Inland Revenue Tax Bulletin - Issue 54

Contents

Interpretations

Miscellaneous

Gross Payments of Interest

This article outlines changes made by Finance Acts 2000 and 2001 to the rules requiring deduction of tax at source from certain payments of interest. Although the types of interest payment involved differ, both sets of new rules came into force on 1 April 2001. From that date companies have been able to make many more payments of interest without deducting income tax and, as a consequence, both individuals and companies have received more payments of interest gross. The Inland Revenue has received enquiries about these changes and this article is intended to clarify the position for payers, for those who may now be receiving payments gross, and for any tax professionals asked to explain why some interest payments have begun to be made without income tax having been deducted.

Changes made by FA 2000

Amongst other things FA 2000:

  • repealed Sections 118A-118K Income and Corporation Taxes Act (ICTA) 1988 which placed an obligation on UK paying and collecting agents to deduct tax from foreign dividends (including interest);
  • repealed Section124 ICTA 1988 which deals with interest on quoted Eurobonds, and
  • amended Section 349 ICTA 1988 by bringing UK public revenue dividends into the general provisions for the deduction of tax at source, and incorporating within the section an updated definition of a Eurobond.

Public revenue dividends

The inclusion of public revenue dividends within Section 349 ensures that, unless there are specific provisions to the contrary elsewhere in the Taxes Acts, tax will be deducted from gilt interest, or other public revenue dividends.

The rule for interest on UK gilt edged securities (gilts) is set out at Section 50 ICTA 1988. This provides that interest on bearer and registered gilts flows gross. A holder of registered gilts can, however, continue to request net payment under the provisions of Section 50(2). These specific provisions override the general provisions for deduction of tax in Section 349.

Payments of interest on a quoted Eurobond

Under Section 349(3)(c) payments of interest on a quoted Eurobond are excluded from the general requirement to deduct income tax. The updated definition of a quoted Eurobond can be found in Section 349(4). A "quoted Eurobond" now means any security that:

  • is issued by a company;
  • is listed on a recognised stock exchange, and
  • carries a right to receive interest.

This definition is more widely drawn than the definition in Section 124 so that now all listed securities issued by companies will pay interest gross both to individuals and to companies.

Changes made by FA 2001

FA 2001 made more changes which impact on Section 349. Again these changes have increased the likelihood of interest being paid and received gross.

FA 2001 inserted new Sections 349A to 349D ICTA 1988. Under these provisions companies (or partnerships with at least one member which is a company) will be able to pay interest as well as certain royalties, annuities and annual payments without deducting income tax when the person beneficially entitled to the income is:

  • a UK resident company;
  • a partnership where all the members are UK companies; or
  • a UK branch of a non resident company, where the income will be charged to CT.

The normal Section 349 requirement to deduct tax is switched off when the payer ‘reasonably believes’ that the recipient is within one of these categories. It should be noted that the provisions refer to a ‘company’ which, as defined by Section 832 ICTA 1988, means:

"any body corporate or unincorporated association but does not include a partnership, a local authority or a local authority association."

Thus payments made by and to local authorities are not included in the new provisions while payments made to a charity might be. They are included if the payments are made by a company and the recipient charity is constituted as a UK resident company.

Reasonable Belief

Basing the obligation to deduct income tax on ‘reasonable belief’ rather than an objective test enables companies to make gross payments even when it is not possible to verify the circumstances of the recipient directly. For instance, where the payment will be made through a series of intermediaries it should be possible for the payer to reach a reasonable belief based on the evidence provided by an intermediary.

What would constitute grounds for ‘reasonable belief’ will vary depending on the relationship between the payer and payee. Where, for example, a payment is made between associated companies, the payer is in a good position to know whether the recipient is the beneficial owner and meets the conditions to receive the payment gross. Where the payer and payee are not known to each other, the payer may want to obtain documentary evidence of the status of the recipient, perhaps in the form of a statement signed by the appropriate officer of the company. Such a statement might contain either:

  • confirmation that the recipient is beneficially entitled to the income and meets the conditions to receive the payment gross; or
  • if the recipient is a nominee, confirmation that the beneficial owner meets these conditions.

The Revenue is willing to work with market operators and support them in drawing up their market-sector specific guidance.

If the payer is in doubt as to the accuracy or trustworthiness of the evidence provided by the payee then the payer will not have reasonable grounds for believing the payee is entitled to receive the payment gross and should therefore make the payment under deduction of income tax.

What if a reasonable belief proves incorrect?

The right to make a payment gross based on the payer’s reasonable belief does not affect the Revenue’s right to recover tax and interest from the payer where it is subsequently found that the recipient was not within any of the categories of recipient to which the new gross payments rule applies. It is for this reason that some payers may wish to seek indemnities as protection from the risk of paying gross where this is not appropriate.

There will not normally be any question of a penalty being imposed on a company which makes a mistake. If, however, the company makes a payment without deducting tax when it does not believe (or could not reasonably believe) that the beneficial owner is in one of the relevant categories, the Revenue will consider seeking a penalty.

National Insurance Contributions and Personal Liability Notices

What are Personal Liability Notices?

Personal Liability Notices were introduced by Section 64 Social Security Act 1998. This amended Section 121 Social Security Administration Act 1992 by introducing Section 121C.

This section provides that where a body corporate has failed to pay "contributions" at the prescribed time and the failure appears to the Board to be attributable to fraud or neglect on the part of culpable officers, the Board may issue a Personal Liability Notice requiring the culpable officers to pay the sum specified in the notice. Personal Liability Notices may be issued to more than one officer of the company and in amounts which reflect the level of culpability of the individual officer, but the total cannot exceed the "contributions" that are due from the company.

What are "contributions"?

Companies are liable for Class 1, both primary and secondary, Class 1A and Class 1B National Insurance Contributions. Any amount of these that are unpaid are included in the "contributions" that may be recovered from the officers of the company.

The legislation also brings into the definition of "contributions" any interest and penalties charged in respect of the "contributions".

Who can a Personal Liability Notice be issued to?

Personal Liability Notices can be issued to individuals who were "officers of the body corporate". The word officers is defined in Section 121C (9) as including

a) "any director, manager, secretary or other similar officer of the body corporate, or any person purporting to act as such; and

b) in a case where the affairs of the body corporate are managed by its members, any member of the body corporate exercising functions of management with respect to it or purporting to do so".

Does this mean that company managers may be issued with a Personal Liability Notice?

No. Generally a Personal Liability Notice will only be issued to a person who is not a director or secretary of the company where that person substantially manages the affairs of the company or is a person in accordance with whose direction or instructions the directors of the company are accustomed to act.

Within what circumstances will a Personal Liability Notice be issued?

In law, a Personal Liability Notice may be issued whenever contributions are unpaid because of the neglect of a culpable officer. Clearly any failure to pay on time can constitute "neglect" as a taxpayer who knows of an obligation - the need to pay National Insurance Contributions by a certain date - and fails to fulfil that obligation is negligent.

However, in practice, a Personal Liability Notice will only be issued in the most serious cases. What we are looking at is persistent failure to pay against a background of other payments being made on time or, for instance, the continued drawing of a director's salary. And we will be focusing on cases where the culpable officer has been involved with other companies which have had persistent or substantial failures to pay.

Before consideration is given as to whether a Personal Liability Notice should be issued the full facts behind the company's failure to pay the "contributions" due will be enquired into. We will aim to identify the officers whose negligence or fraud has led to the non-payment and the extent of the responsibility of each culpable officer.

Who will decide whether a Personal Liability Notice should be issued?

Local offices will make enquiries into the reasons why the company did not pay the "contributions" on time, but a central unit will decide on whether to issue a Personal Liability Notice. This unit will also decide what proportion of the outstanding "contributions" should be apportioned to each culpable officer.

What factors will be taken into account when deciding whether a Personal Liability Notice should be issued?

Broadly there are 6 aspects of a case which will be considered when deciding whether to issue a Personal Liability Notice. These are:

  • Has there been a failure to pay contributions on time?
  • Who were the officers of the company?
  • Was the failure due to the negligent or fraudulent behaviour of an officer of the company?
  • Which officers acted negligently or fraudulently?
  • What is the amount of contributions which could be subject to a Personal Liability Notice?
  • How should that amount be apportioned between the culpable officers?

What happens to the amount owed by the company when a Personal Liability Notice is issued?

The issue of a Personal Liability Notice does not change the position of the company and it is still liable to pay the outstanding "contributions". If any amount is paid in respect of a Personal Liability Notice then the amount due from the company is correspondingly reduced. Equally if the company pays any of the outstanding "contributions" then the amount charged on a Personal Liability Notice will be reduced.

Example

A Ltd owes £12,000

A Personal Liability Notice has been issued to two directors Mr X and Mr Y. It has been determined that Mr X was largely responsible for not paying the National Insurance Contributions on time, although Mr Y knew about it. Mr X's apportionment is 80% (£9,600) and Mr Y's 20% (£2,400).

A Ltd pays £7,000, which leaves £5,000 still outstanding. So the revised amount due from Mr X in respect of his Personal Liability Notice is now £4,000 (80% of £5,000) and that due from Mr Y is now £1,000 (20% of £5,000).

Can an appeal be made against the issue of the Personal Liability Notice?

Yes. An appeal can be made on the following grounds.

  • That all or part of the contributions included in the notice should not have been included in the notice.
  • That the failure to pay the contributions was not a result of fraud or neglect.
  • That the person named on the notice was not an officer of the company at the time of the fraudulent or negligent failure to pay.
  • That the level of the apportionment of the debt to the person named on the notice was unreasonable.

The Special Commissioners will hear appeals. Payment of the amount charged on the Personal Liability Notice can be postponed until the Special Commissioners reach a decision. Where Personal Liability Notices were issued to more than one officer of the company then all the appeals may be heard together.

What happens after the Special Commissioners decide?

Either the culpable officer or the Inland Revenue can appeal to the High Court.

In some cases one person's appeal may succeed and another person's fail. For instance it may be decided that one director was not responsible for the failure to pay the "contributions" on time , but that the other was. In such cases the amount due from the culpable director will be increased to reflect the amount no longer due from the other director.

(Superceded by INTM 164150)
Double taxation relief: Dividends from groups taxed overseas as a single entity - Section 803A, ICTA 1988

This article brings together guidance previously put on the Inland Revenue website and additional situations on which we have given individual guidance. All references are to the Income and Corporation Taxes Act 1988 (ICTA 1988) unless otherwise stated.

Paragraph 15 of Schedule 30, Finance Act 2000 introduced a new Section 803A to ICTA 1988. In some countries the law may provide that one company may pay tax in respect of the aggregated profits of itself and others as if they were a single entity. The new provisions at Section 803A provide that for the purposes of calculating credit relief the relevant profits of these companies are regarded as a single aggregate figure in respect of a single company and the foreign tax paid by the responsible company was paid by that single company.

The consolidation rules of some countries provide that under certain circumstances foreign companies may be brought into the consolidated group for tax purposes. The Section 803A provisions are framed so that only companies that are resident as a matter of fact in the country concerned may be included in the calculations of relevant profits and foreign tax for the deemed single entity. By the same token, a dual resident company will be included in the calculation of underlying tax on the group as a single entity if it satisfies the criteria for inclusion.

It is possible that a consolidated group may have no relevant profits at all, but be subject to foreign tax. If a company within the group pays a dividend to a United Kingdom company it is possible that it may be disadvantaged under the new rules, which came into play for dividends paid to the UK on or after 21 March 2000. Because the start date for other aspects of the Finance Act provisions were extended, we will accept that underlying tax may continue to be calculated using relevant profits for the individual companies in accordance with existing practice and information leaflets for dividends paid to the UK prior to 31 March 2001.

The following brings together various questions International and the Underlying Tax Group have been asked on taxation of a group as a single entity.

Does this extend to include entities other than companies?

In some countries it is possible to include, for example, branches in a consolidated group for tax purposes. S803A specifically states that the entities to be included must be resident in the country concerned. It does not therefore extend to branches of non-resident companies. (See examples below).

How precisely should consolidation be defined for the purposes of Section 803A?

Section 803A applies where "tax is payable by any one company …. " In the US, for example, tax may be paid by any or several members in a single year, and not necessarily by the company which is the common parent. The legislation covers any type of consolidation that falls within the stated criteria.

There may be more than one consolidated group in a country, and the legislation is framed so that each tax-filing group will be treated as a "single taxable entity" for the purposes of Section 803A. There would be no "super-consolidation" unless the relevant country law permitted that.

How far does the legislation extend within a country?

Similarly, in some countries a consolidated group may own more than 10% of the shares of a second consolidated group, but an insufficient amount to permit consolidation of the second group with the first under local law. In these circumstances, the legislation does not permit the first and second groups to be treated as a "single taxable entity".

The legislation does not extend to "quasi-consolidations", where countries do not permit the filing of consolidated tax returns, even if they arrive at the same result by allowing the surrender of tax attributes among companies.

How should a consolidated group that includes a branch be split to exclude the relevant profits and tax in respect of the branch?

The starting point will be, as now, the accounts of the relevant companies. Similarly there will normally be separate accounts for the branch in existence, and these will be the primary indicators of the relevant profits and tax to be excluded from the single taxable entity under Section 803A. If no separate branch accounts exist, the facts and circumstances, and the particular information available in that particular case, will be considered on a case by case basis to determine the profits arising for the branch, in the same way as happens now for, e.g. Section 797 purposes.

What if a partnership or an entity that the UK does not recognise as coming within the definition of a company is included?

Suppose the foreign tax consolidation consists of a number of companies and a partnership. The pre-conditions of S803A are satisfied for the companies, but the partnership is not, by definition, a company and so it cannot be included. As for a branch of a foreign company, the appropriate amounts of relevant profits and foreign tax will need to be excluded from the calculation of underlying tax for the S803A entity. The same will apply for foreign entities that the UK does not recognise as a company. The question of whether a foreign entity satisfies the UK tests for a corporate entity can often be difficult. If the matter is material in a particular case, advice should be sought in the first instance from International (External Relations Group).

What happens when there is one consolidated grouping for Federal Tax purposes, but State taxes are paid on an individual company basis?

Suppose corporations A, B and C are in a consolidated group for federal tax purposes and therefore within S803A. A dividend paid by A is treated as paid by A/B/C out of the aggregate relevant profits of A/B/C and the foreign tax paid by A, B or C is paid by A/B/C. So if A also pays a State tax this will be included as part of the total foreign tax available for relief on an aggregate basis.

What if overlapping consolidations are permitted for different taxing jurisdictions within a country?

In some countries, federal, state and other local taxes may be paid. The underlying tax claimed on the eventual payment of a Case V dividend to the UK would comprise several elements in these cases. Consolidations involving different companies may be allowed for Federal as opposed to, say, State taxes. In such a case it may be necessary to calculate the amount of, say federal tax, on a consolidated basis, but the State tax might relate only to that one company. It will be a question of fact in each case, and if necessary the different taxes claimed for relief will need to be considered separately.

Suppose a joint venture is subject to a tax-sharing agreement which differs from the marginal tax paid on a consolidated return?

The legislation looks at the actual tax payable under local law and in accordance with any DTA applicable. Section 803A requires that companies joined in a consolidated tax return will be treated as a single taxable entity, and it is not possible to specify that the payment under a tax-sharing agreement can be considered as underlying tax in preference to the computation that would otherwise be made.

How are relevant profits and underlying tax calculated when a further dividend is paid out of a source where a previous dividend had been specified?

The intention in these circumstances is that, as far as possible, underlying tax and relevant profits should neither be counted twice, nor fall out of account. In general this will be most easily achieved by taking the residue of profits and tax remaining in the company after any amounts which have been specified. If this does not give an equitable result in any particular case, the full facts and circumstances should be discussed in the first instance with the Underlying Tax Group.

What happens on acquisitions and disposals?

If a new company is brought into the consolidated group it may bring accumulated profits with it. If the new parent can access these accumulated profits and pay a dividend out of them, then they should be included in the aggregate figure of relevant profits for the consolidated group. The converse will apply when a company leaves the group.

What if there are accumulated losses?

Pre-acquisition losses will be dealt with on a consistent basis. Where a group acquires a new member with accumulated profits that can be accessed to pay dividends, we will take into account the pre-acquisition profits and losses that have produced the accumulated profits, and the associated foreign tax paid. Where a group acquires a new member with an accumulated deficit, the pre-acquisition profits and losses that have produced the deficit will also be taken into account in arriving at relevant profits, together with any foreign tax paid.

Where a group has accumulated losses that exceed current profits, can it access the tax payable on those profits?

Section 799(3)(a) allows a company to specify that a dividend has been paid out of the relevant profits of a specified period. For example if a company has losses brought forward that will extinguish profits earned in the year, we will allow it to access (say) 2001 tax paid on its 2001 profits ignoring the accumulated losses, provided the dividend is paid out of 2001 profits on or before 31 December 2001.

If an overseas group is taxed as a single entity, for consistency and simplicity we will allow the deemed single entity to do the same as if it were a true single company in that country. So if a single company in the country concerned with sufficient distributable profits could specify the year for which a dividend is paid, then we will allow a deemed single company within S803A to do the same, provided that this deemed single company has sufficient distributable profits.

What paperwork is needed to support such a specification?

Dividend specifications normally arise in dividend resolutions, which would not exist for a notional single company. The Revenue will accept a Board Resolution of the company declaring the dividend. This should minute that, for the purposes of UK double taxation relief, the dividend is deemed to be out of the relevant accounting period of the single company.

Can US Generally Accepted Accounting Practices (GAAP) accounts be used?

If US GAAP accounts are produced for a consolidated group they will be accepted by the UTG as a basis for determining relevant profits provided that this is done on a consistent basis.

Examples

S803A: Example A

Example A

Pre-FA2000 position

France_3 has paid tax of 105 but it is not paying up a dividend to the UK. So strictly there is no UK source against which to set the tax it has paid, whether in respect of its own profits or those of the other French companies. Similarly the dividend of 100 paid by France_1 has no underlying tax attached to it, as this would need to be paid by France_1.

In practice, the consolidated tax would be apportioned between France_1, 2 & 3 on the basis of taxable profits. This was on an extra-statutory basis.

Post FA2000

S803A

  • The non-resident companies are treated as if they were a single company;
  • Dividend treated as paid by that deemed single company.

So dividend of 100 deemed to come from France_1/2/3, and France_1/2/3 has paid 105 tax in respect of total profits of 300: so underlying tax in respect of dividend is 105÷3 = 35.

S803A - Example B (Branch included)

Example B

Pre-FA2000 position

The branch has paid tax of 105 but has no profits itself chargeable to UK tax. There is therefore no relief possible for the tax it has paid, whether in respect of its own profits or those of the French subsidiaries.

Similarly the dividend of 100 has no underlying tax attached to it, as this would need to be paid by France_1.

Post FA2000

S803A(1):

"Under the laws of [France], tax is payable by any one company resident in that territory …. in respect of the aggregate profits …… of that company and one or more other companies so resident, taken as a single taxable entity."

Although the UK company has paid tax in respect of the aggregate profits of that and other companies, it is not itself resident in France and S803A does not therefore apply.

So there is no change from the Pre-FA2000 position. Consolidated tax would still be apportioned on an extra-statutory basis.

S803A - Example C (Branch included)

Example C

Pre-FA2000 position

France_1 has paid no tax, so the dividend of 100 has no underlying tax attached to it, as this would need to be paid by France_1.

No element of France_3’s profits has been paid to the UK as a dividend. Strictly there is therefore no relief possible for the tax it has paid, whether in respect of its own profits or those of the other French companies.

In practice, the consolidated tax would be apportioned between France_1, 2, 3 & the branch on the basis of accounting profits. This was on an extra-statutory basis.

Post FA2000

S803A:

  • The non-resident companies are treated as if they were a single company;
  • Dividend treated as paid by that deemed single company.

So dividend of 100 deemed to come from France_1/2/3. But France_1/2/3 has paid 105 tax in respect of total profits of 300, which includes 100 profits from the branch of a company not resident in France. This element cannot therefore be included in the deemed single entity under S803A.

The branch profits will be included in the Case I or Case V profits for UK PLC, and if they are excluded from the relevant profits on which France_3 has paid tax this should mean there is no double- or non-counting. Relevant profits for the France_1/2/3 group then become 200.

Similarly the 35 tax in respect of the branch paid by France_3 is not in respect of the profits of "…. that company and one or more other companies so resident,…." and cannot therefore be included as part of the underlying tax paid by, and in respect of, the deemed single entity. So underlying tax in respect of France_1/2/3 is 70, and that attaching to the dividend of 100 is 70÷2 = 35.

Can the tax paid by France_3 on behalf of the France branch of UK Plc be accessed by it? Yes: Statement of Practice 6/88 covers this situation and others of a similar nature. So the branch will have profits of 100 assessed to UK tax and be able to credit (subject to S797, ICTA 1988) up to 35.

Contact Points

Further advice in a particular case may be obtained from

Paul West
International (External Relations Group),
(Underlying Tax Group)
Fitzroy House
PO Box 46
Castle Meadow Road
Nottingham
NG2 1BD

Tel: 0115 974 2020

Or

Susan New
International (External Relations Group)
Victory House
30-34 Kingsway
London
WC2B 6ES

Tel: 020 7438 7250
E-mail: Susan.New@ir.gsi.gov.uk

Personal Pension schemes - New Extra statutory concession

The Inland Revenue has today published a new extra-statutory concession ESC A101 which will ensure that the amount of tax relief obtained by individuals in respect of contributions they pay to approved personal pension schemes properly reflects the Government's intentions.

Section 639(5A) Income and Corporation Taxes Act (ICTA)1988, as inserted by paragraph 15(7) of Schedule 13 to Finance Act 2000, is concerned with ensuring that an amount of higher rate tax relief is obtained by individuals in respect of eligible personal pension contributions paid in any year of assessment where higher rate liability arises, or would arise if the contributions had not been made. (The provision takes effect for contributions paid in the year of assessment 2001-02 and subsequent years.) Section 639(5A) provides for higher rate relief by increasing the basic rate limit by the total amount of the contributions, which is eligible for tax relief. The intention is that the relief should be given at the basic rate to all contributors and, where appropriate, that further relief should be given if the contributor is chargeable to any tax at the higher rate, or would be so chargeable were the basic rate band not increased in accordance with Section 639(5A). For these purposes, the amount chargeable at the higher rate includes gains charged to capital gains tax at that rate under the Taxation of Chargeable Gains Act (TCGA) 1992.

But Section 639(5A)(b) refers only to total income charged to income tax, and does not mention capital gains. This means that the extension of the basic rate band applies only where the higher rate liability arises, or would arise, in respect of income, and not where it arises, or would arise, only in respect of capital gains. So, according to the strict letter of the law, if the taxpayer's income before the relief is below the basic rate limit, although chargeable gains would take him above that limit, the basic rate band is not increased.

The new extra-statutory concession provides that the adjustment to the basic rate limit provided by Section 639(5A) will apply in such cases. It takes effect in relation to contributions paid in the year of assessment 2001-02 or in any subsequent year of assessment.

The text of the concession is set out below.

ESC A101. Personal pension schemes: tax relief for contributions.

1. Section 639 of the Income and Corporation Taxes Act 1988 (ICTA) provides the rules for giving tax relief on members' contributions to approved personal pension schemes. It has been amended by paragraph 15 of Schedule 13 to the Finance Act 2000 for contributions made in the tax year 2001-02 and subsequent tax years. The new subsection (3) of Section 639 provides for a member to obtain relief at the basic rate by deducting from his or her payment to the scheme administrator an amount equal to basic rate tax on the payment. The new subsection (5A) provides that the basic rate limit is increased by the amount of the payment where the member:

(a) is liable to income tax at the higher rate on any income for the tax year in which the payment is made, or

(b) would be so liable if the adjustment were not made.

The consequence is that an additional amount of income is charged at the basic rate instead of the higher rate, so that the member obtains relief at the higher rate on some or all of the payment.

2. The rules in Section 639 as amended do not, however, provide for any relief to be obtained on the payment at the higher rate where the member, although not liable to any income tax at the higher rate in the tax year in question, would be liable to some capital gains tax at the higher rate in that year. This will happen in any case where the member's income is below the basic rate limit, but some capital gains tax would be charged at the higher rate in accordance with Section 4 of the Taxation of Chargeable Gains Act 1992. In order that these members should not be disadvantaged by the new rules, the adjustment to the basic rate limit provided by Section 639(5A) ICTA will also apply in respect of any member who:

(a) is liable to capital gains tax at the higher rate on any chargeable gains for the tax year in which the payment in question is made; or

(b) would be so liable if the adjustment were not made.

! This Article Is No Longer Current (Deleted Index 2004)

Directions that ITSA Payments on Account do not Apply

We have realised that SAT2, "Self Assessment; the legal framework", issued in 1995, is misleading on the subject of directions that income tax self assessment payments on account do not apply. It suggests that we will issue directions in much wider circumstances than we actually should do.

Section 59A(9) Taxes Management Act 1970 (TMA) gives an officer the power to direct that payments on account do not apply to a specified person for a particular year. SAT2 says, in paragraph 3.54, that we will make such directions where, for example, an employee has received an exceptional receipt that triggers payments on account for the following year but it is clear the payments are unnecessary.

However, where a source of income has ceased or a customer has received an unusual payment, we cannot know what other circumstances will apply in the following year and so we cannot tell that payments on account will not be properly due.

We issue directions, under S59A(9) TMA, that payments on account do not apply:

  • where the taxpayer has ceased to be within Self Assessment
  • for tax equalised foreign national employees whose employers have entered into an agreement with the Inspector to use the ‘Modified PAYE Scheme’.

A customer can still make a claim to reduce the payments on account, under S59A(3) or (4) TMA, giving the reasons and at his or her own risk of an interest charge on any payments that turn out to have been due. Both directions by an officer and claims by the customer must be made before 31 January following the year of assessment.

Using "Discovery" Provisions with an open Enquiry Window

We have been reviewing one aspect of our internal procedures in the light of experience with self assessment enquiries. Where we have concerns about a self assessment return our normal approach is to open an enquiry. However, where a return has been made fraudulently or negligently, the legislation at Section 29 Taxes Management Act 1970 (ITSA) and at paragraphs 41 to 45 of schedule 18 to Finance Act 1998 (CTSA) allows a discovery assessment to be made without opening an enquiry. This can be done even though the deadline for opening an enquiry into the return has not passed. Our current guidance, in Enquiry Handbook (EH571), says that if an enquiry window is open we should normally open an enquiry. But we ask staff to submit to Head Office for advice if they have a case where they feel that it would be more appropriate to make a discovery assessment.

Normally, and in the great majority of cases, where we have concerns we will open an enquiry. But there are a few cases, in limited circumstances, where it is easier and quicker to raise a discovery assessment (or recognise the potential to do so in the amount of a contract settlement) despite an open enquiry window. We are now changing our guidance to describe those cases where it is quicker and easier, both for our staff and our customers, to reach agreement using the discovery provisions.

The cases where we would (or would recognise the potential to) raise a discovery assessment are those:

  • Where a taxpayer negligently sends in an incorrect return while an earlier return is still under enquiry, and the later return seems likely to contain errors similar to those identified during the enquiry. This is particularly apt where we have agreed with the customer a formula by which to calculate additions to profit or the same contentious issue arises for all years.
  • Where a previously undisclosed source of income is returned and acceptable figures for that source in previous years are supplied without returns being issued.

To open a series of enquiries or issue returns in these circumstances introduces delay and further paperwork. It will often be possible for the officer to agree with the customer that the better course is to include these later or earlier years in a total settlement or for discovery assessments to be made.

Interpretations

Capital Gains Tax (CGT): Holdings Of Shares: Matching Acquisitions And Disposals - A Second Instalment

An article on matching share acquisitions and disposals in Tax Bulletin 52, published in April 2001, set out the Revenue’s views on how the matching rules work in some circumstances. The points concerned the "same day" rule in Section 105 Taxation of Chargeable Gains Act (TCGA) 1992 and the "bed and breakfasting" rule in Section 106A(5). This second article discusses how the matching rules work when shares are transferred between a married couple and Section 58(1) TCGA applies so that the transfer is treated as being made at no gain/no loss to the transferor.

Whenever necessary, this article assumes that:

  • Section 58(1) applies to the transfer between husband and wife;
  • the normal share matching rules in Section 106A apply; and
  • purchases and sales are at arm’s length to unconnected persons.

The first point in relation to husbands and wives is that a transfer under Section 58(1) of shares, or any other asset, is still a disposal by one spouse and an acquisition by the other one for CGT purposes. Section 58(1) does not change the date on which either spouse’s disposal or acquisition are made. It simply fixes the disposal and acquisition value at whatever amount results in there being neither gain nor loss on the transfer.

From the point of view of the spouse making the disposal, this means that the shares transferred are identified with acquisitions under the normal Section 106A rules, and the deemed amount of consideration for the transfer follows from that. From the other spouse’s angle, those shares are treated as a single acquisition and will be matched with disposals by him/her under the normal rules by reference to the date on which they were acquired on the transfer.

If and when the transferee spouse comes to dispose of the shares and needs to work out what taper relief is available, he/she will have to take into account paragraph 15 Schedule A1 TCGA 1992. This lays down that, where there is a transfer within Section 58(1), the transferee spouse is treated for the purposes of taper relief as acquiring the asset at the time when the other spouse originally acquired it. This is relevant to determining the transferee spouse’s qualifying holding period and the relevant period of ownership.

There is therefore a tension between:

  • the basic identification rule, which treats the shares as acquired at the date of the transfer, and
  • the taper rule, which looks back to the date of original acquisition by the first spouse.

This tension does not matter either if the shares transferred were originally acquired on the same day, or if they were acquired on different days but the transferee spouse disposes of them all in one go. In this latter case the different holding periods or relevant periods of ownership are simply applied to the relevant parts of the total holding. But if the shares transferred were originally acquired on different days, and the spouse receiving the shares disposes of only some of them, it is not immediately clear how to work out the holding period(s) and relevant period(s) of ownership of the shares disposed of on that occasion.

Our view is that in these circumstances:

  • the spouse receiving the shares is treated as acquiring them as a single asset;
  • a disposal of some of those shares is therefore a part-disposal and the cost of the shares is apportioned under the normal part-disposal formula in Section 42;
  • the Section 42 apportionment does not attribute to the cost of the holding to any particular shares within it; and
  • for taper purposes you apply the normal LIFO (last in, first out) rule in working out the period for which the shares disposed of have been held by both spouses overall.

A simple illustration of how this works out in practice is as follows:

  • on 1 June 1998 Jack buys 3,000 shares in XYZ plc @ £2.50 = total cost £7,500;
  • on 1 July 1999 Jack buys another 1,000 shares in XYZ plc @ £3.00 = total cost £3,000;
  • on 1 January 2000 Jack transfers 1,500 of the total 4,000 shares to his wife Jill;
  • on 1 August 2001 Jill sells 1,200 of her 1,500 shares @ £4.00 = total proceeds £4,800.

Jack’s position is simple. The 1,500 shares he gave to Jill on 1 January 2000 comprised the 1,000 shares acquired on 1 July 1999 and 500 of the 3,000 shares acquired on 1 June 1998, under the LIFO rule. His disposal proceeds under the no gain/no loss rule in Section 58(1) are:

1000 shares @ £3 = £3,000
+ 500 shares @ £2.50 = £1,250
deemed disposal proceeds = £4,250

Jill’s disposal on 1 August 2001 produces a gain as follows:

Disposal proceeds £4,800
(ignoring disposal costs)  
Cost £4,250 x 1,200 *
1,500		 £3,400
Chargeable Gain £1,400

* the pragmatic method of apportionment under Section 42 by reference to the number of shares disposed of and retained, adopted in the Capital Gains Manual at paragraphs CG50727-8.

For taper relief purposes Jill must look through her acquisition to the original purchases by Jack in order to work out her total holding period. These shares were originally acquired by Jack as follows, again applying the LIFO rule -

  • 1,000 were acquired on 1 July 1999
  • 500 were acquired on 1 June 1998.

5/6ths (1,000/1,200) of the chargeable gain arises on an asset that was held for two whole years and 1/6th on an asset held for three whole years. Taper relief will be calculated accordingly.

Enterprise Investment Scheme - Qualifying Trades (Section 297 ICTA 1988)

(This article is an updated version of one originally published in Tax Bulletin for August 1995)

For the purposes of the Enterprise Investment Scheme (EIS), the requirements which a trade must meet if it is to be a qualifying trade are set out at Section 297 Income and Corporation Taxes Act (ICTA) 1988. Section 297 ICTA 1988 subsection (2) provides that the trade must not consist of any of the various activities listed in that subsection, neither may such activities, taken together, form a substantial part of the whole trade. (These activities will be referred to below as "excluded activities"). In order to decide whether a particular trade is a qualifying trade, it is therefore necessary to ascertain whether it includes any excluded activities.

This article focuses on the three types of excluded activity listed in paragraph (e) of Section 297(2) ICTA 1988 - leasing, receiving royalties and receiving licence fees. The article applies equally for the purposes of the Corporate Venturing Scheme, Enterprise Management Incentives and the Venture Capital Trust Scheme, for which the corresponding rules are found in Paragraphs 25-26, Schedule 15, Finance Act 2000, Paragraphs 18-19, Schedule 14, Finance Act 2000 and Paragraph 4, Schedule 28B, ICTA 1988, respectively.

Leasing

This is defined in the statute as including letting ships on charter (though this exclusion is subject to an exception, which is set out in Section 297(6) ICTA 1988) and letting other assets on hire. It thus covers any trading activity which consists in allowing the customer the use of the trader’s property. Examples are television rental, video hire and the provision of self-storage warehousing facilities. It applies where, subject to reasonable conditions imposed by the trader, the customer is free to use the property for the purpose for which it is intended.

One area which has been found to give rise to difficulty is what is, and what is not, car hire. The question to be considered here is whether the person using the car is the company or the company’s customer. On the one hand the company may itself use the car to provide a transportation service for customers. On the other hand the company may provide the car to the customer as a transportation facility, for use by the customer. The latter activity constitutes hire of an asset. A taxi service is likely to be a transportation service. By contrast, what is offered by a company providing chauffeured car hire is likely to be a transportation facility; the fact that the customer is not personally driving the car does not mean that that person is not the person using the car. But what is important is not the label "taxi service" or "chauffeured car hire" but the true nature of the contract between the parties.

Receiving Royalties and Licence Fees

Royalties or licence fees will be received where property rights of certain kinds are exploited by granting permission to others to make use of that property. But there will be cases where, although the ‘sales’ are made under licence, the receipts are nevertheless consideration for the supply of goods - for example, the retailing of CDs.

Where there is an activity of receiving royalties or licence fees there is one exception to the general exclusion. This is set out for the EIS at Section 297(4)-(5C) ICTA 1988, as enacted by Finance Act 2000. It applies, broadly speaking, in certain cases where the receipts are attributable to the exploitation of assets such as intellectual property which have been created by the company itself or a group company.

Licence Fees

Licences may be granted as a means of exploiting an interest in land. But in some situations the grant of the licence is merely incidental to an activity of supplying services. In such cases it is considered that Section 297(2)(e) ICTA 1988 is not in point; for example, what the proprietor of a cinema offers in return for payment for a ticket, is not just to admit the customer and provide a seat but to show a film.

This principle can be illustrated by looking at activities concerned with the provision of sports and leisure facilities. At one extreme, a simple activity of making sports facilities available to the general public, with no provision of services, would consist of little more than charging a fee in return for the right to use property. This would be an activity of receiving licence fees. But such a situation would be exceptional. A more commonly encountered activity might be operating a health club which provides a high level of services, including active supervision and advice from qualified staff. Here the licence to enter the premises and use the equipment would be merely incidental.

In some cases where fees for admission are received, while is no direct provision of services to customers, continuous work is required to keep the property in a fit state for use by them. The main question to be considered in any such case is the extent to which the fees relate to the cost of such work.

(Superseded by BIM75050)

Anticipated Income Tax Loss Claims

We have been asked why we do not process Income Tax loss claims under Sections 380 and 381 Income and Corporation Taxes Act (ICTA) 1988 which are made before the end of the accounting period giving rise to the loss. In this article, the term "accounting period" is used to refer to a period for which accounts are drawn up.

In the Help Sheet IR227 on IT losses we say that people can claim loss relief as soon as they know how big the loss is. Normally that will be when the accounts have been prepared. But we do not insist that loss relief claims should be quantified precisely. A "best estimate" claim could be made in advance of accounts being prepared, with the final figure following as soon as possible.

However, our view is that it is not possible to anticipate a loss by claiming it before the end of the accounting period.

In most cases a taxpayer will not be able to establish with any certainty until the accounting period is finished that they have made a loss. It would be unusual for a trader to know that a loss had been made before having evidence for it, in the form of their accounts.

But in some rare situations it may be possible to say even before the end of the accounting period that there has been a loss, and to quantify it with some accuracy. One example is where a partnership is set up to invest in UK films. The only transaction in an accounting period may be an investment in a single qualifying film, giving a very high certainty that a loss will be made. And the approximate size of the loss may be quantifiable at a very early stage.

Even if we are satisfied that there would be an economic loss (i.e. the outgoings will exceed all possible income for the period) it is not possible to say that a loss has arisen for tax purposes until the accounting period is complete.

In the case of Jones v O’Brien (60 TC 706), involving Case V income, Hoffman J as he then was held that the Revenue could not raise an in-year estimated assessment on income assessed on a current year basis:

Schedule D charges annual profits or gains and tax chargeable under Case V on profits or gains arising in Ireland is computed on the full amount of the income arising in the year of assessment. There is no charge to tax on the income per diem in diem as it arises during the year. In my view the imposition of liability to tax on the full amount of the income arising in a year necessarily entails that the year has elapsed. Until then the profits in respect of which he is liable to tax will not exist and therefore no charge to tax can attach. (714)

Section 382(3) ICTA 1988 provides that losses shall be computed "in like manner and in respect of the same period" as profits. This means that the comments in the O’Brien case are equally applicable to anticipated loss claims.

The same principle applies where the results of more than one accounting period are required to compute the profit/loss for a year of assessment.

For example, a trader’s first accounting period may run from 1 December 2000 to 31 January 2001 and give rise to a loss. But they cannot claim loss relief until all of the accounting periods which will contribute to the profit/loss for 2000-2001 are complete. Only then is it possible to say whether a loss exists for 2000-2001.

This is in contrast to what happens with a continuing business. A trader might contact their tax office on 28 February 2002, claiming to carry back losses from their accounts to 31 October 2001 (2001-02) against other income for 2000-01. In those circumstances there would be no problem with our processing the request as a stand-alone claim (Schedule IB TMA 1970) immediately. We would not need to know the business results for the rest of 2001-02 because they relate to the following year of assessment.

It may be worth reminding readers about another related matter concerning loss carry back claims. A claim to carry back relief relates to the later year. So although relief is given in terms of the reduced liability of the earlier period, the self assessment for the earlier period is not affected. Payments on account for the later year will be based on the liability for the earlier year before the carry back claim was made.

It may be appropriate however to make a claim to reduce the payments on account for the later year because the total Income Tax and Class 4 NIC payable for the later year (less any tax deducted at source) will be less than the total of the payments on account based on the liability for the previous year.

Take the case of someone who draws up their accounts to 31 March, and who has net Income Tax and Class 4 liability for 1999-2000 of £10,000. This is payable as follows:

1st payment on account 31/1/2000 £4000
2nd payment on account 31/7/2000 £4000
balancing payment 31/1/2001 £2000

The payments on account have been paid but the balancing payment remains outstanding.

Payments on account of £5000 each are set up for 2000-2001, payable on 31/1/2001 and 31/7/2001. These have not been paid.

On 20 April 2001 they make a claim to carry back losses from the year 2000-2001 to 1999-2000, based on a "best estimate" of their loss for the year to 31 March 2001. At the same time, they claim to reduce the payments on account for 2000-2001 to £1000 each on the grounds that their net liability for that year will be less than the payments on account based on 1999-2000.

The estimated loss relief amounts to £5000. They will get the relief as follows:

  • £2000 is set off against the balancing payment due on 31/1/2001 with an effective date of 20/4/01
  • £1000 is set off against the (revised) first payment on account due on 31/1/2001 with an effective date of 20/4/01(interest under S86 TMA is due on both these charges, from 31/1/2001 to 20/4/2001)
  • £2000 is repaid (no repayment supplement is payable)

The 2nd payment on account due on 31/7/2001 is £1000.

The same principle applies to all types of claim covered by Schedule 1B.

Miscellaneous

(Superseded by CISM3215)

Subcontractors in the Construction Industry (The Multiple Turnover Tests): Expiry of Extra Statutory Concession B52

ESC B52 ceased to apply from the 1 August 2001.This concession allowed a subcontractor business to count the maximum number of relevant persons in the six months prior to the date of its application rather than in each of the years of the test.

It was introduced to help those businesses where the normal test would have involved counting relevant persons who no longer contributed to generating income for the business but remained either shareholders or directors or partners in name only. It was felt that very few businesses would have begun to re-organise without knowing the level at which the turnover thresholds would be set. Details of the intended turnover thresholds were announced on 9th June 1998 (PR90/98). This concession was announced on the 23rd October 1998 (PR132/98).

When the ESC was first published, it was stated that it would expire on 31 July 2001.

! This Article Is No Longer Current (Deleted Index 2004)

Increase in the Youth Rate of the National Minimum Wage

The youth rate of the national minimum wage will increase to £3.50 per hour from 1 October 2001 and, subject to the economic conditions at the time to £3.60 from 1 October 2002. Workers aged 22 years and over who start a new job with a new employer and do accredited training, can be paid the accredited training rate of minimum wage, this rate will also increase to £3.50 per hour from 1 October 2001. The accredited training rate can only be paid for the first six months of employment.

The Government announced that it would accept these recommendations made by the Low Pay Commission in the second volume of their third report published in June. The Government also accepted the recommendation, to increase the accommodation offset from a maximum of £19.95 to £22.75 per week from 1 October 2001.

In the first volume of their third report the Low Pay Commission recommended that the main rate of minimum wage should be increased to £4.10 per hour from 1 October 2001 and subject to economic conditions increased to £4.20 from 1 October 2002. The Government accepted these recommendations.

Up to the minute information about the minimum wage can be obtained from the helpline on 0845 6000 678 or by visiting the DTI’s minimum wage website at www.dti.gov.uk/er/nmw. Interactive guidance is available from www.tiger.gov.uk

Stamp Taxes Bulletin

Stamp Taxes are planning to introduce a regular bulletin to keep customers up to date with the latest developments. It will be issued at least twice a year and aims to provide the answer to stamp duty questions on a variety of topics.

The first edition which is due for publication in July looks at stamp duty rules on goodwill and intellectual property, explains the basis of charging on fixed and moveable items and reminds customers about Adjudication procedures.

The Bulletin will not give all the information that customers need, but it aims to help people make the most of services available from their local Stamp Office, and understand their obligations in paying the right amount of tax.

The Bulletin will be available in both paper and electronic versions and it will be published on the Stamp Taxes website: www.inlandrevenue.gov.uk/so.

If there are any topics that customers would like to see included in future editions please contact, Pauline Hudd, the editor on 0117 9273742.

(Article deleted since index 2002)

The Social Security (Contributions) (Amendment No. 5) Regulations 2001

These regulations, which came into force on 26 July, will:

  • Ensure that certain cash rewards paid by the finance sector to retail staff do not incur a NICs liability (more detail provided below).
  • Correct an omission in the Social Security (Contributions) Regulations 2001 (which came into force in April 2001, consolidating secondary legislation on NICs for both Great Britain and Northern Ireland) to ensure that where an employee’s share option was not capable of being exercised after more than ten years (a "short option") there would be no NICs on the grant of the option (this is in line with tax treatment).
  • Confirm the existing NICs exemption on luncheon vouchers by ensuring that contributions are paid only on the excess value of the voucher over 15p (again in line with the tax treatment).
  • Revoke three pieces of Northern Ireland legislation which are obsolete as a result of the consolidation of NICs Regulations (see second bullet point above).

Cash rewards from third parties for recovered stolen credit cards.

Third parties such as credit card companies, banks and building societies pay cash rewards to the employees of retailers who detect lost or stolen credit cards, debit cards or cheque guarantee cards (these rewards are around £50 on average). As the third parties are employers in relation to the cash payments for the purposes of the PAYE regulations, they have to operate PAYE on the payments. But they do so under the ‘free of tax’ arrangements, so that they pay the employees’ tax liabilities on the awards.

To date no NICs have been charged on these third party rewards, but a recent review identified that the payments were in fact earnings attracting Class 1 NICs, so that the direct employers should have been taking the payments into account when calculating and accounting for Class 1 NICs.

To provide certainty, the Inland Revenue has decided to regulate so as to exclude from earnings for NICs purposes the rewards made by banks, building societies, etc. to workers, who are not their employees, who detect fraudulent use of credit, debit and cheque guarantee cards. The Regulations apply from 26 July but the Inland Revenue will not seek to enforce a liability on rewards paid by third parties before that date.

These Regulations do not change the existing liability of a bank or building society, or any employer, who provide cash rewards to their own employees. The value of such rewards must be included in the employee’s gross pay and PAYE and NICs worked out in the normal way.

Revenue Prosecutions

The Inland Revenue has a policy of selective prosecution involving the most serious cases across the whole of the tax system. The Board see this as an important part of its strategy to deter tax fraud and evasion. As part of the wider publicity for this strategy, details of Revenue prosecutions are occasionally published in Tax Bulletin.

Jail for company director who stole from public purse to buy a yacht and pay school fees

Company Directors David Kerry and William Bugh were sentenced on 21 June for stealing from the public purse. It was found during an investigation that both Directors had failed to declare company interests and lied in the disclosure report and certified statements to the Inland Revenue.

Kerry owns 30% of the company but hid this behind an offshore company and offshore trust and lied about what his interests were. He also used company money to pay credit card bills and school fees and both directors used company money to buy a motor yacht, which they kept in Lanzarote.

William Bugh had pleaded guilty at an earlier hearing at Hereford Crown Court on 26 March to two counts of cheating the Public Revenue. Mr Bugh received a 6 month suspended Jail sentence. He was also ordered to pay £7,500 towards the Prosecution costs and disqualified as a director for 3 years. Mr Kerry had also been found guilty on 25 May, after a nine-week trial, of five counts of cheating the public purse and was sent to jail for 4 years. He was also disqualified as a director for 10 years. A confiscation/costs hearing has been set for 7 September.

The total loss of Tax and interest to the public purse as a result of these actions is £540,000.

Majinder Singh Thethy

Mr Thethy was sentenced to 15 months in prison at Birmingham Crown Court on 29 June 2001 for Working Families Tax Credit order book fraud and benefits fraud, to which he pleaded guilty.

The case was worked jointly between SCO Solihull and the Benefit Agency Security Investigation Service (BASIS) in Birmingham. The case involved the theft of order books in transit by an unknown gang.

Mr Thethy was a heroin addict and worked in his father’s post office. A local drug dealer, in possession of a number of the stolen order books, approached him and he agreed to cash the stolen WFTC and Benefit order Books. A gang of females who would make themselves known to him brought the books into the post office. Mr Thethy then cashed the orders without question and was paid for his part in the fraud in cash and drugs.

Mr Thethy admitted that over a 3-month period he had cashed order books with face value of £22,000 knowing them to be stolen.

The identities of the drug dealer and the females used to cash the order books are not known.

Hotel proprietor jailed for 3 years for stealing from the public purse

Azhar Ahmed Khan aged 42 of Warwick Gardens, was sent to jail for 3 years.

Mr Khan was found guilty on three counts of common law cheat after a trial lasting ten weeks at Blackfriars Crown Court.

He had 3 jobs under PAYE and joined Newham Borough Council, again under PAYE, as an Estate Manager’s assistant in the Housing Department. He saw a business opportunity while working for the council and started his own letting business. At any one time Khan managed 60 properties, mainly in the East End of London. These were let mainly to homeless

People with the Council paying the rent. Khan owned 9 of the properties and sub-let the rest.

Through two of his companies Khan acquired The Granham House Hotel and The Da Silva Hotel. These hotels housed homeless people. He also acquired a tourist hotel in the West End of London - The London Continental Hotel.

Mr Khan as convicted of three charges involving false invoicing and false accounting.

The fraud covers the period from 1991 to 1996. Offences on the indictment were in fact committed while an investigation was in progress.

The Criminal Prosecution Group based at Manchester Special Compliance Office conducted the investigation. Mr Khan was the subject of a search by the Inland Revenue with evidence being gathered following the execution of search warrants at 21 locations in the South of England.

Mr Khan’s main defence was that he relied on his professional advisors at all times and it is they who let him down.

The total loss to the public purse is more than £400,000.

Inland Revenue Statements of Practice and Extra-Statutory Concessions issued between and 1 June 2001 and 31 July 2001.

Statement of Practice

Extra-Statutory Concessions

Number

Title

Date of Issue

A101

Personal pension schemes: Tax relief for contributions
Please see page (874)

10/08/01

Statement of Practice

There have been no Statements of Practice issued in this period.

You can get copies of SPs and ESCs from the Inland Revenue Visitors Information Centre, Ground Floor, South West Wing, Bush House, Strand, London WC2B 4RD or by ringing the Inland Revenue Enquiry line on 020 7438 6420.

Content

The content of Tax Bulletin gives the views of our technical specialists on particular issues. The information published is reported because it may be of interest to tax practitioners. Publication will be six times a year, and include a cumulative index issued on an annual basis.

  • You can expect that interpretations of the law contained in the Bulletin will normally be applied in relevant cases, but this is subject to a number of qualifications.
  • Particular cases may turn on their own facts, or context, and because every possible situation cannot be covered, there may be circumstances in which the interpretation given here will not apply.
  • There may also be circumstances in which the Board would find it necessary to argue for a different interpretation in appeal proceedings.
  • The Bulletin does not replace formal Statements of Practice.
  • The Board’s view of the law may change in the future. Readers will be notified of any changes in future editions.

Nothing in this Bulletin affects a taxpayer’s right of appeal on any point.

Letters on any article appearing in Tax Bulletin should be sent to the Editor, Sarah Guerra, Room S18, West Wing, Somerset House, Strand, London, WC2R 1LB or e-mail Sarah.Guerra@ir.gsi.gov.uk. We are sorry though that neither she nor our contributors will normally be able to enter into correspondence about Tax Bulletin or its contents.

Subscription

The subscription for 2001 is £22. If you would like to subscribe to Tax Bulletin please send your name and address together with your cheque to Inland Revenue, Finance Division, Barrington Road, Worthing, West Sussex BN12 4XH. Cheques should be crossed and made payable to "Inland Revenue".

If you would like information regarding Tax Bulletin, please contact Ms Nahid Shariff, Assistant Editor, on 020 7438 7842 or at the address below.

Copyright

Tax Bulletin is covered by Crown Copyright. There is no objection to firms copying the Bulletin for their own use. Anyone wishing to republish Tax Bulletin or extracts more widely should write for permission to Ms Nahid Shariff, Assistant Editor, Room S15, West Wing, Somerset House, Strand, London, WC2R 1LB.

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