To keep the brain cells exercised over the Christmas period, here are some tax related questions. I hope you all have a good Christmas break and wish you a healthy and prosperous New Year.
1. In which year did married women start to have to complete their own returns (having been previously considered as ‘chattels’ of their husbands?)
2. Which tax was introduced in 1973 as a simple tax?
3. Who said “No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores.” When was this?
Weird but true:
4. Which newscaster said she was prepared to read the news naked and why?
5. Why does it matter whether a Jaffa Cake is a cake or a biscuit?
6. In what circumstances can you pay more than 100% tax on your income in 2012-13? (NB excluding indirect taxes like VAT/council tax/fuel duty etc)
7. What is the name of the tax case that might help you claim tax relief on training costs in certain circumstances?
8. What is the point of claiming child benefit for a new baby and then immediately saying you don’t want the benefit?
9. If your parents gave you money for a deposit on your house in recent years – and in x years time, they move in with you – what unexpected tax effect will that have (assuming rules are unchanged in x years)
Liz Densley is medical specialist partner with Sussex Chartered Accountants, Honey Barrett, and is secretary of AISMA (the Association of Independent Specialist Medical Accountants). Contact her at email@example.com.
1. Independent taxation was introduced as recently as 1996/97.
2. VAT – was originally declared to be a simple tax - the exact opposite of what it has turned out to be.
3. James Avon Clyde, Lord Clyde, Ayrshire Pullman Motor Services and Ritchie v. IRC (1929) 14 TC 754. This case was 1929. Today the lines between tax avoidance (which is legal) and tax evasion (which is illegal) are beginning to blur morally as there is an increasing feeling that tax avoidance is wrong. The question is where does normal tax planning stop and avoidance start? The boundary will vary according to individual morals, which makes life hard for accountants!
4. Sian Williams – trying to obtain tax relief on the clothes that she wore for work – needless to say she failed.
5. For VAT purposes – cakes are treated as food with no VAT whereas biscuits are luxuries that attract VAT. The definition came down to what happens when they go stale – biscuits go soft and cakes go hard – and thus Jaffa cakes were held to be cakes – with no VAT.
6. From January this year, the highest earner of a couple, one of whom claims child benefit, will see a tax on their income over £50k to recoup some or part of the child benefit. Where a couple have 5 or more children for whom they claim benefit, the effect is a greater than 100% tax charge on the excess income.
8. Claim child benefit to establish ‘protection’ to keep up your National Insurance record whilst not working but staying at home looking after your child, then say no to actually receiving it to save having to pay it back in tax later (and forcing the higher earner into completing an annual tax return when they may not otherwise need to)
9. Your parents could be caught under the ‘Pre-owned assets’ rules because they would be benefiting from the money they gave you many years ago. The amount they gave you could be treated as still part of their estate (so there would be tax to pay potentially on their death) – or alternatively they would have to pay you a full market rent (on which you’d be taxed) to live with you.