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Office of Tax Simplification (OTS)

This was recently launched and there are genuine high hopes of this initiative serving to create a simpler tax system.

The Chancellor has initially asked the OTS to take forward two reviews, which cover tax reliefs and small business tax simplification (including IR35), with details as follows:

Tax Relief on Employment Expenses

It has long been the case that unfairness rules when it comes to deciding whether expenses you incur as an employee are tax deductible. You have to meet a very stringent test – namely that the expense has to be incurred wholly, exclusively and necessarily in the performance of your duties.

Furnished Holiday Lets Update

Another topic we have covered before, but where actual proposals are now out in the open. Specifically, the advantageous tax regime is only likely to apply from 6 April 2011 if the property in the EEA is available to let for at least 210 days (30 weeks) in the tax year and is actually let for at least 105 days (15 weeks). The latter requirement may well be fine for a property in France, Spain or Portugal, but you could struggle to let a property in the UK for that number of weeks given the vagaries of our climate.

3 Line Accounts

If you are self-employed with annual turnover of less than

Overpayment Relief

There can be instances where we review your past tax affairs and lodge a claim to a tax refund as a result of a change in tax law or practice.

More Pension Scheme Changes

In the last edition we mentioned that from 6 April 2011 the current requirement to purchase an annuity by the age of 75 will stop, and that in the meantime the age will increase to 77.

We now have some more information to enable decisions to be made, although there are still some unanswered questions. What we now know as likely to be the structure is summarised below:

More Notice of Coding Errors

There have been plenty of figures bandied around as to how many Code Numbers are wrong as a result of errors made by the tax authorities. Whatever the exact figure may be, it is clearly significant and shows no sign of being reduced to any meaningful degree.

One annoying aspect of this is that if you have more than one job, the policy is to bring into account ALL taxable benefits within the main job's Code Number, even where the benefit actually relates to a different job. That seems bizarre and surely itself causes queries to be raised.

Is it a repair or an Improvement?

If you purchase or refurbish a business property it has long been an issue that one needs to consider how much of the expenditure is a repair (then deductible from the relevant income) as opposed to an improvement (then treated as capital expenditure).

CORPORATION TAX RATES AND THE IMPACT OF A REDUCTION IN THE SMALL COMPANIES RATE

The reduction in the small companies rate is welcome, but yet again
there is no move to increase the profit level of

REGIONAL EMPLOYER NICs HOLIDAYS FOR NEW BUSINESSES

This special scheme is aimed at helping new businesses in targeted areas of the UK that need it most. During a three year qualifying period, new businesses which start up in these areas will get a substantial reduction in their employer NICs.

Within the qualifying period, the employer will not have to pay the first

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