Owner-managed Businesses

This "Ask the Team" is longer than usual, but in it we illustrate the complex new tax and NICs regime for internationally mobile employees' share options. We take the example of an employee who works between the USA and the UK.

The First-tier Tribunal held that whether shares are of "negligible value" for CGT purposes depends on whether they have a market value in Barker & Ors v HMRC [2011] UKFTT 645 (TC).

The Department for Business, Innovation and Skills (BIS) published its response to its consultation paper on the proposal for a new employment status “employee owner” (now known as "employee shareholder") on 4 December 2012. 

Our summary of the key business tax announcements in the 2009 Pre-Budget Report.

We have created a page with links to PLC's Autumn Statement coverage. (Free access.)

We asked leading tax practitioners what they saw as the key points of interest for business in the 2011 Budget. (Free access.)

A summary of the issues on which we anticipate that the government will make announcements in the 2012 Budget.

The Chancellor, George Osborne, delivered his Budget on 21 March 2012. This update summarises the most important private client tax announcements. (Free access.) If you don't yet subscribe to PLC, you can request a free trial by completing this form or contacting the PLC Helpline.

The Chancellor, George Osborne, delivered his Budget on 20 March 2013. This update summarises the most important private client tax announcements. (Free access.) If you don't yet subscribe to PLC, you can request a free trial by completing this form or contacting the PLC Helpline.

An update commenting on announcements in the 2008 Pre-Budget Report relevant to small and medium-sized businesses and their owners.

This practice note summarises the development of anti-avoidance case law from the European Court of Justice's decision in Halifax to date. It also includes some practical tips for structuring transactions to reduce the risk of attack by HMRC based on anti-avoidance case law.

Drafting notes to accompany the letter to HMRC seeking its view under the non-statutory clearance procedure. This drafting note was formerly known as Code of Practice 10 application: drafting note.

On 27 July, the House of Lords gave its judgment in Jones v Garnett [2007] UKHL 35.The facts are relatively common in family owned businesses. Mr and Mrs Jones each acquired half the ordinary share capital in a company. Mr Jones provided IT consultancy services via the company and earned the income of the business. Mrs Jones provided administrative support. Both took a salary but Mr Jones' salary was less than he would have earned in the market. The balance of the company's profits were paid as dividends. This reduced the total tax bill because national insurance contributions are not payable on dividends and Mrs Jones paid tax at lower rates than Mr Jones.HMRC argued that anti-avoidance rules applied to the dividends paid to Mrs Jones to treat the dividends as income of Mr Jones. The rules apply to gifts between spouses if the transferor (or spouse) has an interest in the asset or income deriving from it and the asset is wholly or substantially a right to income.Their Lordships agreed that the anti-avoidance rules applied in principle but dismissed the appeal on the basis that ordinary shares are not substantially a right to income. HMRC immediately announced that legislation will be introduced to reverse the decision.Individuals that are considering providing their services via a corporate vehicle must consider carefully whether incorporation is appropriate. Such companies are likely to be caught by the IR35 rules or the new managed service company rules. Additio

An Ask the team about whether contracts entered into by an individual, and claims by or against an individual, survive that individual's death.

The second part of an Ask the team that explains when a disposal of shares or securities of a company will qualify for entrepreneurs' relief and considers certain factors which may affect the availability of the relief.

An Ask the team on how entrepreneurs' relief applies to share-for-loan note exchanges.

An Ask the team considering whether Part 7A of the Income Tax (Earnings and Pensions) Act 2003 could apply to a gift of shares in a will.

An Ask the team reflecting on the Chancellor's proposal that employees or new recruits might contract out of some employment rights and protections in exchange for capital gains tax exempt shares in their employer, by agreeing to a new employment status of "employee shareholderr" (originally named "employee owner"). This article looks at how it might work and some possible key issues, mainly from the perspective of our share schemes team.

A standard document for an asset purchase agreement, the key agreement documenting the sale and purchase of a business. For the provisions to be inserted into the property schedule, see Standard document, Property schedule: asset purchase agreement. For a list of supplementary standard clauses to be used with this document, see Supplementary clauses: asset purchase agreement. PLC Corporate with thanks to David Day and Simon Howley, CMS Cameron McKenna for their comments. (Employment provisions by PLC Employment. Intellectual property provisions by PLC IPIT & Communications. Data protection provisions by Simon Jones, DLA Piper UK LLP. Pensions provisions by PLC Pensions, based on material originally contributed by Mayer Brown. Environmental provisions by PLC Environment.)

A checklist of questions and issues to consider when acting for the buyer on the acquisition of a business or part of a business.

This practice note discusses the tax implications of a hive down. A hive down is the transfer of all or part of the business or assets of a company to a new company (the hive down company), followed by the sale of the shares in the hive down company to a third party.

A legal update outlining the key developments in private client law and practice covered by legal updates published in August 2010.

A legal update outlining the key developments in private client law and practice covered by legal updates published in June 2011.

A legal update outlining the key developments in private client law and practice covered by legal updates published in November 2011. (Free access.)

A practice note about the Bribery Act 2010, which received Royal Assent in April 2010 and came into force on 1 July 2011.  The background to the Act is described in Practice note, Bribery: law reform. PLC's materials on the Bribery Act are set out in Bribery Act 2010: toolkit.

Gordon Brown, the Chancellor of the Exchequer, delivered his eleventh and (probably) final Budget speech on 21 March 2007.

HMRC has published draft regulations relating to the measures contained in Finance Bill 2012 providing business investment relief for individuals who are eligible to be taxed on the remittance basis. 

When deciding if an individual is resident in the UK for tax purposes it is necessary to calculate the period of time spent in the UK in a tax year. HM Revenue & Customs guidance booklet IR20 provides that days of arrival and departure should normally not be counted for this purpose. However, in a recent case, the Special Commissioners for Income Tax held that this approach did not yield an accurate result and instead counted the number of nights spent in the UK. In reaching their decision the Commissioners considered a number of aspects of the individual's relationship with the UK, not just the number of days spent here, and it is not clear how much weight they gave to any one factor. While this is only a first level decision, there is not currently any other ruling on this point. Therefore anyone calculating a period spent in the UK for tax purposes should be wary of discounting the days of arrival and departure days. See Gaines-Cooper v Revenue & Customs [2006] UKSPC SPC00568, 31 October 2006.

I act for a manufacturing company which wants to apply for EIS relief. The comapny has one subsidiary, a 50:50 owned JVC incorporated in India. My client and the other shareholder of the JVC are a party to a shareholder's agreement in respect of the JVC. The JVC carries out marketing activities, promoting the company's products in the Indian market. It accounts for a tiny fraction of the company's business activities. If the subsidiary was based in the UK, I understand that the company would not qualify for EIS because it has, and has control of, a subsidiary that is not a Qualifying Subsidiary. However, does the fact that the subsidiary is not based in the UK alter that position? Thank you in advance for any assistance that you can provide.

I have a concern about a CGT saving scheme that has been suggested to a client by his accountant but do not want to damage an existing long-standing relationship if I am being overcautious. The client owns farmland which is subject to a FBT. He wants to sell when he regains VP. He tells me he needs the rental income and that he regards the land as his 'pension pot'. The suggestion is that the land be transferred into a discretionary trust until the FBT expires then transferred back to the client and sold after 12 months, thus obtaining maximum benefit from Entrepreneur's Relief. The trust is used to 'wipe the slate clean' as to ownership. My concern is that the only role of the trust (which must be settlor-interested) is to reduce the rate at which CGT will apply on the ultimate sale, is circular and is pre-ordained and so will be ignored by HMRC under the Ramsay principle. According to the accountant the potential CGT saving is "well in excess of 100K" and they "consider the risk of challenge to be minimal". Am I being overly pessimistic?

Drafting note for provisions to be inserted in an asset purchase agreement or a sale contract of commercial property where a joint capital allowances election is to be made by the buyer and the seller to fix the amount paid for fixtures, where that amount is part of a larger sum paid for an interest in land and buildings.

HMRC has published draft legislation and a summary of responses to a consultation document on the claiming of capital allowances on fixtures.

On 8 February 2011, HMRC released details of the most recent amendments to its Capital Gains Manual. We report on those amendments and on the updates that are shown as having taken place on 22 September 2010, although the date of their actual incorporation into the manual is uncertain.

In a ministerial statement made on 24 January 2008, the Chancellor, Alistair Darling, announced the introduction of a new relief for entrepreneurs from 6 April 2008.The new relief will apply for disposals or part disposals of:1. A trading business that an individual runs either alone or in partnership. 2. Shares in a trading company by officers and employees that hold at least 5% of the shares in the company and are able to exercise at least 5% of the voting rights in the company.For qualifying gains of up to £1 million, the tax rate will be 10% with the balance taxed at the new flat rate of capital gains tax of 18%. The new relief will be a lifetime relief available on multiple occasions on a cumulative basis. The government will keep the limit under review.The Chancellor indicated that the new relief would cost the Exchequer £200 million.The Chancellor also indicated that current reliefs, such as EIS and VCT reliefs, and the annual capital gains tax exemption will remain available.Draft legislation dealing with the implementation of the capital gains tax reforms, including the new entrepreneurial relief, is expected to be published by HMRC today.PLC Tax will publish a further update shortly analysing the proposals in more detail. PLC Share Schemes & Incentives have published an update analysing the implications for share plans.Source: HM Treasury, New tax relief for entrepreneurs

On 24 January 2008, HMRC published the draft legislation and explanatory notes which will implement the government's 2007 Pre-Budget Report proposals for reforming the capital gains tax regime.The draft legislation, which is to form part of the Finance Bill 2008, is in line with the proposals. As expected, no transitional measures have been included in the draft legislation.

The Court of Appeal has held that loan notes containing a provision giving the noteholder a time-limited option to elect for redemption in a foreign currency did not become Qualifying Corporate Bonds for capital gains tax purposes when the option lapsed.

HMRC published for comment draft guidance on the income tax reliefs cap that applies for 2013-14 and subsequent tax years on 28 March 2013.

Under the title Simpler Income Tax for the Simplest Small Businesses, HMRC launched a consultation on 27 March 2012 on the proposed use of the cash basis.

On 11 December 2012, the government published for consultation the first draft of legislation to be included in the Finance Bill 2013 to introduce a voluntary cash basis for small businesses. Further draft legislation containing transitional provisions was published on 27 December 2012.

Changes to capital gains tax, including the abolition of taper relief and the introduction of entrepreneurs' relief, will have a significant impact on the sellers of private company shares who receive an earn-out right as part of the consideration. This update examines the effect both on existing earn-out rights and on the structuring of future deals. It also includes a decision tree to assist in determining whether the right-holder could reduce his tax liability by making an election.

Radical reforms to capital gains tax (CGT) for individuals and trusts will come into effect on 6 April 2008. In this update, we look at the options for shareholders and loan note holders looking to maximise taper relief and indexation allowance before they are abolished and replaced by the 18% rate of CGT.

HMRC has released draft secondary legislation and guidance in connection with clause 55 of the Finance Bill 2011.

This is a chapter from the Bloomsbury Professional book Tax Planning for Farm and Land Diversification, 3rd Edition, which examines traditional farming and diversification in the light of tax and planning procedures. It explores the current trend to diversify away from pure food production, and the turn towards alternative land use for the purpose of profitable enterprise. It also covers forms of tax planning that are necessary to cope with the upheavals facing all those in farming communities. It will be very useful for advisers who wish to gain a general understanding of farming, diversification, tax planning and the big changes that are facing the agricultural world. This chapter, the table of contents and the index are FREE to view, as a sample of the book's contents. To view the other chapters, please subscribe to Books online.

This is a chapter from the Bloomsbury Professional book Tax Planning for Farm and Land Diversification, 3rd Edition, which examines traditional farming and diversification in the light of tax and planning procedures. It explores the current trend to diversify away from pure food production, and the turn towards alternative land use for the purpose of profitable enterprise. It also covers forms of tax planning that are necessary to cope with the upheavals facing all those in farming communities. It will be very useful for advisers who wish to gain a general understanding of farming, diversification, tax planning and the big changes that are facing the agricultural world. Chapter 1, the table of contents and the index are FREE to view, as a sample of the book's contents.

This is a chapter from the Bloomsbury Professional book Tax Planning for Farm and Land Diversification, 3rd Edition, which examines traditional farming and diversification in the light of tax and planning procedures. It explores the current trend to diversify away from pure food production, and the turn towards alternative land use for the purpose of profitable enterprise. It also covers forms of tax planning that are necessary to cope with the upheavals facing all those in farming communities. It will be very useful for advisers who wish to gain a general understanding of farming, diversification, tax planning and the big changes that are facing the agricultural world. Chapter 1, the table of contents and the index are FREE to view, as a sample of the book's contents.

This is a chapter from the Bloomsbury Professional book Tax Planning for Farm and Land Diversification, 3rd Edition, which examines traditional farming and diversification in the light of tax and planning procedures. It explores the current trend to diversify away from pure food production, and the turn towards alternative land use for the purpose of profitable enterprise. It also covers forms of tax planning that are necessary to cope with the upheavals facing all those in farming communities. It will be very useful for advisers who wish to gain a general understanding of farming, diversification, tax planning and the big changes that are facing the agricultural world. Chapter 1, the table of contents and the index are FREE to view, as a sample of the book's contents.

This is a chapter from the Bloomsbury Professional book Tax Planning for Farm and Land Diversification, 3rd Edition, which examines traditional farming and diversification in the light of tax and planning procedures. It explores the current trend to diversify away from pure food production, and the turn towards alternative land use for the purpose of profitable enterprise. It also covers forms of tax planning that are necessary to cope with the upheavals facing all those in farming communities. It will be very useful for advisers who wish to gain a general understanding of farming, diversification, tax planning and the big changes that are facing the agricultural world. Chapter 1, the table of contents and the index are FREE to view, as a sample of the book's contents.

This is a chapter from the Bloomsbury Professional book Tax Planning for Farm and Land Diversification, 3rd Edition, which examines traditional farming and diversification in the light of tax and planning procedures. It explores the current trend to diversify away from pure food production, and the turn towards alternative land use for the purpose of profitable enterprise. It also covers forms of tax planning that are necessary to cope with the upheavals facing all those in farming communities. It will be very useful for advisers who wish to gain a general understanding of farming, diversification, tax planning and the big changes that are facing the agricultural world. Chapter 1, the table of contents and the index are FREE to view, as a sample of the book's contents.

This is a chapter from the Bloomsbury Professional book Tax Planning for Farm and Land Diversification, 3rd Edition, which examines traditional farming and diversification in the light of tax and planning procedures. It explores the current trend to diversify away from pure food production, and the turn towards alternative land use for the purpose of profitable enterprise. It also covers forms of tax planning that are necessary to cope with the upheavals facing all those in farming communities. It will be very useful for advisers who wish to gain a general understanding of farming, diversification, tax planning and the big changes that are facing the agricultural world. Chapter 1, the table of contents and the index are FREE to view, as a sample of the book's contents.

This is a chapter from the Bloomsbury Professional book Tax Planning for Farm and Land Diversification, 3rd Edition, which examines traditional farming and diversification in the light of tax and planning procedures. It explores the current trend to diversify away from pure food production, and the turn towards alternative land use for the purpose of profitable enterprise. It also covers forms of tax planning that are necessary to cope with the upheavals facing all those in farming communities. It will be very useful for advisers who wish to gain a general understanding of farming, diversification, tax planning and the big changes that are facing the agricultural world. Chapter 1, the table of contents and the index are FREE to view, as a sample of the book's contents.

This is a chapter from the Bloomsbury Professional book Tax Planning for Farm and Land Diversification, 3rd Edition, which examines traditional farming and diversification in the light of tax and planning procedures. It explores the current trend to diversify away from pure food production, and the turn towards alternative land use for the purpose of profitable enterprise. It also covers forms of tax planning that are necessary to cope with the upheavals facing all those in farming communities. It will be very useful for advisers who wish to gain a general understanding of farming, diversification, tax planning and the big changes that are facing the agricultural world. Chapter 1, the table of contents and the index are FREE to view, as a sample of the book's contents.

This is a chapter from the Bloomsbury Professional book Tax Planning for Farm and Land Diversification, 3rd Edition, which examines traditional farming and diversification in the light of tax and planning procedures. It explores the current trend to diversify away from pure food production, and the turn towards alternative land use for the purpose of profitable enterprise. It also covers forms of tax planning that are necessary to cope with the upheavals facing all those in farming communities. It will be very useful for advisers who wish to gain a general understanding of farming, diversification, tax planning and the big changes that are facing the agricultural world. Chapter 1, the table of contents and the index are FREE to view, as a sample of the book's contents.  

A checklist of the main questions to be asked and issues to consider when setting up a limited liability partnership.

A legal update about the additional tax-related measures in the final Conservative and Liberal Democrat coalition agreement, published on 20 May 2010.

An update about the Value Added Tax (Amendment) (No.4) Regulations 2009 (SI 2009/2978), made on 9 November 2009. Note that the House of Commons Statutory Instruments Committee has reported that regulation 4 of the 2009 Regulations (time of filing of electronic return) is defectively drafted. HMRC has undertaken to amend the defect - see House of Commons Statutory Instruments Committee: Report for defective drafting. 

On 21 July 2008, the government launched a consultation on tax avoidance involving tax relief obtained for travel expenses claimed under the temporary workplace rules.The government is currently considering options to tackle avoidance, including:1. Provisions to make certain third parties (such as workers and end clients) liable for avoided tax.2. Restrictions so that workers using such structures are not entitled to tax relief.

An update about the joint HMRC/HM Treasury document "Simplification review: the associated company rules as they apply to the small companies' rate of corporation tax", publlished on 29 October 2009.

The Office of Tax Simplification (OTS) published a discussion paper on possible approaches to simplifying the income tax treatment of the smallest unincorporated businesses on 29 July 2011.

The government published its plans for reform of corporation tax, including the controlled foreign companies rules and the taxation of intellectual property and foreign branch profits, on 29 November 2010 (full update). free access

A legal update about the Corporation Tax Act 2010, part of the Tax Law Rewrite project, which comes into effect from 1 April 2010.

The Finance Act 2007 has introduced a targeted anti-avoidance rule in relation to management expenses.

Additional support will be given to small- and medium-sized enterprises by extending the enhanced tax relief in respect of qualifying expenditure on research and development activities and vaccine research, and in some cases the payment of a tax credit.

The High Court has held that travel expenses of a franchisee milkman from his home to the depot were not deductible for tax purposes, as the base of his trading operation was the geographical area of his round and not where he completed his paperwork.

A consideration of the key features of warranty and indemnity insurance for buyers and sellers in private acquisitions.

An outline of some of the issues to be considered by companies when dealing with charities.

On 16 September 2008, HMRC published guidance on the circumstances in which it will exercise its discretion to transfer a PAYE liability from employer to employee under the "Demibourne regulations". The effect of a transfer is that HMRC will not seek to recover PAYE income tax from an employer if the worker has paid tax on the relevant sum under self-assessment: a transfer does not impose any additional tax liability on the employee.Given that HMRC states in its guidance that it will always exercise its discretion to make a direction other than in exceptional circumstances, businesses entering into arrangements with a self-employed worker should ensure that the worker is obliged to self-assess income tax on sums paid under the arrangements.

This checklist takes the form of two summary flowcharts of the direct tax disclosure legislation.

This practice note gives an overview of direct taxes in the UK tax regime. It covers income tax, corporation tax and capital gains tax. It discusses the principles of calculation, rates, payment and compliance, and reliefs (such as capital allowances and research and development (R&D) relief).

Draft legislation introducing relief from corporation tax on chargeable gains, when a small company transfers its business to its shareholders, was published for consultation on 11 December 2012 and will be included in the Finance Bill 2013.

A practice note on the tax treatment of dividends.

Assume a manager holds shares in Target and is to roll these over into Bidco (for a combination of shares/loan notes in Bidco) and then make a second rollover of some of those Bidco shares into shares in Topco. If the holding he has in Bidco is, say, 7% of Bidco ordinary shares (along with some loan notes), and the holding he has of Topco ordinary shares is 2%, does he qualify for entrepreneurs relief on the disposal of Topco shares? i.e. he doesn't meet the 5% test by reference to Topco, but he has 5% of the ordinary shares in another member of the group. (Assume all other qualifying conditions are met.)

There was an article in the FT on Thursday 9 January (Tax relief extended for angel investors) that mentions an extension to the seed enterprise investment scheme (SEIS). Do you have any more details?

EIS query - Does the existence of a ratchet operating on a company's shares affect EIS relief e.g. s 173(2) matters. (The ratchet could either operate directly on the EIS shares- to decrease value (assets, dividends) attributable to them- or operate on the other shares. Or convert the EIS shares (or other shares) to deferred (i.e. essentially worthless) shares).

This practice note explains what domicile is in the context of UK taxation and how it is determined. It does not seek to cover the application of domicile in the context of the conflict of laws, which is beyond the scope of this note. NOTE: This resource is being reviewed in light of the 2013 Budget. For more information, see 2013 Budget: key private client tax announcements.

A practice note about the direct tax disclosure regime applicable before 1 August 2006. NOTE: This resource is being reviewed in light of the 2013 Budget. For more information, see Legal update, 2013 Budget: key business tax announcements.

HMRC and HM Treasury published tax policy updates and draft legislation for the Finance Bill 2012 on 6 December 2011. This update summarises the most important private client measures. Note: we are inserting links to more detailed PLC analysis of some of the draft legislation as we publish it.

An update about the announcement by the government on 19 March 2009, and the draft legislation subsequently published by HMRC, restricting tax relief for interest payments on loans designed to produce a guaranteed post-tax profit.

On 28 February 2008, HMRC published the draft legislation (with accompanying explanatory notes and frequently asked questions) which is intended to implement the new relief for entrepreneurs.The draft legislation is based on the rules for the former CGT retirement relief and reflects HMRC's press release issued on 24 January 2008. The following important issues are clarified:1. The £1 million lifetime cap on the amount of qualifying capital gains will only include gains realised after 5 April 2008.2. No transitional measures have been introduced that would allow taxpayers to apply the existing taper relief regime retrospectively. However, taxpayers with certain deferred gains may elect to claim entrepreneurs' relief retrospectively but only if the taxpayer would have been entitled to claim entrepreneurs' relief had it been available when the disposal giving rise to the deferred gain occurred. If such an election is made, the relief claimed will reduce the £1 million lifetime allowance.3. The new relief is unlikely to benefit taxpayers who have exchanged their shares for non-qualifying corporate bonds (non-QCBs). However, for exchanges that occur on or after 6 April 2008, taxpayers will be able to elect to trigger a disposal at the time of the exchange. This will be beneficial if a disposal of the shares would have qualified for relief but a disposal or redemption of the non-QCBs would not. However, triggering a disposal may give rise to cashflow issues if the tax

Four decisions of the Special Commissioners were reported, dealing with the application of the IR35 legislation to specialist IT consultants: First Word Software Limited v The Commissioners for HM Revenue & Customs [2007] UK SPC 652. MKM Consulting Limited v The Commissioners for HM Revenue & Customs [2007] UK SPC 653. Dragonfly Consulting Limited v The Commissioners for HM Revenue & Customs [2007] UK SPC 655. Datagate Services Limited v The Commissioners for HM Revenue & Customs [2007] UK SPC 656. As the four cases were heard by three different Special Commissioners but have similar facts, they are a useful indication of the tribunal's approach to applying the IR35 legislation and also usefully illustrate the differences of interpretation and application.

This letter should be addressed by the taxpayer to HMRC to elect to treat the loss on the disposal of an earn-out right as accruing in an earlier tax year, so as to offset it against eligible gains.

The recent High Court decision in Porton Capital Technology Funds and others v 3M UK Holdings Limited and another shows that agreeing to an earn-out as part of the purchase price for a business does not always produce the desired result ([2011] EWHC 2895 (Comm)). The case also illustrates the dangers of relying on the common contractual compromise of “consent not to be unreasonably withheld”.

Earn-outs can be a fair way to bridge any valuation gap between sellers and a buyer, and are frequently used where the sellers’ ongoing involvement is critical to the development of the business. Although the nature of the contractual protections relating to earn-out payments will be driven by the characteristics of the underlying business and the type of earn-out, certain key points should be considered.

HMRC confirmed on 7 June 2012 that the European Commission has given state aid approval to three changes to the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme.

HMRC confirmed on 6 October 2011 that the European Commission has given state aid approval to two changes to the Enterprise Investment Scheme rules. (Free access.)

The Finance Act 2011, Section 42 (Appointed Day) Order 2011 (SI 2011/2459), which brings into force the increase in the rate of income tax relief under the EIS to 30% for 2011-12, was made on 12 October 2011.  

An update about the announcement by HM Treasury on 29 April 2009 that the EIS, VCTs and the CVS have obtained state aid approval.

The Finance Act 2012's increases in the Enterprise Investment Scheme limits came into force on 19 July 2012 but have effect for shares issued on or after 6 April 2012 (Finance Act 2012 (Enterprise Investment Scheme) (Appointed Day) Order 2012 (SI 2012/1896)).

HMRC has published further details of the 2012 Budget proposal to extend entrepreneurs' relief from capital gains tax to disposals of shares acquired under EMI options.

An update about the decision of the Tax Chamber of the First-tier Tribunal in Burton v HMRC [2009] UKFTT 320 (TC), released on 18 November 2009.

HMRC has added two new examples to its guidance on Part 7A of the Income Tax (Earnings and Pensions) Act 2003. These deal with the interaction of Part 7A with IR35, and amounts set aside by trustees for an employee who is not yet identified.

An update about an HMRC consultation document "Extra-statutory Concessions - Technical Consultation on draft Legislation", published on 3 November 2008.

An update on the Court of Appeal decision in Revenue & Customs v Alan Blackburn Sports Limited and Alan Blackburn [2008] EWCA Civ 1454.

Letter seeking assurance from HMRC that the company issuing shares is a qualifying company for the purposes of the Enterprise Investment Scheme. Note: HMRC has produced a template application for assurance. For further detail, see Legal update, HMRC publishes EIS advance assurance application. 

The availability of entrepreneurs' relief has significant implications for individuals and trustees. This practice note explains the key features of entrepreneurs' relief.

This letter, which should be addressed by the taxpayer to HMRC, contains an irrevocable election to disapply the no-disposal provisions when an earn-out right is received in (part) consideration for shares and the seller wants to include the value of the earn-out claim in the amount on which he is claiming entrepreneurs' relief.

Flowcharts showing how entrepreneurs' relief applies to share-for-loan note exchanges occurring before 6 April 2008, from 6 April 2008 to 22 June 2010, and from 23 June 2010.

Twelve beneciaries own shares in a limited company under a trust. Combined they have 80% ownership. They wish to sell their interest. I propose appointing each beneficiary as a director of the company, selling the shares and then having each beneficiary resign their directorship. I believe this will entitle each beneficiary to claim entrepreneur's relief on the capital gains tax liability that will result. The exemption is the sale of 'shares in and securities of a trading company' and it requires the taxed party to be an officer or employee of the company and own 5% or more of the shares. Am I correct?

An update about the First-Tier Tribunal's decision in Coll & Coll v HMRC [2009] UKFTT 00028 (TC) (21 April 2009).

Standard form execution clauses (or attestation clauses) for the execution of simple contracts or deeds by a company governed by the Companies Act 2006, together with guidance notes on the applicable formailties of execution.

Overview of the key legal requirements relating to the execution of deeds and documents under the laws of England and Wales. It reflects the law on execution from 1 October 2009. For details of the law governing execution of deeds and documents before 1 October 2009, see Practice note, Execution of deeds and documents: pre-1 October 2009.

 A short-form, bilateral, secured or unsecured, sterling, term facility agreement (or loan agreement) between a director or shareholder (as lender) and the company (as borrower).  This standard document contains integrated drafting notes.

A legal update on the summary of consultation responses received, which was published by HMT and HMRC on 10 March 2010.

This checklist sets out a list of questions which family members might be asked to address as part of the process of drawing up either a strategic plan for a family business, a shareholders' agreement, a family charter or a family constitution. Not all questions will be relevant or appropriate for every family or every family business.For details of the different governance structures which a family business can adopt, see Practice note, Family business governance.

This is an example of a short form family charter which is merely intended to be a useful starting point when preparing such a charter. The integrated drafting notes explain different or contrary approaches which the family may wish to adopt.Family charters are not generally intended to be legally binding but advisers should take care that if the family adopts particular employment practices that they do not open themselves to discrimination claims.

This note explains what a family council is and why it may be appropriate to have one as part of the family governance structure of larger family businesses.

The Finance (No.3) Bill 2010 Public Bill Committee agreed to several provisions of the Bill on 19 October 2010.

The government has proposed amendments to the definitions of "trading company" and "trading group" in paragraph 34 of Schedule 2 to the Finance Bill 2008. These definitions are relevant to claims for business asset gift relief and entrepreneurs' relief.As part of the abolition of taper relief, Schedule A1 to the Taxation of Chargeable Gains Act 1992 (TCGA 1992), which contains certain definitions, will be removed. Schedule 2 to the Finance Bill 2008 therefore introduces a new section 165A of the TCGA 1992, which substantially reproduces the definitions in Schedule A1, in particular, the meanings of "holding company", "trading company" and "trading group".In replicating the provisions relating to joint venture companies, paragraphs 23(4), (6) and (7) of Schedule A1 to the TCGA 1992 were omitted. The proposed amendments reproduce those provisions.For more information on the 2008 Budget capital gains tax reforms and entrepreneurs' relief, see Legal update, Budget 2008: Capital gains tax reform and Practice note, Entrepreneurs' relief.Source: Finance Bill 2008: Amendment Paper - Public Bill Committee Amendments as at 6 May 2008.

On 5 June 2008, the government tabled amendments to Schedule 7 to the Finance Bill 2008 relating to Share Incentive Plans (SIPs) and Save as You Earn (SAYE) option schemes.The amendments are unchanged from their draft form, as to which, see Legal update, Finance Bill 2008: draft government amendments (30 May 2008).Source: Amendment Paper Public Bill Committee Amendments as at 5 June 2008.

On the afternoon of 22 May 2008, the following clauses of, and Schedules to, the Finance Bill 2008 (as to which, see Legal update, Finance Bill 2008) were agreed, unamended unless otherwise stated, by the Public Bill Committee of the House of Commons:1. Clause 55 (UK residents and foreign partnerships). The Treasury minister defended the retrospective effect of the clause by claiming that UK individuals and companies have been artificially routeing their income through offshore trusts and partnerships and maintaining that one of the UK's double taxation treaties exempts them from tax. That was said to be in wilful contravention of the purpose of the treaty and of legislation passed in 1987.2. Clause 56 (UK residents and foreign enterprises).3. Clause 57 and Schedule 21 (Restrictions on trade loss relief for individuals).4. Clause 58 (Non-active partners).5. Clause 59 and Schedule 22 (Financial arrangements avoidance). The amendments to Schedule 22 tabled by the government were all agreed (see Legal update, Finance Bill 2008: proposed government amendments (15 May 2008)). The Treasury minister explained the schemes which the amendments aim to prevent. She also confirmed that Schedule 22 will not apply to debt for equity swaps where there is no intention to reduce taxable profits. 6. Clause 60 and Schedule 23 (Manufactured payments).7. The proposed government amendments to clause 61 (controlled foreign companies), tabled on 15 May (see above), were agreed but the deb

The Public Bill Committee debated clauses 36 to 45 of, and Schedules 8 to 10 to, the Finance Bill 2011 (referred to in Parliament as the Finance (No.3) Bill 2010-11) on 24 May 2011.

The government included amended draft legislation on the new restrictions for claiming capital allowances on fixtures in the first version of the Finance Bill 2012, published on 29 March 2012.

During sittings on 14 and 21 June 2012, the Public Bill Committee agreed a number of private client related provisions of the Finance Bill 2012.

The Finance Bill 2013 was published on 28 March 2013. Measures of interest to private client practitioners are listed in this legal update.

BIS and the FRC have jointly published a discussion paper seeking feedback on proposals to simplify the existing financial reporting regime for the smallest businesses. (Free access.)

An update about the "Spotlights" on avoidance schemes published by HMRC on 27 April 2009.

With regard to the Enterprise Investment Scheme, can an investment instalment be paid before the shares have been issued by the investee company?

For the purposes of sections 1122 and 1123, Corporation Tax Act 2010, does control include negative control, the power to stop actions been taken without a shareholders approval?

The revised furnished holiday lettings rules in Schedule 14 to the Finance Bill 2011 bring the period of grace provisions for the occupancy threshold into force from 2010-11, rather than from 2012-13 as originally drafted.

An update on permission given to Robert Gaines-Cooper to appeal against the High Court's refusal to allow him to apply for judicial review of HM Revenue & Customs' decision on his residence and ordinary residence status.

I am working on a transaction involving a loan by a company to one of its directors. The sum involved is about 750,000 and the term in prospect is up to 7 years, notwithstanding the payment that the company needs to make to HMRC for Corporation Tax in relation to the loan given that it will be outstanding beyong the relevant period. Given the recent adverse publicity given to celebrity use (abuse!) of loans from captive companies, there is a possibility that there will be legislative changes (tax treatment/Company law), is there anything that should be inserted into loan agreements to address this (e.g. accellerated repayment terms, tax indemnity for any further tax issues aring that do not already exist)?

An update about a Background Note and Practice Note published on 29 January 2009 by HMRC on apportioning consideration to goodwill on the sale of trade related properties.

The government has announced the opening of seven new HM Revenue & Customs (HMRC) specialist research and development (R&D) tax-credit units to provide practical support and guidance to small and medium-sized enterprises (SMEs) on R&D tax credits, in line with the proposals it made in 2005 (see Legal update, Government publishes proposals for overhaul of R&D tax credit). HMRC has at the same time, in conjunction with the DTI and the Treasury, published a brochure of case studies on SMEs' experiences of claiming R&D tax credits.Source: GNN press release, 1 November 2006.

This standard document is intended to be used in connection with a sale of a private company when the parties have agreed that the target company or a subsidiary of the target company will surrender losses to a group company of the seller for the accounting period or periods up to completion.

A practice note providing a brief overview of the schemes and guidance available to homeowners who are in arrears with their mortgage repayments and at risk of repossession.

An update about anti-avoidance measures announced by HMRC to close up tax avoidance schemes exploiting relief on gifts of qualifying investments to charity.

With the consent of HMRC, responses by HMRC to technical questions on the operation of entrepreneurs' relief rules have been published.

The Institute of Chartered Accountants in England and Wales published guidance on 30 December 2011 on business property relief as it applies to groups of companies.  It includes HMRC's views on mixed activity holding companies, foreign companies within the group, intra-group loans and indirect subsidiaries.  The guidance builds on HMRC's answers to questions previously raised by the Chartered Institute of Taxation.

An update on HMRC's consultation document on bulk and specialist information powers, published on 9 July 2009.

On 15 September 2008 HMRC issued an invitation to comment on the scope and structure of the guidance which will replace IR20 (HMRC's guidance on individual residence, domicile and related issues) following the Finance Act 2008 changes. HMRC proposes 12 chapter headings (set out at the link below) and asks for views on: 1. The proposed structure of the revised guidance. 2. Whether the scope of the current IR20 is about right and, if not, which aspects are unnecessary or irrelevant and which issues should be added to the revised guidance which are not covered in IR20.3. Whether anything in the current IR20 needs clarification.Responses are requested by 15 December 2008 with a view to publishing revised guidance by March 2009. For more information about individual residence and domicile, including a link to the current version of IR20, see Legal update, HMRC publishes new remittance basis and updated UK tax residence guides and the following practice notes: Residence, ordinary residence and domicile: definitions and UK tax implications for individuals and Domicile.Source: HMRC: Replacement guidance for residence and domicile: an invitation to comment.

HMRC launched a pilot R&D relief advance clearance scheme for small companies on 31 October 2011.

HMRC published an advance assurance form for the Enterpise Investment Scheme and Seed Enterprise Investment Scheme on 15 May 2012.

HMRC has announced that its R&D tax relief advance clearance pilot for small companies has closed.

An update about the HMRC ready reckoner for calculating hybrid rates of capital allowances.

HMRC has announced that its next campaigns against tax cheats will focus on individuals involved in home improvement trades and those who buy from and sell goods directly to others or receive commission.

HMRC is to review its business records check pilot.

On 18 June 2012, HMRC published updates to guidance on post transaction valuation checks in the HMRC Shares and Assets Valuation Manual.

HMRC published its rewritten Venture Capital Schemes manual on 27 December 2012.

On 25 August 2010, the Chartered Institute of Taxation released a note of a meeting, held on 23 March 2010, at which HMRC, the Chartered Institute of Taxation and the Royal Institute of Chartered Surveyors discussed the valuation of goodwill on trade-related properties.

This practice note sets out how to incorporate a limited liability partnership (LLP) under the Limited Liability Partnerships Act 2000, the factors to consider when incorporating and the key steps to take post-incorporation.

If the seller becomes an employee of the buyer rather than remaining an employee of the target, does this eliminate the risk of a cash earn-out being recharacterised as S’s employment income?

The Special Commissioner has recently released his decision in Stafford Robert Buck v Revenue & Customs [2008] UKSPC SPC00716 (23 October 2008).

The High Court has held that a tax avoidance scheme marketed to wealthy individuals in the 1990s, with the aim of creating tax-deductible losses, failed for artificiality.

The Court of Appeal has held that dividends paid to a wife from a company jointly owned by her and her husband were not taxable as income of the husband, but were taxable as income of the wife.

This note is a general summary of the rules for calculating income for the purposes of UK income tax. It also provides links to notes describing other aspects of the UK income tax rules, such as how income is taxed and exemptions from income tax.

This note is a general summary of exemptions and relief from UK income tax. It also provides links to notes describing other aspects of the UK income tax rules, such as how income is calculated for income tax purposes and how income is taxed.

The Treasury and HM Revenue & Customs are consulting on draft legislation and draft guidance to counter certain forms of income shifting using companies and partnerships.

The Special Commissioners have held that an additional income tax charge arose where, on the exercise of employee share options, employees failed to put their employer in funds to account for its PAYE liabilities before the expiry of the relevant deadline.

The Court of Appeal has considered the scope of sections 555 and 556 of the Income and Corporation Taxes Act 1988 and the importance of the application of the territoriality principle to tax legislation.

The Special Commissioners have held that the law, and not HM Revenue & Customs guidance, must be applied in considering domicile, residence and ordinary residence.

A legal update on the government news release of 29 March 2010 on "time to pay" requests for large tax debts.

An update about the revised FAQs on the new penalties and interest regime for PAYE, published on 11 December 2009.

A list of current interest rates that are useful for private client practitioners, with links to earlier rates. It includes interest on pecuniary legacies and the statutory legacy, interest on tax paid late and overpaid, Court Funds Office rates, the Bank of England base rate and the official rate of interest (used to calculate the taxable benefit from beneficial loans and pre-owned assets).

An update about the article and frequently asked questions on intermediary companies published by HMRC.

This negotiating guide explains the purpose and rationale for the provisions in Standard document, International tax covenant. It also explains some issues that commonly arise in negotiations and, in some cases, suggests additional drafting that may be useful.

This drafting note is for use with Standard document, International tax warranties.

The High Court has held that the IR35 (personal service company) rules apply to the services of an IT consultant in Dragonfly Consultancy Limited v The Commissioners for Her Majesty and Revenue & Customs 2008 EWHC 2113(Ch), upholding the decision of the Special Commissioner. The decision shows that it is difficult in practice for arrangements relating to the services of highly skilled workers to fall outside the IR35 rules because the client is unlikely to accept an unfettered right of substitution in this situation.

The First-tier Tribunal has allowed an IT consultant's appeal against an IR35 assessment. The tribunal decided that the terms of the notional contract would not result in the consultant being regarded as the client's employee for income tax and NICs purposes. (E C R Consulting Limited v HMRC [2011] UKFTT 313 (TC).)

If a UK company has an associated company that is based outside of the UK jurisdiction, do the profits made by the foreign company contribute to the level of corporation tax paid by the UK company?

My client has just ceased to trade and has a valuable property that was used in the trade. He would ultimately like to keep the property and use it to generate income in the future. However, unless he disposes of it within the next 3 years he will lose his entrepeneurs' relief. Would it be possible for him to sell the property to either his son or wife in at open market value in return for a loan note in order to cystalise a disposal and pay CGT at 10% rather than 28%.

The query relates to the availability of entrepreneurs relief where the shares are held under a bare trust by an individual. The situation is as follows: 1. A holds 200 ordinary shares in a limited company. 120 are held on bare trust for B with A holding the balance for himself. 2 The trust deed provides that any voting rights in the shares held by A on behalf of B can only be voted by A in accordance with B’s instructions. 3. B is not currently employed by the company nor a director. We appreciate that B needs to be employed by the Company or become an officer as soon as possible but what isn’t clear from the HMRC guidance and the TCGA legislation is whether B currently holds at least 5% of the ordinary shares in the company and has at least 5% of the voting rights. Our understanding of section 60 TCGA 1992 is that as A is holding shares as bare trustee for B then the shares are deemed to belong to B for CGT purposes and any voting rights exercisable by A are deemed to belong to B himself. Is there any confirmation either in legislation, case law or under any HMRC guidances which confirms that based on the facts above B is definitely considered to be the holder of the 120 shares and the person who has the right to exercise voting rights on those shares so that he will be entitled to entrepreneurs relief by virtue of his beneficial ownership of the shares under a bare trust arrangement? The legislation deals with joint holdings under s169S(4) TCGA but it does n

The latest tax act from the Tax Law Rewrite Project, the Income Tax (Trading and Other Income) Act 2005 came into force on 6 April 2005.

Our summary of the key business tax announcements in the 22 June 2010 Budget. (Free access.) Leading tax practitioners told us what they see as the most important announcements in the Budget, see Article, June 2010 Budget: the second half.

A large number of business tax changes come into effect in April 2008. We have outlined the key measures in this update and included links to more detailed information.References in this update to the Finance Bill 2008 are to the version of the Finance Bill that was ordered to be printed on 18 March 2008: see Volume 1, Volume 2 and Explanatory notes.

An update on anti-avoidance rules announced on 13 November 2008 affecting the taxation of leasing transactions.

A standard form legal mortgage over a property (often referred to as a "legal charge") granted by an individual borrower in favour of an individual lender, securing monies that have been borrowed for the purpose of the borrower's business. Note: This standard document can only be used in the prescribed circumstances discussed in the integrated drafting notes as it has been drafted to bring it within one of the categories of exempt agreements for the purposes of the Consumer Credit Act 1974 (CCA 1974).  Any amendments should be discussed with a specialist in consumer credit since any alterations may take this mortgage outside the definition of exempt agreement.  This would mean that the lender would need a consumer credit licence and this mortgage would need to comply with the provisions of the CCA 1974 to be enforceable without a court order.  This mortgage is not drafted to be compliant with the CCA 1974.

This note outlines the law regarding a limited liability partnership's (LLP) choice of name and its trading disclosure requirements under the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 (SI 2009/1804) (as amended). It discusses the factors to consider when choosing and registering an LLP name and also the disclosures required on business letters and at the LLP's registered office.

This practice note examines the various tax issues that arise in relation to limited partnerships, including the tax treatment of partners and the tax consequences of changes in limited partnership interests.

A loan note instrument constituting floating rate guaranteed loan notes. The loan notes are for issue by the buyer of company shares to the seller(s) of those shares as consideration for the share sale.

In Harding v HMRC [2008] EWHC 99 (Ch) (published on 30 January 2008), the High Court dismissed the taxpayer's appeal and held that loan notes containing a foreign currency provision which had lapsed by the time the loan notes were redeemed, were not qualifying corporate bonds (QCBs) within the meaning of section 117(1) of the Taxation of Chargeable Gains Act 1992 (TCGA 1992). The case involved the exploitation of an apparent anomaly in section 117(1) of the TCGA 1992 which, if successful, allowed loan notes which were not QCBs on issue to become QCBs before redemption, with the result that capital gains tax on a substantial gain was avoided.Amendments introduced by the Finance Act 1998 rectified this anomaly and the tax planning opportunity has been removed. However, the decision will be relevant to those who had put in place such tax planning before the amendments were made.The decision also illustrates the High Court's willingness to apply a purposive approach to construing tax legislation.Of more practical interest, it was notable that HMRC accepted that a right to redeem in a foreign currency was sufficient to prevent the loan note from being a QCB even though the taxpayer's exposure to foreign currency fluctuations was strictly limited by a cap and a collar and by the lapse of the option to redeem in a foreign currency ten days after the taxpayer had served a redemption notice.

HMRC issued Revenue & Customs Brief 41/10, setting out its revised view on the offset of losses on jointly-held and nominee-held shares, on 12 October 2010.

A note examining the legal and taxation framework surrounding the use of managed service companies (MSCs). The note also considers the differences between MSCs and personal service companies.

HMRC and HM Treasury have published draft legislation which will make certain third parties liable for the unpaid PAYE debts of managed service companies (MSCs) from April 2007. Those that may be caught include anyone who has encouraged, facilitated or been involved in the MSC arrangement. This could include employment businesses, end-user clients and the individual worker whose services are provided via the MSC.

Our summary of the key business tax announcements in the 24 March 2010 Budget. See what other tax practitioners thought were the highlights of the Budget: Article, March 2010: When is a Budget not a Budget? Tax practitioners comment.

On 25 May 2011, HMRC published the minutes of the April 2011 R&D consultative committee meeting.

Promoters and in some cases users of certain National insurance contributions (NICs) saving arrangements are obliged to disclose details of those arrangements to HMRC from 1 May 2007. This note sets out the types of arrangements that are caught by those rules, who must disclose and when disclosure must be made. 

Ansell Computer Services Limited has won an appeal to the Special Commissioners against an Inland Revenue demand for national insurance contributions. The demand related to payments made by two different companies working in the defence sector, Marconi and BAe, for work performed by Mr Ansell who was a director and shareholder in ACSL.

A legal update on the guidance published by HMRC on claims for overpayment relief from 1 April 2010.

On 6 May 2008, HMRC announced its publication of interim guidance which updates its December 1999 booklet on residence and liability to UK tax (IR 20). The new version of IR 20, dated April 2008, contains amendments to reflect:1. Developments since 1999 (including HMRC's interpretation of the Robert Gaines-Cooper v HMRC SpC 568, 31 October 2006 decision - we note that the High Court judgment (see Legal update, Internationally mobile businessman had not lost his domicile of origin), which upheld the Special Commissioners' decision, is not referred to).2. Changes to cross-referenced material. 3. Changes to contact points arising from the merger of Inland Revenue with HM Customs & Excise to create HMRC.HMRC confirms that it will publish full replacement guidance covering changes to the residence and domicile rules resulting from the 2008 Budget once they have been approved by Parliament and included in the Finance Act 2008. For more information on the 2008 Budget developments on residence, see Legal update, Budget 2008: Personal tax and investment: residence and domicile. See also, Draft legislation on residence and domicile published and Finance Bill: UK residence and domicile.In our view, it would have made more sense for HMRC to wait for those changes to be finalised before publishing a new version of IR 20. The April 2008 date is confusing as one would expect it to be guidance correct as at that date, but that is not the case.Source: IR 20: Residents and non-resid

We have published a new practice note on Seed Enterprise Investment Scheme Relief.

A legal update about the announcement by HMRC that the NASDAQ OMX Tallinn and the Bahamas International Securities Exchange have obtained "recognised stock exchange" status.

On 11 March 2008, PLC Tax published a new standard document (with accompanying drafting notes) for seeking HMRC's assurance that the company issuing shares under the Enterprise Investment Scheme is a qualifying company for the purposes of that scheme, see EIS assurance application and drafting notes. We are grateful to Osborne Clarke for providing the standard document.

We have published a new standard form application for companies seeking advance assurance from HMRC that they are qualifying holdings for the purposes of the Venture Capital Trust scheme.  

The draft Social Security (Contributions) (Earnings and Thresholds) (Amendment) Regulations 2012 and the draft Social Security (Contributions) (Re-rating) Order 2012  were published on 30 January 2012.

The Court of Appeal has confirmed that fee rebates to individual managers who had invested their own money in funds were not deductible for the managing partnership. The court also held that the partnership's receipt of fees from the managers was not outside the scope of tax as mutual trading. However, HMRC's discovery assessment was out of time. (HMRC v Lansdowne Partners Limited Partnership [2011] EWCA Civ 1578.)

The First-tier Tribunal has ruled that Class 1A NICs liability fell away when income tax liability for benefits in kind was removed when the recipients of those benefits made them good (Marcia Willett Ltd v HMRC [2012] UKFTT 625 (TC)).

The Upper Tribunal (Tax and Chancery) dismissed all appeals in Bonner & Ors v HMRC  and HMRC v Brumpton [2010] UKUT 450 (TCC) in a decision released on 14 December 2010.

An update about the decision of the Tax Chamber of the First-tier Tribunal in Klincke v HMRC (Appeal SC/3146/2008), released on 1 July 2009.

Update about an OECD consultation on a discussion paper about encouraging tax compliance by high net worth individuals.

An update on the Enactment of Extra-Statutory Concessions Order 2009 (SI 2009/730), which was made on 18 March 2009.

An overview of the main tax issues to consider when setting up a partnership in England and Wales.

An update about the decision in Parnalls Solicitors Ltd v Commissioners for Revenue & Customs [2009] UKFTT 318 (TC).

A table which tracks the reforms arising from and related to HMRC's review of powers, deterrents and safeguards.

PLC Tax has updated its legislation trackers to reflect developments in July 2011.

PLC Tax has updated its legislation trackers to reflect developments in May 2011.

This practice note examines powers of attorney, in particular, general powers of attorney and their commercial application. It includes links to standard documents for general powers of attorney and specimen execution clauses. For further details on other types of powers of attorney, see Practice note, Lasting powers of attorney and Practice note, Enduring powers of attorney.

The Chancellor, Alistair Darling, delivered his first Pre-Budget Report on 9 October 2007.

An alphabetical list of cases reported by PLC Private Client, with links to our legal updates and the official judgments. There are separate sections for charities, Court of Protection and Court of Justice of the European Union (ECJ) cases.

This legislation tracker is an archive of items removed from PLC Private Client legislation tracker, including Acts where provisions of interest to private client practitioners have been in force for at least a year, Bills that are not proceeding and Law Commission projects where the government has introduced a Bill in Parliament or published a draft Bill for consultation, or where it appears that the government will take no further action.

News stories for the PLC Private Client weekly e-mail to 5 January 2012.

This practice note covers the tax issues that commonly arise when private equity firms invest venture and development capital in start-up and smaller companies.

This practice note explores the main tax issues arising in a private equity backed management buyout that can have an impact on the investee company or group.

On 11 April 2011, the European Commission published the first Annual Report on the implementation of the European Progress Microfinance Facility, which covers the year 2010.

An update about the decision of the First-tier Tribunal in Jones & Another v HMRC [2009] UKFTT 312 (TC), released on 18 November 2009.

An update about government amendments to the Finance Bill 2009 tabled on 28 May 2009.

The First-tier Tribunal has held that a company's purpose and not its intention determines whether it is a close investment-holding company. (Reddleman Properties Ltd v HMRC [2011] UKFTT 395 (TC).)

Ths note explains that a Quistclose trust is a form of resulting trust that may arise when funds are transferred for specific and exclusive purposes, as explained in Twinsectra Ltd v Yardley and others [2002] UKHL 12. It gives examples from case law of loans and other situations, and summarises factors to consider when advising.

Details of parliamentary, court and tribunal closure dates during summer 2011.

The draft Finance Bill clauses to implement the changes to the enterprise investment scheme (EIS) and the venture capital trust scheme (VCT) and to create the new seed enterprise investment scheme, were published on 6 December 2011.

In respect of HM Revenue and Customs v PA Holdings Ltd [2011] EWCA Civ 1414 - is the leave to appeal only to appeal in respect of the income tax? i.e. is the national insurance point (i.e. that it is payable) now accepted?

A practice note about the Finance Act 2012 measure creating a new tax relief for foreign income or capital gains brought to the UK by a remittance basis taxpayer for the purpose of making a commercial business investment in an unlisted company or a company listed on an exchange-regulated market (such as AIM or PLUS-quoted). We would welcome subscribers' comments on the practical operation of the relief (see Your comments). NOTE: This resource is being reviewed in light of the 2013 Budget. For more information, see 2013 Budget: key private client tax announcements.

HM Revenue & Customs has published draft legislation on the new residence and domicile tax rules announced in the 2007 Pre-Budget Report.

This practice note covers the meaning of "residence" and "ordinary residence" of individuals in the context of UK taxation. NOTE: This resource is being reviewed in light of the 2013 Budget. For more information, see 2013 Budget: key private client tax announcements.

This practice note sets out in detail the UK tax implications of residence, ordinary residence and domicile for individuals. NOTE: This resource is being reviewed in light of the 2013 Budget. For more information, see 2013 Budget: key private client tax announcements.

This practice note considers the anti-forestalling measures implemented by the previous government in the Finance Act 2009 in advance of its abortive plans to restrict tax relief on pension saving for high-income individuals. The anti-forestalling measures only applied to pensions tax relief claimed in the 2009/10 and 2010/11 tax years.

This practice note is a guide to the use of salary and bonus sacrifice arrangements.

An update on the Special Commissioner's decision in Chappell v Revenue & Customs [2008] UKSPC SPC00717 issued on 12 November 2008.

A practice note on the tax treatment of scrip dividends and dividend reinvestment plans (DRIPs).

The government has announced an SDLT exemption for certain land transactions consisting entirely of residential property where the chargeable consideration is up to £175,000. The exemption applies to transactions with an effective date (normally completion) after 2 September 2008 and before 3 September 2009. This measure will benefit buyers of residential property for more than £125,000 and up to £175,000 (there is already no SDLT due where the consideration is up to £125,000).

A form of application for clearance under section 138 of the Taxation of Chargeable Gains Act 1992 for a transaction under section 135 (and section 138A) of that Act.

A standard document application for assurance that the shares to be issued will satisfy the requirements of the seed enterprise investment scheme. Note: HMRC has published a template application for assurance. For further details, see Legal update, HMRC publishes EIS and SEIS advance assurance application.

A practice note summarising the Seed Enterprise Investment Scheme (SEIS), which gives tax relief to individuals for certain investments in small unquoted trading companies.

A discussion of the main tax issues to consider where the whole or part of the consideration payable on a share sale is to be deferred. This note assumes that the target company is resident and incorporated in the UK. The tax treatment of non-UK residents depends on the tax laws of their jurisdiction.

This checklist is a list of common tax issues that may arise on a share sale that the seller may wish to consider. This checklist is in three sections - issues that may arise whether the seller is a company or an individual, issues that you may need to consider only when the seller is an individual, and issues that may arise only when the seller is a corporate entity.

This practice note covers the main issues that the seller should consider during a share sale. It assumes that the target company is resident and incorporated in the UK. The tax treatment of non-UK residents depends on the tax laws of their jurisdiction. Note: This resource is being reviewed in the light of the 2013 Budget. For more information, see  Legal update, 2013 Budget: key business tax announcements.

This practice note sets out the tax treatment of disposals of shares by individuals before 6 April 2008 and outlines some of the tax planning which took place before changes to the capital gains tax rules took effect on 6 April 2008. It also covers loan notes and earn-outs issued before 6 April 2008 in consideration for the sale of shares. We have retained this material as it may be useful when completing tax returns for periods to 5 April 2008 and dealing with HMRC enquiries relating to those periods.

Almost all sales of private companies include a tax covenant (also called the tax schedule or tax indemnity), generally given by the seller in favour of the buyer. This practice note explains, in broad terms, the main provisions of the tax covenant.

This practice note is about the way payments made by the seller to the buyer under the tax indemnity and tax warranties contained in a share purchase agreement are taxed.

An update on the decision of the Special Commissioners in Fletcher v HMRC [2008] UKSPC00711, released on 29 September 2008.

The First-tier Tribunal (Tax) has released its decision in Patmore v HMRC [2010] UKFTT 334 (TC).

The Office of Tax Simplification (OTS) published its interim report on the tax treatment of small businesses, including IR35, on 10 March 2011.

The Office of Tax Simplification published its final report on tax administration simplification measures for small businesses on 28 February 2012. 

The Special Commissioners have decided in principle an appeal by Sempra Metals Limited concerning:(1) corporation tax deductions; and(2) PAYE and national insurance contributions (NICs) liabilities,in respect of bonuses paid into offshore trusts set up to benefit employees or members of employees' families.

The First-tier Tribunal, expanding on its earlier decision in the same case, has held that a taxpayer was not entitled to corporation tax deductions for sponsorship payments to a rugby club (Interfish Ltd v HMRC [2012] UKFTT 599 (TC)).

This practice note considers the practical impact of stamp duty land tax in the context of commercial transactions. 

A standard letter to be sent from a company to an employee as part of salary sacrifice arrangements.

On 22 December 2011, HMRC confirmed that state aid approval for the small and medium-sized enterprise (SME) research and development (R&D) relief increase to 200%, from 1 April 2011, and (by implication) the proposed subsequent increase to 225% (from 1 April 2012) was given by the European Commission.   

A form of application (with drafting notes) for clearance under section 1091 of the Corporation Tax Act 2010 that a distribution is an exempt distribution. It should be read in conjunction with Practice note, Statutory demergers: tax.

Please click on the "Open in Word" icon to open precedent stock transfer form. This form has been created using Microsoft Word and Microsoft Excel. Please type within the cells provided as typing beyond this may affect the formatting. For more information on when the form is needed and details on how to complete the form, see Practice note, Stock transfer form. We have updated the stock transfer form to include the new stamp duty exemption certificate which may be completed, where appropriate, in relation to transfers executed on or after 6 April 2012.

This is a briefing note for employers to explain the tax treatment of subsistence expenses.

The terms of reference and first minutes of the working groups established to consider proposals for the integration of tax and NICs were published by HM Treasury on 31 January 2012.  

A practice note about how to lodge a tax appeal and the optional HMRC internal review of a disputed decision.

This practice note explains the procedure for bringing a tax appeal before the First-tier Tribunal, including notification of the appeal, allocation of the appeal to one of the four tax case categories, case management, the hearing, evidence and witnesses, the tribunal's decision and costs. 

This letter seeks clearance under section 1044 of the Corporation Tax Act 2010, on behalf of a client, that the proposed purchase by an unquoted company of its own shares, where the purchase meets the trade benefit test, will be treated as being capital in nature. The letter can be adapted for use where the own share purchase meets the payment of inheritance tax test. For details of the clearance procedure, see Practice note, Tax clearances: share buybacks.

This drafting note should be used in conjunction with the PLC standard document tax covenant: corporate seller version. Note: This resource is being reviewed in the light of the 2013 Budget. For more information, see  Legal update, 2013 Budget: key business tax announcements.

This drafting note should be used in conjunction with the PLC standard document, tax covenant: individual seller version and with all PLC standard share purchase agreements for the purchase of shares from individual sellers and containing a tax covenant as a schedule.

  This drafting note should be used in conjunction with Tax covenant: long form . This drafting note is intended as a general guide to the terms and various paragraphs in the long-form tax covenant. For more detailed practical guidance on negotiating, commenting on and marking up the tax covenant, see Tax covenant: long form: negotiating guide.

A note containing links to tax data of interest to individual taxpayers and trustees (including personal representatives).  It covers rates, allowances and time limits for inheritance tax, capital gains tax, income tax and stamp taxes, and tax limits that apply to registered pension schemes and individual savings accounts. It includes links to interest rates on tax paid late and tax overpaid.

A note containing tables of income tax rates and allowances for individuals and trusts, deadlines for returns and payments, and time limits for assessments and claims, with links to interest rates on tax paid late and overpaid tax, and to more detailed information about income tax.

A note containing tables of limits that apply to registered pension schemes for tax purposes (annual contributions, annual and lifetime allowances, and former requirement to buy an annuity at 75), with links to more detailed information about tax on pensions.

An update about the introduction of the Corporation Tax Bill and the Taxation (International and Other Provisions) Bill in the House of Commons.

A document tracking the development of certain notable pieces of proposed new legislation relating to the taxation of owner-managed businesses.

HMRC and HM Treasury published tax policy updates and draft legislation for the Finance Bill 2011 on 9 December 2010. Areas covered include CFCs (interim reform), taxation of foreign branches, bank levy, chargeable gains of corporates and a new approach to tax policy making.  Note: we have added links to more detailed coverage published by PLC after 9 December.  See also this practice note this summarising tax consultations and draft legislation published in autumn 2010. (Free access.)

An update on draft legislation published on 8 December 2008 which, if introduced, will change how businesses claim tax relief for expenditure on cars.

This is a short briefing note for employers on the tax implications of staff parties and gifts to employees.

These tax warranties are a long form version for use with share purchase agreements if there has been little or no tax due diligence or if the due diligence has revealed a major cause for concern. They require a high degree of disclosure by the seller. For most deals, the Tax warranties: short form version may be more appropriate. Note: This resource is being reviewed in the light of the 2013 Budget. For more information, see  Legal update, 2013 Budget: key business tax announcements.

These short form tax warranties are an alternative to the standard long form tax warranties and require less disclosure on the part of the seller.

An article with links to information about tax developments expected in 2011 and tax developments that happened in 2010.

A consultation document on reforms to the taxation of non-UK domiciled individuals was published by HM Treasury on 17 June 2011. The government proposes to increase the remittance basis charge, allow the tax-free remittance of income and capital gains for commmercial investment in UK businesses, and simplify some aspects of the current rules.  This is a detailed legal update on the consultation.

An overview of the way in which payments made to employees on termination of their employment are taxed.

A checklist of questions to consider when advising on the tax treatment of termination payments.

An update about the new taxpayers' Charter.

Leading tax practitioners discuss the key points of interest for the City in the 2007 Pre-Budget Report.

The First-tier Tribunal found that the appellant's dominant purpose for heating sandwiches and meatball sauce was to enable them to be consumed at a temperature above the ambient air temperature (Sub One Ltd (t/a Subway) v HMRC [2010] UKFTT 487 (TC)).

This letter provides a format for an application for clearance under section 701 of the Income Tax Act 2007 and section 748 of the Corporation Tax Act 2010. For more information, see Practice note, Transactions in securities: tax anti-avoidance. This application assumes that the transaction has yet to take place. If clearance is sought for a completed transaction, the letter will need to be amended accordingly. It also assumes that the applicant seeks HMRC's confirmation that the transaction in securities has no tax avoidance purpose or object. If confirmation is sought that one or more of the other requirements for HMRC to counter a tax advantage is not satisfied, the letter will need to be amended.

In its judgment released on 1 May 2008 in Talbot v HMRC (2008) VAT 20665, the VAT and Duties Tribunal considered the nature of "employment" for the purposes of UK VAT.The tribunal decided that the taxpayer, a cab driver, had been an employee of one of the firms for which he worked in the period under consideration but had not been an employee of the other. This case will be interesting reading for those concerned with the boundaries between employment (which does not carry separate, individual VAT liability) and independent activities (which might), as the tribunal discussed the concept of "employment" from both a UK and an EU perspective.

An update about the decision of the Tax Chamber of the First-tier Tribunal in Taylor v HMRC [2009] UKFTT 366 (TC), released on 25 November 2009. NOTE: this decision was overturned by the Upper Tribunal: see Legal update, Tribunal denies EIS relief.

A legal update about the decision of the Tax Chamber of the First-tier Tribunal in David Harper v HMRC [2009] UKFTT 382 (TC), released on 29 December 2009.

A legal update about the First-tier Tribunal's decision in Skye Inns Ltd & Anor v HMRC [2009] UKFTT 366 (TC), released on 15 December 2009.

A marketed scheme involving the use of a trust to avoid capital gains tax on a disposal of loan notes by a UK resident and domiciled taxpayer has succeeded before the First-tier Tribunal, despite the application of the Ramsay principle (James Albert McLaughlin v HMRC [2012] UKFTT 174 (TC).)

A brief legal update announcing publication of the UK Supreme Court judgment in an appeal against tax charged under Chapter 3D of Part 7 of the Income Tax (Earnings and Pensions) Act 2003, Grays Timber Products Ltd v HMRC (Scotland) [2010] UKSC 4.

An update about our recently revised practice note on transactions in securities and our new clearance application letter with drafting notes. (Free access.)

A legal update on the decision of the Upper Tribunal in John Coll and Marian Coll v HMRC [2010] UKUT 114 (TCC).

A practice note providing a brief summary of the operation of the rules governing the transfer of a business as a going concern where the assets transferred include land and buildings.

In a decision released on 11 November 2012 (hearing 14 January 2011) the First-tier Tribunal held that a newly formed company, established to acquire and manage a target company in a management buyout was entitled to recover input tax on professional fees incurred during the acquisition process (Cloud Electronics Holdings Limited v HMRC [2012] UKFTT 699 (TC)).

The First-tier Tribunal considered that HMRC's guidance on recovering VAT on fees for accountancy services to partnerships was a concession designed to avoid disputes over "small" sums. The fees in question were not "small" so the relevant LLP could not use the concession to recover all of the VAT on those fees. (Mundays LLP v HMRC [2012] UKFTT 707 (TC).)

The Finance Act 2012's increases in the Venture Capital Trust scheme limits came into force on 19 July 2012 but have effect for shares and securities issued on or after 6 April 2012 (Finance Act 2012 (Venture Capital Trusts) (Appointed Day) Order 2012 (SI 2012/1901)).

A legal update about HMRC's announcement about the new small enterprise condition, made on 26 January 2010.

A practice note summarising the rules relating to Venture Capital Trusts (VCTs) and the tax reliefs for individuals who invest in VCTs. VCTs are listed companies which invest in unquoted trading companies.

In a family farming partnership where the father is the landlord what is the CGT implication if the existing 1986 tenancy agreement is surrendered and a FBT is granted in its place?

What are the tax risks for an employee/ director/ shareholder of a private company transferring shares in the company to his spouse in order for his spouse, who is a basic rate tax payer, to receive the dividends?

I have a client which regularly issues EMI share options to various senior employees, and which also issues shares under the EIS scheme. The exercise price for the shares under the EMI options, and the subscription price used for the purpose of the EIS scheme, are the same (£50 per share). In its EMI returns, the client has previously stated that it considers the actual market value of the shares issued to be £50 per share. The client has not obtained a formal share valuation, nor had this value approved by HMRC, and it is aware of the risks of this approach. One of the client’s senior employees has recently exercised a non-EMI share option to acquire shares in the company at nominal value i.e £0.01 per share. The employee in question wishes to argue that the market value of the shares is much less than £50 each (based in part on a minority discount) and the client wishes to support this in the annual Form 42 return. My concern is whether this may have any consequences for reliefs available on the EMI options and EIS shares that the client has previously granted/issued, and any to be granted/issued in the future. I do not think it raises an issue for EMI options, as there is no difficulty with employees paying more than the market value for the shares. However, I consider that the situation may be different for EIS relief. Whilst I appreciate that market value is not specifically taken into account when calculating EIS relief, issuing shares for many times th

I have come across an interesting matter upon which I would welcome any comment or insight that you may have. In brief, Father sadly passed away approximately 12 months ago. In his will, he made several specific and pecuniary legacies, leaving the entire residuary estate (including the shares in the family company) equally between his surviving issue (two children). A deed of variation was subsequently made pursuant to which the entire residuary estate (excluding the shares) was passed to trusts and other beneficiaries. The will, as amended by the deed of variation, now provides for the two children to receive the residuary estate (comprising only of the shares in the family company) equally between them. The children are now, 12 months following the date of death, considering selling the family company within the next 6 to 12 months. The shares have not yet been transferred by the executors to the children. My question therefore is at what point does the entrepreneur’s relief ‘clock’ start running in respect of the children. I refer to section 62(4) TCGA 1992 which provides that the personal representative’s acquisition of the asset from the deceased will be treated as the beneficiary’s acquisition although question whether this applies to beneficial interest or merely to base cost.

My query concerns the provisions included in a loan note to make it a non-QCB, in particular the foreign currency election. I understand from your drafting note on loan note instruments that in order to ensure the loan note is not a deeply discounted security the upper limit in your precedent is 100.5% and the upper limit should be no greater than 0.5% above the issue price for each year until the noteholder's earliest redemption opportunity. You state that where the redemption is less or more than a year the percentage will need to change. I am looking at a loan note that cannot be redeemed until four years after issue. Does that mean that the upper limit must be 102% or can it remain 100.5% without affecting its status as a non-QCB or making it a deeply discounted security?

Two shareholders in a private company (Company S) entered into a shareholders agreement containing cross options on death and each took out a life policy to be held on trust for the other pursuant to trust deeds in a form provided by the assurer (L&G in this case). The two shareholders are the two trustees of each trust. Susbequent to entering into the shareholders agreement and the trust deeds, the two shareholders have set up a holding company (Company H) and transferred their shares in Company S to Company H so that S is now a wholly owned subsidiary of H. I am dealing with a new shareholders agreement at the level of Company H. However, the trust deeds under which their respective life policies are held on trust for each other refer specifically to Company S. What is the most appropriate way of dealing with those trust deeds. Can they simply be amended by the two shareholders in their capacities as the trustees to substitute the reference to Company S with a reference to Company H or do the two trusts need to be terminated and then new declarations of trust entered into which refer to the new Company H?