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June
2004
1.
Revenue
ease the pressure on "husband and wife companies"
challenge
2. Form
42
3. Customs
help to define a “van”
4.
Joint ownership of shares
Welcome
to another edition of TNT - tax news and tips.
We have included below some "hot off the press" tax
reports, which we hope you find interesting. If you would
like to discuss any of these areas, please
contact the people named below, or your usual Sagars
contact.
www.sagars.co.uk
_____________________________________________________________________
1. Revenue
ease the pressure on “husband and wife companies”
challenge
The
Revenue is currently taking a case on the so called "husband and
wife tax", where dividends are paid to a non working spouse,
which the Revenue contends should be taxed on the working
spouse. The test case originally included a claim to 6
years of back taxes, amounting to tax of over £42,000 for the
company challenged. The Revenue has suddenly relented, and
is now only pursuing 1 year of back taxes - the significance
being that this effectively removes the retrospective element of
the challenge.
Contact
Kate Naylor on 0113 297 6825 or k.naylor@sagars.co.uk
for more information
_____________________________________________________________________
2.
Form
42
Anyone
who received shares "by virtue of their employment", i.e.
former, current or future employment, in the tax year to 5 April
2004, needs to consider whether Form 42 should be completed.
The form normally has to be filed by 6
July following the tax year, however as this is a new form,
the Revenue has this week announced that it will not
penalise anyone who sends the form
in by 7 September 2004. The onus is
generally on the company itself, but the obligation can fall to
an individual if, for example, an existing shareholder passed
shares to an employee. The definition of what constitutes
“by virtue of employment” is wide ranging, so if you are
concerned, you should seek advice as soon as
possible.
Speak
to your usual Sagars' contact to find out how it affects you.
Contact us on 0113 297 6789 or advice@sagars.co.uk
_____________________________________________________________________
3. Customs
help to define a “van”
As
there are so many "hybrid" car/vans around, Customs have set out
in more detail what they believe constitutes a van rather than a
car, which is significant because businesses registered for VAT
can usually recover VAT on van purchases, but not on car
purchases. As the Revenue look to the Customs’ definition
of a van when deciding whether the higher car benefit in kind
charges apply, or the much lower van rates the implications
could be significant. If you are interested in acquiring a
van, or van/car hybrid (like double cab pick ups), it is worth
checking the definition first.
Contact
Kate Naylor on 0113 297 6825 or k.naylor@sagars.co.uk
for more information
_____________________________________________________________________
4.
Joint ownership of shares
The
Revenue's challenge to husband and wife companies referred to in
1. above has sometimes been circumvented by married
couples holding their shares in joint names but
with one spouse (usually the husband) retaining a 99%
interest in the joint holding. For tax purposes,
the income was deemed to be split 50/50 even though the
legal split was 99/1. In response, the Revenue changed the
law in the last Budget to prevent variations in the income
tax and capital tax splits, but the changes only affect
unquoted shareholdings. Land and buildings and quoted
shares are unaffected at present, so the 50/50 division for
income tax purposes may lead to significant
tax savings whilst the 99/1 split may be preferred for
estate planning.
Contact
Colin Williams on 0113 297 6736 or c.williams@sagars.co.uk
for more information
___________________________________________________________________
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_____________________________________________________________
This
e-newsletter is intended only to provide a general guide and
cannot give specific advice. It is not sufficiently detailed to
form the basis of specific action being taken or not taken in
relation to your affairs. You should ALWAYS obtain appropriate
and detailed professional advice.
Sagars
is regulated by the Institute of Chartered Accountants in
England &
Wales for a range of
investment business activities and registered to carry on audit
work.
Sagars
Chartered Accountants & Business Advisers
Elizabeth
House, Queen
Street, Leeds
LS1
2TW
Phone:
0113 297 6789 Fax: 0113 297
6790 |