We have supported our Tax Partner Pro members via email and call-back service. Here’s an overview of some of the more recent questions we have answered during November 2024
Q
Could I have some information on the 10-year anniversary trust return completion, I have looked at HMRC and its very contradictory.
My client has a trust this has a GIA ( originally investment £66,500), the income is generated from dividends and interest from the GIA portfolio of stocks and shares (2024 was < £1,000.00)
Does the client fall into the category to report its 10 year anniversary?
What does qualify a trust to complete a 10 year anniversary form?
A
In general, if the trusts assets are valued at less than 80% of the NRB then it would be an excepted estate and no 10 year anniversary charge return is required.
Q
We have a client how earns £488,000 through PAYE per year gross and is having RSU Gains and Tax withheld through his payslip.
Are there any additional disclosures we need to make on the self-assessment other than reporting the P60?
A
No there shouldn’t be. The income has been declared and the tax paid via PAYE so just the P60 is all you’d need.
You’ll need to report on the CGT pages when the shares are sold if there is a gain to be declared.
Q
I have a one person company client who is considering ceasing trading as his last trading receipt was in January, though he has just quoted for a small project and is waiting to hear if it will go ahead. Meanwhile, he’d like to make a £60,000 pension contribution from the company. My concern is that – especially if the small project does not materialise – that the contribution will be 9 months after the last trading receipt and may not be allowable for corporation tax – being considered part of the process of closing the company down rather than say part of the director’s remuneration.
A
My concern would mirror yours, as the business appears to have ceased to trade.
Contributions made as part of the arrangements for going out of business, in particular where there is no pre-existing contractual obligation to make such a contribution, are not considered as meeting the ‘wholly and exclusively for the purpose of the trade’ test.
In the case of CIR v Anglo Brewing Co Ltd [1925] 12 TC 803, the company decided to close down its business. In the past, the company had granted pensions to employees on their retirement. The company promised to treat its present employees with equal generosity. The company therefore agreed pension amounts (which were later commuted for lump sums) and compensation payments. The company claimed the costs as a deduction in computing its profits.
The high court took the view that the payments were made for the purpose of winding up the company and that no deduction was due for the pensions or the compensation. There is now a statutory relief for redundancy payments but the principle of the decision, that payments to go out of business are not allowed, remains valid.
Q
I have a client who is a musician. He is looking to “book some music related events next year for research purposes in order to keep track of current and new trends in the electronic music market. “
He has asked me about whether this is tax deductible.
I am aware of wholly and exclusively and have shared this with him but he’s shared with me an example of a business package referencing VAT etc
I am not sure what to advise. It makes sense for him to attend these events for research but by the letter of the law is looks like it could be entertaining it and then would it be disqualified in full!! I cannot find any similar case law.
Are you please able to advise?
A
I think it would be hard to justify this as an expense and would expect HMRC to disallow if challenged.
You could perhaps claim a portion of the cost and argue that there is a duality of purpose but I’d emphasise the risk of it being disallowed if HMRC were to challenge it.
That being said, in an article in Tax Weekly magazine in May 2024 there is some commentary on this and the adviser quoted “If a performer incurs research expenditure to research their role, such as attending performances, this will probably be allowable.”
I note the commentators use of the word ‘probably’ in that passage as it’s a subject that no one will be able to offer iron clad case law backed opinion on the matter.
I’d suggest making the client aware of the risk, but ultimately letting them make the call on it.
Q
We have a client who invested in a US fund (not listed in HMRC’s reporting fund listing) in the last 2-3 years and according to her financial advisers, the fund is making losses. She is looking into selling the fund to realise the losses. From reading HMRC’s manual IFM13550, I understand the losses would be treated as a capital loss – please confirm that my understanding is correct?
Furthermore, could you also please confirm that the above losses can be offset against capital gains arising (in the same year/future) in the normal way.
A
Yes, the losses will be capital losses and relievable in the normal way (against current year or future years capital gains)
Next Steps
Do you have any questions similar to the above, could Tax Partner Pro membership be right for you? Don’t hesitate to get in touch with ETC Tax to find out more.
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