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Business Alert 12 December 2007 |
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Welcome to Moore Stephens’ Business Alert Service, designed to help you keep up-to-date with business and tax legislation. The service provides details of key changes, issues and opportunities, and includes suggested action and links to more information.
To receive these Business Alerts automatically, email businessalerts@moorestephens.com.
INCOME SHIFTING PROPOSALS ANNOUNCED
Since the success of the taxpayer in the Jones v Garnett settlements case, which concerned the payment of dividends in a husband and wife company, we have been expecting details of changes to tax law which were announced on the day after the House of Lords decision was published. The case established that under current law it is possible for a company to be set up jointly between husband and wife and for the income of the company to be split between the couple by way of payment of dividends on ordinary shares, irrespective of whether either or both of the couple were actively involved in the business. It is Government’s policy that such income shifting, as it is now referred to should not be effective in reducing the tax liability of one individual by the transfer of income to a second individual. Proposed legislation has now been released, which is intended to take effect from 6 April 2008. Comments are invited by 28 February 2008.
NEW FUEL ONLY ADVISORY RATES
The HMRC advisory rates allow employers to reimburse staff for fuel used on business journeys without separately negotiating a dispensation. They may be used for both income tax and VAT purposes if the employer so desires. Alternatively, employers may agree separate mileage rates with HMRC. The recommended rates will be increased with effect from 1 January 2008 to take account of the rise in fuel prices. The new rates are :
 | Petrol | Diesel | LPG |
| Up to 1400 cc | 11p | 11p | 7p |
| 1400 – 2000 cc | 13p | 11p | 8p |
| Over 2000 cc | 19p | 14p | 11p |
These rates are based on fuel prices of 102.1p per litre for petrol, 106.3p for diesel and 50.2p for LPG.
RESIDENCE AND DOMICILE
Following announcements made in the Pre Budget Report in October of this year, a consultation has now commenced on changes to the law regarding the tax issues related to both residence and domicile. The proposed changes will include the measures announced in October, including a £30,000 per annum tariff for those UK resident taxpayers wishing to retain the benefit of the non domicile rules, and changes to the way the law works in relation to non residents who visit the UK. The consultation document does not include any detailed technical material, but seeks to explore the broad issues in relation to this complex topic.
MORE DATA LOSSES ADMITTED
Things go from bad to worse at HMRC in relation to security of confidential date. Dave Hartnett, acting head of HMRC since Paul Gray resigned this week admitted to a total of five breaches of data security since HMRC came into existence, and accepted before the Commons Public Accounts Committee that the failures could be viewed as systematic. Meanwhile, even the letter sent apologising for the initial loss of records of 25 million people has been widely criticised for including further confidential data, which if misdelivered would represent a further breach. Advice from a wide range of sources suggests that those affected report any suspicious movements on bank accounts, or the receipt of credit card statements for unrecognised cards. It is not presently considered necessary to change bank accounts.
We believe the information in this Business Alert to be correct at the time it was sent, but cannot accept any responsibility for any loss occasioned to any person as a result of action or refraining from action as a result of any item herein.
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