“Rowan is the most qualified UK tax professional, with 8 qualifications and the 9th on the way.

Crazy.

If that’s not crazy enough, he’s been interviewed by Vogue magazine, appeared on Times Radio multiple times, and has addressed MPs in parliament on a tax topic. All of these are pretty cool gigs to get (cool for a tax adviser, anyway!).

In this episode, we discuss:

▶ Why Rowan did so many qualifications – I thought it would be to benefit his career, but was I right?
▶ Whether there is a limit to the amount of qualifications that will benefit your tax career
▶ Whether, for the benefit of your career, you are better off spending your time doing something other than gaining further qualifications
▶ Which qualifications are essential or helpful depending on area of tax specialism
▶ How Rowan Morrow-McDade ended up getting his interesting gigs

By the end of the episode, you should have a good idea of whether you should or shouldn’t do another professional qualification.

Listen here: https://lnkd.in/eREa6HeJ

Or search for “The Tax Professionals Podcast” in your podcast player of choice.”

Rishi Sunak has just released a summary of his tax return for 22/23. Sunak made £2,229,086, on which he paid tax of £508,308, an effective tax rate of 22.8%. This was largely due to c. £1.8m of capital gains being taxed at 20%, but also his £276,218 of dividends being taxed at a lower rate to income.

If you were an employee and you made £75,000 you would have paid tax of £17,432 (not including the £5,369 of employees NIC also due). This gives an effective tax rate of 23.2%, which is higher than Rishi’s, despite making just 3.3% of what Rishi made in that year.

In 2016, just a year after becoming an MP, Sunak voted to reduce the capital gains tax rate from 28% to 20%. Absent this cut, he would have paid an extra £143,697 in tax for 2022/23.

Sunak’s policy to exempt Capital Gains Tax on sales to tenants is expected to cost the treasury £20m. The average landlord will save £21,000. This means £20m/£21k = a whopping 𝟵𝟱𝟮 homes are expected to be sold under this scheme. Either this has been terribly forecasted or the scheme will be so restrictive almost no one can use it. I suspect it is the former, as it is ripe for abuse.

The deadline for filing and paying for the 22/23 tax year was on Wednesday last week. But if you’ve been naughty last tax year, should you have disclosed your income and paid tax on it?

HMRC taxes illegal activities if they are a ‘trade’. This generally means ‘on a commercial basis with a view to profits’, but the actual tax definition is found within complex case law dating back 70 years. It is the same test used for other areas of income tax, and has been widely misrepresented in recent media regarding individuals selling on sites like Vinted or eBay.

Smuggling alcohol for sale is a trade (Lindsay, Woodward & Hiscox v CIR). Drug dealing is also a trade (Woodward & Hiscox v CIR). Burglary is not (J P Harrison (Watford) Ltd v Griffiths). And receiving stolen goods might be a trade (Denman J v Mallendine).

Drug dealing is taxable because according to HMRC Manuals “selling controlled drugs and smuggling goods for sale (as opposed to personal consumption) may well involve the commercial acquisition and provision of goods or services.”

HMRC notes that profits from burglary are not taxed because “what is lacking is the commercial character. [Burglars] do not obtain their goods by normal commercial means such as buying or growing them.” However, the US tax authorities operate differently, and will tax individuals on the market value of stolen property, unless it is returned in the same year.

The advice is clear: if you are a thief who wants to remain compliant with the domestic tax code of your jurisdiction, but pay the least amount of tax, be a thief in the UK and not the US*

*Obviously none of the above is actual advice

Today, you should see more in your bank account from your salary than in March. This is due to the National Insurance cut for employees from 10% to 8%, which was announced with much fanfare.

By way of example, if you are an employee on the median salary of £35,000 a year you will see an extra £37 a month. On £25,000 you will see an extra £21 a month. If you are lucky enough to earn £50,270 or more, you will see an extra £63 a month in your pocket.

Whilst this is seemingly good news, you may not have noticed your Personal Allowance has not changed from £12,570 since April 2022 . Since this time, inflation has been around 14.5%, so your Personal Allowance should be around £14,390. This lack of uprating the Personal Allowance with inflation is costing you around £30 monthly.

If you are a Higher Rate taxpayer, your Basic Rate Band (the band at which you pay 20% income tax) should now be around £43,158, not still stuck at £37,700*. Had the Basic Rate Band increased with inflation, you would be better off to the tune of around £91 a month.

Not moving allowances with inflation is a deliberate government policy, known as ‘fiscal drag’, and is generally more palatable to taxpayers than outright tax increases.

“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” Jean-Baptiste Colbert, 1665

Have you ever been on hold to HMRC for six months? That could happen if you call HMRC between 8th April and 30th September. They are permanently closing their self-assessment helpline between these dates each year. I’ve been in tax (just) long enough to remember HMRC having local offices and taxpayers being able to have face-to-face meetings with tax inspectors. Now, you can’t even call them.

This will cause more taxpayers to use tax advisors for what are often simply queries. This increases costs to taxpayers. If they can’t or don’t want to pay for the advice and can’t call HMRC, they are more likely to get it wrong, potentially leading to penalties and interest.

This is part of a long running tradition of HMRC doing less and offloading their work and ultimately costs to taxpayers.

*EDIT – HMRC have now halted the changes – see comments. What business doesn’t love some uncertainty?!

If you’re not sure about a tax matter, you can ask HMRC who will helpfully provide advice on the matter, right? In theory yes, but they sometimes get it wrong.

The recent case of Gregory Sewell v HMRC demonstrates you can’t rely on incorrect HMRC advice.

In the below forum post, an HMRC officer advises a non-resident can make a claim for EIS loss relief. They can’t (technical analysis in comments)*.

In another post below, HMRC assert “There is no legislation on this, but you have to be resident somewhere for tax purposes”. The reason there is no legislation on this is because it’s flat out false; you don’t have to be resident anywhere for tax purposes.

This incorrect advice is still on HMRC’s website – I have notified them but they still haven’t removed it**.