify that no returns are due at a much earlier point

it removes the obligation to make real time submissions and subsequent requests for both returns and payment

it removes an unnecessary burden on employers and the additional cost to HMRC of maintaining and administrating their record on our systems

For more information on the criteria HMRC apply for closing a scheme please see guidance on 'Automatic cancellation of a PAYE Scheme' on HMRC website. (HMRC website What's new 19.10.13)

6.4 RTI for Employers With Expatriate Employees

HMRC have updated their frequently asked questions (FAQs) on the operation of PAYE real-time information (RTI) for expatriate employees.The 59 questions and answers now include important information for users of EP Appendix 5 and 6. (HMRC website What's new 03.10.13)

7. NATIONAL INSURANCE 7.1 HMRC Brief on ITV Services Case HMRC have published Revenue & Customs Brief 29/13, National Insurance contributions: HMRC‘s position following the Court of Appeal decision in the case of ITV Services Ltd v Commissioners for HMRC. This Brief sets out HMRC‘s position following the decision by the Court of Appeal (CoA) in the case of ITV Services Ltd (ITV). The case concerned the employment status for National Insurance contributions purposes of actors engaged by ITV under specific contract types. The Court handed down its judgment on 23 July 2013 and found against ITV unanimously upholding the decisions of the First Tier Tribunal (FTT) and Upper Tribunal (UT) that the actors' contracts provided for remuneration by way of salary and there was liability for Class 1 National Insurance contributions on all the remuneration payable under the contract.

In the brief, HMRC state: ‗Although the specific contracts cited in the [Court of Appeal] judgment [(2013) EWCA Civ 867] only concerned actors engaged by ITV, HMRC consider that the principles established in this and the previous decisions in the tribunals below cover all ―entertainers‖ as statutorily defined in [the Social Security (Categorisation of Earners) Regulations, SI 1978/1689, Part 1 Sch 1 para 5A] – ―a person employed as an actor, singer, or musician or in any similar performing capacity‖. HMRC now expect those in the industry engaging entertainers to comply with the court‘s decision.‘

HMRC added ‗the extent to which HMRC will seek to apply the Court of Appeal decision retrospectively will be determined by a number of different factors‘, and that: ‗Where HMRC have previously issued a written opinion to a party that class 1 NICs are not due in respect of payments made under a particular contract because HMRC did not consider those payments to be ―by way of salary‖, they will not seek recovery retrospectively of the unpaid NICs that were due and payable prior to 6 April 2011 (unlessHMRC have expressly advised an engager that NIC should be operated from an earlier date).‘ (Reported in Tax Journal 09.10.13)

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7.2 Employment Allowance in New NI Contributions Bill

The Chancellor announced the creation of a NICs Employment Allowance in the 2013 Budget. This is planned to start on 6 April 2014 and moved a step closer to becoming law with the First Reading of the Bill on 14 October 2013. Businesses, Charities and Community Amateur Sports Clubs will be able to reduce their Employer Class 1 NICs bill by up to £2,000 per year. The Employment Allowance will be straightforward to claim using standard payroll software. More details on how to claim the Employment Allowance will be available in the New Year - there is no need to call HMRC or do anything to claim the Employment Allowance now. Details of this and other measures in the Bill are available on the GOV.UK website. (HMRC website What’s new 15.10.13)

7.3 Treatment of Class 2 NICs Recovered through PAYE

From April 2014 HMRC may collect outstanding Class 2 National Insurance Contributions (NICs) by adjusting the tax codes of customers in PAYE employment or are paid a taxable UK based private pension. HMRC has been sending payment requests since April 2013 to customers who owe Class 2 NICs. The payment requests said that if not paid, HMRC may collect the debt through their PAYE code from April 2014 or pass it to a private debt collection agency for recovery on our behalf. Customers were asked to pay or contact us if their payment request is wrong. An insert included with the payment requests informed customers of what they needed to do, including letting us know if they have stopped being self employed, which could explain why their payment request is wrong. Customers who did not pay or contact us are likely to get an Annual Coding Notice (P2) between January and March 2014. This will show the Class 2 NICs debt to be collected from April 2014. If a customer does not want the outstanding debt to be included in their tax code, then they will need to pay the full amount. (HMRC website, What’s new 28.10.13)

7.4 NICs Disclosure Regime: New HMRC Powers

On 10 October 2013, regulations were made:

Giving HMRC a new power to require the promoter of a NICs avoidance scheme to provide information about parties to the scheme if HMRC suspect the reported clients are not the only parties.

Requiring the client to provide information to the promoter to enable HMRC to identify the client.

Providing for a £5,000 penalty for failure to comply with the requirements mentioned above.

The regulations effectively align the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2012 (SI 2012/1868) (NICs regulations) with the Finance Act 2013 changes to Part 7 of the Finance Act 2004. The regulations also make consequential changes to the NICs regulations. The regulations have effect from, broadly, 4 November 2013. (Practical Law Tax weekly update 22.10.13)

8. VAT & CUSTOMS DUTIES 8.1 Filing VAT Returns Online

(Bishop) The facts Three taxpayers have won their appeals against HMRC‘s requirement that they file their VAT returns online. In a groundbreaking judgement, the First-tier Tribunal held that HMRC acted illegally when they issued a notice requiring three taxpayers to file their VAT returns online. The judge, Barbara Mosedale, found that HMRC‘s decision was a breach of the appellants‘ human rights and unlawful under EU law: ―I have found that because of its disproportionate application to persons who are computer illiterate because of their age, or who have a disability which makes using a computer accurately very difficult or painful, or those who live too remotely for a reliable internet connection, that the regulations were an interference with convention rights under A1P1 and A8 [of the Human Rights Convention] combined with A14 [of that convention] which was not justified … So far as EU law was concerned I found the obligations to be disproportionate because they failed to make exemptions for the elderly, disabled persons or persons living too remotely for reliable internet access.‖ The judge also reviewed the authorities on whether taxpayers can appeal against HMRC‘s refusal to apply extra-statutory concessions, and concluded that they can.

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Concessionary alternatives During negotiations before the hearing, HMRC offered the three lead appellants the option of filing their VAT returns by telephone, an offer which the appellants rejected. The judge said that, even if telephone filing had been lawful under reg 25A, it was illegal on public law grounds as it was ―Wednesbury unreasonable‖. She said (her italics): ―I consider that HMRC have acted as no reasonable taxing authority could have acted. While it is legitimate to restrict a concession to only those meeting its terms (in this case the disabled), this legitimate objective cannot be achieved by not publishing the concession and then, for those few taxpayers who do find out about it anyway, granting the concession without checking that they are entitled to it.‖ What next? In the final pages of the Bishop decision, the judge noted that the law had moved on and considered what effect this might have. She said: ―While the online filing regulations still exist, a taxpayer‘s liability to file online no longer depends on a decision by HMRC. It is very unsatisfactory, but the only way a taxpayer now has to challenge the regulations is by judicial review proceedings or by appealing against a penalty imposed for non-compliance (see my decision in Le Bistingo Ltd).‖ It now remains to be seen whether HMRC are prepared to amend the regulations so that they are compliant with the convention and European law, and give appropriate exemptions for disabled and elderly taxpayers, and those without broadband access, so that they can continue to file on paper. (LH Bishop Electric Co Ltd and others v HMRC, First-tier Tribunal (2013) TC 2910, reported in Taxation 24.10.13, p.10-13)

8.2 House Renovation - Appropriate Rate of VAT (Bhachu)

The facts A couple purchased a house and engaged a builder (Mr Bhachu) to renovate it. Mr Bhachu accounted for VAT at the reduced rate of 5% on his supplies. HMRC issued an assessment charging VAT at the standard rate. Mr Bhachu appealed, contending that his supplies were within VATA 1994 Sch 7A Group 7. The First-tier Tribunal rejected this contention and dismissed his appeal, finding that the conditions of Group 7 Note 3 were not satisfied, as Mr Bhachu had not shown that the house had been unoccupied for two years before the renovation. Why it matters VATA 1994 Sch 7A Group 7 Item 1 provides that certain supplies of services ‗in the course of the renovation or alteration of qualifying residential

premises‘ qualifies for the reduced rate of VAT. Group 7 Note 3 provides that one of the necessary conditions is that the premises have not ‗been lived in during the period of two years ending with the commencement of the relevant work‘. The First-tier Tribunal upheld HMRC‘s contention that the builder had not submitted evidence to show that this condition was satisfied, so that his supplies failed to qualify for the reduced rate. (GS Bhachu v HMRC, First-tier Tribunal (2013) TC 2887, reported in Tax Journal 18.10.13, p.4)

8.3 Conversion of Hairdressing Salon into Café (Cinnamon)

The facts Ms Khoshaba obtained a lease of a hairdressing salon and arranged for it to be converted into a cafe. In her first VAT return, she reclaimed input tax on the conversion. HMRC rejected the claim on the basis that it related to a supply of services which had taken place more than six months before Ms Khoshaba registered for VAT, and was therefore not deductible. The First-tier Tribunal dismissed Ms Khoshaba‘s appeal, specifically distinguishing the earlier decision in Miller v C & E Commrs (VTD 18630), and holding that the invoice related to a single supply of services. Why it matters The First-tier Tribunal upheld HMRC‘s contention that the work of converting a hairdressing salon into a cafe was a supply of services rather than a supply of goods. Therefore, since the supply had been taken place more than six months before the appellant had registered for VAT, the input tax could not be reclaimed. (Ms A Khoshaba (t/a Cinnamon Cafe) v HMRC,First-tier Tribunal (2013) TC 2864, reported in Tax Journal 4.10.13, p.4)

8.4 New Standard EU VAT Return The European Commission proposes to have a common format for the VAT returns applicable in all Member States. This format will contain 5 mandatory information boxes. The mandatory information will be: chargeable VAT, deductible VAT, net VAT amount (payable or receivable), total value of input transactions and total value of output transactions. In addition Member States will be entitled to ask for up to 21 boxes of additional information, covering, for example, the split between tax rates or details of cross-border transactions. These optional boxes are to cater for the specific needs of different tax administrations. For example, Denmark uses only one rate, so the split between tax rates would be superfluous. The content of the 5 + 21 information boxes will be exactly the same in all Member States. In practice, it

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means that a taxpayer filling a VAT return in its own Member State will be able to understand and fill a VAT return in any other Member State. The Commission also proposes to harmonise the periodicity of the returns, the submission deadlines, the procedures to submit corrections and the format of electronic submission of returns. The proposed declaration period is one month with an optional quarterly period for micro businesses (under € 2 million annual turnover). Member States may allow longer periods not exceeding one year. The Commission's proposal will have to be adopted by Member States in the Council, after consultation of the European Parliament. The Directive should enter into force on 1st January 2017. (European Commission Press Release IP/13/988 23.10.13)

9. COMPLIANCE 9.1 Discovery - Tribunal Success for

Taxpayers (Nijjair Dairies& Michael Freeman)

Two recent First Tier Tribunal decisions have contributed towards a shift in favour of the taxpayer in relation to ‗discovery‘. Many of the cases preceding these have been settled in favour of HMRC, although the tide was turned somewhat with the decision made in the case of Charlton last year, a case considered by many to be a landmark decision in terms of summarising what is meant by ‗discovery‘ and ‗information made available‘. Nijjair Dairies – the facts This case concerns a company which submitted a return showing a loss in 2005. The loss was subsequently challenged by HMRC on the basis that the expenses claimed were not considered to be wholly and exclusively for the purposes of the trade. In December 2011 HMRC wrote to the company advising that ‗protective discovery assessments‘ had been made in relation to the loss and that certain expenses had been disallowed. An appeal was lodged on the basis that no discovery determination had been raised and therefore the loss was still allowable. In June 2012 HMRC wrote again, and on this occasion the letter was headed ‗Notice of Determination‘ to resolve any doubt. The First Tier Tribunal allowed the taxpayer‘s appeal against this notice on the grounds that HMRC were outside the statutory time limit. HMRC contended that the letter sent in December 2011 constituted a valid discovery determination and the required notice had therefore been issued before the time limit expired. The FTT Judge rejected this on the basis that the letter sent by HMRC in December 2011…

…did not have the appearance of an official record of a decision to make a determination in relation to a taxpayer but appeared to be part of the ongoing correspondence between HMRC and [the] accountant in relation to the tax dispute. The only decision that the letter clearly recorded was the decision to issue protective assessments. Why it matters The broader implication of this case is the importance of taking the time to carefully review all correspondence received from HMRC. Particular attention should be paid to whether reference is made to the appropriate legislation and the correct time limits adhered to. Michael Freeman – the facts The taxpayer claimed taper relief in his 2002/03 return in respect of a capital gain arising on the redemption of loan notes (these had been received in 1997 in exchange for shares in a company co-founded by him). In the white space disclosure the taxpayer stated that the loan notes were non-qualifying corporate bonds, as he had understood them to be at the time. It subsequently emerged, following an enquiry, that the supposed non QCBs were in fact QCBs, and a discovery assessment was issued in 2007. The Tribunal allowed the taxpayer‘s appeal against the assessment on the grounds that while the white space disclosure itself was insufficient in terms of enabling an officer to identify an underassessment of tax, the papers provided during the course of an earlier enquiry provided the sufficient level of detail. The assessment was subsequently discharged. Why it matters This case highlights the issues involved when attempting to protect against potential discovery assessments and the necessary level of detail and supporting documentation required in both the white space and elsewhere to achieve this. (Nijjair Dairies Ltd v HMRC (TC 2828)and Michael Freeman (TC 2885), reportedat http://www.gabelletax.com/tax-news 25.10.13)

9.2 Penalties – Allocation of Payments (Francis)

The facts HMRC imposed a penalty under FA 2009 Sch 56 on the basis that Mr Francis had failed to pay his 2010/11 tax liability by the due date. Mr Francis appealed, contending that he had sent a cheque for the liability but that HMRC had allocated this against arrears for previous years, rather than against his 2010/11 liability. The First-tier Tribunal allowed Mr Francis‘ appeal. Judge Khan held that Mr Francis had 'a reasonable excuse for assuming that HMRC would allocate the

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payments to the current liability rather than to the oldest debt due. 'The practice of the Commissioners does not appear to be covered in the legislation but rather in the Debt Management and Banking Manual (paras 210105 and 210120). It does not appear that these were brought to the notice of the taxpayer. In these circumstances, therefore, a taxpayer should be able to ask the Commissioners to reallocate the payments.' Why it matters This case demonstrates that, where a taxpayer has fallen into arrears, it is important to ask HMRC to allocate payments in such a way as to minimise liability to subsequent penalties and interest. HMRC sought to allocate the payments made to the oldest liabilities, which would mean that further penalties would arise in respect of the current liabilities. However, the First-tier Tribunal observed that there was no statutory backing for HMRC's action, and held that the payments should have been allocated to the current liability first, so that HMRC were not justified in seeking to impose further penalties. (J Francis v HMRC (TC 2860), reported in Tax Journal 11.10.13, p.4)

9.3 Penalties – Appropriate Rate? (Kohal)

The facts HMRC formed the opinion that a civil engineer had under declared his income by more than £70,000. It issued an amendment to his self-assessment, and imposed a penalty under TMA 1970 s 95, at the rate of 60% of the evaded tax. The First-tier Tribunal upheld the penalty in principle but directed that it should be reduced to 45% of the evaded tax. Judge Tildesley observed that 'the tribunal is entitled to take an overall view of the appropriate penalty, and not obliged to follow HMRC's approach of giving abatements for various categories of conduct'. Why it matters The FTT decided that HMRC had been unduly harsh in imposing a penalty at the rate of 60% of the tax lost, and reduced it to 45%. The interesting feature of this case is that, unlike several other tribunal judges, Judge Tildesley specifically declined to follow the general HMRC procedure of arriving at the percentage rate by giving specific discounts for the extent of disclosure, the seriousness of the offence and the degree of cooperation. Judge Tildesley's comments are self-explanatory, although it is uncertain whether other tribunal judges will adopt a similar approach. (Dr J Kohal v HMRC (TC 2870), reported in Tax Journal11.10.13, p.4-5)

9.4 HMRC Ordered to Pay Taxpayers’ Costs(Roden)

The facts The First-tier Tribunal awarded costs against HMRC because they acted unreasonably in an appeal in pursuing an argument that the tribunal considered unsustainable. The tribunal followed Wallis v HMRC [2013] UKFTT 81 (TC) and decided that:

If HMRC's view had no reasonable prospect of success, HMRC would have been acting unreasonably if they ought to have known this.

In determining whether HMRC should have known whether the case had a reasonable prospect of success, it should consider HMRC as a whole, not just the officer presenting the case.

In the main appeal (heard by the same judge as the costs appeal), HMRC argued that item 1(d) of Group 1 in Schedule 9 to the Value Added Tax Act 1994, which standard-rates supplies of hotel accommodation (an exception to the exemption for supplies of land), required the recipient of the supply to be the person who actually used it. The tribunal rejected HMRC's argument and allowed the appeal. The tribunal in the costs appeal decided that HMRC's case had had no reasonable prospect of success. Among other things, HMRC never presented any supporting authority, exceptions to exemptions (such as item 1(d)) are not interpreted narrowly and the wording of the legislation did not imply that the recipient's identity was significant. Further, given HMRC's resources, it should have known the normal rules of interpreting exceptions to exemptions and that, without some authority or argument founded in law, it was extremely unlikely that a tribunal would read into item 1(d) a limitation that was irrational, not indicated on its face and unlikely to have been intended. Consequently, HMRC had acted unreasonably so had to pay the appellants' costs. Why it matters The case is unusual because the Tribunal generally operates a no-cost regime. The decision contrasts with that made in Market & Opinion Research where the First-tier Tribunal rejected the company‘s application for costs, holding that costs could only be awarded against HMRC if they had acted unreasonably and finding that they had not done so in this case. (Roden and another v HMRC (TC 2911),reported in Tax Journal 11.10.13, p.4; Market & Opinion Research International Ltd v HMRC (No.3) (TC 2876), reported in Tax Journal 11.10.13, p.5))

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10. ADMINISTRATION 10.1 Voluntary Disclosure Opportunity

for Health and Well-being Professions

On 4 October 2013 HMRC announced the launch of the Health and Wellbeing Tax Plan, a new voluntary disclosure opportunity for those working in the medical and health professions. The opportunity will run from 7 October 2013 to 6 April 2014 and will be open to professionals working in the following areas:

Physical therapy – eg physiotherapist, chiropractor, chiropodist, osteopath, occupational therapist.

Alternative medicine or therapy – eg homeopathy, acupuncture, nutritional therapy, reflexology, nutrition.

Other therapy – eg psychology, speech therapy, arts therapy.

Those wishing to take part should notify HMRC by 31 December 2013 and provide details of the disclosure and payment in full by 6 April 2014. The benefits of disclosing through the facility are detailed by HMRC as follows:

Penalty – HMRC guidance states that ‗you can tell HMRC how much penalty you believe you should pay‘, advising that the level of penalty will depend on whether you have been careless or deliberate in failing to submit accurate returns. It is not clear how this will work in practice and whether HMRC will deviate from the statutory minimums defined for careless or deliberate behaviour.

Time to pay – HMRC will consider requests to spread the payment of tax, interest and penalties, depending on the circumstances of the individual or entity concerned.

Historical duties – Those disclosing through the facility who have been careless in failing to pay the correct tax in previous years will only have to pay for a maximum of 6 years. The implication is that those who fail to come forward during this time will face up to 20 years of assessments on the basis that they have acted deliberately. As with the penalty position, it is not clear whether there is any real benefit here, as the 6 year time limit is imposed by the legislation in any case.

Avoid name and shame – on entering the facility and adhering to the terms throughout in making a full and accurate disclosure and paying what is due, HMRC will provide a guarantee that personal details of those involved will not be published.

As with all such campaigns, the usual restrictions for entry apply and those who were already the subject of an HMRC enquiry prior to 7 October 2013 will not be able to make use of the facility. Those who wish to take part but are not working in the prescribed fields are encouraged to make a disclosure to HMRC but will not benefit from the terms of the campaign. (Reported at http://www.gabelletax.com/tax-news, 11.10.13)

10.2 New HMRC Approach to Business Records Checks

HMRC Business Records Checks (BRCs) programme uses on-site visits to encourage customers to keep better records, and keep up to date. The checks help and encourage small and medium-sized enterprises to improve the standard of records they keep. This then helps them to send correct returns to HMRC. Customers whose records were not adequate on first inspection, and who received follow up visits, all improved their record-keeping standard. HMRC have not had to charge any penalties. In the latest phase of BRC, many of the customers contacted by HMRC have been keeping records correctly. So HMRC want to explore how to better target this activity. From 4 November 2013, HMRC's BRC activity in the Edinburgh, Glasgow, Leeds, Bradford and Stockport areas will explore new ways of using the checks. As part of this, HMRC will evaluate new risk processes and ensure new approaches are cost-effective and fit with its wider compliance activity. HMRC will also work with tax agents‘ representatives to review the benchmarks of what good record-keeping should be. Many tax agents already do much to improve their clients‘ record keeping and HMRC wants to work with them to improve standards. For customers outside the development areas HMRC will continue with existing BRCs until they are completed. This means:

if you have received a letter dated on or before 23 October 2013, HMRC will still contact you by telephone to ask you to complete an initial telephone questionnaire

if HMRC has not yet booked a visit with you, they will offer you the opportunity to get advice on keeping business records from their Business Education and Support Team as an alternative to a visit

if HMRC have already booked a visit, they will offer you the option of advice on keeping business records from a member of the Business Education and Support Team

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if you are waiting for a follow-up visit, this will still go ahead.

(HMRC website What’s New 23.10.13)

10.3 Concession on DOTAS Disclosure Deadlines

The government has published draft guidance on changes made to the Disclosure of Tax Avoidance Schemes (DOTAS) rules by the Finance Act 2013. One important change is that promoters of tax planning schemes will not have to disclose their clients' identities to HM Revenue and Customs (HMRC) before clients themselves do so. Only after the deadline set to the client has expired will the scheme promoter be required to disclose. Under the earlier draft regulations, published last December, promoters were required to disclose their clients‘ national insurance numbers to HMRC within 30 days of a notifiable transaction with the client. Since January 2011, promoters of notifiable tax planning schemes have had to provide HMRC with quarterly lists of clients. The new guidance also states that clients who withdraw from a tax avoidance scheme soon after joining it must still be included in the promoter's quarterly DOTAS submissions. The new regulations will come into force in early November. Draft guidance has also been published on the DOTAS employment income ‗hallmark‘ (a test to determine whether a scheme must be notified under the DOTAS rules). This test is to be amended by the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Amendment Regulations 2013, shortly to be laid before parliament. The new hallmark definition relates to employment income provided through third parties. It amends the test to state that DOTAS applies if 'the main benefit or one of the main benefits' of the tax planning scheme was that an amount that would otherwise count as employment income under Income Tax (Earnings and Pensions) Act 2003 s.554Z2(1) was reduced or eliminated. Earlier drafts limited the test to just ‗the main benefit‘. (STEP Industry News Thursday, 3October, 2013)

10.4 Draft Guidance on DOTAS for ATED

Draft guidance has been published on the Disclosure of Tax Avoidance Schemes (DOTAS) Annual Tax on Enveloped Dwellings (ATED) for information and comment. (HMRC website What’s New? 17.10.13)

10.5 OTS Reviews Tax Definitions The Office of Tax Simplification (OTS) is carrying out a project to identify and measure the factors responsible for tax complexity. As part of the project, definitions in tax legislation have been considered. For the first stage, the OTS has released a paper, which outlines initial findings, identifies commons themes, analyses the large number of definitions used within tax legislation, and considers some suggestions and guidelines. Whilst making no firm recommendations at this stage, the OTS's preferred approach is to try to identify features of a 'good' or helpful definition for future use, tending away from the introduction of an interpretation act for tax legislation and towards creation of a database of definitions.

(Reported in Tax Journal 11.10.13, p.3)

10.6 Reducing Tax Gap HMRC have estimated the tax gap for 2011/12 at £35bn, or 7% of tax due, and suggested that the latest figures reflected a 'long-term downward trend'. Measuring tax gaps: 2013 edition includes revisions for 2005/06 onwards to take account of 'improved methods and the latest available information'. The tax gap has 'fallen steadily' from 8.3% of tax due in 2005/06 to 7% in 2011/12, the department said. 'However, the value of the tax gap has increased from £34bn in 2010/11 to £35bn in 2011/12, mainly due to an increase in the VAT gap reflecting the rise in the standard rate of VAT to 20%.' The figures showed that the tax gap was 'continuing to fall', said exchequer secretary David Gauke. But Labour MP Shabana Mahmood, the shadow exchequer secretary, said they showed that the government was 'failing to tackle' avoidance and evasion. Most of HMRC's 2011/12 estimates are provisional and there are 'many sources of uncertainty and potential error', the department said. But it attributed £15.2bn of the tax gap to criminal attacks, evasion (where income is understated) and the hidden economy (where entire sources are omitted); £4.4bn to non-payment; £4bn to avoidance; £4.3bn to legal interpretation; and £7.2bn to error and failure to take reasonable care. HMRC pointed out that avoidance does not include legitimate tax planning, which 'involves using tax reliefs for the purpose for which they were intended'. Its estimates necessarily exclude the impact of 'base erosion and profit shifting' by some multinationals, which is the subject of the OECD's BEPS project.

(Reported in Tax Journal 18.10.13, p.3)

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10.7 Adjudicator Upholds Most Taxpayers’ Complaints about HMRC

The official Adjudicator's Office received a record 1,331 complaints about HMRC in the year ending March 2013, double the previous year's number. Most of the complaints were wholly or partially upheld. The Chief Adjudicator Judy Clements criticised HMRC's poor quality of complaints handling, with many ‗careless and avoidable‘ errors. Several case studies appear in her report as examples of bad practice. 'For the first time since the role of Adjudicator began, I am upholding six out of every ten complaints from HMRC customers either wholly or in part,' wrote Clements in her report. She pointed out that the adjudication service is only designed to deal with exceptional cases, but is in fact being swamped by routine matters that are 'well within the capability of departmental staff to resolve successfully, but in practice are often mishandled by HMRC staff.' ‗For the third year running I have seen a range of cases where specific customer needs have not been recognised or addressed,' says Clements' report. 'I am unable to establish whether complaint handlers are not recognising the customer need or feel they are not empowered to step outside of procedures and provide alternative support. Either way this is an area of serious concern and, in the context of an ageing society, a matter which will grow in importance and visibility‘. An improvement in the quality of HMRC complaints handling is needed, she stressed. The Adjudicator's decisions forced HMRC to write off £900,000 in tax, and pay compensation of £81,000 to individuals. (STEP UK News Digest 7 October 2013)

11. EUROPEAN AND INTERNATIONAL

11.1 Crown Dependencies Sign IGAs

with UK

Isle of Man The UK and the Isle of Man signed an IGA - the 'UK-Isle of Man Agreement to Improve International Tax Compliance' - on 10 October 2013. This is the first agreement of this type to be signed and published where neither party is the USA. Selected areas of draft guidance have been published alongside the Agreement to give clarity on the key differences in scope. Further draft guidance relating to issues specific to this Agreement will be published in full, along with draft regulations, later this year. (HMRC website What’s New 14.10.13)

Guernsey and Jersey Guernsey and Jersey signed IGAs with the UK on the 22 October 2013 - the 'UK-Guernsey Agreement to Improve International Tax Compliance' and the 'UK-Jersey Agreement to Improve International Tax Compliance' - meaning that all the Crown Dependencies have now entered into automatic tax information exchange agreements with the UK. (HMRC website What’s New 23.10.13)

11.2 “Both Sides of the Story on Eurobonds”

Comment from Patrick Stevens The Independent newspaper is running a series of articles about the taxation of UK companies, mainly those owned from overseas and particularly those owned by private equity funds. The complaint seems to be that the UK companies are paying little UK corporation tax because most of their trading profits are offset by interest paid on loans put in place when the companies were acquired. In addition, the interest is paid out without withholding tax by using the ‗quoted Eurobond exemption‘ using loan instruments quoted on the Channel Islands stock exchange. There are two pieces of tax policy here to be debated and for everyone to take a view on what the law should be. The first is the wide question of whether interest on debt used to acquire a company should be available to set against the taxable profits of the target. This has been available for as long as I can remember (I can certainly remember it being the accepted rule for acquisitions 30 years ago). It has been thought about by successive governments (I have been part of the discussions on various occasions) and has been left as the law. It is fair to say that we have a more generous tax regime than several other countries. It is a topic up for debate. Just because past governments have decided that this is good policy does not mean that we should not change now. Is it fair to give a tax deduction for interest on an amount borrowed for capital investment, and, if not, how much will it inhibit investment in the UK. The current work being done by the OECD on the Base Erosion and Profit Shifting (BEPS) project will probably lead to further thinking in this area. The second question is the withholding tax on interest paid to entities outside the UK. The basic rule is that tax should be deducted from interest at 20pc and retained by the UK government. If the entity receiving the interest is located in most of the 120 or so countries where we have a full Double Tax Treaty (DTT) the requirement to withhold is taken away by the DTT. However, if there is no DTT with the country of the lender there is a 20pc deduction. There is often no DTT where the country is a tax haven. Private equity funds (especially those originating in the US) are often transparent for tax purposes (that is, income flows through, so as soon

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as it hits the fund it becomes taxable for the investor), so the investor will immediately pay tax on interest received in their own country. The fund is located in a tax haven because, otherwise, there might be a second charge to tax. In these cases the fund often receives the interest free of withholding tax by structuring the debt as a quoted Eurobond (that is, a loan note issued by a company quoted on a recognised stock exchange). There is an exemption for withholding tax in these cases. This also has been around for many years, including the use of it in this way. Again this has been accepted by successive governments. Only last year, HMRC put out a public consultation paper to discuss whether this withholding tax exemption should be withdrawn. After debate the government decided to leave the exemption in place. Even if this exemption was withdrawn many of the investors in the private equity fund would still receive their share of the interest free of withholding tax because they are located in a DTT country. This may have been part of the reason for leaving the exemption in place. Both of these areas of tax policy have been accepted by successive governments as being best for the UK and they are regularly reviewed. You may take the view that this policy is wrong in one or both cases. It is reasonable for individuals or newspapers to make the case for a change in the law. To the best of my knowledge it is not the current policy of any of the main parties to make any such change. It does seem a bit unreasonable to run a series of articles on this area of tax, on the first day criticising several companies for taking advantage of these tax exemptions and then on the second day revealing that the policy was consulted on publicly only last year and confirmed to be continuing government policy. But that's a story for you. (Patrick Stevens, CIOT Acting Tax Policy Director, 25.10.13)

11.3 Hastings-Bass Rule Back in Force in Jersey

An amendment to Jersey's trust law has come into force to incorporate the so-called Hastings-Bass rule into statute. The rule, which emerged from case law, has traditionally allowed trustees who have made a costly mistake to apply to a court to have their action voided. This allowed the adverse consequences ‒ usually tax-related ‒ to be nullified without the need for the trust beneficiaries to sue the trustees for negligence or breach of trust. But the value of Hastings-Bass was seriously undermined by the UK Supreme Court in the Pitt and Futter decisions this year. These rulings (2013 UKSC 26) declared that previous court decisions had been wrong in law and that the rule has a much narrower field of application than previously thought.

Jurisdictions with well developed trust industries that have relied upon the rule have been considering how to react. Now Jersey ‒ whose trust industry has GBP400 billion of assets under administration ‒ has become the first to enact a statutory amendment restoring Hastings-Bass's potency. The Trusts (Amendment No.6) (Jersey) Law 2013 confirms the Jersey Royal Court's ability to provide discretionary relief where beneficiaries find themselves materially prejudiced by a trustee's decision. It is not necessary for the fiduciary to be shown to have been at fault. Moreover, the amendment has retrospective effect. ‗This provides a welcome alternative to the uncertainties and costs surrounding classic negligence litigation,‘ commented Jersey Finance Chief Executive Geoff Cook. (STEP Industry News Monday, 28 October 2013)

11.4 USA – The Growing Imposition Of State Death Taxes

The Wall Street Journal has published a report on the 20 US jurisdictions that levy their own estate tax on top of the federal estate tax. Rates are often much higher, and exemptions lower, than the federal tax.

(STEP Wealth Structuring News Digest 28October 2013)

12. RESIDUE 12.1 RDR1: New HMRC Guidance Note

on Residence, Domicile and the Remittance Basis

HMRC have published RDR1: Guidance Note: Residence, Domicile and the Remittance Basis, which replaces the previous guidance in HMRC6 and applies from 6 April 2013. Readers are also referred to the separate guidance in RDR3: Statutory Residence Test.

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HMRC added: 'RDR1 does not yet incorporate the guidance on remittance basis changes from 2012, which are covered in Information note: changes to the remittance basis and Guidance notes: changes to the remittance basis [available on HMRC's website].' (Reported in Tax Journal 18.10.13, p.2)

12.2 Pitfalls when Paying ATED

Many offshore companies will be making payments to HMRC in relation to the ATED charge. As these payments will be made to the UK, the directors of these companies need to be aware of the possibility that these payments could be taxed as ‗remittances‘ and thus create ‗tax on tax.‘ In the majority of cases an ATED charge will apply where a property is held by a non-UK company (albeit that it is important to remember that the tax can apply to UK companies too). Such companies are likewise likely to be owned either by an individual or an offshore trust and there could be a taxable remittance where the individual shareholder or a beneficiary of the trust is a UK resident non-domiciled individual and the payment to HMRC in the UK represents or derives from the individual’s foreign income or gains. For this purpose, the foreign income or gains may be deemed to be those of the individual. Examples where an individual‘s actual income is remitted could include:

Where an individual transfers some of his foreign income or gains to the offshore company to enable it to pay the ATED charge; or

Where a trust was originally settled with the individual‘s foreign gains and its wholly owned company pays the ATED charge. This is a taxable remittance because the payment is likely to have ‗derived‘ from the individual‘s foreign gains.

An example of where the individual‘s deemed income can amount to a taxable remittance will include where the company‘s foreign income is deemed to be the individual‘s income under s720 ITA 2007 (the transfer of assets abroad rules). The permutations in this context are many and the rules are complicated, so whether or not there is a taxable remittance in any particular case will turn on the facts. For example, where the individual is the settlor of a ‗settlor interested‘ trust and the payment of the ATED is made out of untaxed income from the underlying trust structure there is likely to be a taxable remittance. This is because such untaxed income is assessable on the settlor on a remittance basis. By contrast, where a trust has no living settlor or UK resident beneficiaries, paying the ATED tax would be unlikely to give rise to a taxable remittance.

In addition to all of the above, there are a number of other tax issues which will need to be considered when considering how the ATED liability might be paid. For example, if additional funds are transferred to the company to facilitate this, is there is a risk that the individual providing funds might be making a chargeable lifetime transfer for inheritance tax purposes or be inadvertently becoming a ‗settlor‘ of trust? There is a lot to think about! And is it unfortunate that – unlikely in relation to the remittance basis charge, there is no concession to provide that monies brought to the UK to pay the ATED charge will not give rise to taxable remittance. Furthermore, there appears to be little if any guidance in this regard. (Reported at http://www.gabelletax.com/tax-news 25.10.13)

12.3 Government Drops Plan to Extend 1975 Act Jurisdiction

The government has agreed to remove a controversial measure of the Inheritance and Trustees' Powers Bill that would have allowed reasonable provision claims to be brought against the estates of persons domiciled outside England and Wales. The Bill is largely based on recommendations issued by the Law Commission after lengthy consultation. It was introduced in the Lords in July this year by Justice Minister Lord McNally, and had its second reading last week. It was at the second reading that McNally announced the dropping of the reasonable provision section, which would have amended the Inheritance (Provision for Family and Dependants) Act 1975. As it stands the 1975 Act only allows claims on the estates of deceased persons domiciled in England and Wales. There was much opposition to this attempt to extend the 1975 Act's jurisdiction, not least because it would have required English courts to make possibly unenforceable orders affecting overseas property. According to McNally, the measure was finally killed off by objections from members of the Scottish government, who complained that it might undermine inheritance rights under Scots law (as, of course, it could also do for jurisdictions outside the UK). 'We have carefully considered these concerns from our colleagues across the border,' said McNally. 'I do not now believe that it is possible to engineer a compromise on this point that would answer these concerns and retain the benefits of our original proposal.' The minister also acknowledged that his additional jurisdiction proposal was not only highly controversial but had not been based on the Law Commission's findings. McNally has not yet moved his amendment, but he said it would 'delete the

November 2013 19

additional ground of jurisdiction in its entirety'. This indicates he will not attempt to replace that section with any of the other options canvassed in its consultation ‒ one of which was to base an extended jurisdiction criterion on the existence of real property in England and Wales. (STEP Industry News Monday, 28 October 2013)

12.4 LPA Donor Cannot Appoint SuccessiveReplacement Attorneys

The facts Dr Boff executed a property and financial affairs LPA on 9 September 2012 appointing her husband as her attorney. She also appointed three replacement attorneys, her two sons and her niece in a strict order of succession. She made it clear in the box accompanying the section "How you want your attorneys to make decisions" that she did not want her replacement attorneys to act jointly or jointly and severally but successively. In her witness statement Dr Boff explained that she wanted her attorneys to act one at a time in succession to avoid problems in dealing with financial institutions. This was as a result of her experience in acting as an attorney for her mother. In practice she had found that financial institutions did not recognise joint and several powers and always insisted that joint attorneys should both sign documents and sometimes insisted that both attorneys should be present in person when dealing with the donor's affairs. The OPG refused to register Dr Boff's LPA because of the provision that the replacement attorneys should act successively. It applied to the Court of Protection to have those provisions severed. Dr Boff objected to the application on the basis that there was nothing in the MCA 2005 or the supporting regulations to prevent the appointment of successive replacement attorneys in an LPA. The decision The Court of Protection judge, Senior Judge Denzil Lush, noted that, although the court dealt with a high volume of severance applications made by the OPG every year, Dr Boff was the first donor to object to a severance application by the OPG. The judge considered the following documents that led to the enactment of the MCA 2005:

Law Commission: The Incapacitated Principal (Law Com No 122)(1983) (the 1983 report).

Law Commission: Mental Incapacity (Law Com No 231)(1995) (the 1995 report).

Law Commission: Draft Mental Incapacity Bill (1995) (annexed to the 1995 report).

The two reports showed an awareness of the potential problems that might arise if successive attorneys could be appointed and saw the solution as the appointment of joint and several attorneys or

replacement attorneys. However, in the draft bill the draftsman did not make it clear that successive replacement attorneys could not be appointed. The imprecision in the draft bill eventually became what is now section 10(8) of the MCA 2005. OPG guidance and the prescribed LPA form made it crystal clear that replacement attorneys could not be appointed in succession but could only act jointly or jointly and severally. The judge agreed with Dr Boff that the wording of section 10(8) of the MCA 2005 was ambiguous because it did not make it clear whether replacement attorneys were included within the term "the donee". Looking at the pre-legislative history, the ambiguity seemed to have arisen from the 1995 report where the draft bill that accompanied it failed to give effect to the true intention of Parliament which was that replacement attorneys should only be available in circumstances where the original donee had ceased to act for a reason which could be established by objective evidence. Neither the 1983 report nor the 1995 report considered whether a replacement attorney could replace a replacement attorney. Looking at the LPA scheme in its entirety including its pre-legislative history, OPG guidance and the prescribed LPA forms, the judge held that a replacement attorney could only replace an original attorney and could not replace a replacement attorney. The judge also observed, obiter, that Dr Boff's only method of achieving a kind of succession would be to execute two LPAs, one appointing her husband as her attorney with one of her sons as his replacement and another LPA appointing her other son as her attorney with her niece as that son's replacement. The second LPA could contain a condition that it should not come into effect until the first LPA had ceased to be operable for any reason. There would be no immediate need to register the second LPA and, in fact, it might never need to be registered. The judge also made some observations about the practical problems with the appointment of replacement attorneys as follows:

Persons notified when an application to register an LPA is made are not made aware of who the replacement attorneys are.

There is no formal registration process for replacement attorneys so notified persons cannot object to their appointment.

The office of replacement attorney only works successfully where there is a sole original attorney or one or more original attorneys acting jointly and severally.

Although a replacement attorney can replace an original attorney who has been appointed to act jointly the outcome is often uncertain in that, when one of the original attorneys dies or

November 2013 20

becomes bankrupt or disclaims the original joint appointment terminates and the replacement actually becomes a sole attorney rather than an attorney acting jointly with the remaining original attorney. The LPA form does not make this clear.

These issues had not been tackled in the MCA 2005 nor in the two Law Commission reports that led to its enactment. Comment This is an important clarification of the law relating to replacement attorneys. Although the point was uncertain because no one had challenged OPG applications to sever provisions appointing successive replacements, this confirms our understanding of the law (which was the general understanding of most practitioners in any case). Denzil Lush's observations about the practical workaround for those wanting to provide for successive attorneys will be useful for practitioners who are asked to advise donors wanting to cover the possibility that their chosen attorneys might die or disclaim. (Reported on Practical Law website 27.09.13)

12.5 Updated Charity Guidance HMRC have updated several areas of charity guidance. The new and updated publications include:

Gift Aid Small Donations Helpsheet: new helpsheet giving an overview of how the gift aid small donations scheme works;

Charities: annex II — non-charitable expenditure: detailed guidance notes updated; and

Charities: annex VIII — tainted charity donations: detailed guidance notes updated.

These can all be viewed on HMRC's website via www.lexisurl.com/jE8kQ. In addition, HMRC announced that they no longer accept gift aid repayment claims made on R68(i) forms, and that the charities online service must be used. (Reported in Tax Journal 11.10.13, p.2)

November 2013 21

Gabelle LLP 33 Cavendish Square

London W1G 0PW

Tel:020 7182 4034 Fax:020 7182 4142

Email: MTR@gabelletax.com

APPENDIX HMRC press releases, notes, notices and statements 1. Practice Note: Apportioning the Price Paid for a

Business Transferred as a Going Concern (30.09.13)

2. PAYE for employers: Real Time Information and Exam and Elect employers (30.09.13)

3. Draft guidance on the Disclosure of Tax Avoidance Schemes (DOTAS) employment income hallmark is published today (30.09.13)

4. Draft guidance on the DOTAS Finance Act 2013 changes is published today (01.10.13)

5. PAYE for employers: Update to Expatriate Employers Frequently Asked Questions(03.10.13)

6. New and updated charity guidance (02.10.13) 7. HMRC relationship with tax agents(03.10.13) 8. Pensions Newsletter 59 (07.10.13) 9. Gift Aid repayments - no more R68(i) claims

(07.10.13) 10. Framework for Higher Education Institutions

Partial Exemption Special Methods (10.10.13) 11. Revised Notice 709/1 (October 2013): Catering

and take-away food (11.10.13) 12. Revised Notice 708 (October 2013): Buildings

and construction (11.10.13) 13. Pay PAYE Settlement Agreements (14.10.13) 14. UK and Isle of Man sign Agreement to Improve

International Tax Compliance (14.10.13) 15. Isle of Man - Exchange of Letters (14.10.13) 16. Uruguay Tax Information Exchange Agreement

(14.10.13) 17. The National Insurance Contributions (NICs)

Employment Allowance(15.10.13) 18. PAYE Real Time Information (RTI) pilot

employer research (16.10.13) 19. New rules on using red diesel when gritting

have been laid before Parliament (16.10.13) 20. Revised VAT Notice 701/05 Clubs and

associations (16.10.13) 21. Draft guidance on the DOTAS regime for

Annual Tax on Enveloped Dwellings (17.10.13) 22. PAYE Real Time Information: Filing and paying

HMRC (18.10.13) 23. Treatment of Class 2 contributions recovered

through the PAYE tax code (18.10.13) 24. Helping employers keep up to date with their

PAYE(21.10.13) 25. Automatic cancellation of a PAYE

scheme(21.10.13) 26. Research and Development (R&D) Relief for

Corporation Tax(22.10.13) 27. UK signs Agreements for Automatic Information

Exchange with Guernsey and Jersey(23.10.13) 28. Seed Enterprise Investment Scheme (SEIS) -

How the Companies qualify?(23.10.13) 29. Seed Enterprise Investment Scheme (SEIS) -

Background(23.10.13) 30. Limits on Income Tax reliefs – Guidance

(23.10.13) 31. HMRC develops a new approach to Business

Records Checks(23.10.13)

32. Guernsey and Jersey - Exchange of letters (23.10.13)

33. Outstanding Class 2 National Insurance Contributions to be collected from PAYE (28.10.13)

Revenue & Customs Briefs 1. National Insurance contributions: HM Revenue

& Customs' position following the Court of

Appeal decision in the case of ITV Services Ltd

v Commissioners for HMRC (29/13 4.10.13)

2. Excise duty: Suspension of certain aggregates

levy exemptions, exclusions and reliefs during

an investigation by the European Commission

(31/13 11.10.13)

The Crown copyright material in this publication is reproduced with the permission of the Controller of Her Majesty’s Stationery Office. The extracts reported from HMRC documents have not been approved by HMRC. For the precise words of the original article, reference should be made to the original publication. The extract should be read subject to the qualifications mentioned therein, to which reference should be made before reliance is placed upon an interpretation. YOU SHOULD NOT ACT (OR OMIT TO ACT) ON THE BASIS OF THIS REVIEW WITHOUT SPECIFIC PRIOR ADVICE. GABELLE LLP PROVIDES A TAX CONSULTANCY SERVICE, OR WE CAN DIRECT YOU TO AN ALTERNATIVE SOURCE OF ADVICE.