The wave of litigation which has followed the turmoil in the financial markets as a result of the credit crunch has led to many decisions that have resulted in those suing financial institutions being left to lick their wounds (and also facing sizeable legal...
HM Revenue and Customs (HMRC) have had difficulties in the past in checking on property sales to ensure that the ‘principal private residence’ exemption for Capital Gains Tax (CGT) is being used correctly. Notwithstanding the complexity of the...
In order for an asset to be removed from an estate for Inheritance Tax (IHT) purposes, the donor of the asset must retain no benefit from it after the legal title to it passes. Complex ‘reservation of benefit’ legislation exists to ensure that...
People who suffered losses as a result of the collapse of mutual insurer Equitable Life in 2000 will be pleased to know that the compensation payments they receive as a result of the passing of the Equitable Life (Payments) Act 2010 will be tax free. The...
New measures put forward by HM Revenue and Customs (HMRC) to deal with the problem of ‘tax agents who act dishonestly in tax matters’ include proposals that HMRC should ‘name and shame’ advisers who are found to have acted dishonestly...
The Supreme Court recently handed down its judgment in the case of Gaines-Cooper v Revenue and Customs . In what will be a suprising decision to many, the Court has ruled in favour of HM Revenue & Customs (HMRC), who argued that businessman Robert...
Just four months after relaunching Index-linked Savings Certificates, the Government-backed savings institution National Savings & Investments (NS&I) has withdrawn its Savings Certificates from sale. The move was necessary in order to ensure that it...
According to a new report from the Institute for Fiscal Studies (IFS) – Tax by Design – the current tax system is "inefficient, overly complex and frequently unfair" . It calls for some radical changes to taxation policy, warning...
If a person's estate does not fully utilise the nil-rate band for Inheritance Tax (IHT) purposes, the unused proportion of the nil-rate band can be used on the death of that person’s spouse or civil partner. This is termed the ‘transferable...
The High Court recently ruled in favour of a pension scheme which decided to stop awarding pension increases which, though discretionary, had in practice been regularly given in the past. The Prudential’s pension trustees had for many years followed...
In the year to December 2010, HM Revenue and Customs (HMRC) raised in the region of £70 million in additional tax as a result of challenging property valuations included in the estates of people who had died. Inheritance Tax (IHT) is payable if the...
Trustees of discretionary trusts who have found that recent tax changes have resulted in an unacceptably high level of taxation (especially as regards trust income from dividends) should give consideration to the possibility of amending the trust to give a...
Clients who have discretionary trusts in place are reminded that the advent of higher rates of tax since April 2010 may warrant a review of the trust structure. Since April 2010, trustees of discretionary trusts have been subject to a 50 per cent tax rate...
Two divorcees who allege that the investment advice they received after their divorces was negligent have commenced proceedings against their financial advisers in a bid to recover their alleged losses. Friends Megan Scotney and Clare Gallacher both...
Changes by HM Revenue and Customs to the disclosure requirements for executors have come into effect. These apply to deaths occurring from 1 March 2011. The first change is that where the deceased gave gifts which exceed the annual ‘Inheritance Tax...
A woman who was suffering from a chronic mental illness and had developed a phobia of opening mail had her bankruptcy annulled by the High Court recently after HM Revenue and Customs (HMRC) were judged to have breached their duties under the Disability...
As of 6 April 2011, the following changes have been made to tax credits: Working Tax Credit (WTC) and Child Tax Credit (CTC) These have been largely uprated in line with inflation. The basic and 30-hour elements of WTC will then be frozen for three...
A tax case recently decided in Scotland has implications for businesses in which a trade that qualifies for Business Property Relief (BPR) for Inheritance Tax (IHT) purposes is carried on alongside one which does not. BPR operates to reduce the value of a...
When seeking to claim the ‘principal private residence’ (PPR) exemption – which exempts from Capital Gains Tax (CGT) gains made on the sale of the PPR of the taxpayer – the criteria for exemption are strictly interpreted by HM Revenue...
The Capital Gains Tax (CGT) reliefs for property owners are surprisingly generous in the UK and provide a variety of tax planning opportunities. The rather beneficial tax regime is probably why many people think that the ability to make an election that a...
A family's eleven-year argument with HM Revenue & Customs (HMRC) over the valuation of a property for IHT purposes has finally been decided by the Tax Tribunal . Mr Price's wife died in 1999, leaving her half share in the matrimonial home to her four...
In a recent Tribunal decision , two beneficiaries under a will, who had donated a part of their inheritance to charity by way of a deed of variation, failed in their attempt to claim Income Tax (IT) relief on the gifts. Mr Ronald Harris and his sister, Mrs...
Inheritance Tax (IHT) allowances and reliefs are available individually to each taxpayer. Because transfers of assets between spouses or civil partners normally have no tax consequences for IHT purposes, it is easy to fall into the trap of thinking that...
Trustees who make mistakes that have unintended tax consequences can normally obtain relief from the court. Recently, a tax-avoidance exercise by which trustees of offshore trusts passed the absolute beneficial interest in the assets of trusts to the...
A robust attitude taken by an executor to the valuation of a property came to nothing recently when HM Revenue and Customs (HMRC) were successful in defeating the executor’s claim that a property valued by them at £475,000 for Inheritance Tax...
The Court of Appeal has recently made a decision which is of huge importance to clients seeking tax advice. Despite extensive lobbying by the Institute of Chartered Accountants in England and Wales (ICAEW) , the Court ruled that legal professional privilege...
HM Revenue and Customs (HMRC) are well known for applying the letter of the law when it suits them and, with the Government seeking to reduce the massive fiscal deficit, are pursuing some cases that seem to stretch the limits of reason. In a recent case ,...
A taxpayer who submitted his tax return well before the deadline had cause to regret doing so recently when the Tribunal supported the rejection by HM Revenue and Customs of his right to carry back a charitable contribution of nearly £1 million...
If you gift your house to your children but continue to live in it, then the gift will normally be a ‘gift with reservation’, which means that the property will be treated for IHT purposes as having never left your estate. If, however, your...
In a recent case , the executors of a woman's estate have been ruled to be liable for Inheritance Tax (IHT) on the value of her pension fund, after she failed to take her pension when she was terminally ill. The woman was diagnosed with cancer five months...
HM Revenue and Customs have announced that non-UK resident persons who remained in the UK due to disruption of their travel plans because of the volcanic ash cloud and who, as a result, spent more than 90 days in the UK at one time, will not be treated as...
Taxpayers who evade more than £25,000 of tax will now be ‘named and shamed’ by HM Revenue and Customs (HMRC) where the evasion affects a period after 1 April 2010. It is expected to be 2011 before the first tax evaders will be publicly...
With tax rates on the rise and the coldest winter in years still a vivid memory, it may be a tempting prospect to leave Britain behind and settle somewhere in the sun. One of the drawbacks with this approach is that it is, in practice, difficult to sever...
A recent case illustrates that HM Revenue and Customs (HMRC) will often vigorously challenge potentially low asset valuations for Inheritance Tax (IHT) purposes. HMRC disputed the probate value of a property, which had been valued by two different valuers...
Those who invest in the shares of private companies have generally been able to reassure themselves that, should the worst happen and the shares become worthless, they can at least make a 'negligible value' claim. This leads to the shares being treated...
The increased focus on wealthy individuals by HM Revenue and Customs (HMRC) has resulted in a dramatic rise in the tax yield from their investigations (reported to be £373 million in 2008/9 compared with £81 million the...
Here are some things to think about following yesterday's Budget ISAs The ISA limit is being raised from £7,200 to £10,200 for 2010/11 and will increase each year after that in line with inflation. Is now the time to look at moving...
Yet again the end of the tax year is nigh. With tax increases scheduled to take effect on 6 April and the chance that the budget will further restrict tax advantages, there has probably never been a time when considering your tax strategy was so important. ...
Getting your tax right can sometimes be complex and it is often the case that when HM Revenue and Customs (HMRC) investigate a taxpayer, they find that there are irregularities. When these result in an underpayment of tax, HMRC will normally levy interest...
Owners of properties used for furnished holiday lettings (FHLs) are reminded that the tax regime relating to these is set to change significantly (for the worse) next April. Under the current tax regime, such businesses have advantages for both Income Tax...
HM Revenue and Customs (HMRC) recently won a significant victory in a tax case when the court ruled that tax advice given by an accounting firm to its client is not privileged. In other words, HMRC can force accountants to divulge advice given to their...
Even though property prices have fallen considerably in recent years, getting ‘on the property ladder’ has never been harder as lending criteria have been tightened considerably since the ‘boom’ days of 125 per cent mortgages. Young...
No one likes to pay tax unnecessarily and Inheritance Tax (IHT) can be especially problematic, as it must often be paid ‘up front’ when administering an estate. It is quite common for people to decide to mitigate the effects of the tax by...
The changes to Individual Savings Account (ISA) allowances announced in this year’s Budget, increasing the maximum annual investment from £7,200 to £10,200, came into effect on 6 October for those aged 50 or over, as well as anyone who will...
You may think that after an estate has been probated and the assets have passed to the surviving spouse or civil partner, that is the end of the matter and the paperwork (including the will) can be consigned to the shredder after a suitable period of time. ...
The recession hasn’t brought much favourable comment, but falling asset values do present opportunities for savings on Inheritance Tax (IHT). Here are some ways that you can save IHT when asset prices are depressed. Lifetime Gifts In general, the...
One of the often forgotten issues in retirement planning is the possibility of having to fund long-term care at some future time. Such care is means-tested and most care home residents of means will pay in full for their care. With an ageing population and...
The Court of Appeal has overturned what was to many a surprising decision of the High Court and confirmed that when a company pension scheme member takes benefits early (at 60 rather than 65), the benefits may be subject to an actuarially-calculated...
Yet again, we hear a report of the Financial Services Authority and the police investigating a firm that was promising investors returns of between 6 and 13 per cent per month. It is said that £80 million may be involved. Assets including Ferraris,...
Following changes in the tax legislation governing the income tax payable by non-domiciliaries, and some relevant tax cases, HM Revenue and Customs (HMRC) have issued a new guidance booklet (HMRC 6) . This replaces the old guidance, which was contained in...
One of the principal tenets of law in the UK is that a successful action in damages will restore the claimant to the position they would have been in had the 'tort' not taken place: there is no concept of punishment for the person causing the damage. ...
