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The Inland
Revenue intends to set up small-specialised teams to deal with processing,
customer service and compliance matters relating to taxpayers who have
complex tax affairs. Taxpayers with large amounts of foreign or trust
income, residence or domicile issues, employment issues, significant land or
property income, or high income/wealth may be affected. Each taxpayer or
their agent will be written to informing them of their allocation officer.
The Inland
Revenue has requested feedback from agents in respect of the services to be
offered under a new Internet service, for corporation tax matters. This
service is to be online at some point later in the year.
Before
agents can log on to a company’s details, the Inland Revenue will require an
up-to-date mandate form signed by the client.
Disabled
persons will no longer pay income tax on the private use of assets provided
by their employers, which they require in order to carry out their work. For
example, a wheelchair or hearing aid may be required to carry out duties of
employment but also used in private time. Under the new provision a benefit
in kind charge will no longer apply. The provision comes into effect on the
9 July 2002.
The double
tax treaty between the UK and The Hashemite Kingdom of Jordan came into
force on the 24 March 2002. The provisions of the convention will apply in
the UK from 1 April 2003 for corporation tax and from 6 April 2003 for
income tax and capital gains tax. In Jordan the provisions will apply from
the 1 January 2003.
The
Valuation Office agency has published lists of all council tax bandings in
England and Wales. The listing is sorted by postcode. There is a proposal
that the Keeper of the Registrars of Scotland will also be offering this
service online in the future following a pilot study.
The Inland
Revenue has worked closely with these offices to enable the implementation
of the new e-commerce as proposed in the Stamp Duty consultation document.
Foreign nationals in the UK
A recent
tax bulletin from the Inland Revenue states its view of the treatment of tax
equalisation payments by employers of foreign nationals working in the UK.
The tax equalisation payments are made to compensate the employees for the
excess of their UK tax liability above the tax they would have incurred in
their homeland.
Employees
who are resident but not ordinarily resident in the UK are taxable on
emoluments in respect of duties performed in the UK under Schedule E Case
II. They are also taxable under Schedule E Case III on emoluments received
in the UK even though their duties were carried out outside the UK.
There have
been differing opinions among accountancy firms as to whether tax
equalisation payments are taxable under Schedule E Case II or III. The tax
bulletin states the Revenue’s opinion that tax equalisation payments are
wholly referable to be assessed under Schedule E Case II, as the underlying
tax liability is wholly referable to duties in the UK.
Also, the
Revenue considers that if a tax equalisation payment arises by virtue of
Schedule E Case III liability it is also chargeable to UK tax, as the
payment is wholly in respect of a liability incurred in the UK.
The
situation is further complicated where the tax equalisation payment is in
respect of the tax difference arising on the employee’s investments and
savings. The Revenue considers it unfair to have it treated wholly as
arising from duties in the UK and says it is fair to time-apportion this
payment in relation to UK and non-UK duties.
If you
require further information in respect of this please contact us.
Substantial shareholding exemption regime and share reorganisations
The Inland
Revenue has published a guideline to explain the new legislation in respect
of the interaction of the substantial shareholding legislation and the rules
covering share re organisations. The new legislation exempts the gains on
the disposal by a trading company or group of the disposal of a substantial
shareholding of a trading company. The guideline looks at reorganisations
within a group of trading companies and outwith a group. There are specific
examples of intra-group share exchange and share exchange with qualifying
corporate bonds.
The
legislation Clause 43 and Schedule 8 of the Finance Act 2002 will not become
final until the Act receives Royal Assent.
An updated
booklet has been produced by the Inland Revenue that explains the treatment
of employee travel expenses for income tax and national insurance. In
particular it details the new mileage allowances. If you require a copy
please contact us.
Two new
share scheme manuals have been published and are available online at the
Inland Revenue web site. The Share Schemes Manual provides more detailed
information on the taxation of shares and share-related benefits. The
Employee Share Schemes Unit Manual gives detailed guidance to Revenue staff
on their operational responsibility for the approval and overseeing of
employee share schemes.
The Inland
Revenue has written an article clarifying their approach towards the tax
treatment of private finance initiatives. The article discusses the
treatment of expenditure, which will depend on the nature of each particular
trade. This is a complex area and requires a case-by-case analysis. Please
contact us if you require further assistance.
The Inland
Revenue has agreed that the replacement of single glazed windows by double
glazed windows will constitute a repair and will now be considered not to
involve an element of improvement. This means that none of the cost will be
treated as a capital cost and will be wholly deductible from income.
In
addition landlords should be especially careful when incurring repair costs
as the Revenue has stated that only like-for-like replacements will be
considered as repairs. Any element of improvement requires to be treated as
capital expenditure, although the Revenue will consider repairs in the
context of the passage of time and technological improvements.
A
deduction for “notional repairs” will no longer be allowed.
The Inland
Revenue has recently published a new leaflet providing a basic introduction
to capital gains tax. It provides an outline of when capital gains tax is
payable and what it is payable on. If you would like a copy of the leaflet
please contact us.
A recent
judgement at the European Court of Human Rights against the Inland Revenue
has ruled that a man was sexually discriminated against because he was not
awarded the widows’ payment and widowed mothers’ allowance. The man was
awarded £25,000 in damages and a further £12,500 costs. It is thought that
this judgement gives more weight to the lobby for equality in the widowers’
bereavement allowance being awarded to men.
The
Vehicle Certification Agency has published a new booklet, which provides
information required for company car benefit purposes about carbon dioxide
emissions. Please call us if you require further information.
Finance leasing of intangible
assets
The
Corporation Tax (Finance Leasing of Intangible Assets) Regulations 2002 have
been published which deal with the new legislation of the Finance Act 2002.
Customs
and Excise have released a Finance 2002 update, which contains detail of the
clause in respect of bad debts.
Under the
new clause businesses that have not paid for supplies within six months of
the relevant date will be required to pay the input VAT and the supplier
will be able to reclaim the VAT paid.
This will
remove the onerous burden on suppliers to notify the debtor company within
seven days of its intention to reclaim the VAT.
This
clause will come into effect once the statutory instrument is in place. The
date will be notified in a future update.
The
changes introduced by the Budget to the VAT margin schemes for second-hand
goods that apply to banks and other financial institutions will come into
effect on 1 July 2002. This will affect these institutions when the goods
were purchased by assignment of rights under a hire purchase or conditional
sale agreement.
This
legislation will also apply from 1 July 2002 to all businesses selling
goods, which were obtained as the result of a transfer of a going concern.
Eligibility to use the margin scheme depends on the original owner of the
goods having been permitted to use the scheme. The changes also define the
purchase price to be used in the scheme calculation where the seller has
obtained the goods by way of a transaction that is not a supply for VAT
purposes. In practice this will only affect cases involving assignments.
These
changes will not affect goods assigned prior to 1 July 2002. If you require
further information please contact us.
Customs
and Excise have announced a change to the layout of the certificates for
zero rating construction or sale of “relevant residential” or “relevant
charitable” buildings, and for reduced rating renovation and conversion of
relevant “residential buildings”.
One of the
criteria for zero rating is that the person who intends to use the building
provides his supplier with a certificate stating the building will be used
for a relevant residential or charitable purpose.
Two new
certificates will replace this certificate. One certificate will cover
construction, renovation and conversion and the other will cover sales or
long leases of new buildings.
The new
notices will be available from August 2002, and Customs and Excise will not
accept old certificates after May 2003. If you require help in obtaining a
certificate please call us.
Customs
and Excise have published a press release to answer questions in relation to
the new Euromarker to be added to rebated gas, oil and kerosene. The
Euromarker must be in use by 1 August 2002 at the latest.
Customs
have noted some exceptions to the rule where there are technical or health
and safety reasons. In addition they have stated that fuel to be used for
certain industrial uses or aviation fuel that is not marked will be required
to have strict controls in place. For an exception to apply, an officially
agreed waiver must be in place prior to the delivery of the rebated oil. |
