The proposals are still far from clear and details will not be published until the summer, followed by a period of consultation and draft legislation later in the year. The new regime will start in April 2013 and, most worryingly, could affect arrangements which are already in place.

Whilst the new regime will only affect reliefs which are not capped at the moment (thus pension contributions and EIS/VCT investments, for example, will not be affected) there are some arrangements clearly at risk if other income is not high enough to avoid capping. These include:

1. Highly geared investments in buy-to-let properties;

2. Film partnership investments, where gearing is a major component;

3. Loss relief, where losses from one activity are being set off against other income.

At this stage, we have to hope that the outcome of the consultation phase will be a preservation of reliefs for arrangements put in place before the Budget announcement. Certainly, it is to be expected that the professional institutes will be making strong representations on these points.

Further information will be posted as it becomes available.

It was confirmed that the anticipated fall of the additional tax rate of 50% to 45% will take place from 6 April 2013 (next year).

It was also confirmed that the personal allowance will increase to £9,205 from 6 April 2013.

Further information on the proposed changes and the restrictions to reliefs will follow once the report has been published.

After 6 April 2012, excess pension savings over £1.5m will attract additional tax charges when they crystallise UNLESS you apply for “fixed protection”.

So, if you think that your pension pot will exceed £1.5m in value, you might need to make a fixed protection claim by 5 April 2012, thus allowing the existing £1.8m LTA to continue without penalty. There are a number of consequential side issues relating to the making of a fixed protection claim, so please discuss these with your pension’s adviser for advice on what to do.

Under the CDF, HMRC can write to a taxpayer saying that they are suspected of serious tax fraud. The letter will give the taxpayer an opportunity to enter into a contract with HMRC to disclose that fraud within 60 days. In return, HMRC will agree to remove the risk of criminal prosecution and agree to settle the investigation as a civil matter, leading to a financial settlement for tax, interest and penalties.

For further information please contact Geoff Adams (geoff.adams@britishtaxpayers.com)

This move has coincided with the signing of a new Double Taxation Agreement (DTA) with the UK, and the promised implementation of new laws in Liechtenstein allowing exchanges of information with the UK.

For further information please contact Geoff Adams (geoff.adams@britishtaxpayers.com)

Most employers have automatically assumed that the exemption applied to the latest generation of mobile phones, such as iPhones and Smartphones, but HMRC has disagreed.

However, in an apparent about face, HMRC has now confirmed that Smartphones can qualify for the exemption – and back-dated claims for tax refunds can be made for years back to 2007-08 if necessary.

Problems remain with some PDA’s that do not have full Smartphone capability, so please ask us for further information if applicable.

Any Tax Returns and payments received after the original deadline of 31 January 2012 but before 3 February 2012 will not be subject to the automatic £100 late filing penalty, nor will interest be charged.

However, HMRC has the answer to this problem –why not unburden your soul (and your bank balance) now and wipe the slate clean with a voluntary disclosure?

HMRC’s problem is that they have more information than they can effectively deal with, so the impetus to use that information in an efficient way in order to avoid having to mount costly investigations, whilst the information is current, must be significant.

From 31 January 2012, HMRC will be contacting people they suspect of serious tax fraud to offer them the opportunity to take advantage of the Civil Investigation of Fraud procedures by entering into a contract with HMRC to disclose the fraud within 60days. There are very few positives to receiving such a letter but one of them is that, in return for a full disclosure, HMRC will not undertake a criminal investigation with a view to prosecution.

This is a natural progression of the way that all HMRC enquiries are evolving i.e.
placing more of the compliance burden and cost on the taxpayer as opposed to the public purse. Those clients who do have something to hide would be well advised to make the disclosure as HMRC’s press release promises a full investigation and, in some cases criminal prosecution.

It also invites clients to consider a voluntary disclosure using the same contract to disclose the fraud and with the same conditional immunity from prosecution. We have yet to establish the quality of the information HMRC holds in each of these cases but what is always of paramount importance in such cases is the need to analyse the information calmly and objectively before deciding whether to accede to HMRC’s request for a disclosure. After all, HMRC’s information may be inaccurate and any disclosure should be looked at with a view to establishing whether the client’s actions could be construed as innocent error or carelessness rather than deliberate action. In such cases the potential penalty loading can be reduced substantially.

Note: this is a reprint of an article prepared by CCH who underwrite the Premier Fee Protection Service which is offered to all our clients.

For further information, please contact Geoff Adams

From April 2012 this will no longer apply and gains will no longer be chargeable, and losses will no longer be relievable by individuals, trustees and personal representatives of deceased persons.

Therefore in order to determine an Individual’s UK residency position we must continue to refer to H M Revenue & Customs (HMRC) guidance in the form of HMRC6 and case law.

Under current guidance an individual may break residence with the UK by leaving through a settled purpose or by full time employment abroad.

In order to break residence through full time employment abroad, the individual must be in a full time contract of employment overseas for at least one complete tax year and keep days in the UK to below 91 on average, when looked at over a maximum of a 4 year period.

When an individual returns to the UK, incidental duties may be performed in the UK without them affecting ones residence position or without the days being subject to UK taxation. HMRC also confirmed a number of months ago that if an individual performed less than 10 days of substantial duties in the UK, it would not affect their residence position, but tax should be paid on those duties.

This is quite different from the proposals under STaRT as it was thought that the meaning of incidental duties would be scrapped. It had been proposed that an individual could work no more than 20 days (a day being more than 3 hours of work) in the UK, including incidental and substantial duties, without it affecting there residency status where they had left the UK for full time work abroad.

If you have concerns that with the delayed and still uncertain introduction of STaRT you may not be able to break residence with the UK or would like to discuss this further, please contact me.