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    Each month we review the emerging themes from the calls to our tax advice lines. Below is a short summary of the key points our team has been discussing with accountants in July.

    HMRC targets professionals

    HMRC is targeting professionals who incorporate their businesses, charging a capital sum to the Newco for the right to future income. The sale of occupation income legislation at S773-789 Income Tax Act 2007 refers (page 434 onwards).

    An occupation, in relation to an individual, refers to an individual carrying on a profession or vocation on the individual’s own account or as an employee or office-holder.

    Income tax is charged on the capital amount as income arising on the individual and is taxed in the tax year in which the capital amount is receivable.

    In the cases we are seeing, the individuals thought they would be liable at the capital gains tax rate of 10% and are getting a severe shock when HMRC explains the sum is liable to income tax and a rate of up to 45%. The capital sums vary from £200,000 to £3m, so the tax bill is substantial.

    It should be noted, however, the liability arises if the primary objective is the avoidance of tax or a reduction of liability to income tax.

    The topic is covered in HMRC’s Business Income Manual at BIM35725 and BIM100360

    Death and taxes

    When HMRC published its latest Annual Report, earlier this month, one of the headlines was the increase in inheritance tax (IHT) collected. In the last financial year, HMRC collected £5.2bn, up from £4.1bn in 2014/15.
    Despite a reducing number of IHT returns being submitted, the tax take has gone up and so has the number of enquiries:

     Year  IHT returns submitted  Enquiries open
     2013/14  53,394  2,521
     2014/15  48,567   4,251
     2015/16  47,267  6,395

    HMRC is very active in the IHT arena and our telephone advisers continue to take questions about IHT related matters.

    Gender pay

    The battle of the sexes is well and truly front and centre at the BBC, with pay transparency highlighting unfairness amongst men and women essentially performing the same role.

    From 6 April 2017, employers with 250 or more employees will be required to publish four types of figures annually on their own website and on a government website:

    • Gender pay gap (mean and median averages)
    • Gender bonus gap (mean and median averages)
    • Proportion of men and women receiving bonuses
    • Proportion of men and women in each quartile of the organisation’s pay structure

    Employers will have up to 12 months to publish their gender pay gaps.

    After witnessing the subsequent recriminations within the BBC, it would be wise for employers to consider acting now, prior to publication, to reward people fairly and to limit any negative post publicity.

    If you need any more support with these subjects, please contact us on 0345 223 2727.