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News briefing, 21 Feb 2014
Avoidance & evasion
HMRC have written to about 5,000 taxpayers to ask them whether or not tax is due on their Swiss bank accounts.
Financial Times
UK taxpayers with undeclared assets or income held in offshore accounts should, ideally, pre-empt a Revenue letter by making a voluntary admission – or consider using the Liechtenstein disclosure facility.
Nearly 300 wealthy individuals face average losses of more than £1m each over tax avoidance scheme Eclipse 35 was successfully challenged by HMRC.
Times
This story should worry those who have invested in avoidance schemes based on tax relief for investment in films (or indeed in another flavour of the month arrangement, as Eclipse once was): liabilities can end up exceeding original investment.
Business
Companies that pay low levels of corporation tax in the UK could be penalised under proposals by retailers to overhaul the business rates system.
Telegraph; Times
The proposals are for a tax based on energy use, put forward by the British Retail Consortium. It is not entirely coincidental that retailers use far less energy than manufacturers. Business rates are continually criticised as being unfair, and there is a groundswell of opinion that the next revaluation will be an opportunity to review the system, although there is no consensus on what should be done. Replacing rates with a tax based on energy use is one idea – but one that will be unpopular with manufacturers.
UK savers could suffer a £3.6bn cut in the value of their savings following the introduction of a financial transaction tax on City trading, according to a report by consultancy London Economics.
Guardian
The so-called Robin Hood tax looks set to be introduced in 11 countries of the EU. It is based on the basic economic principle that an easy way to make a lot of money is to place oneself between two parties passing large sums from one to the other; taking a hardly noticeable percentage will yield large amounts. In fact, the numbers could be considerable simply because of the amount of transactions. Since the UK is not going to introduce the financial transaction tax, the country will suffer only collateral damage from countries that charge the levy; £3.6bn is the high end of estimates.
Fraud
HMRC have warned of a huge rise in the number of tax scams by fraudsters using email.
Times
Phishing is a common problem for the Revenue, which has closed down a record number of scam websites.
Inheritance tax
The average inheritance tax (IHT) bill reached £166,000 in 2010/11, with half of the total £2.6bn revenue coming from London and the southeast.
Telegraph
It is not surprising an increasing number estates are subject to IHT, given that the threshold has been £325,000 since April 2009 (and is not due to be increased until 2015 at the earliest). Most of those who died will have acquired their homes for very little capital expenditure over the years, with house price rises making up most of the value of the estate. These will not have been subject to capital gains tax or any other tax, so it is hard to see why they should not be taxed on death.
Policy
The Labour party faces a backlash from wealthy business people over the proposed tax on residential properties worth £2m or more, according to shadow infrastructure minister Andrew Adonis.
Financial Times
It is not only rich bankers and Russian oligarchs who own expensive houses, but Lord Adonis’s comment that everyone “at all well off” tells him how they loathe the idea of a so-called mansion tax says more about the circles in which the shadow infrastructure minister moves than about how the policy is likely to play across the UK.
VAT
About 1,000 UK golf clubs are set to share a £115m windfall after an EU court ruled in favour of Bridport and West Dorset Golf Club in a long-running VAT dispute.
Mail
This story was first reported early last month and was covered in our 17 January briefing. Analysis of the Bridport case was included in Neil Warren’s article Life in the fast lane.
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