BTG Tax News

It's a backs to the wall Budget

Andrew Shaw — Thu, 18 Mar 2010 14:47:03 GMT

Business leaders have called on Alistair Darling to make clear his plans to reduce the deficit when he stands up in the Commons next Wednesday. This is likely to be an unusual budget so close to a General Election.

Andrew Shaw, national tax managing partner for BTG Tax, part of the Begbies Traynor group believes Darling will be a “Budget for floating voters”.

He said: “We’ve already had the 50 per cent tax band on income tax and I think after the election we will see both capital gains tax and vat go up, but they can’t raise them beforehand. And, given the parlous state of public finances, they can’t give away much either.

“Petrol is due to jump 3p a litre in April but they might just defer that.”

We can expect a phoney budget on 24 March with any hard hitting, significant tax raising measures deferred until the second 2010 Budget.

Facing an enormous deficit and with no money in the bank and a General Election ahead Chancellor Alistair Darling is unlikely to deliver an “earth shattering” budget given his limited options.

BAA wins £6.7m VAT M&A case

Tony Jackson — Mon, 22 Feb 2010 17:20:00 GMT

On 10 February the First Tier Tax Tribunal released its much delayed decision in the BAA Ltd VAT case.

The decision confirmed the ability of taxpayers to recover VAT on costs incurred in connection with a corporate takeover.

In a lengthy and complex decision released some eight months after the hearing, it was successfully argued that the VAT on costs such as legal, advisory and due diligence services incurred on a takeover by the company established to acquire the shares in the target, was recoverable.

This decision, coupled with the decision in My Travel (recovery of VAT on third party costs) opens up the potential to recover significant amounts of VAT in relation to M&A and funding activity, that previously may have been ignored, considered unclaimable or disallowed by HMRC. However, it is still open to HMRC to appeal the BAA decision as they have done in MyTravel, so the issue may not yet be closed.

Sporting Image Rights – The Reality

Jeff Millington — Fri, 12 Feb 2010 09:00:00 GMT

There has been a lot written and said in respect of footballers’ image rights, agents’ fees and football clubs over recent months: some of it accurate, some of it less so. HMRC have always been keen to investigate player transfers and in recent times these have included some high profile criminal cases, none of which have yet been proven and one of which was rightly brought to an end.

When I worked at HMRC Specialist Investigations (SI), prior to joining BTG Tax, my job was to establish the technical arguments and manage a specific project in connection with image right payments. For the first time, HMRC had decided that a structured approach, with what quickly developed into a team of people to undertake the investigations, was appropriate.

Those with longer memories will remember that HMRC took a case against a football club alleging that the payments made under image right agreements were a sham and that PAYE was due. This case was known as Sports Club (1), Evelyn (2), Jocelyn (3) v HMIT (“Sports Club”). The Inland Revenue (as it was then) lost the case and, therefore, their appetite to investigate further similar cases diminished. However, a number of football clubs, perhaps not knowing the full technical implications of the case, appeared to believe that they could enter into image right agreements with little thought to the commerciality of the agreement or the amount they proposed to pay.

As a result of this, along with other SI investigators, I became aware of a large number of substantial payments being made to footballers for image rights. Rather than continue with isolated investigations a project was undertaken to enquire into the position en masse. One of my then colleagues was already enquiring into agents’ fees and whether the declaration on form G2 (part of the necessary paperwork required by the FA) of the player’s employment contract was correct. On most occasions it stated that the agent had acted for the club only, and not the player, when it was sometimes obvious from an agent’s own website that the agent did in fact act for a player and had the appropriate representation agreements in place reflecting that relationship.

The initial enquiries made by HMRC highlighted a great deal of inconsistency in the amounts being paid and the reasons behind the payments, even within the same club.

For example, image right agreements existed whereby the related payments to the player were based on the amount of games played and goals scored. The club could not really have done anything better to tie the reason for the payment as being linked to employment!

With anomalies like this HMRC realised that any enquiry undertaken had to be far-reaching and in great depth to ensure that it would realise the maximum amount of tax take and to have any impact in changing the behaviours of clubs, players and agents.

HMRC have never said and never will say that image right agreements cannot be entered into. Sports Club established the precedent that this could happen, however, HMRC consistently argue that the payment made must be made for commercial reasons and the club must be able to demonstrate that fact. In the case of football clubs it is unlikely that HMRC would agree a fixed percentage payable for image right exploitation. One such arrangement was agreed for Rugby Union, however, the amounts involved in comparison to football clubs do not begin to compare and HMRC believe that such a without prejudice agreement will not have an impact upon their enquiries into such matters with the football clubs. In my opinion it was a generous agreement and one that is unlikely to be offered again, especially as I would anticipate Counsel for HMRC would be bullish on their position given the evidence they have collated in this particular area.

So where do we stand on image rights within football and how are the investigations likely to conclude?

Firstly I would recommend that clubs look at image rights in the first instance as a genuine commercial arrangement to generate money and not as merely a way to limit the impact of employer’s National Insurance. I would advise a club to consider acquiring as many of the players’ rights as they can and wherever possible to not have excluded items that the player can continue to exploit. In this regard it would be best for a club to consider how it could obtain the image rights of young players being offered their first professional contract. These image rights should not cost a great deal, but could be worth a substantial amount to both the club and the player at a later date. What price would you put on the image rights of the next Ryan Giggs to come through Manchester United’s academy?

There are numerous tax efficient ways to do this for both the club and the player. The higher profile clubs will continue to have the better opportunities.

So that is the future, but what of the present?

I will look first at the player. Some people have indicated that HMRC were especially concerned about monies being paid to offshore companies. To be honest if the image right payments had all been paid to UK companies HMRC would have been amazed. Why would a non-domiciled player set up a UK company to receive his image rights for the rest of the world? This would not make commercial sense and would also be tax ineffective.

Where a non-domiciled player has set up an offshore structure HMRC believe that they have a right to pursue the player, if needed, via the transfer of assets abroad legislation (now s714 ITA 2007, previously s739 ICTA 1988) and also s773 ITA 2007 (previously s775 ICTA 1988). It obviously depends on how the individual has established their offshore structure and in the first instance HMRC will always pursue the club for the PAYE. On analysis the pursuit of the non-domiciled player via s714 ITA 2007 may well be difficult and one wonders if HMRC has the support of its own technical experts in this area.

The payment of the money to an overseas tax haven has no real bearing as HMRC are always going seek to charge the club to PAYE first and pursue the player second. If the player has left the UK and is not in another EU member state then this will prove problematic, but it is not something HMRC can control.

HMRC believe that they have some very strong arguments given the evidence they have acquired and continue to acquire. From my past experience and understanding of the issues involved in the ongoing HMRC enquiries, a number of clubs should seek to settle for the best possible deal if HMRC are willing to offer or listen to one. HMRC are confident that an image rights agreement is not required for the club to sell merchandising such as shirts or photographs. They base their opinion on various litigated cases such as Irvine v Talksport, wherein Eddie Irvine successfully sued Talksport under what is known as “passing off”, for using his image without his permission to advertise their radio station. In that case the judge went into great length to discuss the difference between endorsement and merchandising.

However, as this matter was not discussed in any great detail in the Sports Club case there is still some ambiguity here and an argument to be made by the football club. There will also be clubs where the facts presented in the Sports Club case will not wholly apply to them. So no matter how confident HMRC are, a number of these cases should be keenly contested and some may be too close to call, especially if the tax adviser knows what elements of the Sports Club case to call upon and other facts to raise that have not yet been brought out.

Jeff Millington worked within HMRC for 24 years and worked in Specialist Investigations prior to joining BTG Tax. Whilst in Specialist Investigations he instigated the current image rights project and helped develop their strategy and technical contentions in relation to image right payments.

T: 0121 452 1515
E: jeff.millington@btg-tax.com

Schedule 36 & HMRC: A Breach of Power

Jeff Millington — Fri, 05 Feb 2010 16:30:37 GMT

In a recent Tax enquiry, the Inspector decided to use the powers available to him under Schedule 36. In particular, the Inspector wanted to obtain information and documents from third parties that my client had conducted business with.

As the matter concerned VAT, the Inspector issued the Notice under Paragraph 34 of Schedule 36. This meant that in his opinion the records came within the definition of statutory records which gave the Inspector the advantage of not needing to seek the permission of the Tax Tribunal to issue the Information Notice. It was clear to me that at least three of the items requested did not come within the concept of statutory records. For instance, the Inspector deemed the notes of a meeting between a customer and my client as statutory records.

The party under enquiry has no way of appealing against a notice requiring statutory records. Indeed statutory records are poorly defined. Having telephoned and written to the Inspector to challenge the notice, this correspondent met with a dogmatic and unhelpful response.

So what can be done?

I decided to write to HMRC’s Policy Office and the director of Specialist Investigations, the department within which the Inspector worked. Not surprisingly the involvement of Policy Office brought about a significant change in attitude. In the initial letter from the director there was a tacit admission that not everything that had been requested came within the definition of statutory records. Not satisfied with the response I wrote back asking for a more definitive explanation and acknowledgement that, since the Inspector had not obtained authority from the Tax Tribunal for the third party notice, the notices were invalid.

HMRC’s response confirmed that the notice had requested information that did not come within statutory records and that HMRC’s guidance notes would be amended to reflect these points. However, the director advised me that because the notices had been complied with by the third parties that whether they were invalid or not was irrelevant.

This view is, in my opinion, incorrect and misses the point. In this case, had the Inspector gone via the Tax Tribunal, what he was asking for could be said to be relevant to the overall enquiry and I am sure the Tribunal would have granted it. What if, however, the Inspector had used these powers without Tribunal approval to ask for something that was not appropriate? Had the third party provided it, would this still be okay and the fact that the Inspector had abused their powers irrelevant? It appears that we have to rely on the HMRC Officer following correct guidance and intentions. But what safeguards are in place to protect taxpayers in situations of ambiguity? How many would pursue the matter as far as I did in a non statutory manner?

We are seeing a more aggressive stance being taken by HMRC in its demands for information and it is up to advisers to ensure this does not include an abuse of powers.

Agents Fees in Football and the Taxman

Jeff Millington — Fri, 05 Feb 2010 16:27:30 GMT

HMRC have always considered that there is scope for abuse with regards to agent’s fees. In particular, that football clubs are incorrectly recording that they have used the agent exclusively and that he did not act for the player during the transfer negotiations, or when the player re-negotiates his contract with the club. Moreover, that in some cases the amount paid to an agent was in reality disguised employment income, such as a signing on fee that ultimately finds its way back to the player via the agent. In recent times there have been some high profile criminal cases, none of which have yet been proven and one of which was rightly brought to an end.

HMRC will continue to investigate payments to agents and, where they think the amount is excessive, they will look to track the money and see where it ultimately ends up. If some of it finds its way to the player’s bank account they will quite rightly be suspicious but this does not necessarily mean that the club have sought to cheat the public purse by disguising the payment of employment income.

In most cases, where some of the money eventually goes to the player, the player will be a non-domiciled individual and it may be that the agent has an agreement whereby some of the fees he earns will be paid to the player. There can be a multitude of reasons for this. For instance, in return for a share of the fee, the player will help the agent penetrate the football market in that player’s country, possibly generating more transfers and agents fees in the future.

If you consider that an average agent fee could be in the region of £300,000 to £400,000 and that if the player receives £200,000 of it, then if the club was complicit in evading employment related taxes, the tax and NIC loss would be in the region of £102,000. Whilst this may sound a lot, most clubs wage bills are likely to be at least £2m a month, with a tax and NIC take of £1m. This figure will be considerably greater with a lot of premiership clubs. So why would a club seek to avoid £100k liability to HMRC and face criminal action just to sign a player for the club?

Whilst HMRC may have justified concerns over some agents’ fees, I think they should have irrefutable corroborating evidence showing the club were complicit in evading taxes, before wasting a lot of taxpayer’s money on criminal investigations with a high profile but little impact to date.

HMRC set to increase powers

Jeff Millington — Mon, 04 Jan 2010 15:41:03 GMT

It pays with any Government announcement to look below the headline grabbers and there you will find the devil in the detail. The recent pre budget report is no different. Slipped in under the heading of offshore tax evasion, is reference to a consultation document that will give HMRC the right to request the disclosure of certain new bank accounts opened offshore.

The opening of a bank account, offshore or otherwise, is not necessarily the initial step into a career in tax evasion. The fact that HMRC are looking to obtain the rights to make UK taxpayers disclose when they have opened certain offshore accounts, looks to be a significant increase in their powers to pry into the lives of the public.

The first and obvious question to ask is which accounts will they want disclosures about?

It is likely that any country on the grey or the black list of the OECD will be an automatic trigger for disclosure, but what about the Channel Islands or Switzerland? These countries appear on the white list and have recently entered into Tax Information Exchange Agreements. In the notes to the pre budget review it would seem likely that HMRC will not require people to disclose a new account in these jurisdictions. HMRC will expect people to disclose new accounts opened in countries where no TIEA exist, subject to an aggregate de minimis threshold of £25,000.

This may also include people who have closed an account in Liechtenstein since the 10 August 2009 and with the closing funds opened a further account in other jurisdictions. This is a wide definition but the one obvious flaw in the recent Memorandum of Understanding between Liechtenstein and the UK, is that up until 31 March 2015 people can close their bank accounts in Liechtenstein and move the funds elsewhere. This will enable them to avoid having to make a disclosure to HMRC under the Liechtenstein Disclosure Facility (LDF).

So what a very clever way to shut off this particular loophole by making that very act something that has to be disclosed. Whilst many people may do this and ignore the potential consequences it does tighten the net on those bent on tax evasion. And when HMRC catch up with those evading their taxes the level of penalty could be as much as twice the tax avoided.

This coupled with the fact that HMRC are going to start enquiries into people with offshore accounts from January 2010, means the focus really is getting sharper on overseas assets. Those who do have something to disclose should seriously consider the two disclosure opportunities available at the moment. The New Disclosure Opportunity (NDO) which ends today (4 January 2010) and the LDF. If they qualify, the LDF would appear to be the opportunity of a lifetime in the current climate.

Having helped a number of clients register for the LDF already we are well placed to advise and help people who may need to follow a similar route. Jeff Millington can be contacted on 0121 452 1515 or by email jeff.millington@btg-tax.com.

Deadline to Disclose Offshore Income Extended

Jeff Millington — Wed, 09 Dec 2009 10:28:00 GMT

On 27 November three days before the deadline for people to register under the New Disclosure Opportunity (NDO) HM Revenue & Customs (HMRC) announced that they were extending the deadline to 4 January 2010.

The reason given by Dave Hartnett (HMRC Permanent Secretary for Tax) was that HMRC had become aware that a number of bank customers would not be contacted in good time to allow them to register the fact that they needed to make a disclosure by 30 November 2009.

He went on to say that he would strongly urge anyone who has been hiding taxable assets offshore to go online and register. Dave Hartnett has warned people who choose not to register that, at the beginning of the New Year, HMRC will begin to investigate those people that were eligible to disclose under the NDO but “instead buried their heads in the sand”.

It is interesting to note that this is the first time HMRC have actually stated a date for when they will commence the many investigations they are known to have ready. One reason for this could be the very low registrations under the NDO, estimated at just over 6,000 so far.

We would acknowledge that this does give people a second chance to come forward, however people who opened their offshore accounts up without going through a UK branch or agency can also now make a disclosure under the Liechtenstein Disclosure Facility (LDF). It does not matter if at present they do not hold an asset in Liechtenstein, as one can be acquired. The LDF is considerably more favourable, especially if people believe they will have a tax liability that was incurred more than ten years ago.

So before people rush to register under the NDO, it might be worthwhile considering whether there is a better way to make a disclosure to HMRC. Whichever way to disclose is chosen we would be able to give you the best professional advice. In the last 4 months BTG Tax has established a number of working contacts with trust companies, banks and solicitors in both Liechtenstein and Switzerland. These contacts will be able to assist in advising how to acquire relevant property in Liechtenstein at a competitive cost. Most of the investigations team are ex senior Inspector of Taxes within HMRC, or have many years experience in dealing with HMRC enquiries and disclosures to HMRC.

Everyone's a Loser

Andrew Shaw - National Tax Managing Partner — Wed, 12 Aug 2009 10:36:13 GMT

Andrew Shaw, national tax managing partner for BTG Tax, part of the Begbies Traynor Group, analyses the “crazy” ways in which the Government relieves you of your hard-earned cash.

When I first started in tax, we were still dealing with the Labour Government of the late 1970s with income tax at 83 per cent on earned income, and a further 15 per cent surcharge on investment income, 98 per cent in total.

Many clients chose to go into business renting trailers for articulated lorries.

Yes, really.

The idea was that you bought the trailer and in the first year claimed an allowance of 100 per cent of the cost – you had no income as it was bought on the last day of the year. The loss was carried back and you recovered tax at 98p in the pound. HM Revenue & Customs paid you interest as well, so you ended up with about 107p for every 100p lost.

The client therefore had no worries about how much rental income he or she might receive on the trailer.

Unfortunately the man running the rental business only had one trailer; he just sold it several hundred times.

Thirty years later we now have a top rate of tax in excess of 100 per cent – raise your income but take home less.

Imagine you earn £160,000 a year and pay £50,000 into your pension scheme. Your company then gives you a £10,000 rise, on which you pay £5,000 in Income Tax and National Insurance of £150, leaving you with a net increase of £4,850. However, your pension contribution will now only get 30 per cent tax relief instead of 40 per cent, so this costs you £5,000 (£50,000 x [40% - 30%] = £5,000). Therefore you are £150 worse off than before you had the pay rise – a marginal rate of 101.5 per cent.

It’s nonsense, complete and utter rubbish.

Who thinks up such a crazy tax system?

There has been a furore in professional circles about the stupidity of the proposals and how the forestalling provisions worked. Although the Budget announced the changes as only applying from 2010, in practice for many taxpayers, including myself, the effective date, now long past, was April 22.

For those that were not alert enough to pay their annual pension contribution between April 6 and April 21 the new rules were effectively retrospective.

There has been much lobbying over the changes but most of it was ignored by Parliament and the Finance Bill was largely enacted as announced, except the de minimus limit for the forestalling measures rose from £20,000 per annum to £30,000.

Where it is still wrong or patently unfair, then hopefully there will be further changes in the years to come.

Good legislation creates certainty as to how income or capital is taxed and works so that changes are small and gradual. In that way taxpayers can act responsibly and respond to Government plans.

The Government encourages taxpayers to save into pension plans with generous tax allowances. The taxpayer does not then expect the Government to complete a volte-face and punish them for acting in accordance with Government wishes. The

Government either wants people to save for their retirement or they do not. People are making long term decisions and they need certainty that the tax rules will remain constant.

On another note, Capital Gains Tax was 40 per cent (or 10 per cent with taper relief on business assets) and it is now 18 per cent, with income tax rising to 50 per cent next year.

Any significant discrepancy between the levels of tax on income and capital will lead to distortions in the investment market and taxpayers choosing to invest in ways that minimises their tax exposure. So how long will the 18 per cent CGT rate last? My guess is about 12 months.

Tax revenues will continue to fall as earned income and investment income gets hit by the recession and the Bank of England’s decision to reduce interest rates to nominal levels.

In these circumstances the Government will have to raise tax rates just to keep the revenues flowing.

Double whammy for high-earners

uat — Thu, 09 Jul 2009 16:39:57 GMT

High earners are facing a swingeing new pensions blow, it was claimed today.

Tucked away in the 2009 Budget small print was further bad news for those earning £150,000 and above, according to Andrew Shaw, national tax managing partner at BTG Tax, part of the Begbies Traynor Group.
Already hit with a 50 per cent tax charge and the reduction in tax relief for pension contributions to 20 per cent, HM Revenue & Customs wants to treat their employer pension contributions as benefits in kind chargeable at 20 per cent on the individuals concerned, effectively a "double whammy".
The change is scheduled for 2011 but would not affect standard rate taxpayers. The proposals are currently up for consultation.

“However, the Treasury has already indicated that it now takes the view that employer contributions are ‘deferred salary’ and therefore should be legitimately taxed as a benefit,” said Mr Shaw.
“This means a top rate taxpayer would have to pay £2,000 in tax on a £10,000 contribution to a money purchase scheme. But the situation is even more complicated and expensive for final salary scheme contributions, where benefits are added on in the form of years. The tax bill could be much higher.”

Mr Shaw said the proposals would also hit high earning employees whose bonuses are paid as tax efficient pension contributions, also where these are part of a termination package. If enacted, the rules would also include so called "forestalling" measures designed to operate from April 22 2009 and prevent high earning employees from accelerating salary or bonus waivers in exchange for additional employer contributions in the tax years 2009/10 and 2010/11.

Mr Shaw said: “It is therefore recommended that any employer considering a salary waiver pension scheme should be wary of including employees or directors who will fall into the high earner category, and therefore may be caught by the forestalling provisions, as they could potentially be in a worse position.

“The good news is that basic rate and 40 per cent taxpayers will still receive full tax relief on their pension contributions and salary sacrifice schemes for these employees will continue to be tax and NIC effective, even more so when NIC contributions are increased.

“The number of salary waiver schemes is now expected to increase as employers seek ways to reduce their salary costs.”

Mr Shaw said pension firms situated offshore had also reported a jump in enquiries about so-called qualifying recognised overseas pension schemes (Qrops). These do not require the purchase of an annuity at 75 and the individual can pass pension assets on to the next generation without punitive UK tax charges.

“Offshore bonds, with similar perks, are also expected to flourish. However, it may only be a matter of time before these schemed are targeted.”

BTG Tax Continues Expansion on the Investigation Front

uat — Thu, 09 Jul 2009 16:33:22 GMT

As new HM Revenue & Customs (HMRC) powers and growing scrutiny of the offshore tax arena hits UK companies and individuals, BTG Tax, a national tax practice is continuing to expand its tax investigations department by making two further significant appointments.

Sue Bradshaw has joined BTG Tax in London as Director of Tax Investigations following 6 years with PricewaterhouseCoopers Tax Investigations team. Notably before joining PwC, she spent 25 years working for HMRC where she investigated the more complex cases of tax avoidance and evasion and led the London Special Civil Investigations group of serious fraud investigators. Sue has gained particular expertise in offshore arrangements using tax haven based affiliates and trusts. She was a member of an HMRC national project team advising on the tackling of offshore avoidance. Coupled with her extensive knowledge of the Revenue’s wide ranging information powers, she has successfully handled all manner of disputes for clients.

Andrew Shaw, National Tax Managing Partner said “Sue’s invaluable expertise in tax investigation work and HMRC practice would further strengthen the wide range of services offered by the firm.”

Also joining the tax investigations department in Manchester as a Senior Manager is Andrew McKenna. Andrew spent 15 years with HMRC working for the Special Civil Investigations (now Specialist Investigations) unit - scrutinising tax fraud enquiries. During his last three years at HMRC he led the Offshore Fraud Project Group.

After leaving HMRC in 2007, Andrew spent two years at PricewaterhouseCoopers in Manchester where he advised clients, individuals and corporates, on offshore tax issues, tax investigations and how best to deal with HMRC.

Andrew is CTA qualified and a member of the CIOT Taxes administration sub committee where he offers feedback on various HMRC consultancy documents such as compliance powers, penalties and the new tribunals.

Steve Bold, National Tax Partner at BTG Tax said: “Andrew is a hugely experienced tax professional with a breadth of experience that will really benefit our clients. As HMRC brings in new penalties and regulations, companies and individuals need to review all internal tax and record keeping systems to ensure they will stand up to HMRC inspections.”

Internet insurance introductions are exempt from VAT

uat — Thu, 09 Jul 2009 14:41:13 GMT

The High Court has decided that insurance commissions earned from internet introductions are exempt from VAT. This followed jointly-heard appeals by the taxpayer and HM Revenue & Customs from two conflicting decisions of the VAT Tribunal on similar facts.

After a detailed analysis of the case law, the Judge held in InsuranceWide.com Services Ltd v RCC and RCC v Trader Media Group that the act of introduction alone is sufficient to count as an exempt insurance intermediary service within the meaning of EU and UK VAT law. This was in the face of HMRC arguing that maintaining a website amounted to advertising, which is subject to VAT, and that an introducer was not sufficiently involved with the parties to constitute an insurance intermediary within the legislation.

Mark Chesham of BTG Tax said: “This is a welcome clarification of a particularly contentious area of VAT law and brings the law into the 21st Century. We still await however the outcome of the EU review which may restrict the scope of the exemption for these types of services in future'.

Begbies Traynor Group Announces the Launch of BTG Tax

uat — Wed, 28 May 2008 10:46:00 GMT

BTG Tax advises individuals and businesses on a wide range of specialist tax issues, with a significant amount of work derived from smaller firms of accountants, lawyers and IFAs.

BTG Tax is an £8m turnover business, with significant potential to grow its revenue stream. It will assist all parts of the Group’s business by delivering answers to difficult tax situations, whether it be for Insolvency partners or for the corporate finance teams. The Group’s extensive network of contacts will enable the team to refer work in to other parts of the business

BTG Tax has 53 tax experts across 4 locations (Manchester, Birmingham, London and Cyprus), assisted by 12 support staff. The group’s expertise is very much geared to niche areas and includes Tax Investigations, VAT, Corporate Transactions, HNWI tax planning, Sports, Media and Entertainment, and International Tax.

Most of the Senior Management Team has Big 4 tax experience and many have also worked for HMRC. There are currently 8 partners in the business and 8 Directors.

Acquisition of CoyleClarke LLP

Ric Traynor — Fri, 22 Feb 2008 10:45:00 GMT

The acquisition represents a further step in line with the Group’s stated strategy to extend and diversify its professional services offering.

CoyleClarke LLP was founded in 2002 by Leo Coyle and Alex Clarke, and operates in a wide range of areas from investigation work, forensics, and financial mediation through to prosecution defence. They also use their investigation background in writing reports as expert witnesses to assist legal contacts in defence of Confiscation Orders, be it a tax prosecution or any matter involving the Proceeds of Crime Act.. Following the acquisition, Leo and Alex will become Partners in BTG Tax.

The business will be integrated with the Group’s existing tax consultancy, which is based in Manchester and which was established following the recent acquisitions of Shaw Tax and Stellar Financial Services. As a result of these acquisitions, together with organic growth, the Group now derives annualised fee income of over £5 million from tax consultancy services.

Ric Traynor, Executive Chairman, commented:

“The CoyleClarke team extends the Group’s penetration of the specialist tax consultancy market and broadens our service offering considerably. I am delighted that they have chosen to become a part of Begbies Traynor Group and we look forward to growing the business as part of the Group and to driving cross referral opportunities from our professional contact base.“

BTG Tax VAT and Indirect Tax Bulletin

Barry Stocks — Thu, 24 Jan 2008 10:42:00 GMT

This first issue kicks off with one of the most significant VAT decisions for some years – that could cost the Treasury £1bn in overpaid VAT if some estimates are to be believed. The decision potentially gives taxpayers the opportunity to recover overpaid VAT back to 1973 – but the government is expected to slam the door shut very quickly – so urgent action is required to make claims now.

Continuing the theme of decisions against the Revenue, also in this issue we report on another major decision against HMRC in a case on carousel fraud, where the Tribunal supported the taxpayer in a case of whether a business should have knowledge of fraud somewhere in the chain of transactions, and the case of Weald Leasing which held that a cash flow planning scheme was not abusive.

Cumulatively, the cost to the Treasury of these decisions will be dramatic – but taxpayers will need to act quickly, as the Government will take steps to lessen the impact.

Major opportunity for reclaims as 3 year capping held illegal in landmark decision

The House of Lords has ruled in the cases of Fleming and Condé Nast that the 3 year cap introduced in 1997 was implemented illegally, and cannot have retrospective effect. This opens up the opportunity for claims for VAT overpaid before the cap’s introduction. However, it is widely anticipated that the window of opportunity will be limited, with a six month time limit expected to be introduced. Claims that have already been made should now be repaid but where claims have not yet been lodged swift action is required.

All businesses and advisers should check through records to identify any opportunities for reclaims before the door is slammed shut – this is a one-off opportunity. Claims can be enhanced by asking for compensation at full commercial rates of interest – this would often amount to more than the VAT itself rather than simple interest provided for under statute. However, before such an interest claim is paid another battle through the courts is needed.

Defeat for HMRC in Carousel Case

In a significant decision in the case of Livewire Telecom the Tribunal overturned a decision by HMRC that a company “knew or should have known” about fraud in a supply chain. HMRC’s arguments included an allegation of VAT losses allegedly offset by so called “contra trading”. Livewire Telecom should have £2.14m in VAT payments returned to it in a decision that could pave the way for funds to be returned to businesses in a similar predicament

The decision will be of interest to hundreds of companies who have had their repayments denied or withheld in similar cases, and a number of the Tribunal’s key findings should have a marked effect upon future cases to involve alleged defaulting or missing traders. However, it is doubtful whether HMRC will change their approach significantly.

Cashflow scheme is not an “abusive practice”

The High Court has held in the case of Weald Leasing that an arrangement for deferring VAT payment was not an abusive practice. The arrangement spread the VAT cost of IT and office equipment for an insurance business that was unable to recover VAT on all its costs. The court decided that even if the tax payer admitted that a tax advantage was the essential aim of the arrangement the arrangement was not contrary to the purpose of the VAT system.

The decision is great news for businesses (and charities) that have, or are about to enter into, cash-flow planning who should consider whether any steps should be taken to improve VAT recovery.

VAT recovery opportunities on bookmakers SIS costs

Following a decision in the VAT Tribunal HMRC have accepted that VAT incurred on satellite information system (SIS) services can be partially recovered – they had previously said that the VAT on these costs was wholly irrecoverable.

Bookmakers should prepare claims for VAT on these costs. Careful consideration should be given to the best method of calculation.

Barry Stocks
Director, VAT and Indirect Taxes

T: 0161 837 1876
E: barry.stocks@btg-tax.com