Tax Bulletin Issue 45
February 2000
CONTENTS
- Provision of Personal Services through Intermediaries
- CT: Quarterly Instalment Payments
- Inland Revenue Review of SA Enquiry Work (Article
no longer current)
Interpretations
Miscellaneous
- Post Transaction Valuation Checks
- Revenue Prosecutions
- Business Entertainment - Clarification (Superseded by BIM45033)
- Special Tax Bulletin: - Working Together with CIOT and ICAEW
- Self Assessment Tax Return Guides (Article deleted since index 2004)
- Extra Statutory Concessions and Statements of Practice
PROVISION OF PERSONAL SERVICES THROUGH INTERMEDIARIES:
A broad outline of the new rules was given in a Press Release on 23 September 1999. They are intended to apply where a worker supplies his or her services to a client through an intermediary such as a service company or partnership. One of the central questions in deciding whether the new rules apply to an engagement is to establish whether the worker would have been an employee of the client if engaged directly. This article addresses this issue in detail. More details of the proposals can be found on the Inland Revenue website at: www.inlandrevenue.gov.uk/ir35
The approach to be adopted
Whether a worker would have been an employee if engaged directly by the client depends on a range of factors, set out in this article. But the final decision is not reached by adding up the number of factors pointing towards employment and comparing that result with the number pointing towards self-employment. The Courts have specifically rejected that approach. In Hall v Lorimer, (66TC349) Mummery J made the following comment which was quoted with approval by Nolan LJ in the Court of Appeal:
“In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person's work activity. This is not a mechanical exercise of running through a checklist to see whether they are present in, or absent from, a given situation. ... It is a matter of evaluation of the overall effect, which is not necessarily the same as the sum total of all the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.”
When the detailed facts have been established the right approach is to stand back and look at the picture as a whole, to see if the overall effect is that of a person in business on his own account or a person working as an employee in somebody else's business. If the evidence is evenly balanced the intention of the parties may then decide the issue (Massey v Crown Life Insurance Co (1978) ICR590).
Establishing the facts
In deciding whether a worker would have been an employee if engaged directly by the client it is firstly necessary to establish the terms and conditions of the engagement. In a simple case involving one intermediary (e.g. where a worker works through a service company) these will normally be established mainly from the contract between the client and the intermediary. It is that contract that will usually reflect the terms that would have applied had the worker been engaged directly by the client. The contract may be written, oral or implied - or a mixture of all three.
Having established the terms and conditions it is then necessary to consider any surrounding facts that may be relevant - for example, whether the worker has other clients and a business organisation. In this context other contracts the company has under which the worker's services are supplied and any business organisation of the company which is relevant to the supply of the worker's services will be taken into account as relevant surrounding facts.
Deciding employment status
There is no statutory definition of “employment”. However, the question of employment status has come before the Courts on numerous occasions. The approach taken by the Courts has been to identify factors which help to determine if a particular contract is a `contract of service' (employment) or a `contract for services' (self-employment). Relevant factors are:
Control - A worker will not be an employee unless there is a right to exercise `control' over the worker. This may be a right to control `what' work is done, `where' or `when' it is done or `how' it is done. Actual control of this sort is not necessary -it is the right of control that is important.
Where a client has the right to determine `how' the work is done this is a strong pointer to employment. But it is not an essential feature of employment - many `experts' who are employees are not necessarily subject to such control (for example, ship's captain, consultant brain surgeon, etc).
Equally, a right to determine `what' work is carried out is a strong pointer to employment. It will normally be a feature whenever a client needs a worker to undertake whatever tasks are required at any particular time or where the worker is required to work as part of a co- ordinated team.
A working relationship which involves no control at all is unlikely to be an employment (Ready Mixed Concrete( South East) Ltd v Minister of Pensions and National Insurance (1968) 2QB497).
The right to get a substitute or helper to do the job - Personal service is an essential element of a contract of employment. A person who has the freedom to choose whether to do the job himself or hire somebody else to do it for him, or who can hire someone else to provide substantial help is probably selfemployed (Australian Mutual Provident Society v Chaplin (1978) 18ALR385 and Express and Echo Publications Ltd v Tanton (1999) IRLR 367). However, this must be viewed in the context of the arrangements overall. For example, a worker may choose to pay a helper to take phone messages and deal with invoicing and general book keeping work for the intermediary. But this would not be directly relevant when considering an engagement where the worker is engaged to lay bricks for a client.
Provision of equipment - A selfemployed contractor generally provides whatever equipment is needed to do the job (though in many trades, such as carpentry, it is common for employees, as well as self- employed workers, to provide their own hand tools). The provision of significant equipment (and/ or materials) which are fundamental to the engagement is of particular importance. For example, where an IT consultant is engaged to undertake a specific piece of work and must work exclusively at home using the worker's own computer equipment that will be a strong pointer to self-employment. But where a worker is provided with office space and computer equipment that points to employment. The fact that a worker might occasionally choose to do some of the work at home using his or her own computer does not change that (many employees do just that). (Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance).
Financial risk - An individual who risks his own money by, for example, buying assets needed for the job and bearing their running costs and paying for overheads and large quantities of materials, is almost certainly selfemployed. Financial risk could also take the form of quoting a fixed price for a job, with the consequent risk of bearing the additional costs if the job overruns. Another example of a financial risk is where a skilled worker incurs significant amounts of expenditure on training to provide himself with a skill which he uses in subsequent engagements. This can be treated in the same way as investment in equipment to be used in a trade, as a pointer to self-employment, if there is a real risk that the investment would not be recovered from income from future engagements (Market Investigations Ltd v The Minister of Social Security (1968) 2QB173).
Basis of payment - Employees tend to be paid a fixed wage or salary by the week or month and often qualify for additional payments such as overtime, long service bonus or profit share. Independent contractors, on the other hand, tend to be paid a fixed sum for a particular job. Payment “by the piece” (where the worker is paid according to the amount of work actually done) or by commission can be a feature of both employment and self-employment.
Opportunity to profit from sound management - A person whose profit or loss depends on his capacity to reduce overheads and organise his work effectively may well be self- employed (Market Investigations Ltd v The Minister of Social Security). People who are paid by the job will often be in this position.
Part and parcel of the organisation
- Establishing whether a person becomes `part and parcel' of a client's organisation can be a useful indicator in some situations. For example, someone taken on to manage a client's staff will normally be seen as part and parcel of the client's organisation and is likely to be an employee.
Right of dismissal - A right to terminate an engagement by giving notice of a specified length is a common feature of employment. It is less common in a contract for services, which usually ends only on completion of the task, or if the terms of the contract are breached.
Employee benefits - Employees are often entitled to sick pay, holiday pay, pensions, expenses and so on. However, the absence of those features does not necessarily mean that the worker is self- employed especially in the case of short- term engagements where such payments would not normally feature.
Length of engagement - Long periods working for one engager may be typical of an employment but are not conclusive. It is still necessary to consider all the terms and conditions of each engagement. Regular working for the same engager may indicate that there is a single and continuing contract of employment (Nethermere (St Neots) Ltd v Gardiner (1984) ICR612). Where an engagement is covered by a series of short contracts, or an initial short contract subsequently extended for a longer period, it is the length of the engagement that is relevant, rather than the length of each contract.
Personal factors - In deciding a person's employment status it may sometimes be necessary to take into account factors which are personal to the worker and which have little to do with the terms of the particular engagement being considered. For example, if a skilled worker works for a number of clients throughout the year and has a business- like approach to obtaining his engagements (perhaps involving expenditure on office accommodation, office equipment, etc) this will point towards self-employment (Hall v Lorimer 66TC349). Personal factors will usually carry less weight in the case of an unskilled worker, where other factors such as the high level of control exercised by the contractor are likely to be conclusive of employment.
Intention - It is the reality of the relationship that matters. It is not enough to call a person “self- employed” if all the terms and conditions of the engagement point towards employment. However, if other factors are neutral the intention of the parties will then be the decisive factor in deciding employment status (Massey v Crown Life Insurance Co (1978) ICR590).
Revenue Guidance
In most cases the question of whether a worker would have been an employee of the client if engaged directly will be obvious from a careful consideration of the terms and conditions of the engagement and the surrounding facts. However, where a worker is in doubt about whether an engagement would have been employment or self-employment then he may ask for an opinion from the Inland Revenue. Full details of how to contact us can be found on our website at: www. inlandrevenue. gov. uk/ ir35. In such cases a copy of the relevant contract setting out the full terms and conditions of the engagement will have to be provided, together with details of any fact that he considers relevant to the status position. An opinion will only be given on signed contracts and not on draft agreements.
The terms of contracts used by service company workers who obtain engagements through agencies tend to be of a standard form. Such contracts typically require the worker to work on the client's premises, use the client's equipment, work standard hours, be paid at an hourly rate and be subject to a high level of control. In such cases, the opinion of the Revenue about the engagement is likely to be that it would be employment.
Where a worker is engaged on this type of contract for a period of one month or more, and cannot demonstrate a recent history of work including engagements which have the characteristics of self-employment (see the third example below) then we will say that the engagement would have been employment and therefore be covered by the new rules. Where the contract is for less than a month, then, although the engagement may still have been one of employment, the status position will be considered on a case by case basis.
Examples
The examples which follow illustrate the process for deciding whether an engagement is employment or self-employment. These examples are purely illustrative. They do not indicate our view of the employment status of particular groups of workers. The role of the Revenue is to provide advice and guidance about the employment status resulting from a given set of circumstances, not to impose any particular status. The terms and conditions of any engagement are entirely a matter for the parties involved.
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QUARTERLY INSTALMENT PAYMENTS
Some 20,000 of the largest companies now have to pay their corporation tax by instalments, starting in- year. The rules are in Statutory Instrument 1998 No. 3175 - the Corporation Tax (Instalment Payments) Regulations 1998. They are outlined in Revenue leaflet `inst. 1 - A Modern System for Corporation Tax Payments'.
The Revenue is monitoring the transition to this `Quarterly Instalment Payment' (` QIP') system. Early indications are that companies are coping with the change, but we are continuing to consult companies' and tax advisers' representative bodies. It will be some time before we can draw firm conclusions.
There is detailed guidance on the operation of QIPs, and the special group payment arrangements, in Chapters 12 and 13 of `A Guide to Corporation Tax Self Assessment'. (The text of this guide is available on the Internet at www. inlandrevenue. gov. uk). But our consultations have identified some areas where it may be helpful to further clarify the rules now to help companies adapt to the new system. This article deals with those areas.
Over- and under- payments of early QIPs
Some people have taken a very cautious view of the interaction between Regulation 5 (the principal instalment payment rule) and Regulation 6 (the repayment rule) particularly where the best view of the ultimate liability changes. They have:
- viewed each instalment as a separate liability, to be paid at its due date regardless of any balance over- or under- paid at previous instalment dates;
- assumed that they had to claim repayment under Regulation 6 to recover (by repayment or set- off) any over- payment at an individual instalment due date.
The system is intended to operate more flexibly than that.
The QIP system is best thought of as creating a running balance of payments and liabilities, not a series of free- standing liabilities. The effect of Regulation 5 is to require the company to:
- make its best estimate of its total liability for the accounting period about six months after its start, and pay a specific proportion of that amount at the first instalment date
- keep that estimate under review and
- make a top- up payment if the estimate increases
- base subsequent instalment payments upon the latest estimate, taking account of the current balance of payments already made against the percentage of the estimated liability which is due by that instalment date.
Where the estimated liability for the accounting period goes down, and the cumulative amount paid to date exceeds the proportion of the latest estimated liability which should have been paid to date, the company has a choice: it can either leave the balance with the Revenue and reduce the next instalment payment accordingly, or it can claim a repayment under Regulation 6.
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Top- up payments
Where the estimated liability increases, the company can minimise its exposure to interest by making a top- up payment at any time. It does not have to wait for the next instalment due date to do this.
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This is perfectly acceptable. However, it is important to quote the correct collection reference number when making the payment (whether electronically via BACS, CHAPS or Bank Giro, or by cheque). This helps us to allocate the payment to the correct period. See `Making QIP Payments' below.
Revenue compliance action
The QIP system leaves it entirely to the company to estimate its liability and calculate what payments to make. We will try to identify companies likely to have to pay QIPs and issue payslips at appropriate times to facilitate payment, but we will not issue demands or take any form of collection action until a tax charge is established for the accounting period usually when the company return reaches us and we record the self- assessment.
So, if a company finds at the final instalment due date that its earlier estimates have been excessive and it has already paid enough to cover its total liability, it should not pay any more. We do NOT expect it to pay the amount that falls due at the fourth instalment and also seek repayment of earlier over- payments.
Making QIP payments
Where possible, we recommend that companies pay using the electronic BACS or CHAPS systems. Payments made under a group payment arrangement MUST be made electronically. Companies which are not within a group payment arrangement can choose to pay by cheque if they prefer, though we recommend the more secure and modern payment methods, rather than cheques, which are susceptible to theft when in the post.
Whatever method of payment is chosen, it is important to use the correct collection reference number. This reference appears near the centre of the payslip. It is specific to the accounting period, so it is important to use the reference from the correct payslip, or there is a risk that the payment will not be allocated to the intended accounting period.
Although we do our best to send QIP payslips to companies which need them, there are some cases particularly new cases - where our computer may not be able to identify the need to do so.
That does not affect the obligation to pay QIPs. Companies should tell their Inspector if they do not receive payslips. The Inspector can set an indicator on our computer system so that it will start to issue payslips at the appropriate times.
If you do not have the appropriate payslip when you need to make a payment, please telephone the Revenue Accounts Office to which you make your payments and ask them to tell you what reference to use. The telephone numbers are:
Accounts Office Cumbernauld:
01236 783077
Accounts Office Shipley:
01274 539536
Credit and debit interest
Regulations 7 and 8 provide for interest on over- and under- paid balances during the period from the first QIP due date (6 months and 13 days after the accounting period begins) to the normal tax due date (9 months and a day after it ends). We only calculate and pay - or charge this interest once the tax charge is established and the normal due date is passed.
Again, it is best to think of the running balance of payments and liabilities.
We pay interest (credit interest) for each day on which the total amount paid to date exceeded the amount which should have been paid by that date.
We charge interest (debit interest) for each day on which the total amount paid to date was less than the amount which should have been paid by that date.
Example
Stores Ltd is within the QIP rules for its accounting period 1.1.2005 - 31.12.2005. The company had initially estimated its total liability as £4M. An upturn in business later in the year led it to revise the estimate to £6M at the end of the accounting period. Due to unforeseen group relief, its final self assessed liability was £5M. So the company's liability was in fact £1.25M at each instalment date (14 July and 14 October 2005, and 14 January and 14 April 2006).
Stores Ltd actually made the following payments:
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The resulting interest position can be expressed as follows:
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Stores Ltd files its return in November 2006. The relevant amounts of credit and debit interest will be posted to its account on our computer system when the self assessment is recorded from the return. We will then repay the overpaid balance (£ 1M tax, plus credit interest, less debit interest). We will add repayment interest to this repayment, calculated from the normal due date (1 October 2006) to the date of repayment.
Group Payment Arrangements
A large number of grouped companies affected by QIPs have already taken advantage of the arrangements for payment of tax on a group- wide basis. The arrangements are explained in detail in Chapter 13 of `A Guide to Corporation Tax Self Assessment'. The text of the arrangement contract and the accompanying notes, as well as the guide itself, are available on the Internet at: www.inlandrevenue. gov.uk
Only groups of companies whose first CTSA accounting period ends on or after 31 December 1999 have so far been able to take advantage of group payment arrangements. Other groups of companies are invited to enter into an arrangement for their first accounting period ending after 31 December 1999. This is entirely voluntary, but the arrangements make the administration of QIPs easier for all concerned. They can also save companies interest. If you would like more information, please contact the special group payment team at the Revenue Accounts Office to which your company makes its payments:
Group Payment Team
Accounts Office Cumbernauld
St Mungo's Road
Cumbernauld
Glasgow
G70 5TR
Tel: 01236 785228
Fax: 01236 785341
Group Payment Team
Accounts Office Shipley
Victoria Street
Shipley
West Yorkshire
BD98 8AA
Tel: 01274 539561
Fax: 01274 539669
Groups should make contact as early as possible. We will only normally agree to enter into a group payment arrangement for an accounting period if we receive the completed arrangement document at least two months before the first quarterly instalment payment is due.
Groups which have already entered into an arrangement do not need to reapply. Once made, the contract automatically applies to subsequent accounting periods unless it is expressly terminated by either side. However, you should provide the group payment team with an amended schedule of participating companies if you wish to remove a company from, or add a company to, the arrangement.
! This Article Is No Longer Current (Deleted Index 2001)
INLAND REVENUE REVIEW OF INCOME TAX SELF ASSESSMENT ENQUIRY WORK
As announced in our Press Release of 9 December 1999 we are to review our procedures for making enquiries into self assessment tax returns.
The review will cover options which would require legislative and/ or computer changes as well as those that could be implemented by revising departmental guidance or procedures. The following areas will be included:
- Codes of Practice
- Faster working
- Letters opening enquiries
- Use of the correction power and its link with enquiries
- Enquiries limited to particular entries on a return, including capital gains tax enquiries
- Enquiries into partnerships
- Use of formal self assessment information powers
- Contract settlements and penalty determinations
- Litigating points in dispute
This list is provisional and will be added to as the review progresses. The intention is to centre the review on a questionnaire which will be available on the Inland Revenue Internet Website from the end of February 2000. Contributions will be invited from interested parties, both within and outside the Revenue.
We will be working together with the Chartered Institute of Taxation in collecting and analysing the views of practitioners, unrepresented taxpayers and Revenue staff.
If there are any particular points that you would like to contribute to the review, whether or not included in the above list, or if you would like to receive a copy of the questionnaire when it is available would you please contact either:
Barry Jefferies
Inland Revenue Compliance Division (Technical)
Apsley House
Wellington Road
North Stockport
SK4 1EZ
Phone: 0161 475 2719
Fax: 0161 475 2730
E- mail: Barry.Jefferies@ir.gsi.gov.uk
Or
Ann Hansford
Bristol Business School
Coldharbour lane
Frenchay
Bristol
BS16 1QY
E: mail: Ann.Hansford@uwe.ac.uk
SHOTGUNS: THE CAPITAL GAINS TAX TREATMENT
We have received a number of enquiries recently about the Capital Gains Tax treatment of pairs of shotguns and this article sets out our views on the point. It is written on the premise that any transactions by private individuals involving the acquisition and disposal of such guns are not regarded as `trading' or an `adventure in the nature of trade' within the charge to Income Tax under Case I of Schedule D.
It is common for items such as shotguns to be purchased and sold in pairs, generally matched according to their maker. This does not, in our view, mean that a pair of guns should be treated as the asset (singular) for Capital Gains Tax purposes rather than as two separate assets. The guns may well have been bought and sold together but they are still separate assets and any computation should apportion the figures for the disposal consideration and the cost or 31 March 1982 market value as appropriate, between the two guns.
This distinction could be important where the overall consideration for a pair of guns is £12,000 or less so that each single gun would have realised less than the £6,000 exemption, Section 262( 1) TCGA 1992. Where in such circumstances a loss arose by reference to the original cost or market value of each gun, that loss would then be restricted using a deemed disposal figure of £6,000 for each gun, Section 262( 3).
We accept that this raises a further question which is whether the pair formed a `set', Section 262( 4). Assuming that the requirement in that sub- section about the guns being sold to the same person would have been satisfied, that still leaves the question as to whether they would have been similar, complementary and worth more together than separately.
This will depend on the facts of the particular case but we would point out that while there is unlikely to be any doubt about the first two requirements given the nature of such sales, the third is likely to turn on the type of guns involved and whether these could be said to form a natural pair. While the limited number of cases we have seen suggest that this is likely to be the case where shotguns are concerned, there have been exceptions so the answer will turn on the facts of a particular disposal.
Assuming however that the `asset' was disposed of for more than £6,000, we then need to look at Section 44 TCGA 1994 and the questions now become
(i) is a gun, singular or plural, a `machine' or `machinery', given that we do not distinguish between these terms in this context?
or, if not
(ii) did it have a predictable life not exceeding fifty years or less when it was acquired by the person making the disposal?
So far as question (i) is concerned, the word `machinery' is not defined for Capital Gains Tax purposes so it must take its ordinary meaning. The Oxford English Dictionary defines a machine as:
`an apparatus for applying mechanical power, consisting of a number of interrelated parts, each having a definite function'.
In our article in Tax Bulletin Issue 13, October 1994, we set out our views on the various types of asset which we regard as `machinery' and those included antique clocks. However, in our view there has to be a subtle difference between clocks and shotguns. Once you have wound up a clock, it continues to tick more than once, whereas with a shotgun once you have pulled the trigger, you only get one discharge out of the barrel. That said, we accept that you then have to go on and consider what happens if you have an automatic weapon or machine gun which effectively fires continuously.
While we take the view that the matter is not free from doubt, we would generally accept the argument that all types of gun should be treated together under the general description of `machinery' so that they would have a predictable life of less than fifty years, Section 44( 1)( c).
In any event, assuming that these guns have been acquired for sporting or recreational purposes or by a farmer or gamekeeper as working guns, then the answer to question (ii) is, in our view, probably going to be that their predictable life by reference to the purpose for which they were acquired , Section 44( 1)( b), would not exceed fifty years.
It should however be borne in mind that, in the case of working guns particularly, where Capital Allowances had been or could have been claimed on the original acquisition cost of the gun, then any gain on its disposal would still be chargeable, Section 45( 2), notwithstanding its having a predictable life not exceeding fifty years.
Whether a particular chattel should be classed as `machinery' is very much a question of fact which can only be answered by looking at the state and nature of that chattel. Accordingly, we regret that it is not possible for us to issue a fully comprehensive list of those chattels which would, or would not, fall into this category. However, our Capital Gains Tax Manual looks at this and associated matters in the following paragraphs:
- CG76870- 76876: Chattels generally, including antiques, militaria, medals & toys;
- CG76880- 76884: Sets, including non- sterling coins and bank notes, stamps, books and magazines;
- CG76900- 76911: Wasting assets, including clocks and watches, motor cars, locomotives and ships. These paragraphs also set the general principles which we use to decide if a particular chattel was or was not an item of machinery.
miscellaneous
CORPORATION TAX ON CHARGEABLE GAINS- POST TRANSACTION VALUATION CHECKS
On 1 April 1997 we introduced a new service that provides individuals or trustees with the opportunity to submit capital gains tax valuations to their tax office for agreement before the filing date for making their return. We are now able to offer the service to companies as well as individuals and trustees.
The aim of the service is to help with the preparation of the Self Assessment return. As before we will consider valuations only after the relevant transaction has taken place.
The details of the service for companies are essentially the same as for individuals and trustees. No charge will be made for the service. Applications to use the service must be made on form CG34.
If we cannot agree the proposed valuations we will put forward an alternative figure that we would accept. If this is not agreed we will be happy to try to negotiate an acceptable valuation. We will try to put forward an alternative and, if time allows, enter into negotiations before the deadline for filing returns. In some cases this may not be possible, either because of the complexity of the valuation or if the application to use the service is made late. The return must still be filed within the time allowed.
The news release dated 10 January 2000 gives more details. New guidance notes relating to the service have been prepared and these will form an attachment to a revised form CG34. Forms CG34 and the notes will be available from the company's Inland Revenue office or any Inland Revenue Enquiry Centre.
The Inland Revenue has a policy of selective prosecution involving the most serious cases across the whole range of the tax system. The Board see this as an important part of its strategy to deter tax fraud and evasion. As part of the wider publicity for this strategy, details of Revenue prosecutions are published in Tax Bulletin.
Colin Clayton
IT consultant Colin Clayton of East Grinstead was jailed for 3 years and 9 months. He pleaded guilty to two counts of cheat on 8 June 1999. In a joint prosecution between the Inland Revenue and Customs and Excise it was alleged that Clayton ran a succession of service companies with an average life span of seven months. Each company ceased to trade or went into liquidation leaving the public revenue as the chief creditor.
From January 1991 Clayton traded as Valley Engineering Recruitment & Consultancy supplying specialist computer operatives to various electronics companies throughout the UK.
From March 1994 Clayton's operatives were paid through a succession of service companies of which Clayton was either a director or company secretary.
Clayton was disqualified as a company director for 10 years. The case was further adjourned for a confiscation order. Half the jail sentence of 3 years 9 months on both counts, to run concurrently, was suspended.
The tax and National Insurance Contributions lost to the public was £1 million.
John Dermot Hinds
Mr Hinds, a Portaferry plumber, was sentenced to 18 months on each of 20 counts of serious tax evasion. The sentences are to run concurrently and were suspended for 3 years to reflect the fact that Mr Hinds pleaded guilty and co- operated fully with the investigation.
Hinds admitted that bank interest totalling some £228,000 was omitted from his tax returns covering 1976- 77 to 1996- 97. He also omitted dividends for £14,000 for 1988- 89 to 1996- 97 plus business profits of £65,000 for 1971 to 1988. He also admitted that the Statements of Assets and Liabilities and Certificates of Disclosure he completed in 1983 and 1994 were false.
The total tax lost as a result of Hinds' actions was £75,822.
James Hunt
Mr James Hunt of Longton, Preston was jailed for 21 months at Liverpool Crown Court. He pleaded guilty on 17 November 1999 to tax cheat by failing to declare to the Inland Revenue profits from his company Lawrence Hunt and Co Ltd.
Hunt intended to cheat the public of the income and corporation tax due on his company profits between May 1977 and May 1995.
The Revenue investigated Hunt's tax affairs because it was found that he had omitted building society interest for the periods 1970- 1980 and 1989- 1990. Hunt was asked to complete a certificate of full disclosure at the end of the investigation confirming that all relevant matters had been drawn to the Inspector's attention. This form was completed on the 23 October 1995.
However in March 1996 the Revenue became aware that Hunt had purchased a property in France for £600,000 and it was far from clear how this had been achieved on the declared income.
Hunt had diverted company funds in a variety of ways amounting to over £600,000 during the period 1977- 1978 to 1994 -1995. These funds were invested in Monaco or used to buy property in Nice. Hunt employed offshore bank accounts in these transactions in an attempt to evade tax.
He was ordered to pay costs of £17,847.
BUSINESS ENTERTAINMENT CLARIFICATION
Tax Bulletin Issue 42 (August 1999, page 676) referred to a non statutory practice of disallowing legitimate “staff entertainment” expenses in the employer's Case I or II computations as an alternative to reporting the benefits on a P11D and said that the practice should no longer be adopted.
Where the practice still exists it should not be adopted for accounting periods ending after 30 April 2000.
WORKING TOGETHER WITH CIOT AND ICAEW
From April 2000, CIOT, ICAEW and the Revenue will together be launching an important new initiative intended to strengthen local liaison between practitioners and Revenue offices and improve the operation of the tax system. The scheme will build on established links and introduce new fast track mechanisms for the identification, and wherever possible anticipation, of the sorts of national problems and issues which typically become visible first at local level. Key objectives of the scheme will be to improve two way communications, support the Revenue's efforts to become more responsive to its customers' needs and provide greater transparency around the actions it takes to resolve issues identified in this way.
We will be providing more information in the next edition of Tax Bulletin.
! This Article Is No Longer Current (Deleted Index 2004)
SELF ASSESSMENT TAX RETURN GUIDES
Copies of the:
- SA1000 Self Assessment Tax Return Guide
- SA1001 Self Assessment Partnership Tax Return Guide
- SA1002 Self Assessment Trust and Estate Tax Return Guide
incorporating related Forms, Notes and Helpsheets, are produced and issued on an annual basis as a service to tax practitioners and Inland Revenue staff.
We are introducing changes to the distribution this year.
We will be using agent details held on the Self Assessment system for bulk mailing purposes for the first time. Our offices have been asked to keep the records for their local agents up to date leading up to the issue of the guides in March.
One copy of each of the above guides will be sent to any agent on the Self Assessment database with more than 5 clients. We had to draw a line somewhere but if you don't receive your copies of the three SA guides by the end of March - or you need more - you can order them by:
- e-mailing big.book@direct.st- ives.co.uk, or
- telephoning the St Ives Direct Big Book Orderline on 01732 860270
- by fax to St Ives Direct on 01732 862642
- completing the tear-off re-order card, which will come with the 3
guides distributed in March, and sending it to:
St Ives Direct
St Ives plc
Enterprise Way
Edenbridge
Kent
TN8 6HF
Orders and re-orders must clearly state how many copies of each of the three guides [Individual, Partnership, or Trust] are required and where they are to be sent. Please use the Big. Book e- mail address in priority to other routes if you are able to.
We must stress that Inland Revenue Offices will not be able to supply copies of the SA guides to agents. However if you find that the name and address details shown on the initial distribution are incorrect, or there is duplication, please contact the Agent Maintainer at your local office and ask them to correct the details held on the Self Assessment computer system.
We do not intend to do another print run so please order sufficient guides to meet your needs. If necessary specific SA forms, notes and help sheets can be viewed, and downloaded, from the Inland Revenue Self- Assessment web page at www.inlandrevenue.gov.uk/sa
Inland Revenue Statements of Practice and Extra-Statutory Concessions issued between 1 December 1999 and 31 January 2000
Extra Statutory Concessions
|
Number |
Title |
Date of Issue |
|
A74 |
Meals provided for employees (amended) |
19/11/99 |
There have been no Statements of Practice issued in this period.
You can get copies of SPs and ESCs from the Inland Revenue Visitors Information Centre, Ground Floor, South West Wing, Bush House, Strand, London WC2B 4RD.or by ringing the Inland Revenue Enquiry line on 020 7438 6420.
CONTENT
The content of Tax Bulletin gives the views of our technical specialists on particular issues. The information published is reported because it may be of interest to tax practitioners. Publication will be six times a year, and include a cumulative index issued on an annual basis.
- You can expect that interpretations of the law contained in the Bulletin will normally be applied in relevant cases, but this is subject to a number of qualifications.
- Particular cases may turn on their own facts, or context, and because every possible situation cannot be covered, there may be circumstances in which the interpretation given here will not apply.
- There may also be circumstances in which the Board would find it necessary to argue for a different interpretation in appeal proceedings.
- The Bulletin does not replace formal Statements of Practice.
- The Board's view of the law may change in the future. Readers will be notified of any changes in future editions.
Nothing in this Bulletin affects a taxpayer's right of appeal on any point. Letters on any article appearing in Tax Bulletin should be sent to the Editor, Jeremy Sherwood, Room 402, 22 Kingsway, London WC2B 6NR or by e-mail to jeremy.sherwood@ir.gsi.gov.uk. We are sorry though that neither he nor our contributors will normally be able to enter into correspondence about Tax Bulletin or its contents.
SUBSCRIPTION
The subscription for 2000 is £22. If you would like to subscribe to Tax Bulletin please send your name and address together with your cheque to Inland Revenue, Finance Division, Barrington Road, Worthing, West Sussex BN12 4XH. Cheques should be crossed and made payable to “Inland Revenue”.
If you would like information regarding Tax Bulletin subscription or distribution please contact Miss S. Williams, Room 530, 22 Kingsway, London WC2B 6NR. Telephone: 020 7438 7700. For more general information regarding Tax Bulletin, please contact Ms Nahid Shariff, Assistant Editor, on 020 7438 7842 or at the address below.
COPYRIGHT
Tax Bulletin is covered by Crown Copyright. There is no objection to firms copying the Bulletin for their own use. Anyone wishing to republish Tax Bulletin or extracts more widely should write for permission to Ms Nahid Shariff, Assistant Editor, Room 408, 22 Kingsway, London WC2B 6NR.
© Crown Copyright 2000
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