While most of us were winding down to the festive season, the result of HMRC v Donaldson will have left many taxpayers grimacing and hardly full of seasonal good cheer. For those that had become the subject of an HMRC assessment for daily penalties for late submission of income tax returns, the last year will have been quite the rollercoaster in terms of delays and uncertainty as their fate hanged on the conclusion of this case. Many of you may by now be aware that this case culminated early in December 2014, bringing the rollercoaster to a dramatic and perhaps unexpected end. This blog will look into the background of the case and HMRC’s new penalty powers. If you would like to familiarise yourself with the particulars of the case an analysis can be found here.
News & Events
In March 2011, the government extended an olive branch to start-up companies by announcing proposals which were aimed at encouraging investment in new businesses. These proposals included a reform of the existing Enterprise Investment Scheme (EIS) and the introduction of the Seed Enterprise Investment Scheme (SEIS) which focusses on start-up companies and offers generous reliefs in the form of an income tax reduction and two capital gains tax exemptions to participating investors.
SEIS was originally intended to be a temporary measure to stimulate interest from angel investors, however, the success of the initial scheme resulted in £82m being invested into 1,100 companies by the end of 2013, providing a substantial incentive for the Government to remove any time restrictions and continue the availability of Income Tax (IT) and Capital Gains Tax (CGT) reliefs under the scheme.
This blog will look at the characteristics of the SEIS and its reliefs to discover why it has become so popular among investors.
In March 2013, the Government announced proposals to introduce relief from Capital Gains Tax (CGT) on the sale of an interest in a business into an employee ownership trust (EOT), along with a promise to further investigate employee focussed incentives in a bid to assist companies in the recruitment, retention and motivation of staff.
On 4 July 2013, the announcement was put to consultation so that the Government could take views on the proposals for CGT relief and Income Tax (IT) exemption. The provisions subsequently drafted have now been incorporated into the Finance Act 2014.
This document looks at the legislation published as a result of the consultation process, (the summary of responses to the consultation process can be found here) in particular relating to the CGT, IT, Inheritance Tax (IHT), and Corporation Tax (CT) reliefs which have now been made available to Employee Ownership Trusts (EOTs).
EOT’s are relatively well established although somewhat under-utilised due to the restrictions placed on trust property; however, these new reliefs should make the structure much more attractive. Focussing on increasing morale and productivity, the EOT is a form of trust which enables a company to sell and distribute shares to its staff. There are conditions which define what makes a trust an EOT, (such as the controlling interest requirement) and employees also have to meet certain criteria to qualify as a beneficiary of the trust, which we will look at below.
As the summer season around the country draws to a close as winter finally starts to bite, we look at the income, capital gains and inheritance tax position for those individuals* who own and operate holiday hideaways, and consider the implications of a recent Upper Tribunal (UT) case on holiday lettings.
Absolute support at all times
Following a comprehensive review of providers offering HMRC enquiry support services, C3 are proud to announce the appointment of DWF LLP to take responsibility for the provision of enquiry support for all client’s undertaking future planning with C3.