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20 December 2000
It's not only the Revenue …
As we are now fast approaching the cut-off date for submission of 2000 tax returns, my firm has been faced with an interesting problem – our computer has crashed!
As we are now fast approaching the cut-off date for submission of 2000 tax returns, my firm has been faced with an interesting problem – our computer has crashed!
It's not only the Revenue …
As we are now fast approaching the cut-off date for submission of 2000 tax returns, my firm has been faced with an interesting problem – our computer has crashed!
Obviously at this stage we are not in a critical position as no doubt we will (I hope) be back online in the very near future. Nevertheless the problem has reared its ugly head and my poser is what would be the position if the system were to have crashed much nearer to 31 January 2001 and because of this it would not be possible to submit clients' tax returns by the due date? No doubt we would lodge appeals against the penalties to each of the tax districts concerned, but would the fact that the use of our computer was not available for either all or part of the run-up period close to the deadline be a reasonable excuse? I did try the Inland Revenue Information Centre at Bush House, London but was given a 'don't know' answer.
Dare I ask, but do any readers have any feedback from this problem in the past? Does anyone know what the Revenue policy is on this point? Of course, any other pointers would be welcome.
(Query T15,740) – NK.
The costs of Christmas
Many companies and firms authorise a significant amount of expenditure on the Christmas season. This can include office decorations and the sending of Christmas cards to clients, customers, suppliers and other business associates.
The treatment of Christmas parties and functions for staff is well known, and undoubtedly the provision of seasonal functions for clients and customers is business entertaining and comes within section 577, Taxes Act 1988.
However, what about the costs of decorations and sending cards? Is this expenditure 'wholly and exclusively incurred', therefore within the provisions of section 74 (1)(a), Taxes Act 1988 and so claimable as a business expense under Schedule D, Case I or II? Or will it come under the scrutiny of Hector Scrooge, leading perhaps to a technical argument and the threat of an aspect or full Revenue Enquiry?
(Query T15,741) – Rudolph.
Equitable claim
Policyholders in Equitable Life with 'with profits' policies will all lose value. Some will transfer to another fund, losing 10 per cent of their current fund value. Others will lose part of their annual and terminal bonuses from the date the society closed its doors to new business.
Many will incur expense in obtaining professional advice from their registered financial adviser. Is there any way in which, in these exceptional circumstances, such fees could be allowable for taxation purposes?
(Query T15,742) – Prawn Dimarolo.
Building plans
My client is a self-employed builder who has purchased a site on which, assuming planning permission is granted, he proposes to build a residential block of ten flats. The intention is that the flats will not be sold, either individually or as a block, but all will be rented out with management factoring being applied to the whole block. The long term aim is to retain the whole block as a yielder of income to retirement and beyond.
My questions are:
(1) As regards trading, on completion will there be a Schedule D, Case I uplift of cost to market value, with the profit assessed on the builder if the flats are retained for letting?
(2) Can the project be identified from day one as a personal one and, if so, would it be advisable for the construction costs, including site purchase, to be debited to personal drawings as opposed to work in progress?
(3) In relation to VAT –
(a) As the first supply will be an exempt one, should VAT input claims be disregarded on construction costs from the start of the project?
(b) Would VAT input claims be available if, prior to letting, a family company (controlled by the builder) purchased the residential block; what other taxation ramifications would then apply?
(c) If the builder took his wife into partnership in the building business with the block of flats then being transferred to his own name on completion, would VAT then be reclaimable albeit with adverse Case I ramifications?
(4) What if, due to cash flow pressures, there is a change of mind and the flats are sold off on completion; presumably income tax under Schedule D, Case I is applicable to the proceeds derived, but can VAT inputs then be claimed?
(Query T15,743) – Factorman.
As we are now fast approaching the cut-off date for submission of 2000 tax returns, my firm has been faced with an interesting problem – our computer has crashed!
Obviously at this stage we are not in a critical position as no doubt we will (I hope) be back online in the very near future. Nevertheless the problem has reared its ugly head and my poser is what would be the position if the system were to have crashed much nearer to 31 January 2001 and because of this it would not be possible to submit clients' tax returns by the due date? No doubt we would lodge appeals against the penalties to each of the tax districts concerned, but would the fact that the use of our computer was not available for either all or part of the run-up period close to the deadline be a reasonable excuse? I did try the Inland Revenue Information Centre at Bush House, London but was given a 'don't know' answer.
Dare I ask, but do any readers have any feedback from this problem in the past? Does anyone know what the Revenue policy is on this point? Of course, any other pointers would be welcome.
(Query T15,740) – NK.
The costs of Christmas
Many companies and firms authorise a significant amount of expenditure on the Christmas season. This can include office decorations and the sending of Christmas cards to clients, customers, suppliers and other business associates.
The treatment of Christmas parties and functions for staff is well known, and undoubtedly the provision of seasonal functions for clients and customers is business entertaining and comes within section 577, Taxes Act 1988.
However, what about the costs of decorations and sending cards? Is this expenditure 'wholly and exclusively incurred', therefore within the provisions of section 74 (1)(a), Taxes Act 1988 and so claimable as a business expense under Schedule D, Case I or II? Or will it come under the scrutiny of Hector Scrooge, leading perhaps to a technical argument and the threat of an aspect or full Revenue Enquiry?
(Query T15,741) – Rudolph.
Equitable claim
Policyholders in Equitable Life with 'with profits' policies will all lose value. Some will transfer to another fund, losing 10 per cent of their current fund value. Others will lose part of their annual and terminal bonuses from the date the society closed its doors to new business.
Many will incur expense in obtaining professional advice from their registered financial adviser. Is there any way in which, in these exceptional circumstances, such fees could be allowable for taxation purposes?
(Query T15,742) – Prawn Dimarolo.
Building plans
My client is a self-employed builder who has purchased a site on which, assuming planning permission is granted, he proposes to build a residential block of ten flats. The intention is that the flats will not be sold, either individually or as a block, but all will be rented out with management factoring being applied to the whole block. The long term aim is to retain the whole block as a yielder of income to retirement and beyond.
My questions are:
(1) As regards trading, on completion will there be a Schedule D, Case I uplift of cost to market value, with the profit assessed on the builder if the flats are retained for letting?
(2) Can the project be identified from day one as a personal one and, if so, would it be advisable for the construction costs, including site purchase, to be debited to personal drawings as opposed to work in progress?
(3) In relation to VAT –
(a) As the first supply will be an exempt one, should VAT input claims be disregarded on construction costs from the start of the project?
(b) Would VAT input claims be available if, prior to letting, a family company (controlled by the builder) purchased the residential block; what other taxation ramifications would then apply?
(c) If the builder took his wife into partnership in the building business with the block of flats then being transferred to his own name on completion, would VAT then be reclaimable albeit with adverse Case I ramifications?
(4) What if, due to cash flow pressures, there is a change of mind and the flats are sold off on completion; presumably income tax under Schedule D, Case I is applicable to the proceeds derived, but can VAT inputs then be claimed?
(Query T15,743) – Factorman.
