On Friday I was interviewed by HELLO magazine, about Harry and Meghan returning to the UK (link in comments).

They are coming back just after 5 years, which is very important for us tax advisors.

When you sell an assets at a gain when you are non-resident, HMRC has no taxing rights over you*. So an entrepreneur about to sell his business might think he can move to (say) Isle of Man – which has no Capital Gains Tax – sell his business, then move back to the UK the next year with all his untaxed wealth.

However, there is anti-avoidance which states if you sell an asset whilst offshore and return within 5 years then HMRC will tax the gain**.

This is why business owners will stay non-resident for at least 5 years when selling their businesses whilst resident in (say) Dubai.

Regarding Harry and Meghan’s move, I would be very surprised if the timing of the move back here was to avoid the anti-avoidance above. The Capital Gains Tax rates in California – where they were living – are up to 37%, compared to 24% in the UK. They’d likely be better off deferring any sale until they were back here.

In some countries, the receipt you get for buying a £1 bottle of coke could be worth £1000s or even £millions.

How do you get businesses to issue proper receipts to buyers, so they pay the VAT and not evade it? It’s a difficult one for tax authorities, especially for cash purchases.

One answer that Taiwan came up with in 1951 is that receipts are entered into a lottery to win cash prizes. That means the buyer wants the receipt and essentially shoppers become unpaid tax auditors.

Earlier this year, someone in Taiwan won £230k from a receipt for 90p of tea.

Variations of the above been tried in Italy, Portugal, Slovakia, Malta, Brazil and Serbia.

At the moment £12.1bn of VAT goes unpaid each year. When Brazil introduced the lottery, it saw a 21% increase in reported sales and 9% increase in tax. Could this be a simple way for Healey claw back some cash into the coffers?

Burnham certainly has bold spending plans:

1. “The biggest council house building programme since the post-War period”
2. HS2 being extended to Manchester
3. A £15bn increase in defence spending
4. Bringing the ‘essentials of life’ under public control – potentially water and energy
5. Maintaining the triple lock
6. £340m to tackle rough sleeping

There’s also a potential increase in the tax free Personal Allowance as well as a VAT cut on electricity.

These are the sort of spending plans often announced when the economy is hot and the UK public finance are in good order.

But we’re running a deficit equal to 5.2% of GDP, with UK bond yields* higher than even after the Truss/Kwasi budget. How is he going to pay for all this?

Why are people buying a load of lottery tickets that have already lost on eBay? The answer is tax fraud.

In the US, gambling winnings are taxable, but losses from gambling are also allowable as a deduction against winnings.

So if you’re in the US and you hit jackpot on a slot machine or have a very lucky weekend in Vegas you have to declare the income and pay tax on it.

This has created an unusual black market – to evade tax, people buy losing lottery tickets and claim it was them that lost the money. They then take a deduction against their winnings for this. Unsurprisingly if you get caught doing this you’re in big trouble!

In the UK all gambling income is exempt, so there’s no market for losing lottery tickets.

“It’s crazy that the person cleaning an office pays a higher effective rate of tax that the city broker” is what Paul Novak told the Trades Union Congress.

It would be crazy, if it weren’t complete nonsense.

The average cleaner is paid around £26k per year, with tax and NICs of £3,759. That’s an effective tax rate of 14.4%.

A city broker might earn £200k, with tax and NICs of £77,186 giving an effective tax rate of 38.6%.

It’s not even close.

Wanting to tax the rich more is a legitimate position to take. But there’s no need to make up facts to support this argument.

Getting your teeth straightened with Invisalign is about to become more expensive.

Generally, medical treatments are exempt from VAT. Specifically, “dental prostheses” are exempt in the legislation, which is why historically VAT wasn’t charged on aligners.

The Upper Tier Tribunal has overturned the First Tier Tribunal, concluding that “dental prostheses” do not include aligners like Invisalign*. The court ruled that “dental prostheses” means artificial items which replace missing or damaged teeth.

This means that suppliers to dentists will now have to charge 20% VAT on aligners, which will inevitably be passed on to the customer.

Unsurprisingly, the British Orthodontic Society is not happy about it. They put out a statement “Tax policy should support, rather than hinder, the provision of high-quality and accessible orthodontic treatment”.

The case highlights how meanings in tax can be different from normal parlance. For example, if a husband lives in New Zealand and his wife lives in the UK and they meet once a year they are deemed ‘living together’ for tax purposes.

An absolute non-story by The Guardian yesterday about Amazon’s tax affairs, by a journalist who either doesn’t understand tax or is pretending not to.

The government wants people to invest in the UK, so gives tax relief for certain infrastructure. It’s called Capital Allowances and has been around since 1945*.

Amazon spends vast amounts on fulfilment centres, warehouses, robotics etc. The ‘news’ is that Amazon claims tax relief on this spend.

Basically all UK businesses qualify for this relief, and most businesses do claim indeed this relief.

Nothing to see here.**

*Arguably the regime for giving tax relief for assets actually started in 1878. That allowed relief for wear and tear on machinery.
**I don’t know a huge amount about Amazon’s tax affairs. There could be other things they are doing which could be seen as aggressive planning – but I have no evidence of this. If they are, The Guardian should an article on the aggressive planning, not this completely vanilla tax relief.

Rachel Reeves changed the mileage allowance from 45p a mile to 55p a mile, backdated to April for the first 10,000 miles. What does this mean for you?

Let’s say you’ve driven 1,000 miles since April. The easiest thing to do would be to ask your employer to bank transfer you 1000 x 10p = £100 tax free. Note they have no obligation to do this.

If they do not, you can take a tax deduction for the £100. Assuming you are a higher rate taxpayer, this will give you £100 x 40% = £40 tax rebate.

If your employer continues to pay mileage at 45p a mile for the rest of the tax year, you can get a tax deduction for 10p per mile x number of miles driven at year end.

Rayner – the Housing Minister – was advised by two sets of lawyers to take tax advice on the purchase of her flat. She didn’t, and got the tax wrong by £40k in her favour.

HMRC have accepted that this wasn’t a ‘careless’ error – meaning there was no ‘failure to take reasonable care’. As such she is facing no penalties.

Having worked on numerous HMRC enquiries I find this is very surprising.

If you’re wondering why labour intensive industries like hospitality are seriously struggling, it now costs 63% more to employ someone on minimum wage compared to 5 years ago.

In 20/21 a 21 year old on 40 hours a week cost a business £18,197.

This year it costs £29,653.

This is driven by three things:
1. Mainly minimum wage going up 55% from £8.20 p/h to £12.71
2. Employer NIC going up to 15% from 13.8%
3. The threshold when a business starts paying Employer NIC moving down from £8,788 to £5,000.

Whilst it’s nice to put more money in employees pockets, UK job vacancies have just fallen to their lowest level since the pandemic. It’s pointless to set a minimum wage so high employers cannot afford it.