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My client is in the process of selling woodland whose trees are being sold as ‘pending issuance units’ (PIUs). Will the value attributable to the woodland be exempt from Capital Gains Tax?

First, a little background… The UK Woodland Carbon Code (WCC) is a government backed standard for woodland creation projects across the UK. It provides a framework for the sequestration of carbon dioxide from the atmosphere to help the UK achieve its targets for tackling climate change. At its core, the code provides an opportunity for…

HMRC Cracking Down on R&D Claims

Companies that conduct Research and Development (R&D) need to be aware of the upcoming changes in the R&D tax relief starting 1 August , 2023. The UK government has become increasingly concerned about the number of companies that have been abusing the R&D scheme. As a result, HM Revenue and Customs (HMRC) has issued new…

Challenges Posed by HMRC Enquiry

There has been a considerable increase in HMRC’s scrutiny of claims, with bona fide claims being rejected on the basis of a disputed interpretation of the relevant provisions. This in turn has caused considerable commercial anxiety for businesses that may have based their planning on what was a previously settled view of the law. Our…

Research & Development –The New Rules for SMEs

Research & Development –The New Rules for SMEs With effect from 1 April 2023, the rules applying to R&D relief under the Small and Medium Sized Enterprises (SME) scheme will be changing. A summary of these changes is given below. Rates of Relief The enhanced deduction for expenditure incurred after 1 April 2023 will be…

HMRC Enquiry Challenges

There has been a considerable increase in HMRC’s scrutiny of claims, with bona fide claims being rejected on the basis of a disputed interpretation of the relevant provisions. This in turn has caused considerable commercial anxiety for businesses, which may have based their planning on what was a previously settled view of the law. Our…

Increase in the National Living Wage

The National Minimum Wage Act 1998 introduced a statutory right to be paid a certain amount of remuneration for work performed. HMRC announced that from 1 April 2023 the NMW will see an increase and the effect is presented in the following table:   NMW Rate Annual increase (£) Annual increase (%) National Living Wage…

What is the accurate treatment of trading profits and capital gains from April 2023, for corporation tax purposes?

Starting with the 2023 financial year, from 1 April 2023 the main rate of corporation tax will rise from 19% to 25% (an increase of 6% for some companies). For trading profits, the guidance seems quite straight forward although arguably quite unfair. Corporation Tax Act 2009 – Section 8 states How tax is charged and…

Did Truss Get It Right On Tax…?

…sort of! Cutting through all of the political hyperbole and potentially poor timing of the previously announced tax cuts and freezes proposed by ‘Liz and Kwasi’ as I’ll now refer to them, I think the real underlying question which needs asking is “What sort of country do we want to live in? One controlled by…

Budget Summary March 2023

Hunt for growth Jeremy Hunt opened his first full Budget speech by declaring that it was a ‘budget for growth’. He emphasised that this would be ‘long term, sustainable, healthy growth’; after all, Kwasi Kwarteng’s ill-fated September speech at the same despatch box was titled ‘the Growth Plan’. The Office for Budget Responsibility reported that…

Business Asset Disposal Relief – Have You Had Too Much Of A Good Thing?

Key Points HMRC are now issuing letters to taxpayers whom they believe have made claims for Business Asset Disposal Relief (BADR), formerly Entrepreneurs’ Relief, on their 2021/22 tax returns in excess of their lifetime allowance. Agents will also be sent a copy of the letter. What is BADR? BADR is a capital gains tax (CGT)…

Annual Tax on Enveloped Dwellings (“ATED”)

Key Points Revaluations of property are required based on Market Value on 1 April 2022Properties within ATED require reports to be filed before 30 April 2023Failure to comply with the revaluation requirements could result in penalties and interest. What is ATED? ATED has been with us since 1 April 2013 and was introduced to deter…

The New R&D Tax Relief Enquiry Landscape

HMRC has recently recruited additional technical resource which has resulted in a dramatic rise in the number of enquiries opened into claims. Enquiries are now longer and more involved, with the requirement to provide substantiating evidence far greater than ever before. HMRC are increasingly likely to open enquiries into claims that have, in the past,…

Under the Radar – the Relevant UK Earnings Tax Charge

Under UK law, pension contributions are an attractive and tax efficient way of saving for one’s retirement. However, there are several restrictions which apply to effectively cap the amount of tax relief one can obtain. Restrictions to Pension Contributions There are three main restrictions that can apply to pension contributions. These are known as the:…

Super-Deduction Withdrawal Or, A Tale Of Two Donovans

Last year was certainly a rollercoaster. From the highs of the Platinum Jubilee, the Lionesses winning the Euros, and a successful Commonwealth Games – to the lows of the war in Ukraine and the death of the Queen. Of course 2022 also saw the cancellation of the long-running Australian soap opera Neighbours, but whether that…

Winning Tactics To Adopt In Your Dispute With HMRC

Sarah Scala is an Associate Partner and Head of the Tax Dispute Resolution Team at Claritas Tax. Sarah also founded the Contentious Tax Group (CTG), hosted monthly by Claritas, and attended by Tax Dispute Resolution experts and Specialist Lawyers from across the UK. In this article, Sarah draws from her ten years of working full…

Employee Ownership Trusts (EOTs) – A silver bullet?

Whilst the legislation governing EOTs was first introduced back in 2014, I’d say the term has only established itself in the modern M&A adviser’s lexicon over the last few years as EOTs have gained popularity. This is no doubt partly due to the significant reduction in (what was) the 10% Entrepreneur’s Relief lifetime limit from…

What are the changes to overseas R&D?

Under the current rules for both schemes, companies are able to claim relief on R&D activity that is conducted overseas. Claimants under the RDEC scheme are restricted on certain subcontracted costs, but the location of where the work is performed on both schemes is irrelevant. However, from April 2023, this will change.  Where companies subcontract…

HMRC & “NUDGE” LETTERS – How Does Your Tax Fee Protection Policy Respond – If At All!

As the UK Government looks to fill the black hole caused by the Covid-19 Pandemic and the current financial crisis, H M Revenue & Customs (HMRC) is now continuing to increase its enquiry activity across all areas of taxation. Whilst its main focus will remain on those they believe to be fraudsters and deliberate tax…

R&D TAX RELIEF – IT WILL NEVER BE A BETTER TIME TO CLAIM

One area which has been widely scrutinised in recent weeks, and has become a target area for clamping down on abuse, is that of research & development tax relief. It has been well documented that Rishi Sunak has been an advocate of the large company “RDEC” scheme, whilst questioning whether the SME scheme (for small…

100,000 taxpayers fined by HMRC for inaccurate tax returns

Volume of fines paints stark picture of non-compliance, in timely warning to the self-employed. In the 2021/22 tax year, over 100,000 workers were issued with fines by HMRC, according to a Freedom of Information (FOI) request lodged by RSM, an audit, tax and consultancy firm. In total, the tax office issued 101,045 financial penalties in the…

New Late Return and Payment Penalty System

In the past, many businesses will have been subjected to the Default Surcharge regime that penalised them for either submitting or paying VAT returns after the due date or the date they were due to be paid in full. That penalty regime was significantly ‘black and white, as it took no notice of how late…

MTD Update: Government announces more time to prepare for MTD for ITSA mandation

Please can we draw your attention to the important update below, issued by HMRC in respect of Making Tax Digital and its delayed implementation.  Written Ministerial Statement Written statements - Written questions, answers and statements - UK Parliament The UK Government has announced that Making Tax Digital for Income Tax Self Assessment (MTD for ITSA)…

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