Enter Your E-mail

Matthew Hutton MA, CTA (fellow), AIIT, TEP highlights a selection of points from IBC's '101 Tax Planning Ideas' conference in London on 21 January 2010. 

Dividend Depreciations

Adrian Shipwright commented that where a company pays a dividend its shares are usually less valuable following the payment.

Thus ex div and cum div prices are different. A dividend received by one UK company from another UK company is not usually chargeable to Corporation Tax (although note the position of capital sums derived from assets and TCGA 1992 s 122, and the decision in Strand Options and Futures Ltd v Vojak  [2004] STC 64). Consider a company which has a subsidiary standing at a significant gain with significant distributable profits and reserves; if a substantial dividend is paid, the value of the subsidiary’s assets is reduced, so its share value and the dividend received is not taxed as income for Corporation Tax purposes. The subsidiary can then be sold at a lower market value, but the company’s net receipts are higher. In theory, a loss could be created in this way, although anti-avoidance provisions or TCGA 1992 s 16A may prevent such a loss.

(Adrian Shipwright of Pump Court Tax Chambers, speaking at IBC’s ‘101 Tax Planning Ideas’ Conference in London on 21 January 2010, reported by Mark McLaughlin in Busy Practitioner March/April 2010)

Price Adjustment Clauses

HMRC’s Shares and Assets Valuation Manual (at SVM 109070) recognises that many company sale agreements include clauses to adjust the sale price when final accounts are produced some months later. It states that this is a factor which needs to be taken into account if using the ‘headline’ rather than the final sale price to determine the value of shares for relief and Income Tax purposes. Nigel Eastaway noted that price adjustment clauses in agreements which adjust the contract price to market value determined by HMRC Shares and Assets Valuation are not unusual. In Canada, the equivalent agreement has received Revenue approval (Interpretation Bulletin IT 169 of 6 August 1974), provided that a bona fide attempt has been made to arrive at a fair market value. In the absence of such an attempt the price adjustment clause was ignored in Guilder News Co (1963) Ltd v Minister of National Revenue [1973] CTC 1.

(Nigel Eastaway of BDO Stoy Hayward, speaking at IBC’s ‘101 Tax Planning Ideas’ Conference in London on 21 January 2010, reported by Mark McLaughlin in Busy Practitioner March/April 2010)

PAYE: Avoidance Through Bonuses from Overseas Company

An overseas parent company pays bonuses to employees of its UK subsidiary ‘off its own bat’ (i.e., not on behalf of the subsidiary). PAYE is due from the UK subsidiary if the overseas parent is an ‘intermediary’, i.e., if payment is made ‘by a person acting on behalf of the employer and at the expense of the employer or a person connected with the employer’ (ITEPA 2003 s 687(4)(a)). HMRC’s preferred reading of that legislation ends ‘... by a person connected with the employer’.

David Cohen said that the correct reading (which HMRC reluctantly accept) is ‘... of a person connected with the employer’. Thus if the parent company is not acting on behalf of the employer, it is not an intermediary. However, the current rules for NIC purposes are different, (although they were previously the same as for PAYE), and thus there is no PAYE, but there is NIC.

(David Cohen of Norton Rose, speaking at IBC’s ‘101 Tax Planning Ideas’ Conference in London on 21 January 2010 reported by Mark McLaughlin in Busy Practitioner March/April 2010)

What is MTR?

MTR is a 90 minute monthly training course, held in London, Ipswich and Norwich – as well as a reference work. Each Issue records the most significant tax developments over a wide range of subjects (see below) during the previous month, containing 30 to 40 items. The aim is not necessarily to take the place of the journals, but rather to provide an easily digestible summary of them and, through the six-monthly Indexes, to build up, over the years, a useful reference work. 

The first aim, therefore, of MTR is to inform. The second and subsidiary aim is to provide a monthly forum for the discussion of issues that tend to come up in professional practice, largely, though not exclusively, prompted by specific items in MTR.

Who should come to MTR? Does it attract CPD?

MTR is designed not primarily for the person who spends 100% of his/her time on tax, but rather for the practitioner (whether private client or company/commercial) for whom tax issues form part of his/her practice. Attendance at MTR qualifies for 1.5 CPD hours for members of the Law Society, for 1.5 CPD points for accountants (if MTR is considered relevant to the delegate’s practice) and (subject to the individual’s self-certification) should also count towards training requirements for the CIOT. For STEP purposes, MTR qualifies for CPD in principle, on the grounds that at least 50% of the content is trust and estate related.  
 
What is the content of MTR?

The material is drawn from HMRC press releases, Tax Bulletins, VAT business briefs, case reports and articles in the professional press. Each item carries a reference as to source which can be followed up if necessary. 

The logic of the ordering of the 12 sections is as follows:

First, Capital Taxation (viz 1. Capital Gains Tax, 2. Inheritance Tax and 3. Stamp Taxes).
Second, Personal Tax (4. Personal Income Tax).
Third, Business Related Matters (viz, 5. Business Tax, 6. Employment, 7. National Insurance and 8. VAT & Customs Duties).
And fourth, Miscellaneous (viz 9. Compliance, 10. Administration, 11. European and International and 12. Residue).

An annual binder is provided within the subscription cost.

Despite an inevitable element of selectivity, MTR aims to be catholic in its coverage – and this is reflected in the presentations where appropriate: there may well be NI, VAT or employment tax points of which the person advising mainly on estate planning (for example) should at least be aware. That said, the London sessions at least tend to focus, by majority request, on estate planning issues: it is possible that in future one of the sessions might be geared more to company/commercial matters. 

How is MTR circulated?

The Notes are emailed to each delegate in the week before the presentations (and thus can easily be circulated around the office), with a follow-up four or five pages of practical Points Arising during the various sessions (whether in London, Ipswich or Norwich).

How do I find out more?

For further details, visit http://www.matthewhutton.co.uk/ on Conferences & Seminars and then Monthly Tax Review – or email Matthew on mhutton@paston.co.uk.

For those whose firms unable to make the monthly seminars but wishing to order MTR as 'Notes Only' (at £180 per annum for the 12 issues, invoiced six-monthly in advance), visit  our sister site, TaxBookShop.com: Monthly Tax Review Notes