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Lost in Legislation? Manchester & District Workshop Karen Bullen Tolley Exam Training

Lost in Legislation? Manchester & District Workshop Karen Bullen Tolley Exam Training. What is the legislation?. Effectively the same Yellow = Red Orange = Green Minor differences e.g. stamp taxes in CCH Red books and in Tolleys Orange

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Lost in Legislation? Manchester & District Workshop Karen Bullen Tolley Exam Training

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  1. Lost in Legislation? Manchester & District Workshop Karen Bullen Tolley Exam Training

  2. What is the legislation? • Effectively the same • Yellow = Red • Orange = Green • Minor differences e.g. stamp taxes in CCH Red books • and in Tolleys Orange • But at the end of the day all the legislation is in there somewhere

  3. Book 1 • Income Tax, Corporation Tax and CGT • Chronological order • Grey shading = key statutes for us – Consolidation Acts • In-between grey shading = Finance Acts and minor statutes

  4. Book 1a • Taxes Management Act (TMA) 1970 • Administration • But Finance Acts 2007, 2008 and 2009 (in Book 1c) have made lots of changes to administration especially in relation to penalties • Income and Corporation Taxes Act 1988 (ICTA 1988) • Largely replaced by newer acts

  5. Book 1a • Taxation of Chargeable Gains Act 1992 (TCGA 1992) • CGT for individuals and chargeable gains for companies • Reliefs – PPR, Rollover Relief, Gift Relief……. • No blobs……… • Finance Acts to 2000 • Probably most useful is Finance Act 1998 as Schedule 18 has Corporation Tax administration in it.

  6. Book 1b • Capital Allowances Act (CAA) 2001 • Very useful with definition of ‘plant’ • Section 21 – what is a building so not plant • Section 22 – list of structures which are not plant • Section 23 – list of items that look like building / structure BUT are plant • Most of items in Section 23 come from case law

  7. Book 1b • Capital Allowances Act (CAA) 2001 • Very useful with definition of ‘plant’ • Section 21 – what is a building so not plant • Section 22 – list of structures which are not plant • Section 23 – list of items that look like building / structure BUT are plant • Most of items in Section 23 come from case law

  8. CAA 2001 Buildings, structures and land 21  Buildings (1)     For the purposes of this Act, expenditure on the provision of plant or machinery does not include expenditure on the provision of a building. (2)     The provision of a building includes its construction or acquisition. (3)     In this section, “building” includes an asset which— (a)     is incorporated in the building, (b)     although not incorporated in the building (whether because the asset is moveable or for any other reason), is in the building and is of a kind normally incorporated in a building, or (c)     is in, or connected with, the building and is in list A. LIST AASSETS TREATED AS BUILDINGS 1     Walls, floors, ceilings, doors, gates, shutters, windows and stairs. 2     Mains services, and systems, for water, electricity and gas. 3     Waste disposal systems. 4     Sewerage and drainage systems. 5     Shafts or other structures in which lifts, hoists, escalators and moving walkways are installed. 6     Fire safety systems. (4)     This section is subject to section 23.

  9. CAA 2001 22  Structures, assets and works (1)     For the purposes of this Act, expenditure on the provision of plant or machinery does not include expenditure on— (a)     the provision of a structure or other asset in list B, or (b)     any works involving the alteration of land. LIST BEXCLUDED STRUCTURES AND OTHER ASSETS 1     A tunnel, bridge, viaduct, aqueduct, embankment or cutting. 2     A way, hard standing (such as a pavement), road, railway, tramway, a park for vehicles or containers, or an airstrip or runway. 3     An inland navigation, including a canal or basin or a navigable river. 4     A dam, reservoir or barrage, including any sluices, gates, generators and other equipment associated with the dam, reservoir or barrage. 5     A dock, harbour, wharf, pier, marina or jetty or any other structure in or at which vessels may be kept, or merchandise or passengers may be shipped or unshipped. 6     A dike, sea wall, weir or drainage ditch.

  10. 2001 23  Expenditure unaffected by sections 21 and 22 (1)    Sections 21 and 22 do not apply to any expenditure to which any of the provisions listed in subsection (2) applies. (2)     The provisions are— section 28 (thermal insulation of . . . buildings); . . . section 30 (safety at designated sports grounds); section 31 (safety at regulated stands at sports grounds); section 32 (safety at other sports grounds); section 33 (personal security); [section 33A (integral features);] section 71 (software and rights to software); section [143 of ITTOIA 2005 or section] 40D of F(No 2)A 1992 (election relating to tax treatment of films expenditure). (3)     Sections 21 and 22 also do not affect the question whether expenditure on any item described in list Cis, for the purposes of this Act, expenditure on the provision of plant or machinery. (4)     But items 1 to 16 of list C do not include any asset whose principal purpose is to insulate or enclose the interior of a building or to provide an interior wall, floor or ceiling which (in each case) is intended to remain permanently in place.

  11. CAA 2001 LIST CEXPENDITURE UNAFFECTED BY SECTIONS 21 AND 22 1     Machinery (including devices for providing motive power) not within any other item in this list. 2     . . . Gas and sewerage systems provided mainly— (a)     to meet the particular requirements of the qualifying activity, or (b)     to serve particular plant or machinery used for the purposes of the qualifying activity. 3     . . . 4     Manufacturing or processing equipment; storage equipment (including cold rooms); display equipment; and counters, checkouts and similar equipment. 5     Cookers, washing machines, dishwashers, refrigerators and similar equipment; washbasins, sinks, baths, showers, sanitary ware and similar equipment; and furniture and furnishings. 6     [Hoists]. 7     Sound insulation provided mainly to meet the particular requirements of the qualifying activity. 8     Computer, telecommunication and surveillance systems (including their wiring or other links). 9     Refrigeration or cooling equipment. 10     Fire alarm systems; sprinkler and other equipment for extinguishing or containing fires. 11     Burglar alarm systems. 12     Strong rooms in bank or building society premises; safes. 13     Partition walls, where moveable and intended to be moved in the course of the qualifying activity. 14     Decorative assets provided for the enjoyment of the public in hotel, restaurant or similar trades. 15     Advertising hoardings; signs, displays and similar assets.

  12. Book 1b • Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) • Employment income • How to tax it – what benefits to tax / exempt • Schedules 2 to 5 – very useful • Schedules come at the end of the Act after all the section numbers end • Schedule 2 – Approved share incentive plans • Schedule 3 – Approved SAYE option plans • Schedule 4 – Approved CSOP schemes • Schedule 5 – Enterprise Management Incentives

  13. ITEPA 2003 – Contents pages Contents pages Chapter 4 Taxable Benefits: Vouchers and Credit-tokens Cash vouchers: introduction 73 Cash vouchers to which this Chapter applies 74 Provision for, or receipt by, member of employee's family Meaning of “cash voucher” 75 Meaning of “cash voucher” 76 Sickness benefits-related voucher 77 Apportionment of cost of provision of voucher Cash vouchers: exceptions 78 Voucher made available to public generally 79 Voucher issued under approved scheme 80 Vouchers where payment of sums exempt from tax Benefit of cash voucher treated as earnings 81 Benefit of cash voucher treated as earnings Non-cash vouchers: introduction 82 Non-cash vouchers to which this Chapter applies 83 Provision for, or receipt by, member of employee's family Meaning of “non-cash voucher” 84 Meaning of “non-cash voucher”

  14. ITTEPA 2003 Chapter 5 Taxable Benefits: Living Accommodation Living accommodation 97 Living accommodation to which this Chapter applies Exceptions 98 Accommodation provided by local authority 99 Accommodation provided for performance of duties 100 Accommodation provided as result of security threat [100A Homes outside UK owned through company etc] [100B Section 100A(1): exceptions] 101 Chevening House Benefit of living accommodation treated as earnings 102 Benefit of living accommodation treated as earnings Calculation of cash equivalent 103 Method of calculating cash equivalent 104 General rule for calculating cost of providing accommodation Accommodation costing £75,000 or less 105 Cash equivalent: cost of accommodation not over £75,000

  15. ITEPA 2003 Chapter 6 Taxable Benefits: Cars, Vans and Related Benefits General 114 Cars, vans and related benefits 115 Meaning of “car” and “van” 116 Meaning of when car or van is available to employee 117 Meaning of car or van made available by reason of employment 118 Availability for private use 119 Where alternative to benefit of car offered Cars: benefit treated as earnings 120 Benefit of car treated as earnings 121 Method of calculating the cash equivalent of the benefit of a car Cars: the price of a car 122 The price of the car 123 The list price of a car 124 The notional price of a car with no list price 124A Automatic car for a disabled employee Cars: treatment of accessories 125 Meaning of “accessory” and related terms

  16. ITEPA 2003 Cars: capital contributions by employee 132 Capital contributions by employee Cars: the appropriate percentage 133 How to determine the “appropriate percentage” 134 Meaning of car with or without a CO2 emissions figure Cars: appropriate percentage: first registered on or after 1st January 1998 135 Car with a CO2 emissions figure: pre-October 1999 registration 136 Car with a CO2 emissions figure: post-September 1999 registration 137 Car with a CO2 emissions figure: bi-fuel cars 138 Car with a CO2 emissions figure: automatic car for a disabled employee 139 Car with a CO2 emissions figure: the appropriate percentage [139 Cars with a CO22 emissions figure: the appropriate percentage] 140 Car without a CO2 emissions figure: the appropriate percentage 141 Diesel cars: the appropriate percentage

  17. ITEPA 2003 • Chapter 7 Taxable Benefits: Loans • Introduction • 173 Loans to which this Chapter applies • [173A Alternative finance arrangements] • 174 Employment-related loans • Benefit of taxable cheap loan treated as earnings • 175 Benefit of taxable cheap loan treated as earnings • 176 Exception for loans on ordinary commercial terms • 177 Exceptions for loans at fixed rate of interest • 178 Exception for loans where interest qualifies for tax relief • 179 Exception for certain advances for necessary expenses • 180 Threshold for benefit of loan to be treated as earnings

  18. ITEPA 2003 Part 4 Employment Income: Exemptions Chapter 1 Exemptions: General 227 Scope of Part 4 228 Effect of exemptions on liability under provisions outside Part 2 Chapter 2 Exemptions: Mileage Allowances and Passenger Payments Mileage allowances 229 Mileage allowance payments 230 The approved amount for mileage allowance payments 231 Mileage allowance relief 232 Giving effect to mileage allowance relief Passenger payments 233 Passenger payments 234 The approved amount for passenger payments Supplementary 235 Vehicles to which this Chapter applies 236 Interpretation of this Chapter Chapter 3 Exemptions: Other Transport, Travel and Subsistence 237 Parking provision and expenses 238 Modest private use of heavy goods vehicles 239 Payments and benefits connected with taxable cars and vans and exempt heavy goods vehicles 240 Incidental overnight expenses and benefits

  19. ITEPA 2003 Chapter 4 Exemptions: Education and Training Work-related training 250 Exemption of work-related training provision 251 Meaning of “work-related training” 252 Exception for non-deductible travel expenses 253 Exception where provision for excluded purposes 254 Exception where unrelated assets are provided Individual learning account training 255 Exemption for contributions to individual learning account training 256 Meaning of “individual learning account training” 257 Exception for non-deductible travel expenses 258 Exception where provision for excluded purposes 259 Exception where unrelated assets are provided 260 Exception where training not generally available to staff Chapter 5 Exemptions: Recreational Benefits Recreational facilities 261 Exemption of recreational benefits 262 Benefits not exempted by section 261 263 Power to alter benefits to which section 261 applies Annual parties and functions 264 Annual parties and functions

  20. ITEPA 2003 Chapter 11 Miscellaneous Exemptions Living accommodation 313 Repairs and alterations to living accommodation 314 Council tax etc paid for certain living accommodation 315 Limited exemption for expenses connected with certain living accommodation Work accommodation, supplies etc 316 Accommodation, supplies and services used in employment duties [316A Homeworker's additional household expenses] Workplace meals 317 Subsidised meals Childcare [318 Childcare: exemption for employer-provided care] [318A Childcare: limited exemption for other care] [318B Childcare: meaning of “care”, “child” and “parental responsibility”] [318C Childcare: meaning of “qualifying child care”] [318D Childcare: power to vary exempt amount and qualifying conditions] Telephones and computer equipment [319 Mobile telephones]

  21. Book 1b • Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005) • Trading income • Property income • What is a deductible expense? • Contents pages are very useful here as a reminder

  22. ITTOIA 2005 - contents pages Chapter 4 Trade Profits: Rules Restricting Deductions Introduction 32 Professions and vocations Capital expenditure 33 Capital expenditure Wholly and exclusively and losses rules 34 Expenses not wholly and exclusively for trade and unconnected losses Bad and doubtful debts 35 Bad and doubtful debts Unpaid remuneration 36 Unpaid remuneration 37 Unpaid remuneration: supplementary

  23. ITTOIA 2005 - Contents pages • Employee benefit contributions • 38 Restriction of deductions • 39 Making of “employee benefit contributions” • 40 Provision of qualifying benefits • 41 Timing and amount of certain qualifying benefits • 42 Provision or payment out of employee benefit contributions • 43 Profits calculated before end of 9 month period • 44 Interpretation of sections 38 to 44 • Business entertainment and gifts • 45 Business entertainment and gifts: general rule • 46 Business entertainment: exceptions • 47 Business gifts: exceptions

  24. ITTOIA 2005 Contents pages Interest payments 52 Exclusion of double relief for interest Social security contributions 53 Social security contributions Penalties, interest and VAT surcharges 54 Penalties, interest and VAT surcharges Crime-related payments 55 Crime-related payments [Integral features] [55A Expenditure on integral features] [Rental rebates] [55B Rental rebates] Chapter 5 Trade Profits: Rules Allowing Deductions Introduction 56 Professions and vocations Pre-trading expenses 57 Pre-trading expenses

  25. Book 1c • Income Taxes Act 2007 (ITA 2007) • All about individuals and Income Tax • Think “calculation of the Income Tax bill” • Especially Loss reliefs

  26. ITA 2007 Chapter 2 Trade Losses Introduction 60 Overview of Chapter 61 Non-partners: losses of a tax year 62 Partners: losses of a tax year etc 63 Prohibition against double counting Trade loss relief against general income 64 Deduction of losses from general income 65 How relief works Restriction on relief for uncommercial trades 66 Restriction on relief unless trade is commercial Restriction on relief for “hobby” farming or market gardening 67 Restriction on relief in case of farming or market gardening 68 Reasonable expectation of profit 69 Whether trade is the same trade 70 Determining losses in previous tax years

  27. ITA 2007 • Use of trading loss as CGT loss • 71 Treating trade losses as CGT losses • Early trade losses relief • 72 Relief for individuals for losses in first 4 years of trade • 73 How relief works • 74 Restrictions on relief unless trade is commercial etc

  28. ITA 2007 • Carry-forward trade loss relief • 83 Carry forward against subsequent trade profits • 84 How relief works • 85 Use of trade-related interest and dividends if trade profits insufficient • 86 Trade transferred to a company • 87 Ring fence trades • 88 Carry forward of certain interest as loss • Terminal trade loss relief • 89 Carry back of losses on a permanent cessation of a trade • 90 Losses that are “terminal losses”

  29. Book 1c • Corporation Tax Act 2009 (CTA 2009) • It is almost the Corporation Tax equivalent of ITTOIA • e.g. Rules in S47 ITTOIA re Business Entertaining are found in S1300 CTA 09

  30. Book 1c • Corporation Tax Act 2010 (CTA 2010) • More Corporation Tax laws! • Taxation (international etc ) Act 2010 • DTR • Transfer pricing • Tax avoidance • Etc………

  31. Book 1c • Not a consolidation Act BUT • Also in 1c are FA 2007, 2008 and 2009 – very important with regards to Tax administration • FA 2007 Sch 24 Incorrect return penalties • FA 2008 Sch 41 Failure to notify penalties • FA 2009 Sch 55 late return penalties • FA 2009 Sch 56 late payment penalties

  32. Book 1c • INDEX • Two parts to index • 1st – normal index • 2nd – Words and Phrases = commonly used expressions • Index not overly useful and things not listed in the way you might expect but could save your bacon in a sticky situation

  33. Book 1c Index – connected persons Connected persons – “Words and Phrases” (capital allowances) CAA 2001 s 232 (capital gains tax) TCGA 1992 s 286 (corporation tax) CTA 2010 ss 1122, 1123 (income and corporation tax) TA 1988 s 839(1)-(4), (7) “Main Index” application of definition ITA 2007 s 1021 capital allowances, application to CAA 2001 s 575 chargeable gains, application to TCGA 1992 s18 company purchase of own shares, TA 1988 s 228 employee share schemes, unapproved, application to FA 1988 s 83(1), (4) meaning, TA 1988 s 839, TCGA 1992 s 286, ITA 2007 ss 993-994

  34. Q on conditions re EMI scheme • Index look up Enterprise Management incentive scheme • Not there • Look up share schemes • Not there • Look up share option schemes • EMI

  35. More helpful than the index……. • …are the contents pages at the front of the consolidation acts • But in the exam……….

  36. Part 2 • Income Tax, Corporation Tax and CGT • Secondary legislation • And • Non-statutory legislation • INDEX

  37. Part 2 • Statutory Instruments • Revenue Interpretations • Press Releases • HMRC Code of Practice • Miscellaneous • At front of each section is a contents page – very useful

  38. Part 2; SI contents - highlight • SI 1998/3175 Payment of tax – large Cos - instalments • SI 2003/2682 PAYE Heaven!!!!!

  39. Part 2; ESC Contents - highlight • D2 CGT residence – year of arrival / departure • D3 PPR periods of absence (a) • D4 PPR Periods of absence (b) • D6 PPR separated couples • D22 Rollover – assets not brought into immediate use

  40. PPR Relief • 223  Amount of relief • (1)     No part of a gain to which section 222 applies shall be a chargeable gain if the dwelling-house or part of a dwelling-house has been the individual's only or main residence throughout the period of ownership, or throughout the period of ownership except for all or any part of the last 36 months of that period.......... • ……….at end of section you find info re • ESC D3 PPR periods of absence (a) • D4 PPR Periods of absence (b) • D6 PPR separated couples • SP • Cases • Cross references

  41. Part 2; Miscellaneous • My favourite part is Miscellaneous • Misc II – HMRC 6 • Residence, Domicile and remittance basis • Misc III – HMRC Booklet – Employed or self-employed? • Misc V- IR 35 – Revised Guidance • Book 2 is well worth a few hours of looking through

  42. Part 3 • IHT • NIC • Tax credits • and PRT • “All aspects” in each of these 4 sections • So first section is IHT and starts with Acts, then SIs then ESCs the SPs and then non-statutory material. • Ending with the IHT index

  43. Orange / Green Book • Contains all aspects of • VAT • Stamp Taxes • Other indirect taxes (IPT and the ‘green’ taxes) • ‘All aspects’ means • Acts • Statutory instruments • Other stuff – eg Notices, Press releases • Index

  44. Grey blobs! • 1st grey blob is VAT statutes – VATA 1994 is most interesting • 2nd blob is Statutory instruments re VAT • Then EC material, VAT ESCs, VAT Notices, • then Miscellaneous Press Releases . • Finally VAT INDEX

  45. Orange / Green Book 1 • For VAT there are two bits of the first grey blob you really need to be familiar with • VATA 1994 • SI 1995 / 2518

  46. VATA 1994 • -CHARGE TO TAX • -RELIEFS, EXEMPTIONS AND REPAYMENTS • -APPLICATION OF ACT IN PARTICULAR AREAS • -ADMINISTRATION, COLLECTION AND ENFORCEMENT • -SUPPLEMENTARY PROVISIONS • -SCHEDULES

  47. VATA 1994 Schedule 8 • Part II The Groups • Group 1 — Food • The supply of anything comprised in the general items set out below, except— • (a)     a supply in the course of catering; and • (b)     a supply of anything comprised in any of the excepted items set out below, unless it is also comprised in any of the items overriding the exceptions set out below which relates to that excepted item. • General items • Item No • 1 • Food of a kind used for human consumption. • 2 • Animal feeding stuffs.

  48. VATA 1994 Schedule 8 Excepted items Item No 1 Ice cream, ice lollies, frozen yoghurt, water ices and similar frozen products, and prepared mixes and powders for making such products. 2 Confectionery, not including cakes or biscuits other than biscuits wholly or partly covered with chocolate or some product similar in taste and appearance. 3 Beverages chargeable with any duty of excise specifically charged on spirits, beer, wine or made-wine and preparations thereof. 4 Other beverages (including fruit juices and bottled waters) and syrups, concentrates, essences, powders, crystals or other products for the preparation of beverages. 5 Any of the following when packaged for human consumption without further preparation, namely, potato crisps, potato sticks, potato puffs, and similar products made from the potato, or from potato flour, or from potato starch, and savoury food products obtained by the swelling of cereals or cereal products; and salted or roasted nuts other than nuts in shell.

  49. VATA 1994 Schedule 8 • Items overriding the exceptions • Item No • 1 • Yoghurt unsuitable for immediate consumption when frozen. • 2 • Drained cherries. • 3 • Candied peels. • 4 • Tea, maté, herbal teas and similar products, and preparations and extracts thereof. • 5 • Cocoa, coffee and chicory and other roasted coffee substitutes, and preparations and extracts thereof.

  50. VATA 1994 Schedule 8 • NOTES: • (1)     “Food” includes drink. • (2)     “Animal” includes bird, fish, crustacean and mollusc. • (3)     A supply of anything in the course of catering includes— • (a)     any supply of it for consumption on the premises on which it is supplied; and • (b)     any supply of hot food for consumption off those premises; • and for the purposes of paragraph (b) above “hot food” means food which, or any part of which— • (i)     has been heated for the purposes of enabling it to be consumed at a temperature above the ambient air temperature; and • [(ii)     is above that temperature at the time it is provided to the customer.]1

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