Archive for September, 2016

Taxman safeguards billions of tax payments

Wednesday, September 14th, 2016

The Financial Secretary to the Treasury, Jane Ellison MP, announced last week that HMRC has collected £3 billion up-front from tax avoiders. The move continues the government clampdown on tax avoidance following last month’s announcement that enablers of tax avoidance will face tough new sanctions.

The 60,000 accelerated payment notices (APNs) issued since the new rules were introduced in 2014, have required tax avoidance scheme users to pay up £3 billion of disputed tax upfront while their tax affairs are investigated by HMRC.

Under the scheme, which removes the economic advantage of taking part in tax avoidance, a taxpayer with an outstanding tax bill has 90 days once an APN is received to pay up or make representation to HMRC if they consider the notice incorrect.

Speaking at HMRC’s stakeholder conference today the Financial Secretary said:

I’m delighted to announce that we’ve collected £3 billion upfront since 2014 from people using avoidance schemes as HMRC puts its new powers to use.

The vast majority of avoidance schemes just don’t work. We’re determined to change the economics of tax avoidance by making it harder for the dishonest minority to cheat the system – collecting disputed tax upfront and tough new sanctions for enablers of tax avoidance will mean people will think twice.

HMRC has successfully defended the accelerated payment rules in five out of five Judicial Review challenges. With HMRC winning almost 90% of avoidance litigation cases brought against it, the vast majority of individuals choose to settle their tax bill rather than entering into lengthy and costly litigation.

In the latest High Court ruling brought by tax avoidance scheme users, HMRC’s decision to issue APNs on a scheme that companies had used to try to reduce their tax bill was challenged by arguing that the tax authority hadn’t properly arrived at the amounts included in the APNs. The Court ruled in HMRC’s favour. This decision means that an estimated £28 million in disputed tax will be protected.

This year has seen HMRC win several large scale tax avoidance cases, including a win against Eclipse 35 worth £635 million.

Letting out part of your home

Friday, September 9th, 2016

There are a number of considerations that home owners will need to consider if they are letting out part of their home. The following points cover some of the more obscure situations that can arise:

I’m a tenant. Can I sublet part of the property or take in lodgers?

If you are a secure council tenant, you have the right to take in a lodger, but cannot sublet part without the council’s written permission, you cannot sublet the whole of a secure tenancy. If you are a private tenant, you should check the terms of your tenancy. If there has been nothing agreed to the contrary, the tenant would be free to sublet. However, in practice most private tenancies prohibit subletting: because there is something in the written tenancy agreement to this effect (either absolutely or without the owner’s permission) and/or because assured (including assured shorthold) periodic tenancies have this prohibition implied. But a tenant can of course ask his or her landlord for permission anyway. A tenant who has sublet in defiance of these prohibitions cannot use this as justification for denying his own tenant or licensee her rights, for example by evicting her illegally. Also, these restrictions only apply where the intended arrangement is for the tenant to “part with possession” of some of the property: if, for example, you were informally having a friend to stay, or taking in a lodger who you would be providing services to, you would probably not be giving exclusive use of any of the accommodation. Again, if any of these types of tenancies comes to an end, so generally will the sub-tenancy.

Will my home insurance cover be affected if I let part of my home?

It is very likely that insurance premiums will be increased by allowing someone to share the home, because of factors such as accidental damage. It is extremely advisable to check for both contents cover and building cover; and if existing arrangements will not provide cover if part of the property is let, to arrange to extend the cover.

Do I need planning permission or other consent from the local council?

You would not need planning permission simply for letting rooms, so long as the property remains primarily your home: but there could be a planning consideration if you were to use it mainly to earn money from letting accommodation.

What facilities should be provided?

You are free to decide most of these things with the person you let to, subject to the basic requirements of general housing law: you should provide access to kitchen, washing and toilet facilities (but these can be either the ones that you use or separate).

Does there have to be an agreement in writing?

Not unless the let is a tenancy for a fixed term of more than 3 years. But it is advisable to have one anyway, as this will make it easier to sort out any disagreements which may arise later. Even if there is nothing in writing, both parties must still do whatever they agreed to, except where this conflicts with their overriding legal rights and responsibilities.

City trader conceals assets from his creditors

Wednesday, September 7th, 2016

A former City trader has been hit with a £2m-plus confiscation order for concealing assets from his bankruptcy trustee and thus, his creditors.

Tahseen Goni, 41, from Luton, has been ordered to pay a confiscation order of £2,084,897.37 and prosecution costs of £118,352.36, following a hearing at Cambridge Crown Court on 28 July 2016.

Mr Goni was convicted of concealing property from the Official Receiver in August 2015, following an initial investigation by the Insolvency Service and a full criminal investigation and Prosecution by the Department for Business, Energy & Industrial Strategy (BEIS).

The Investigation found that in October 2008 Mr Goni, a previously successful ‘spread betting’ trader, incurred substantial losses and was left with a debit balance of £238,021.30 on his personal account with a company providing financial spread betting, Contracts for Difference (CFDs), stockbroking and foreign exchange services. The company obtained judgment in default against Mr Goni and threatened to petition for his bankruptcy.

Mr Goni then began to put in place arrangements to enable him to continue to trade in the lead up to and following his impending bankruptcy. This involved him making use of both trading accounts and bank accounts in the name of a family member.

The investigation found Mr Goni had sufficient assets to pay off his creditors during the period of his bankruptcy. Despite his duty to declare them to his trustee in bankruptcy, he concealed them. This resulted in him being prosecuted and on being convicted, sentenced to 2 years’ imprisonment. At the subsequent confiscation hearing the court ordered that the benefit from his concealment of £2,084,897.37 should be confiscated of which £537,057.03 was to be paid to his creditor(s). A further £118,352.36 was ordered to be paid to cover prosecution costs.

Deputy Chief Investigating Officer Ian West from the Department for Business Innovation and Skills said:

“This is a substantial penalty and bankrupts should be in no doubt, that if they conceal assets from their trustee in bankruptcy that the Insolvency Service and the department for Business, will take firm action to have them prosecuted, their benefit confiscated and their creditor(s) recompensed.”

Tax Diary September/October 2016

Monday, September 5th, 2016

1 September 2016 – Due date for Corporation Tax due for the year ended 30 November 2015.

 

19 September 2016 – PAYE and NIC deductions due for month ended 5 September 2016. (If you pay your tax electronically the due date is 22 September 2016)

 

19 September 2016 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2016.

 

19 September 2016 – CIS tax deducted for the month ended 5 September 2016 is payable by today.

 

1 October 2016 – Due date for Corporation Tax due for the year ended 31 December 2015.

 

19 October 2016 – PAYE and NIC deductions due for month ended 5 October 2016. (If you pay your tax electronically the due date is 22 October 2016.)

 

19 October 2016 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2016.

 

19 October 2016 – CIS tax deducted for the month ended 5 October 2016 is payable by today.

 

31 October 2016 – Latest date you can file a paper version of your 2016 Self Assessment tax return.

New successes for HMRC in the courts

Monday, September 5th, 2016

HMRC seem to be making progress in their attempts to discourage, and recover unpaid tax, from participators in tax avoidance schemes.

In a recent high profile case, HMRC have recovered more than £434m in unpaid taxes from users of the tax avoidance scheme promoted by the Ingenious Film Partnership. Their scheme tried to use artificial losses arising from investments in a range of movies, including the blockbusters Avatar, Life of Pi and Die Hard 4.

Director General of Enforcement & Compliance Jennie Granger said:

“These were some of the biggest films of all time, and the schemes involved people claiming far more in tax than they invested in the first place. We always say that if something is too good to be true then it probably is. And in this case the long legal battle will mean that investors face even bigger bills for interest and legal costs.”

In a second win for HMRC, they were successful in stopping a scheme by Icebreaker who attempted to create artificial losses from investments in limited liability partnerships.

For both schemes users claimed more in tax relief than they had invested.

The Icebreaker decision is HMRC’s second win against the scheme, following a victory in the First Tier Tribunal in 2014. The total tax at stake was £134 million.

This means that HMRC has now secured more than £1.2 billion in disputed tax from wins in avoidance litigation since the beginning of April.

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