This time of year, private client work can be quiet – but it’s certainly not this year! I think the pandemic has given people time to reflect, so we are seeing many clients considering their estate planning and seeking advice on how they can provide for their family in the future.
We are also seeing an increasing number of clients looking for advice on the taxation of cryptocurrency. While HMRC’s recently published manual provides some helpful new guidance, HMRC admits that it is not a comprehensive guide, so I would hope that the guidance can keep up with the pace of change in the sector.
Internally, some of the team are busy working on a digitisation project which will automate some parts of our tax return process. We expect this will reduce the time spent on the more mundane parts of the process that don’t add value for the client.
If you could make one change to a tax, what would it be?
Aside from simplification across the board, I would like to see an overhaul of the penalty regime, particularly in relation to offshore matters. There is now a raft of measures which give HMRC the ability to recover undisclosed tax liabilities and assess the related penalties. Some of these different regimes overlap, which presents a challenge in itself.
In the last few years, we have also seen the concept of ‘reasonable excuse’ being applied inconsistently by HMRC and in the courts. HMRC has acknowledged these concerns in its recent Evaluation of HMRC’s implementation of powers, obligations and safeguards report; however, I am not hopeful that its commitment to ‘review and update guidance to clarify the range of factors that may contribute to reasonable excuse’ will provide any greater clarity.
While the penalty regime should in theory affect relatively few people, the reality is that we see many cases where there are valid reasons for non-compliance, which I expect will only increase as more countries commit to the common reporting standard.
What do you know now that you wish you’d known at the start of your career?
That it’s ok to feel out of your depth and uncomfortable sometimes, as you will always be learning throughout your career. You will never know everything, but knowing when to seek help and bring in specialists is something you learn.
Are there any new rules that are causing a particular problem?
The capital gains tax reporting for UK residential property continues to cause some problems, particularly for non-UK resident clients that are unable to verify their identity to set up a government gateway account. This has inevitably meant that these clients have missed the 30 day deadline as they are forced to deal with the process by post.
I hope the government adopts the OTS’s recommendation to extend the reporting and payment deadline to 60 days as the current deadline is proving challenging to meet.
Has a recent tax case caught your eye?
I am keeping my eye out for the release of the Upper Tribunal’s decision in the Wilkes case, which concerns HMRC’s power to issue discovery assessments to impose the high income child benefit charge (HICBC) beyond the normal four-year time limit. If the UT upholds the FTT decision ([2020] UKFTT 256 (TC)), this should mean that similar assessments for many taxpayers will be cancelled.
Whilst this case is not concerned with the policy design of the HICBC, it is time for the government to rethink how the HICBC operates. In my view, the fact that the HICBC targets the individual sole earner as opposed to the household income is unfair. From 6 April 2021, the HICBC now also purely affects basic rate taxpayers as the £50,000 threshold at which the charge kicks in has been static since its introduction in 2013.
You might not know this about me but...
My partner and I purchased DJ decks over lockdown, so we have been practising our mixing skills until the world opens up and we can go and see our favourite DJs again.
This time of year, private client work can be quiet – but it’s certainly not this year! I think the pandemic has given people time to reflect, so we are seeing many clients considering their estate planning and seeking advice on how they can provide for their family in the future.
We are also seeing an increasing number of clients looking for advice on the taxation of cryptocurrency. While HMRC’s recently published manual provides some helpful new guidance, HMRC admits that it is not a comprehensive guide, so I would hope that the guidance can keep up with the pace of change in the sector.
Internally, some of the team are busy working on a digitisation project which will automate some parts of our tax return process. We expect this will reduce the time spent on the more mundane parts of the process that don’t add value for the client.
If you could make one change to a tax, what would it be?
Aside from simplification across the board, I would like to see an overhaul of the penalty regime, particularly in relation to offshore matters. There is now a raft of measures which give HMRC the ability to recover undisclosed tax liabilities and assess the related penalties. Some of these different regimes overlap, which presents a challenge in itself.
In the last few years, we have also seen the concept of ‘reasonable excuse’ being applied inconsistently by HMRC and in the courts. HMRC has acknowledged these concerns in its recent Evaluation of HMRC’s implementation of powers, obligations and safeguards report; however, I am not hopeful that its commitment to ‘review and update guidance to clarify the range of factors that may contribute to reasonable excuse’ will provide any greater clarity.
While the penalty regime should in theory affect relatively few people, the reality is that we see many cases where there are valid reasons for non-compliance, which I expect will only increase as more countries commit to the common reporting standard.
What do you know now that you wish you’d known at the start of your career?
That it’s ok to feel out of your depth and uncomfortable sometimes, as you will always be learning throughout your career. You will never know everything, but knowing when to seek help and bring in specialists is something you learn.
Are there any new rules that are causing a particular problem?
The capital gains tax reporting for UK residential property continues to cause some problems, particularly for non-UK resident clients that are unable to verify their identity to set up a government gateway account. This has inevitably meant that these clients have missed the 30 day deadline as they are forced to deal with the process by post.
I hope the government adopts the OTS’s recommendation to extend the reporting and payment deadline to 60 days as the current deadline is proving challenging to meet.
Has a recent tax case caught your eye?
I am keeping my eye out for the release of the Upper Tribunal’s decision in the Wilkes case, which concerns HMRC’s power to issue discovery assessments to impose the high income child benefit charge (HICBC) beyond the normal four-year time limit. If the UT upholds the FTT decision ([2020] UKFTT 256 (TC)), this should mean that similar assessments for many taxpayers will be cancelled.
Whilst this case is not concerned with the policy design of the HICBC, it is time for the government to rethink how the HICBC operates. In my view, the fact that the HICBC targets the individual sole earner as opposed to the household income is unfair. From 6 April 2021, the HICBC now also purely affects basic rate taxpayers as the £50,000 threshold at which the charge kicks in has been static since its introduction in 2013.
You might not know this about me but...
My partner and I purchased DJ decks over lockdown, so we have been practising our mixing skills until the world opens up and we can go and see our favourite DJs again.
