Tax Briefing July 2019

NEWS UPDATES

Draft clauses for Finance Bill 2019-20 and supporting documents were published in July. The proposed changes which appear to have created the most comment and discussion are those relating to capital gains tax private residence relief. The proposed changes include reducing the final automatic qualifying period of ownership from 18 months to nine months and restricting lettings relief to periods when the owner is in shared occupancy with the tenant. Further details can be found here.

Here is a selection of other tax news items from July …


Car & Van Benefits

The ‘Coca cola’ case was concerned with the benefit in kind treatment of certain panel vans which were promoted for sale as commercial vehicles but had additional passenger seats behind the front row of seats.

It is now reported that the decision has been appealed and the case will be heard by the Court of Appeal.

Inheritance Tax Reforms

The Office of Tax Simplification has published its second report on the simplification of inheritance tax. Its recommendations include:

  • Replacing the various small gifts allowances and the regular gifts out of income exemption with a single increased annual gift allowance
  • Reducing the period during which lifetime gifts can be taxed on death from seven years to five years and abolishing taper relief
  • Removing the capital gains tax-free uplift on death for assets which qualify for an inheritance tax relief or exemption. The recipient will instead inherit the deceased’s base cost history.

The OTS report can be found here.

Updated HMRC Guidance

HMRC has created two collections of forms and guidance relating to the Annual Tax on Enveloped Dwellings and Stamp Duty Land Tax.

There is also a step-by-step guide on what do when somebody dies and updated guidance on how to register a client’s estate.

Corporation Tax Changes

HMRC has published a CT600 Budget insert which summarises the corporation tax changes introduced by the 2018 Budget.

HMRC Webinars

Follow this link for access to HMRC’s latest webinars

Tax Abuse Using Insolvencies

The draft Finance Bill clauses referred to earlier include provisions which will make directors and certain other connected persons jointly and severally liable for a company’s tax debts in certain cases of tax evasion or avoidance. Further details can be found here.

TAX CASE DECISIONS 

Dundas Heritable Ltd [2019] UKUT 0208 (TC) – Time Limits for Capital Allowance Claims

The Upper Tribunal has confirmed the First-tier Tribunal’s earlier decision that if HMRC open a corporation tax enquiry following the late submission of capital allowance claims, the effect is to extend the time limit for those claims to 30 days after the enquiries are closed.

Dundas Heritable Ltd

Gray [2019] UKFTT 0393 (TC) – Capital Gains Tax Deductions

A minority shareholder in a company claimed in a legal action that he was being treated unfairly by the majority shareholder. The claim was settled out of court and involved Mr Gray selling his shares for full value with no minority discount together with his share of the additional profits which would have accrued but for interest-free loans to the majority shareholder.

The Tribunal judge decided the legal costs were not allowable as a deduction from the capital gain for reasons including the fact the legal costs were not incurred wholly and exclusively in connection with the disposal of shares.

Gray


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