United Kingdom Tax Bulletin (October 2008)

CURRENT RATES

October 2008

Indexation

Retail price index: September 2008

Inflation rate: September 2008

218.4

5%

Indexation factor from March 1982:

to April 1998

to September 2008

1.047

1.749

Interest on Overdue Tax

Income tax/CGT/NIC

Inheritance tax

VAT

Corporation tax

CTSA instalments

6.5% from 6 November 2008

3% from 6 November 2008

6.5% from 6 November 2008

6.5% from 6 November 2008

5.5% from 20 October 2008

Repayment Supplement

Income tax/CGT/NIC

Inheritance tax

VAT

Corporation tax

CTSA instalments

2.25% from 6 November 2008

3% from 6 November 2008

3% from 6 November 2008

3% from 6 November 2008

4.25% from 20 October 2008

Official Rate of Interest

From 6 April 2007

6.25%

Tax returns: 31 October

Deadline

If you were not aware that 31

October was the deadline for hard copy tax returns, it is a bit

late now. Well, not quite. Tax returns delivered by hand that are

found in the HMRC letterbox when opened on Monday, 3 November, will

be treated as delivered on Friday, 31 October, for all purposes and

will not attract a nonfiling penalty. Furthermore, the enquiry

window for that tax return will close on 31 October 2009.

Tax returns delivered by hand on

that Monday (or that are found in the HMRC letterbox when first

opened on Tuesday, 4 November) will not attract a penalty either.

However, in these cases the enquiry window will not close until 31

January 2010.

There is still the opportunity to

file tax returns online, and the deadline for electronic returns is

31 January 2009, but not once you have filed a hard copy.

Unfortunately, once you have filed a hard copy late, you cannot

avoid the penalty by then filing online before 31 January.

In all cases, the penalty will be

reduced to zero when all the tax is paid by 31 January 2009.

Residence: IR20 Judicial

Review

It is well known that Mr

Gaines-Cooper is challenging the refusal by HMRC to apply the

practice set out in their booklet IR20 on residence. Mr

Gaines-Cooper had taken the trouble to make sure that his visits to

the United Kingdom were below the 91-day limit contained in IR20

? the terms of which had remained pretty much unchanged

for decades ? and he therefore considered that he should

be regarded as nonresident. He claimed that, whatever might be the

strict legal position, the guidance contained in IR20 represented

HMRC's assurance on how they would apply the rules. He had

relied on their statement in organising his affairs, and he felt

that HMRC should not be allowed to go back on it. He sought an

order from the High Court to that effect.

HMRC disagreed and said that IR20

was not binding on them and taxpayers should not expect to rely on

it. It merely sets out how HMRC might approach the taxpayer's

position. Furthermore, HMRC cannot act outside the law, and if the

terms of IR20 differ from the strict legal position, to that extent

it would be ultra vires. Their duty is to collect tax, not

to impose taxes or forgo them. Accordingly, the taxpayer could not

have any legitimate expectation to rely on the terms of IR20. A

taxpayer's residence position had to be determined by reference

to the law, and the terms of IR20 were completely irrelevant. No

matter how carefully Mr Gaines-Cooper may have counted his days to

stay below the 91-day limit, that was not a concept enshrined in

the law, so it did not avail him anything.

HMRC had another interesting

argument. Even if they were bound to apply the terms of IR20, they

could not make a decision on a person's residence before the

matter had been to the Special Commissioners because, until that

time, they would not know all the facts. The matter would first

have to go to the fact-finding tribunal so that they could make

their decision. It would, therefore, not be possible to apply for

Judicial Review before the matter had been heard by the Special

Commissioners. However, after the Special Commissioners have made a

decision, the fact that they have ruled on the law means that you

cannot then apply for...