Enterprise investment scheme/venture capital trust schemes - in-year claims
The Revenue has received a number of in-year claims for income tax relief under the enterprise investment scheme and venture capital trusts scheme to be given by way of a repayment through self assessment.
Enterprise investment scheme/venture capital trust schemes - in-year claims
The Revenue has received a number of in-year claims for income tax relief under the enterprise investment scheme and venture capital trusts scheme to be given by way of a repayment through self assessment.
The legislation relating to these reliefs, i.e., section 306 and Schedule 15B to the Taxes Act 1988, does not allow for in-year claims to be made. In addition, section 42(1A), Taxes Management Act 1970 excludes this type of claim from being made in-year, stating that: 'a claim for a relief shall be for an amount that is quantified at the time the claim is made'.
As both reliefs take the form of a reduction in the tax payable, and rank after various other reliefs and allowances, the amount of relief cannot be known for certain until after the end of the tax year.
For these reasons relief for a year can only be claimed after the end of that year and the Revenue will reject any in-year claims for relief by repayment through self assessment. However, this does not affect the right to make a claim to reduce payments on account.
Relief can still be given through an employed persons pay-as-you-earn tax code in the year.
Employees' business expenses receipts
The Revenue has received representations suggesting that the corporation tax self assessment record retention requirement imposes a burden in the specific area of receipts supporting employees' business expenses claims, because optical imaging or other methods of electronic preservation of all the information in the receipts may be impractical.
The Revenue confirms that provided the information contained in such supporting documentation is retained, the actual receipts may be discarded.
The information the company maintains and retains in relation to such supporting documents does not necessarily have to include everything embodied in them, provided that the company is satisfied that what is retained is sufficient to discharge its responsibility to make a complete and correct return, and that this can be demonstrated to the Revenue. So, for example, in relation to expenses claims, sufficient information should be retained to identify all expenditure disallowable under section 577, Taxes Act 1988, or that which relates to the entertaining of staff.
If an enquiry covers years where original supporting receipts have been discarded, original records held for later periods may be looked at, and information in them may be used as a suggested basis to settle the position for earlier years.
Inheritance tax: wartime compensation payments
Ministers have agreed to requests to extend extra-statutory concession F20 from 13 March 2002, to include further schemes which compensate original victims or their spouses for the personal hurt suffered at the hands of the National Socialist régime during World War II. Claims in respect of the German public law foundation 'Remembrance, Responsibility and Future' and Holocaust Victim Assets Litigation (Swiss Bank Settlement) are being dealt with for non-Jewish claimants by the International Organisation for Migration, and for Jewish claimants by the Conference on Jewish Material Claims against Germany. Claimants entitled to the concession in respect of these claims are being advised by the relevant organisation at the time of their successful claim. The extended concession aligns these payments with comparable ex gratia amounts from the United Kingdom Government to British groups held prisoner by the Japanese during World War II.
Under the present inheritance tax rules, rights to such compensation, or the subsequent proceeds, could form part of the claimant's estate. Extra-statutory concession F20 allows the amount of any compensation payment to be deducted from the claimant's chargeable estate, whether the payment is made to the claimant before death or is made subsequently to the personal representatives. The revised text of the concession is set out in the Bulletin.
Amended extra-statutory concession B53
The Personal Portfolio Bond (Tax) Regulations, SI 1999 No 1029, impose a yearly charge to tax on policies of life insurance, life annuity contracts and capital redemption policies that are personal portfolio bonds within the meaning of those regulations.
It is sometimes possible to change the terms of a policy taken out before 17 March 1998 to take it outside the definition of a personal portfolio bond. A person who was not resident in the United Kingdom on that day and who later becomes resident has to make the change before the end of either the first 'year' to begin on or after 6 April 1999 or, if later, the first 'year' to begin after the policy holder becomes resident in the United Kingdom. Year, in this context, is as defined in section 546(4), Taxes Act 1988.
The Taxes Act makes no provision for splitting tax years in relation to residence. So an individual who becomes resident in the United Kingdom during a year of assessment is resident for the whole year. This means that, in an extreme case, the period available to make the change could end very shortly after the policy holder arrives in the United Kingdom.
By concession, where an individual comes to the United Kingdom to take up permanent residence, or to stay for at least two years, the year before the end of which the change has to be made to the policy or contract will be the first year to begin on or after the date on which the policy holder first arrives in the United Kingdom to take up permanent residence or to stay.
This version of extra-statutory concession B53 replaces an earlier version published on 22 November 1999.
