660A appeal lost

[Bradley]

Re:Tax Returns

Just put in the white space on your tax return that although it looks as if you're caught by s660 you've decided not to follow Revenue guidance and have left your spouse's divis off your return.

After one year of the statutory submission date if they haven't opened up an enquiry they can't then do so i.e. you're in the clear - for that year at least.

They're never going to have time to look at everyone's returns so my guess is that quite a few will escape.

[IR35 Avoider]

Re: Re:Tax Returns

My accountant said it would involve form filling ( whether gifted or bought from my wife ) that may be a 'come and get me' indicator to the IR.

I presume you are talking about the form for notifying the Inland Revenue of share transfers by employees. The following extract from Inland Revenue web site might be of interest.

"Q1(ee) I have gifted some shares in my company to my wife who is an employee. Is this reportable?
If you gave the shares to your wife because of her employment with the company then this is a reportable event. If, however, the shares were given to her in a personal capacity, unconnected with her employment, then it is not a reportable event."

I therefore conclude that if the transfer of shares from your wife back to you is a personal gift, and not a reward to you as an employee of the company, then you don't have to notify the Revenue.

This is a very new requirement, and I think many accountants are still confused about it. The form was meant to track people getting shares and share-options as part of their employement, but the IR somehow managed to re-interpret it so that every time you start a new company (in which you own the shares) you now have to notify them.

[ASB]

That 1 year

Bradley,

Are you saying that the normal 6 year discovery procedures would not apply if you made the appropriate note on the return ?

Simon

[rootsnall]

Re: That 1 year

Thanks for the replies, I'll investigate further and quiz my accountant a little more. I'm maybe getting too old for this game as previously I could just let things drift forever without worrying, so far a successful strategy !

[Bradley]

Reisclosure

Are you saying that the normal 6 year discovery procedures would not apply if you made the appropriate note on the return ?

Simon

Yes

[eAZy]

Disclosure Requirements

What Bradley is saying is correct. If you made full disclosure, then IR have until 31 Jan 06 for year 04-05 self assessment enquiry. If you do not make full disclosure than they can go back 6 years.

This is based on from Langham v Veltema case

Completing Your Self Assessment Return Following The Veltema Judgment
www.inlandrevenue.gov.uk/...eltema.htm

Tax bodies revise SA disclosure guidance
www.accountingweb.co.uk/c...=784&f=785

Revenue issues crucial SA disclosure guidance
www.accountingweb.co.uk/c...=784&f=785

[partimer]

Re: You don't need to change.

Sort of missed the discussion on this one but for what it's worth.
This kind of stems from what we discussed some time ago on here. What the IR didn't like was the way everybody paid themselves (+ wife) minimum wage and everything else split equally in dividends.

I'm not saying that's wrong but the IR see it as a big no-no (wrongly in my opinion !).
If you (+ wife) paid yourself the market rate (that's what the IR like to see) i.e. your Mrs is seen as an equal partner. I guess the IR can't come back and say she's doing s0d all for the business.

I reckon if you + Mrs pay yourself 12k each (roughly what the IR pay their own bods). You still can take roughly 18k each in dividends before the next tax band. The fact that you + Mrs get paid the same wage could be argued in court that you're equal partners. She does everything (accounts, insurance, ringing customers, etc. etc.) apart from literally go on site.

So, make sure you and Mrs have 50/50 split of shares. You both get paid the same salary ("market rates"). Would they then still come after you with S660a ?
Don't know, but you can see where I'm coming from ? The IR won't bother "genuine businesses" - yeah right ...

Now that Liebore has won the election expect more reinterpretation of old rules
We're the easiest targets to squeeze for more tax

[mailmannz]

Re: You don't need to change.

What I dont like about the way the IR has been going about clawing back tax is that if they had a plumber and an IT contractor side by side each earning the same amount of money they will always go after the IT contractor and completely ignore the plumber every time.

Well...thats what it seems anyways.

Perhaps the only real answer to getting people to pay the "appropriate" amount of tax is to introduce a flat rate of 20% and make it not worth peoples efforts to "avoid" paying their tax.

Im pretty sure that if the government went about it this way they would at the end of the day actually save money and increase their tax revenue.

Mailman

[rootsnall]

Re: You don't need to change.

I think the States has a minimum tax rate used to get wealthy people who otherwise would manipulate their bill down to zero.