Mercer & Hole’s Business blog - Tax

British overseas territories, including Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands, will provide information about bank accounts held in their jurisdictions.  Details will include names, addresses, dates of birth, account numbers, balances, and facts about payments made into the accounts.   ...

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The EC has set up a platform for good tax governance, as part of the ongoing drive against evasion and avoidance. Interested parties, including national tax authorities, businesses, academics, and non-governmental organisations, will monitor member states’ progress in tackling aggressive tax planning and clamping down on tax havens.   The first meeting of the platform is provisionally planned for 10 June 2013.   ...

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I read with some interest the PAC report on Tax avoidance: the role of large accountancy firms.  I am in total agreement with some of its conclusions and recommendations; although I have to say not all.  I give below, in no particular order, a summary of these: The UK tax system is too complicated and there is a need for radical progress on simplification - I think anyone involved in tax would agree with this. International tax rules need changing to reflect the way businesses now operate – again there should be little dispute. The Treasury need to...

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One key issue from HMRC’s guidance is that taxpayers are no longer free to reduce their tax bills by any lawful means as previously held by the Courts. The GAAR ‘rejects the approach taken by the courts in a number of old cases to the effect that taxpayers are free to use their ingenuity to reduce their tax bills by any lawful means’.  Several examples given in the guidance support the principle that ‘abusive use’ of what would otherwise be lawful transaction will now not work, including: the use of structures (such as...

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HMRC has published updated guidance on the GAAR.  This guidance now covers the purpose of the GAAR and provides examples that aim to cover the following broad categories: • Situations covered by law where Parliament has given taxpayers a choice, such as the main residence section – which are fine. • Long established practice – which is fine. • Situations where the law deliberately sets precise boundaries – which is generally acceptable. • Standard planning with some element of artificiality – which is a grey area. • Transactions demonstrably contrary to the spirit of the law – which will...

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The government has signed a tax international exchange agreement with France, Germany, Italy and Spain as a further attack on tax evaders. Under the agreement, banks in the five countries will have to reveal financial details of foreign clients to that person’s local tax authority.  It is an attempt to co-ordinate international action against tax evasion. ...

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Apparently, MPs on the Commons energy select committee criticised RWE npower after it emerged that the company’s tax liability had been eliminated by tax reliefs for substantial investment in infrastructure.  One MP claimed that observers would be ‘shocked’ to hear that the company believed it should not pay tax. The problem is that it is a well-established principle of UK corporation tax that depreciation charged in the accounts is disallowed for tax purposes and instead capital allowances are given for investment in plant and machinery. This does raise concerns over the quality of public debate...

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The EC has opened an ‘in-depth investigation’ into the proposed tax relief included in the UK’s Finance Bill. The measure was announced, subject to state aid approval.  The relief is intended to provide an incentive to developers for products meeting certain cultural criteria. The EC has said that there is no obvious market failure in the sector and so doubts that State aid is necessary. Comments are invited within a month of the publication of the decision (in the EU Official Journal).  The opening of an investigation does not necessarily prejudge its outcome. ...

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In a somewhat odd case the Upper Tribunal has ruled that a painting was exempt from capital gains tax as it was ‘plant’ and therefore a ‘wasting asset’. In theory the decision could benefit others with valuable art and antiques as items from their collections may be able to be disposed of without incurring capital gains tax.  However, even if HMRC do not appeal the case we can expect some anti-avoidance rules to counter potential abuse. ...

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From 6 April 2013, the relief available on certain (currently unlimited) income tax reliefs will be subject to a cap of £50,000 or 25% of income, whichever is higher. The main reliefs affected will be trade and property loss reliefs and qualifying loan interest relief. The following income tax reliefs are the main ones that will be affected: Trade loss relief against general income – losses made by an individual carrying on a trade, profession or vocation. Early trade losses relief – losses made in the first four years of a trade. Property loss relief against general income – property business losses arising...

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