TPP Q&A, November 24
We supported our Tax Partner Pro members via email and callback service. Here’s a look at some of the most recent questions we answered in November 2024.
Q
Could I have some information on the completion of the 10th anniversary trust return, I have looked at HMRC and it is very contradictory.
My client has a trust which has a CIG (initial investment of £66,500), income is generated from dividends and interest from the GIA’s stock and equity portfolio (2024 was <£1,000.00)
Does the customer fall into the category to report their 10th anniversary?
What allows a trust to complete a 10 year anniversary form?
A
Generally, if the trust assets are valued at less than 80% of the NRB then it will be an excluded estate and no 10 year return of fees is required.
Q
We have a client who earns £488,000 gross per annum via PAYE and has their RSU earnings and tax withheld via their payslip.
Is there any additional information we need to provide on the self-assessment other than the P60 statement?
A
No, there shouldn’t be. Income has been declared and tax paid via PAYE, so just the P60 is all you need.
You will need to declare on the CGT pages when you sell the shares if there is a gain to declare.
Q
I have an individual business client who is considering going out of business because his last transaction receipt was in January, although he just proposed a small project and is waiting to hear if it will continue. In the meantime, he would like to make a £60,000 pension contribution from the company. My concern is that – especially if the small project does not come to fruition – that the contribution will be paid 9 months after the last commercial receipt and may not qualify for corporation tax – being considered part of the closure process of the business rather than as part of the process of closing the business. of the manager’s remuneration.
A
My concern mirrors yours, since the company appears to have ceased operations.
Contributions made under the terms of cessation of activity, in particular where there is no pre-existing contractual obligation to make such a contribution, are not considered to satisfy the criterion “wholly and exclusively for commercial purposes” .
In the case of CIR v Anglo Brewing Co Ltd [1925] 12 TC 803, the company decided to close its doors. In the past, the company granted pensions to employees upon retirement. The company has promised to treat its current employees with the same generosity. The company therefore accepted pension amounts (which were later converted into lump sums) and compensation. The company claimed the costs as a deduction in calculating its profits.
The High Court found that the payments were made for the purpose of winding up the company and that no deduction was due in respect of pensions or compensation. There is now statutory relief from redundancy pay, but the principle of the decision that severance pay is not permitted remains valid.
Q
I have a client who is a musician. He is looking to “book music-related events next year for research purposes to track current and new trends in the electronic music market.” “
He asked me if it was tax deductible.
I am fully and exclusively aware of this and shared it with him, but he shared with me an example of a commercial package referring to VAT etc.
I don’t know what to advise. It makes sense that he would attend these events for research purposes, but by the letter of the law it seems like he might be entertaining and then he would be totally disqualified!! I can’t find any similar case law.
Can you advise us, please?
A
I think it would be difficult to justify this as an expense and I would expect HMRC to refuse if challenged.
You could perhaps claim some of the cost and argue that there is a duality of purpose, but I stress the risk of this being refused if HMRC challenged it.
That being said, in a Tax Weekly magazine article from May 2024, there is a comment on this and the advisor quoted: “If an artist incurs research expenses to study their role, such as attending shows, this will probably be allowed. »
I note that the commenters use the word “probably” in this passage, because this is a subject on which no one will be able to offer an opinion based on ironclad jurisprudence on the matter.
I would suggest making the customer aware of the risk, but ultimately letting them make the call.
Q
We have a client who has invested in a US fund (not listed in HMRC’s list of reporting funds) for the last 2-3 years and, according to her financial advisers, the fund is making losses. She plans to sell the fund to realize the losses. Having read HMRC’s IFM13550 manual I understand that the losses would be treated as a capital loss – please confirm that my understanding is correct?
Additionally, could you also confirm that the above losses can be offset against realized capital gains (in the same/future year) in the normal way.
A
Yes, the losses will be capital losses and can be recovered in the normal way (against capital gains in the current year or future years).
Next steps
Do you have questions similar to those above? Could Tax Partner Pro membership be right for you? Do not hesitate to contact ETC Tax to find out more.
