“The hardest thing in the world to understand is tax" – Albert Einstein (1879 – 1955)

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SDLT refund opportunities

January 17, 2019
17 Jan 2019

Stamp Duty Land Tax (“SDLT”) is payable on almost all property transactions but have you considered whether you have paid the correct amount?

We have had considerable success in obtaining refunds for clients who have overpaid SDLT on a property transaction.

A possible SDLT refund claim may exist in the following circumstances where the purchase involved

  • the purchase of more than one property, or
  • a property that contained more than one flat/self-contained part, or
  • or was a mixed acquisition (commercial and residential), and

There are numerous other scenarios that may qualify and each purchase would be reviewed on the facts.

Time frame to make a claim

The time frame to claim a refund of SDLT is relatively short – generally 12 months from the date the SDLT1 was submitted to HMRC. Typically this means a maximum of 13 months from the date of purchase to make the claim.

It is possible to extend this to 4 years in some cases, however, it can be difficult to argue the extension so it is best to deal with a claim within the normal 12 month window referred to above when possible.

Next Step

If you would like to discuss the opportunity further then please get in touch with me either by calling me on 0789 667 2314 or by emailing at esfak@aquariustax.co.uk.  I look forward to hearing from you.

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Tax changes to “clobber” London’s luxury home market

December 9, 2014
09 Dec 2014

Tax changes to “clobber” London’s luxury home market

Financial Times

4 December 2014

 

Changes to the Remittance basis change (“RBC”)

UK resident foreign domiciliaries (often known generically as “non-doms”) are going to see another increase in the annual RBC charge that they pay in order to claim the benefit of the remittance basis.

 

The lower £30,000 charge (for those resident 7 out of 9 years) will remain at £30,000 whilst the higher £50,000 charge (for those resident 12 out of 14 years) will increase to £60,000. However, the more radical news is the proposed introduction of a £90,000 annual charge for those resident 17 out of 20 years.

 

At present it is unclear when it is proposed these changes will be introduced from.

 

ATC comment – an ill-thought out attempt to somehow align the RBC with the concept of deemed domicile and effectively squeeze even more tax out of a group of individuals that already contribute in excess of £8bn a year to the UK economy. 

 

Consultation on the Remittance Basis

In delivering his Autumn Statement, the Chancellor has indicated that there will be a consultation into the remittance basis. It has been proposed that those wishing to claim the remittance basis must do so for a minimum period of 3 years.

 

ATC comment – perhaps another attempt to secure more revenues by effectively preventing non-doms from making an annual choice of whether to claim the RBC. We see no logic to this and suggest that those better advised individuals may be able to plan accordingly and could be largely unaffected.  However, there is also a fear that continued increases in this charge could further increase the exodus of nom-doms leaving the UK.

 

Restricting personal allowances of non-residents

The proposal to restrict non-residents’ entitlement to personal allowances has been delayed until at least April 2017.  Although the Government “will continue to discuss implementation of this change”, they have confirmed that a further consultation will only be issued “should they decide to proceed”.

 

Stamp Duty Land Tax

Perhaps the major “headline” change was the radical reform in the rates of Stamp Duty Land Tax (“SDLT”) and how a more graduated tax (akin to income tax) will smooth the previous SDLT distortions. Whilst welcome news generally, the revision of the bands and increased rates of duty will have a significant impact on those acquiring higher valued properties in excess of £1.5m.

 

New rates effective from 4 December will be:

 

  • £250,001 – £925,000 – 5%
  • £925,001 – £1.5m – 10%
  • Above £1.5m – 12%

 

 

 

 

 

Annual Tax on enveloped Dwellings (“ATED”)

 

Despite only being introduced with effect from April 2013, the Government has found that revenues from the ATED charge have been five times as high as their original predictions. It is perhaps not surprising that the Autumn Statement proposed a second increase of “50% above inflation” in as many years.

 

From April 2015 the new rates will be:

 

  • £23,350 (2014/15 £15,400) for properties worth between £2-5m
  • £54,450 (2014/14 £35,900) for properties worth between £5-10m
  • £109,050 (2014/15 £71,850) for properties worth between £10-20m
  • £218,200 (2014/15 £143,750) for properties in excess of £20m.

 

The Government have also confirmed that they will “introduce changes to the filing obligations and information requirements with respect to properties that are eligible for a relief”.

 

Consultation response to previous consultation document “Implementing a capital gains tax charge on non-residents”

 

The Government has now issued a response to its previously issued document in March 2014. The original proposal to charge residential property will not be extended to commercial property, which whilst welcome news should not detract from the fact that foreign investors will be caught by these rules in so far as they own UK residential property.

The proposal to abolish the ‘main residence election’ in favour of highly complex fact-based tests to decide which property would benefit from private residence relief – PRR – (where a person is not subject to tax on gains when they sell their  home) – has been scrapped. Instead, non-residents investing in UK residential property and UK residents investing in non-UK property have to meet an occupation test.

It is much simpler.  If you are in your home for 90 midnights in a tax year you can nominate that property to benefit from the private residence relief. Importantly, there will be no change from the current rules for individuals who are UK resident and own only UK properties.

Should you have any queries or concerns in respect of the above please do not hesitate to contact us at:

 

 

Contact:

  • Martin Dawson 07824 357972 martin@aquariustax.co.uk
  • Esfak Mohmed 07896 672314 esfak@aquariustax.co.uk
  • Michelle Foster 07814 260061  michelle@aquariustax.co.uk

 

 

 

 

 

 

 

 

 

 

This flyer is intended for guidance only, and professional advice should be obtained before acting on any information contained herein. Aquarius Tax Consultancy Limited cannot accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

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“Runners Up” in the category of Tax Consultancy Firm of the year!

September 17, 2014
17 Sep 2014

BREAKING NEWS..after extra-time we came admirable “Runners Up” in the category of Tax Consultancy Firm of the year at the annual “Taxation” awards in London on 22 May 2014…rather like Atletico, we look forward to winning it next year!!!

For further information about Aquarius Tax Consultancy Limited, check out our new website at www.aquariustax.co.uk

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Always the bridesmaid!

June 11, 2014
11 Jun 2014

We recently attended the prestigious Taxation awards at London’s Park Lane Hilton.

Proving there is life (and quality advice) “Up North” (i.e. north of Oxford Street if you believe what they say in London), the team were up for the “Tax Consultancy Firm of the Year” award.

In a closely run contest, rather like Atletico at the recent Champions League Final in Lisbon, we lost on penalties after extra-time (well nearly!).

On a more serious note, it was a great showing and bearing in the mind the other nominees were all based in London this was another fantastic achievement by the guys (and lady J) in the team and following a similar success at the same venue in the annual STEP awards, it is further evidence that the team are consistently punching well above their weight on a National level.

Well done, and rather like Atletico here’s to winning it next year!

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  • taxation awards

Up for the Cup!!

April 14, 2014
14 Apr 2014

It is not only Arsenal or Hull City that are competing for silverware next month.

We have just been shortlisted for similar honours at the annual Taxation awards, to be held at the Park Lane Hilton in London later next month.

ATC director Martin Dawson commented ‘on the back of our recent success at last years STEP awards, where we were runner up as ‘Tax Boutique of the year’, this is further testament to the direction we are heading. Can I take this moment to express our sincerest thanks on behalf of the team to our clients and introducers, as without their continued support, the nomination for this award would not be possible’..

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  • tax planning background

Accelerated payments – a double edged sword and/or level playing field?

March 25, 2014
25 Mar 2014

As expected, last week’s Budget followed up on HMRC’s previous consultation document entitled “Tackling Marketed Tax Avoidance” buy introducing yet another weapon in the Government’s armoury in ensuring everyone “pays their fair share of tax” – hot on the heals of DOTAS and GAAR, and following HMRC’s published proposals we will shortly have the “Accelerated Payments” legislation.

This legislation, which may well be challenged through the Courts as illegal in its nature, is designed to counter the cash-flow benefit to users of high risk tax schemes by allowing HMRC to collect any disputed tax up-front, with the Government confirming “this policy reflects the government’s view that, during investigations and litigation into avoidance, the tax should sit with the Exchequer, not the taxpayer. This approach will not change the underlying rules and the taxpayer will be free to continue to make its case to the tribunal or court. If the taxpayer is successful, the money will be returned with interest”.

On the face of it, once the legislation receives Royal Assent in July, it would appear to be retrospective with the Tax Impact Note confirming that HMRC will be given the power to issue a Notice to Pay to “any taxpayer for whom there is an open enquiry, or the matter is under appeal, and who has claimed a tax advantage by the use of arrangements that fall to be disclosed under DOTAS, or HMRC counteracts under the GAAR following an opinion of the GAAR Advisory Panel that, in the Panel’s opinion, the arrangements are not a reasonable course of action”.

In their defence of this measure, the Government confirmed “this new power will remove the cash-flow advantage for the taxpayer of holding onto the disputed tax during an avoidance dispute. It will also provide HMRC with additional tool to address a legacy stock of an estimated 65,000 avoidance cases. The new power will only apply to tax avoidance schemes that are disputed by HMRC. The legislation will make it clear that HMRC will only be able to issue an accelerated payment notice where they have first sent the taxpayer an enquiry notice or issued them with a notice of assessment. It is not a new tax demand and does not make any changes to tax liabilities. If the taxpayer subsequently wins their case in the courts, they will be reimbursed with interest”

Now we are all for a level playing field and welcome anything that legislates against the ridiculous array of avoidance schemes that seem to be continually played out in the press involving the likes of Jimmy Carr, Chris Moyles, Take That et al.

However, this legislation could be far reaching and again, retrospective – another recurring unhealthy feature of tax legislation over the past few years, with HMRC now appearing to have the power to dispute any planning they consider aggressive (by arguing it within DOTAS or GAAR) and then having recovery powers to collect tax from taxpayers bank accounts (another unhealthy new power buried in the Budget).

With the taxpayer having then effectively paid their tax up front, are HMRC likely to litigate with the current urgency they have? Highly unlikely but the obvious, perhaps aggressive counter argument that will no doubt follow from many promoters is that their (future) planning ideas may no longer need to be disclosed!

Interesting times ahead for those that continue to fish in the avoidance pool!

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Budget 2014 – a brief overview

March 20, 2014
20 Mar 2014

Enveloped Dwellings
Despite only being introduced from 6 April 2013, the bar for the Annual Tax on Enveloped Dwellings (“ATED”) was originally set at £2m. This has now been lowered to £1m with effect from April 2015 with an annual charge of £7,500 on those properties falling within the £1-2m band. With effect from April 2016 the bar will be lowered even further to an entry level of only £500,000, with an annual charge of £3,000.
In additional to the above annual charges, there will also be a direct impact on Stamp Duty Land Tax (”SDLT”) and Capital Gains Tax (“CGT”) for enveloped properties – in fact, as far as SDLT is concerned the impact is immediate with the higher 15% rate coming in on 20 March 2014 on properties worth £500,000 or more!
Remember also:
• the above limits of £500,000 and £1m relate to the values of the property as at April 2012.
• a company (or other entity) that falls within the ATED provisions will be subject to a 28% CGT charge on the disposal of any such property. Therefore the CGT scope is now dramatically widened and will apply to disposals of property within the £1-2m ATED band from 6 April 2015 and within the £500,000 – £1m ATED band from 6 April 2016.
• The previous ATED exemptions relating to commercial property development and letting businesses, farmhouses etc. still remain.
• If an exemption is being claimed you will still have to register for ATED and claim the relief, which means an increased tax burden for those impacted.
Comment:
Another shameless attempt to increase the administrative burden and raise further taxes from those acquiring properties in the UK. With the government indicating that these changes will raise no further revenues for 2014/15 and 2015/16 and only £15m for 2016/17, a cynic may question the logic and intent behind such changes.
Clearly the government does not want property ownership through offshore companies and the best advice now is to probably look at alternative structures. Those individuals now owning properties above £500,000 in value may well need to consider alternative structures ahead of April 2015.

Corporate Tax – Annual Investment Allowance (“AIA”)
The AIA gives businesses a 100% tax deduction for certain qualifying items of plant and machinery.
The current AIA of £250,000 has been doubled to £500,000 for expenditure incurred after 1 April 2014 (for corporates) and 6 April (for individuals) and will run through to 31 December 2015. Thereafter, it will drop back down to £25,000!
Comment:
A welcome increase in the current rates, which should have the biggest impact for smaller and medium sized businesses.
Taxation of Partnerships
Despite calls from the House of Lords to delay the introduction of these changes, the Budget reaffirmed their introduction with effect from April 2014, albeit the government has confirmed that it will implement some of the changes that were recommended by the Office for Tax Simplification.
Comment:
True to form, typically rushed through “knee jerk reaction” with massive implications for many and very little time to assess the practical and financial impact.
Tax avoidance schemes – accelerated payments
Recently mooted, measures will now been introduced from Royal Assent for taxpayers to pay “disputed tax” within 90 days where it relates to arrangements caught by DOTAS or the GAAR.
Comment:
Some may say this is a welcome measure, but there is also a counter argument that says “beware of those bearing gifts!! With the tax at stake effectively being paid up-front, there would seem very little pressure, on an already under resourced HMRC to litigate through the courts in a timely manner to conclude the efficacy of such arrangements.

This flyer is intended for guidance only, and professional advice should be obtained before acting on any information contained herein. Aquarius Tax Consultancy Limited cannot accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

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Advantage HMRC or another own goal?

October 21, 2013
21 Oct 2013

We were interested to hear recently that Rafael Nadal had pulled out of next years Wimbledon “warm up” tournament at Queens, blaming the UKs tax treatment of foreign stars.

Surprisingly, this isn’t the first time that the UK’s taxation treatment of foreign sports stars seems to have hit the news – Usain Bolt, Tiger Woods and last years Champions League Final have all hit the headlines over the last 12-24 months.

So what is all the fuss about? In a nutshell, it all boils down to another naughty 3 letter word – tax!

Historically, HMRC had only sought tax on prize money or appearance fees but ever since their success in the case they brought against Andre Agassi they now look to tax a proportion of the individual’s global earnings from endorsements.

Consider Tiger Woods position last year when he competed in the Ryder Cup at Celtic Manor. He was purported to be earning circa $40m a year from his contract with Nike. Suppose he played 10 tournaments that year one of which was the Ryder Cup, in theory 1/10th of $40m could be taxed at 50%.

Quite a significant tax liability…particularly when there are no appearance fees at the Ryder Cup!

Should we be bothered? Probably not from an individual financial point of view – it will hardly dent Woods’s wealth.

However, this has the potential to not only significantly impact on the UK’s ability to attract the top stars to major sporting events but perhaps more importantly, the ability of the UK to host major sporting events….along with the loss of VAT on ticket sales, corporate entertaining and major sponsorship!!

Interestingly Uefa confirmed ”for tax reasons” Wembley Stadium would not be hosting the 2010 Champions League Final – instead it went to Spain’s Santiago Bernabeu Stadium – Spain has no equivalent tax law.

Arsenal’s Emirates stadium also lost out to Hamburg in the bidding for the 2010 Uefa Europa League Final after Uefa received assurances from the German Government that it would not tax visiting players if the final was played at Berlin’s Olympiastadion or Munich’s Allianz Arena.

Awarding a “dispensation” (i.e. a special status of no tax!!) to certain events such as next year’s Olympics, the 2013 Champions League final (which is taking place at Wembley again) or agreeing to pledge an exemption to FIFA if we had ever got near winning the ballot for the 2018 World Cup is not really the solution as it still leaves a massive amount of uncertainty when bidding for events.

Whilst the 2010 Ryder Cup got an exemption, that is probably a bad example as it was awarded some years ago…but what about Gleneagles in 2014 or the 2015 Rugby World Cup that England have just won the rights for?

Major sponsorship deals could be affected or worse still sponsors could pull out of tournaments if major stars do not participate.

The FA for example were reported as clearing £1m for this years Champions League final – For just one match.

A significant proportion of these profits will no doubt be fed back into the sport at grass roots level, which all goes into supporting a sport which already pays a massive amount of taxes each year to the Exchequer (£725m for 2009/10 and potentially £1bn for the current season).

The current regime really is a ridiculous piece of legislation that was badly thought out and will cost UK Plc in the long run, and not just in lost tax – sounds familiar…definitely another own goal!

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Professional negligence update

June 18, 2013
18 Jun 2013

“the defendants had a contractual duty to advise the claimant that non dom status carried with it potentially significant tax advantages”

Mr Justice Silber, Mehjoo v Harben Barker

The concept of “domicile” has again reared its head – this time in a very recent High Court case involving professional negligence[1]

The case itself appears particularly bizarre.

Briefly, the taxpayer in question realised a significant capital gain on the disposal of his UK trading company. Rather than pay the resulting 10% capital gains tax he entered into an artificial avoidance scheme run by Montpelier, which rather predictably was closed down by HMRC. Strangely though, the case did not involve the latter firm.

Instead, the individual successfully sued his accountants Harben Barker for £1.4m for failing to advise him that as a “non-dom” he could have undertaken alternative, less aggressive tax planning involving the use of bearer shares.

Interestingly the court also ordered the defendants to pay the costs of the failed tax planning scheme that Mehjoo undertook, and which was unsuccessful, attracting penalties with HMRC.

Some of the reporting in the professional press has been frenzied with The Times reporting “the accountancy profession has been thrown into turmoil after a High Court Judge appeared to rule that practitioners had a duty to advise wealthy clients to avoid tax” and Accountancy Live confirming “Accountants must advise on tax loopholes, court rules”.

Whilst Harben Barker intends to appeal the decision, what is clear and indeed always has been so is that the UK tax affairs of foreign domiciled individuals (UK resident or otherwise) are complicated and require a sound understanding of the law. The fact that one of the leading tax publications in this area is now over 3,000 pages is testament to this!

Sadly, the Mehjoo case is not in isolation. Accountancy Age have previously highlighted the continuing importance of being up to speed with the legislation – in brief a Top 20 national accountancy firm were also reported as paying out excess of £1m as a result of a professional negligence claim brought against them by one of their former non domiciled clients[2].

In essence, the firm failed to take into account their client’s foreign domicile status when advising him to acquire UK property (in this case, Hotels) through a UK limited company.

On the face of it acquiring UK real estate through a UK limited company is a sound commercial choice however, from a tax point of view this proved disastrous in that case.

Unlike the Mehjoo case it is still possible to implement planning in advance of any proposed sale without needing to resort to the more esoteric scheme based ideas to reduce your tax exposure. We have recently received agreement from HMRC on a number of recent cases that have enabled UK resident foreign domiciled clients to genuinely reduce their UK tax exposures.

From our experience, the above two cases are definitely not isolated cases and are the tip of the iceberg with many advisers potentially facing significant PI claims. We are already aware of one particular “no win, no fee” type legal firm who are actively marketing their services against potentially negligent advisers.

If you act for foreign domiciled clients that:

  • Hold UK investment property personally (i.e. sole trader, partnership, LLP),
  • Hold shares in a UK limited company (trading or investment)
  • Own their own UK private residence

then tax planning ought to be considered NOW.

If you do not act now other advisers may well do so and this could prove costly in more ways than one.

If you are not familiar with the tax benefits associated with a foreign domicile then now may be an appropriate time to contact us and discuss whether it may be possible to restructure your client’s business interests and not only reduce their potential tax liabilities, but those of your own practice.

Aquarius Tax Consultancy Limited is a bespoke tax practice that specialise in providing UK tax advice to foreign domiciliaries and their advisers. We have significant experience in advising and establishing tax efficient structures through which inward UK investment can be made and work closely with many private banks and offshore providers.

[1] Mehjoo v Harben Barker (A Firm) & Anor [2013] EWHC 1500 (QB)

[2] www.accountancyage.com/aa/news/2078764/hacker-paid-gbp1m-negligent-advice

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Offshore Disclosure Facilty – the dominoes are toppling!

April 16, 2013
16 Apr 2013

The latest Offshore Disclosure Facility (“ODF”) has recently been signed up with the Isle of Man, and this now sits alongside similar agreements with Jersey, Guernsey and Liechtenstein.

These all provide “eligible customers” (the rather odd term that HMRC use to refer to taxpayers) with a means of “coming clean” with HMRC and effectively bringing their tax affairs up to date by way of a full disclosure  of any outstanding liabilities.

The three crown dependant agreements run until September 2016, after which there will be a full exchange of information. This broadly gives taxpayers a three year period within which to make full disclosures to HMRC and benefit from much lower penalties.

Cayman Islands are also in negotiation with a view to a similar arrangement and no doubt further discussions will be opened with other jurisdictions in line with HMRC’s comments in last months Budget.

What is clear is that those individuals with undisclosed liabilities really need to take the initiative and seriously consider making the appropriate disclosure to HMRC now, before the game is up and HMRC receive information from the appropriate jurisdiction.

With the well publicised increased investment in HMRC resource and the increasing use of more accurate data mining tools, the net is most definitely closing on those with hidden assets – internet searches, Companies House records and Local Authority information are just a few of the methods used.

HMRC could even receive information from a 3rd party such as the reported list of 24,000 accounts that were operated by HSBC’s private bank in Switzerland – it was widely reported that this information was initially sold to the french tax authorities who recovered 500m euros in unpaid taxes, who in turn released the relevant information to HMRC under the Tax Information Exchange Agreement. In a similar incident, it was also publicised that the German tax authorities paid 2.5m euros for a disc containing information on Credit Suisse accounts held in Switzerland.

There is no one fits all solution for any particular taxpayer. Not every ODF is available to every taxpayer and likewise certain individuals could potentially disclose under more than ODF.

One thing is for certain, the myth of complete anonymity is beginning to fall like the proverbial domino….

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