Tax Implications on Family Breakdown

Description

DELETE Foreword Preface Acknowledgements Table of Cases Table of Statutes Table of Statutory Instruments Table of International Legislation Chapter 1 Overview UK Taxation System What are taxes used for? A new HMRC Chapter 2 HMRC Powers: Penalties and Investigations Powers 2012 onwards ‘Spouses know where the bodies are buried’ Investigations Investigative powers of HMRC Who is at risk? Discovery Assessment Solicitors and reporting obligations Third Party Notices Anti-Money Laundering Regulations Corporate failure to prevent the facilitation of tax evasion Interest Penalties Penalty mitigation A reasonable excuse Is divorce a reasonable excuse? What is at stake? Consequences of Deliberate inaccuracies Offshore Penalty Regime Chapter 3 Residency and Domicile Domicile Arising or Remittance Basis What constitutes a remittance? Summary of taxation for Non-domiciles Remittance Basis Charge (RBC) Non-domiciles – Settlements and Maintenance Residency Split year UK Resident Taxation of Non-residents Temporary non-residence Doubly taxed income and gains Dual Residents Summary of tax positions Residency and Domicile Checklist Chapter 4 Income Tax Overview The non-taxpayer Understanding the Pro-forma Income tax Pro-forma Calculating the income tax charge Employment Income Trading profits Income from Property Trust Income Savings Income Dividend Income Payment Dates Payments on Account Reporting tax Filing a tax return Allowances Gifts to Charity Joint Income Joint Rental Income Marriage allowances Married couples allowance Marriage allowance Higher Income Child Benefit Charge Personal tax account Income Tax Penalties – An Overview List of taxable and non taxable income and benefits Tax Rates Chapter 5 The Employee Introduction Worker Matrix Pay as You Earn (PAYE) The tax code The annual reconciliation Benefits Termination Payments Fully exempt payments Fully taxable payments Partially taxable payments Earnings over £100,000 Pension Contributions For Employees Tax Relief Annual Allowance Lifetime Allowance Illustrations The Employee – Documents and Key considerations Chapter 6 Self-employed and Partnerships Sole traders and Partnerships Agency rules Opening year rules Partnerships Trading allowance Business Administration Income Tax and National Insurance Spouses in the Business Payments on Account Business Taxation Total turnover Allowable expenses Clothing – usually not allowable Client entertaining – not allowable VAT Overview Registering for VAT Impact on small businesses registering for VAT Making Tax Digital Making Tax Digital (MTD) for VAT post April 2019 Self-employed and partnerships – Family solicitors’ checklist Chapter 7 The Owner Managed Business Introduction Company Directors Off the Shelf Companies Rates Extracting Money from the Company Income by Way of Dividends Directors Loans Timing of the payments Spouses in the Company HMRC’s view of Spouses in the Business When planning doesn’t go to plan Previous Planning Personal Service Companies (IR35) Owner managed Business Family Solicitors Toolkit Chapter 8 Complex Earnings – Employee share schemes Introduction Unapproved shares award life cycle Unapproved shares with restrictions award life cycle Approved Schemes Share incentive plans (SIPs) Savings Related Share Option Schemes Company Share Option Plans Enterprise Management Incentives (EMIs) Summary of tax treatment of share schemes Chapter 9 Pensions Pensions Overview Defined Benefit (Final Salary/Career Average) Defined contribution Tax Relief Operations of relief Personal Pension Occupational Pension Annual Allowance Carry Forward Paying the charge Tax relief on drawing down a pension Lifetime Allowance Values for Lifetime Allowance The Lifetime Allowance Charge Sharing/Attachment orders – the differing tax treatments Pension attachment orders Pension sharing Contribution rules Impact on lifetime allowance where no protections are in place Pension sharing and Protections Primary protection Receiving a pension credit Being subject to a pension debit Enhanced protection Receiving a pension credit Being subject to a pension debit Fixed protection (2012, 2014, 2016) Receiving a pension credit Individual protection (2014 or 2016) Receiving a pension credit Being subject to a pension debit Pensions Checklist Chapter 10 Capital Gains Tax Overview Capital Gains Tax Overview Allowable expenses The non-taxpayer The order of the taxes Understanding the Pro-forma Capital gains tax Pro-forma Gains eligible for Business Asset Disposal relief Other gains not eligible for Business Asset Disposal relief Gains from Property Losses Allowances No Gain No Loss Rule Tax year of separation Inherent Gains and Records Connected persons Date of Disposal Valuations Payment Dates Residential property Reporting and payment requirements for gains on residential property Non residential property Paying in Instalments Capital Gains Tax Penalties – An Overview Capital Gains Tax Reliefs – An Overview Capital Gains Tax Reliefs – An Overview continued List of exempt assets for Capital gains tax Chapter 11 The Family Home The Family Home Properties owned or inherited prior to 1982 Conditions of PPR relief Permitted area Calculation of the relief Final Period of ownership Deemed Occupation More than one home Inherited occupation Family Home on Divorce Family home to be sold Family home to be transferred to other party Transfer then sale? Mesher Orders Deferred Charges Main Home – Checklist Chapter 12 Investment Properties Income tax Capital gains tax Transfers within the tax year of separation Transfers outside the tax year of separation Summary Investment property relief /Rollover relief Will Sabrina and Felicity qualify for the relief? Summary of Sabrina and Felicity Trading or investment Income Tax Act 2007 Investment property – Checklist Chapter 13 Chattels and Investments Chattels and investments Chattels Wasting chattels Cheap chattels Shares Listed shares Tax efficient investment schemes Enterprise Investment Scheme and Seed Enterprise Investment Scheme Venture Capital Trusts Chattels and Investments – Checklist Chapter 14 Extracting Money from a Company Overview Transfer of shares Business Asset Disposal Relief (Formerly Known as Entrepreneurs’ Relief) Main qualifying conditions Business Asset Disposal relief conditions Detail on the conditions Individual conditions Investors’ Relief Conditions Holdover relief Holdover relief restrictions Holdover relief on divorce Extracting Cash from Gem Ltd Withdraw the money as a dividend Taking a Directors Loan Selling the company – Business Asset Disposal relief Company conditions Individual conditions Winding the company up Summary of options Company buy back of own shares Summary Chapter 15 Land Taxes Land Taxes in England and Northern Ireland and Wales Payment and filing dates Transactions in connection with a divorce First-time buyers’ relief Higher rate of stamp duty land tax Required to stay as a legal owner Main Home Land Taxes – Checklist Chapter 16 We let down our clients by making insufficient use of available experts Five Flavours of expert Process alternatives: First: The court’s approach to the involvement of experts Timetabling within the court’s process Chronology where one expert is to be used Overview of stages Some fundamental principles and their origins Practice points arising from the above and generally The expert is independent Confidentiality and privacy Scale of report Are we actually seeking leave to adduce expert evidence on the law, when we appoint a tax expert? The hurdle of necessity Conducting business with the JSE Costs rules reform Non-court dispute resolution Arbitration Other ‘agreement-dependent’ processes Appendices Appendix 1 The detailed chronology of rules relating to the instruction of the part 25 expert Appendix 2 Where multiple experts are involved Appendix 3 Checklist for situations where expert tax evidence may be required Appendix 4 Form of enquiry letter Appendix 5 Form of draft order Appendix 6 Form of instructions Appendix 7 Model form D11 Appendix 8 Possible agenda points for telephoned discussion with expert Appendix 9 Case quotes for fundamentals and principles table from page 266 Appendix 10 Part 25 Index