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One minute with... Annette Morley

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Your expertise includes tax on farming businesses and landed estates. Can you suggest a practical tax tip?
Take care when dealing with the sale of residential property subject to the upper rate of CGT. Following the FA 2016 legislation trail can lead to a concern that being a farming business could in itself associate farmland with a dwelling to apply the upper rate of gains. TCGA 1992 Sch B1(2)(a) defines one condition as being the disposal of UK land that has at any time ‘included a dwelling’. The prevention of this mischief lies in Sch 4ZZC which, in Part 4, requires that mixed use land be apportioned on a ‘just and reasonable’ basis when calculating residential property gains.
What recent tax case caught your eye?
The Upper Tribunal case of Scambler [2017] UKUT 1 (TCC) highlighted a concern for those businesses that are run by competent and genuine working farmers yet make losses, which are caught in unusual circumstances by the restriction posed by ITA 2007 s 67. This is headed as a restriction on ‘hobby’ farming or market gardening. However, that description clearly did not apply to the Scamblers’ situation, as was accepted even by HMRC. Sideways loss relief against capital gains and income tax was denied by HMRC for 2010/11, when it followed five successive years of losses. It was ITA 2007 s 68(3) that caused the damage: that provides an exception from the restriction where the ‘reasonable expectation of profit’ test is met. Any tax adviser hoping to circumvent the s 67 rule would do well to focus his attention on s 68 and read the decision that was so unfortunate for Mr and Mrs Scambler.
Can you highlight a point to watch from a proposed tax change?
Disguised remuneration is no longer open for comment as a consultation, but the draft regulations are provided for feedback before the enactment of Finance Act 2017. Watch out to prevent double taxation. An example is in the area of employment loans. CTA 2010 Part 10 Ch 3A already applies to loans made by third parties to participators. The new Part 7A also deals with this. HMRC affirms that double tax is avoided through priority being given to tax on employment income under Part 7A over a corporation tax charge under CTA 2010 s 464A.
If you could make one change to UK tax law or practice, what would it be?
I’d redesign as it relates to HMRC. Finding a comprehensive answer to an in-depth query is seriously difficult. I think the original manuals fulfilled their purpose well. The website could be kept for areas such as employer’s regulations, VAT for new businesses and online transactions. Developing better links from through to the manuals would have produced a more comprehensible presentation. 
Do you consider yourself solely a tax adviser or does your work overlap into an accountancy remit?
I have always believed there should not be a ‘big divide’ between accounts and tax, as an understanding of at least the principles of each regime is important to the holistic advice a client needs and deserves. However, I have been particularly struck by the lack of awareness by some tax advisers of the effect on tax of the new accounting standard FRS 102. Loan relationships, investment properties and lease incentives are among the aspects most affected. Transitional rules can bring in additional tax, although spreading provisions can help to mitigate their detrimental cashflow effect.
You might not know this about me…
Come holiday time, I am likely to be found on the trail of an adventure. Exploring Tibet and its share of Himalaya, camping in Namibia and Botswana, the ‘express’ (check that definition!) train journey through Vietnam and journeying in the Arctic (admittedly in high summer) form a selection of my jaunts. The next one is not yet planned... 
Issue: 1342
Categories: One minute with