Phoenix companies watch out...

I found the following copy on HMRC's web site today re businesses that will not qualify for the new NIC Holiday. A great example of non-plain English... I believe they are saying that Phoenix companies will not qualify?

Click on title to read complete article.

Businesses that aren't considered to be new

The test of a new business is based on the activities of the business. For the purpose of the holiday, the test requires you to look at the activities of the new business and to consider whether all, or most of them, have previously been carried on by them in another business during the six months leading up to the start of this business. Also you need to decide if the new business consists of activities, or mostly of activities resulting from the transfer of most of the activities of another business. In considering those activities, you will need to consider whether there are similarities that may exist between the products or services, the customers, suppliers and the employees of any previous or ongoing business and the new business.
Your business will not be considered to be new and therefore won't qualify for the NICs holiday if any of the following apply:

• at any time in the six months leading up to the start of this business, you carried on another business and the new business consists (or mostly consists) of activities that were undertaken in the other business
• you begin to carry on a business as a result of a transfer of another business and the activities of the new business (or most of them) were previously carried on in the other business
• you begin to carry on a business and before the business starts you enter into an arrangement to take on an existing business or part of an existing business at some point during the period of the NICs holiday

The meaning of “most of them” in this context means the greater part or the majority of the activities.

Key Tax Dates Confirmed

HM Treasury has posted the following forward announcements:

29 November 2010 - Chancellor will make his Autumn Statement to parliament (a PBR in sheep's clothing!)

9 December 2010 - Government will publish draft clauses for Finance Bill 2011.

At the same time the Government will publish a formal response or update on current consultations:

• Simplification of corporate capital gains for companies
• Pensions annuitisation
• Furnished Holiday Lets
• And a number ofareas relating to HMRC's powers.

23 March 2011 - Chancellor George Osborne has confirmed the Budget will take place on Wednesday 23 March 2011

List of All UK Tax Reliefs

I added a free download to the Landmark Resource Centre yesterday, the spreasheet issued by HM Treasury that lists all 1,042 UK Tax Reliefs.

Just click on title of this post...

Apparently George is reviewing the list, no doubt with an eye on repealing certain reliefs to increase his tax take!

Give away income live on capital

Came up with the following idea when researching IHT planning for a client. Basically the tax payer has ring-fenced a significant block of capital that he intends to leave to a charity. The capital is invested and produces an income that is taxable. (He pays tax at 50% on his marginal income.)

We are discussing the possibility of donating the annual income to the charity under gift aid and using capital to replace the income. In this case there are no CGT complications in reducing the capital sum each year.

Overall charity gets more and HMRC gets less!

Revenue and Customs Brief 44/10 - VAT now recoverable entertaining overseas customers

HMRC's Business brief 44/10, published this month, sets out the scope for recovery of VAT input tax on entertaining overseas customers. Click on title of this article to access the report.

Tax relief on pension contributions - are we better off?

This month I have included an article for clients about the proposed changes to the rules regarding tax relief on pension contributions in the Uktaxworld newsletter. Readers may be interested in the following comments on the article sent to me by Nigel Moon of Reeves of Canterbury.

" ... whilst the £255k annual allowance is reducing, there are the anti-forestalling provisions currently in place that mean that (despite the £255k) higher rate tax relief for many people could be restricted currently to contributions as little as £20k ....

Under the proposed rules, higher rate tax relief will I believe be available on the £50k (though nothing on the excess, indeed there will the horrible excess charges) so in terms of tax relief some/many may be better off under the new rules.

With regard to the "spike" you mention, the draft legislation indicates that if someone belongs to a pension scheme in the three preceding years but has not paid up to the £50k limit then he can use the shortfall in the later year i.e. he could pay up to £200k if nil paid (though a scheme member) in the earlier years - or say £140k if he'd been paying £20k pa.

This latter seems to be producing a bit of a windfall to some - I think this might be the point referred to in a recent FT article - in that if someone had been paying £20k from 2008/09 to 2010/11 for example (in latter years to keep higher rate tax relief) then he can make up the shortfall and get relief in 2011/12 by paying £50k + 3 x £30k.

Of course, all draft thus far ...

Tax on UK flights up by max 55% today

Click on title to read industry commentary...