Tips on saving tax, the latest tax and business news, tax loopholes and useful links

If you subscribe for shares in a trading company, and later dispose of them at a loss, you can normally offset the loss against other taxable income (section 131 of the 2007 Income Tax Act).

However, the Taxman has found a wrinkle in the tax legislation such that he thinks subscriber shares issued in joint names (usually married couples) cannot benefit from this offset.  Section 131 applies to shares “which have been subscribed for by the individual”.  The Taxman argues that jointly owned shares are subscribed for by a couple rather than an individual and thus the offset is not available.

A way round this is for one individual to subscribe for the shares and then transfer some of them to their spouse. The spouse is then treated as subscribing for the shares in their own right. 

This is how we recommend shares are subscribed for when effective joint ownership is desired.

The Taxman has set out his charter, pledging to respect taxpayers, provide help and support, and treat them even-handedly.  However, in return he does ask that the taxpayer is honest and fair with him!

Limited company directors will be excluded from the Agency Workers Directive under the lastest proposals from the Government.  However, those working through umbrella companies and all contractors who are not genuinely self-employed (i.e. if you fail the IR35 test) will still be covered.

Many freelancers have been concerned that the Directive would given them similar rights to employees in terms of hours, holidays, sick pay etc. making them less attractive to businesses.

The Directive only applies to workers who have been in a position for at least 12 weeks and is not effective until 1 October 2011.

Provisions are being introduced from 6 April 2010 to charge penalties on the late payment of monthly PAYE and CIS.  A penalty will not be levied for the first default but penalties will then increase as follows:

• up to 3 defaults - 1% of the amount paid late
• 4-6 defaults - 2% 
• 7-9 defaults - 3%
• 10+ defaults - 4%

If tax is more than 6 months overdue, a 5% penalty can be charged with an additional 5% if the tax becomes 12 months overdue.

Alistair Darling has confirmed that the Pre-Budget Report will be announced at 12.30pm on 9 December 2009.

The Taxman’s telephone helplines do not always give the correct answer.  There have been two recent cases where a verbal assurance from a telephone helpline was not later accepted by a Tax Officer who then raised a penalty for the incorrect tax treatment.  You, the taxpayer, suffers where there is a disagreement between the helpline advice and the Tax Inspector.

Case 1: In the first case Corkteck Ltd exported soft drinks to Poland through a third person: Sintra SA. The VAT helpline told Corkteck that the exported drinks would be zero-rated for VAT. However, the VAT Inspector decided the drinks should have been standard rated as Sintra SA was not registered for VAT within the EU.

Case2: In the second case Acrylux Ltd hired out a private residential property for various functions, some of which lasted several days. The VAT helpline told Acrylux that the hire of the property would be exempt from VAT as it was not a commercial property. However, the VAT inspector said the hire of the property was similar to short-term holiday lettings and VAT should be charged at the standard rate.

In both cases the taxpayer could not prove exactly what facts had been presented to the helpline, or exactly what the helpline had given as its advice. If the advice had been requested in writing the outcome for the taxpayer may have been different. If you have a tax question, please ask an accountant (we recommend using Chartered Accountants) before reaching for the HMRC helplines. If you act on advice that later proves to be incorrect, you could pay a high penalty!

As announced in the 2009 Budget, ISA limits are being increased to £10,200, of which up to £5,100 can be invested in a cash ISA with the balance in a stocks and shares ISA. Investors who will be aged 50 by 5 April 2010 can subscribe up to the new limits from 6 October 2009. All other investors can access the new limits from 6 April 2010.

Officially the deadline for submitting your 2008/09 personal tax return is midnight on 31 October 2009 otherwise a £100 penalty will be charged.

However, if the return is in the Taxman’s letter box when their offices open on Monday 2 November, the return will be treated as being filed on time.

The return will be treated as late, but no penalty will be charged, if it is in the letter box when the office opens on 3 November 2009.

As receipts are no longer given for hand delivered returns, we recommend you use recorded delivery so that you have proof that the return was submitted on time.

From 1 January 2010 new laws will come into force for the supply and receipt of overseas services between UK VAT registered businesses and individuals and businesses in other EU member states.

• if you are selling services to a private individual you should charge UK VAT on your invoice
• if you are selling services to a VAT registered business you should not charge UK VAT on your invoice
• If you are receive a service from a business registered for VAT in another EU member state you need to operate the Reverse Charge mechanism.  The Reverse Charge mechanism is where you pretend that you sold yourself the service meaning that you make the relevant entries in boxes 2 and 4 of your VAT return.

Also from 1 January 2010 businesses selling services will need to complete an EC sales list.  This is a declaration that lists supplies of services made by a UK VAT registered business to a VAT registered customer in another member state.  You will have only 14 days from the end of the relevant period to submit this form.  Businesses selling goods already have to complete these EC sales lists.

Follow this link for further information on these (and other) cross border VAT changes.

The deadlines for submitting tax repayment claims have been changed recently.  If you think you may be due a repayment from previous years you should be aware of the following deadlines:

Tax year                Deadline

2003/04               21 January 2010

2004/05               31 March 2010

2005/06               5 April 2010

2006/07               5 April 2011

2007/08               5 April 2012