Archive for the ‘Tax’ Category

Rise In HMRC Property Raids

Friday, September 30th, 2016

There has been a sharp increase in HMRC carrying out property raids on individuals that evade paying tax. Within the last year, the number of raids carried out by HMRC has shot up by 28 per cent, from 593 properties the year before to 761 properties over the course of the year to March. The research conducted by Law firm Pinsent Masons shows the effort being made by HMRC to catch individuals who commit tax fraud.

Tax expert Paul Noble of Pinsent Masons said “HMRC is being pressured to increase the number of prosecutions secured for criminal tax evasion and has now been provided with the increase means to do so”. A HMRC spokesperson also said: “We have a range of criminal and civil powers we use to tackle tax fraud of all types and do not hesitate to do so where necessary and proportionate”.

Property raids carried out by HMRC are useful in obtaining sufficient evidence for criminal prosecution. HMRC can obtain a search warrant from a judge or magistrate, which can then allow officers to seize any information or documentation, be it electronic or paper, that they believe will be vital in a criminal prosecution. HMRC has also been allocated more resources to help them tackle criminal tax evasion, including £900 million in funding and stronger prosecution powers.

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Potential Probate Court Fee Rise

Monday, August 1st, 2016

Is your estate worth more than £500,000? If so, your probate court fees may be going up from £155 to £4,000; if your estate is worth more than £2m, make that £155 to £20,000.

No, this is not Inheritance Tax: this is justice; the department of justice that is, who are proposing a huge rise in the court fees payable when Executors of a deceased estate apply for a Grant of Probate. The rise is to help cover the cost of other parts of the court system.

The government has been ‘reviewing’ feedback on this proposal since April, so a decision would seem nigh. Will it happen? I think so; if not in full, then in a watered down version.

So is there any escaping this court fee hyperinflation?

The use of multiple bank accounts, joint ownership and trusts could all be strategies. But I suspect the government will identify and shut down all the obvious escapes before, or soon after, bringing the new rules into place. Not only does the proposal’s revenue forecast depend on it, but so does their Inheritance tax collection, which is mightily assisted by the fact that one is required to report on the tax position before one can obtain a Grant. As the Grant is the document that enables you to collect in the substantive assets in the estate, this makes HMRC the gatekeeper to those assets. Take that away and the problems are obvious.

From a legal perspective, incentivising people to avoid obtaining the document that helps to ensure the proper administration of an estate has clear problems. A Grant is a way of ensuring the right people get access to the deceased’s assets; it is also a reference point for many other areas of estate administration. It is not something you want to mess around with.

Total escape from these new fees (should they be introduced) is therefore unlikely.

Partial escape, however, is more feasible. The proposed court fees are structured in ‘bands’; so, for instance, you pay £1,000 for an estate worth £500,000 and £4,000 for an estate worth £500,001; £12,000 for an estate worth £2,000,000 and £20,000 for an estate of £2,000,001. The scope for effective planning is self-evident, although not as simple as it might seem given many assets fluctuate in value. Whether the ‘banding’ approach will survive the final cut, however, is another question.

Unfortunately, the pain does not end there. A court fee of £4,000, let alone £20,000 is a lot of money. Property rich estates may require loans while estates with liquid assets may find that, after paying the probate court fees, there is not enough left to pay Inheritance tax. And you don’t have long to pay that (around 6 months). Otherwise, interest is payable.

HMRC managed to raise that rate of interest from 0% to 3% in September 2009, while raising the corresponding interest rate on repayments of tax from 0% to 0.5%; the only time on HMRC’s records the two rates have not matched. A government sleight of hand, if you like. It adds up, too. Properties are often the cause of Inheritance tax liability and, being illiquid, are most susceptible to interest accruing on that liability. At 3% that interest is now higher than the interest rate on many mortgages. At the time HMRC made the controversial change they stressed that interest was ‘not a penalty but compensation for tax paid late’. So, are they not now being over-compensated?

It seems a fair question, especially when one considers that this 3% rate still stands despite the collapse in interest rates the government pays on its own borrowing to historic lows. As of today, the government pays interest of around 0.8% per annum for borrowing money for 10 years (down from 3.5% in September 2009). Ten years is the longest period you can pay your Inheritance tax liability over. That means a conservatively calculated ‘spread’ of more than 2% for the government; and that doesn’t even factor in the interest ‘paid back’ to the government by the Bank of England on their £375 billion holding in government debt; which is, coincidentally, indemnified by the government.

If this seems unfair to you, then you may wish to consider planning to have liquid funds on hand, or indeed insurance in place, to pay inheritance tax and escape the interest trap.

Death and taxes, on the other hand; they are somewhat harder to escape from.

Call Mark Hopper, our Private Client Solicitor on 020 7998 7777 for more information or email him at mark.hopper@bloomsbury-law.com

Inheritance Tax Relief For Parents Only

Monday, July 11th, 2016

Andrea Leadsom recently withdrew from the tory leadership race following the hysteria surrounding an interview she gave to the Times. The hysteria centred on the fact that Mrs Leadsom has children and her opponent in the race, Theresa May, does not.

Strong opinion was voiced from some conservatives who perceived that Mrs Leadsom was unfairly discriminating against Mrs May (who wanted to have children) by talking about her own children within the context of the leadership race.

This leads to a simple question.

How do these same conservatives view the Residence Nil Rate Band? This was the new Inheritance tax allowance introduced by the conservatives after they were elected to government.

It comes into force in April next year and is worth up to £175,000 per person by 2020/21.

The allowance is only available to people with children.

Unlike Mrs Leadsom, intention is not in question.

Call Mark Hopper, our Private Client Solicitor on 020 7998 7777 for more information or email him at mark.hopper@bloomsbury-law.com

Budget 2015 Breakdown

Tuesday, April 7th, 2015

Download our PDF for a full breakdown of the 2015 Budget, in case you missed it.

Budget Breakdown 2015

For more information speak to our Tax Solicitor, Alison Phillips on 020 7998 7777 or email her at alison.phillips@bloomsbury-law.com.

2015 Budget Information

Tuesday, March 17th, 2015

Keep track with everything that’s happening with the 2015 Budget on Wednesday 18th March 2015. We have concatenated all the useful links to do with the budget so you can keep one step ahead of George Osborne.

If you have any tax queries please get in contact with our Tax specialist, Alison Phillips on +44 (0)207 998 7777.

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Official UK Government Links

Treasury’s Official Budget 2015 – GOV

HMRC’s Official Budget 2015 Page – GOV

Budget 2015 Documents – GOV

Finance Bill 2015 – GOV

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Budget Live

Budget 2015: Live – Independent

Budget 2015: Live Politics Blog – BBC

Budget 2015: Live Q&A – Financial Times

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News Links

Budget 2015: Parliament Statement – Parliament

Budget 2015: What we Already Know – Independent

Budget 2015: Inheritance Tax Slashed – Telegraph

Budget 2015: Tories Election Lift-Off – BBC

Budget 2015: George Osborne’s Top 5 Claims – Guardian

Budget 2015: A Brief History – BBC

Budget 2015: Where To Watch The Budget – Mirror

Budget 2015: Everything You Need To Know – Chronicle

Budget 2015: VIDEO – What City Workers Want – BBC

Budget 2015: VIDEO – What BBC Editors Expect From The Budget – BBC

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Big Four Accountancy Web Pages On The Budget 2015

Budget 2015: KPMG Website – KPMG

Budget 2015: PWC Website – PWC

Budget 2015: Deloitte Website – Deloitte

Budget 2015: EY Website – EY

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For more information please contact our Tax specialist Alison Phillips at: alison.phillips@bloomsbury-law.com or call us on +44 (0)207 998 7777.

UK Payroll Dates – 2015

Monday, March 9th, 2015

2015 UK Payroll, Employer Reporting and Form 42 Deadlines and Dates

It is important for employers to be aware of the reporting deadlines this year (see HMRC payroll annual reporting). See the summary table below.

In addition if you have UK employees, officers or directors that get share options or acquire shares then it is likely that you will need to report the share acquisitions (Investing’s) or share options. This reporting has to be done by 6th July 2015 and for the first time this year it will be done “on-line” via HMRC’s PAYE Online Toolkit (see HMRC guide to annual reporting of share plans & on-line filing of share awards and options). The short-hand name given for employer reporting of share plans is often called “Form 42 reporting”.

If you need help or advice please call us on 0207 998 7777.

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HMRC has yet to confirm all the dates but the deadlines are likely to be:

Employer Action (for the tax year 2014/15)

    P60 to employees
    31 May 2015

    Agree PAYE Settlement Agreement (PSA)
    6 July 2015

    Register for HMRC’s PAYE Online Toolkit for annual share plan reporting
    Do this asap as it can take up to 10 days*

    Register ALL your employee share plans with HMRC via the PAYE Online Toolkit
    6 July 2015 **

    Submit on-line employer share scheme report Form 42
    6 July 2015

    Submit annual EMI share plan report Form 40
    6 July 2015

    Submit/issue benefit and expenses forms P11D
    6 July 2015

    Submit other UK approved share plan reports (CSOP, SIP, SAYE)
    6 July 2015

    Pay Class 1A NIC liability
    22 July 2015 (19 July if you pay by cheque)

    Pay liability under PSA
    22 October 2015 (19 October if you pay by cheque)


*otherwise you may miss some of the deadlines in this table and incur penalties
**if you miss this date your CSOP, SIP and SAYE may lose its approval status and tax benefits!

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For more information please contact our Tax specialist Alison Phillips at: alison.phillips@bloomsbury-law.com or call us on +44 (0)207 998 7777.

Useful HMRC TAX Calculators

Monday, January 5th, 2015

Here is a list of the most useful tax calculators that HMRC provide.

If you are an expat or non-dom, do check whether UK tax applies to you and if you are not sure do call us on +44 (0)207 998 7777. (more…)