Weekly Tax Update - Monday 28 March 2011

1. Private Clients

   1.1. Budget – March 2011

   Our 2011 Budget Brochure and other Budget related information can be found our website:

   www.smith.williamson.co.uk/budget

2. Private Clients

   2.1. Dr Andreas Helmut Tuczka v Revenue and Customs Commissioners

   The Upper Tribunal has confirmed the decision of the First Tier Tribunal that Dr Tuczka was ordinarily resident in UK – see detailed analysis in Informal dated 22 February 2010.

   www.bailii.org/uk/cases/UKUT/TCC/2011/113.html

3. IHT & Trusts

   3.1. IHT DOTAS guidance

   HMRC has published its guidance on the requirements, with effect from 6 April 2011, to disclose Inheritance Tax arrangements that seek to avoid IHT charges associated with transfers of property into trust. This consists of a flow chart, directions to HMRC's other DOTAS guidance and a note on IHT implications including grandfathered schemes. The grandfathered schemes (for which disclosure is not required) include:

   A: Arrangements where property does not become relevant property. Relevant property is defined in s58(i) IHTA 1984 as settled property in which no qualifying interest in possession subsists, subject to certain exceptions which include property held on charitable trusts, a qualifying interest in possession and a disabled person's interest.

   B: Arrangements that qualify for relief/exemptions.

   C: The purchase of business assets with a view to transferring the assets into a relevant property trust after two years.

   D: The purchase of agricultural assets with a view to transferring the assets into a relevant property trust after the appropriate period.

   E: Pilot Settlements.

   F: Discounted Gift Trusts/Schemes.

   G: Excluded property trusts; disabled trusts; employee benefit trusts which satisfy s. 86 and a qualifying interest in possession trust.

   H: Transfers on death into relevant property trusts.

   I: Changes in distribution of deceased's estates.

   J: Transfers of the Nil Rate Band every seven years.

   K: Loan into trust.

   L: Insurance Policy trusts.

   M: Making a chargeable transfer followed by a potentially exempt transfer.

   N: Deferred shares.

   O: Items of national importance.

   P: Pension death benefits.

   Q: Reversionary Interests.

   R: Transfers of value.

   Examples of arrangements which would not be excluded from disclosure include arrangements where property becomes relevant property and an advantage is obtained in respect of the relevant property entry charge:

   where the claim that there is no transfer of value relies on a series of transactions where, in the absence of all other intervening steps, there would have been a transfer of value and a relevant property entry charge; where reliefs and exemptions are used in such a way that the arrangements are not covered by the grandfathering rule (Regulation 3); where an individual makes a potentially exempt transfer to another person and the arrangements are such that the subject matter of the transfer becomes relevant property then, unless the arrangements are covered by the grandfathering rule, disclosure will be required. www.hmrc.gov.uk/aiu/disclosure-avoidance.htm

4. Business tax

   4.1. Ending of concessionary treatment

   For late filing of corporation tax returns, employer's and contractors end of year returns.

   HMRC has issued a reminder in R&C Brief 24/10 that the late filing concession (ESC B46) ends on 31 March 2011. The concession permitted the filing of Company Tax returns or employers' and contractors' (Construction Industry Scheme) end-of-year returns, without a late filing penalty, provided they were received by the last working day within seven days of the filing date.

   From 1 April 2011, company tax returns for accounting periods ending after 31 March 2010 must be filed online. All forms P35 and P14 must already be filed online, and HMRC no longer accept paper returns from the majority of customers. Contractors are no longer required to file end-of-year Construction Industry Scheme returns.

   www.hmrc.gov.uk/briefs/company-tax/brief2410.htm

   4.2. iXBRL and filing of amended returns

   The CIOT has discussed online filing of amended corporation tax returns with HMRC.

   There is currently no requirement to submit amendments to returns online and this will not change at 1 April 2011. As the iXBRL format for accounts and computations becomes compulsory from 1 April 2011, the format for amendments to CT returns from that date will need to be:

   paper; or online in full iXBRL, including the accounts and computations plus a CT600 return. CIOT appreciate that some...