HMRC are considering changes to the tax rules for partnerships. Changes arising will be included in legislation that will be effective from 6 April 2014.

HMRC’s formal consultation closed 9 August 2013 and consideration is now being applied to the following issues:

• Disguising employment relationships through Limited Liability Partnerships, and
• Certain arrangements involving allocation of profits and losses among partnership members.

In their review notes setting up the consultation HMRC offered the following explanation as to who is likely to be affected by the proposed changes:

 Disguised employment:

 An LLP member who works for the LLP on terms that are tantamount to employment.

 Profit and loss allocation schemes:

 Members of LLPs and other partnerships where the members of the partnership consist of members who are chargeable to income tax and others who are not, but only where it is reasonable to assume that:

• a main purpose of the partnership profit-sharing arrangements is to secure an income tax advantage for any person; or
• a main purpose of arrangements in force is to allocate a partnership loss to a partner with a view to that partner obtaining a reduction in tax liability by way of income tax reliefs or capital gains relief.

 Profit and loss allocation schemes also cover tax-motivated arrangements whereby one partner transfers profits to another as a result of a revised allocation of profits in return for payment that is not taxed as income.

These changes will likely require a fresh look at partnership taxation planning when the draft legislation is published later this year.

Many businesses are unaware that the National Minimum Wage (NMW) rules are monitored by HMRC. There are consequences if you fail to pay employees NMW rates.

Currently, the rates set 1^st October 2013 apply. They are:

• 21 and over – £6.31 per hour
• 18 to 20 – £5.03 per hour
• Under 18 – £3.72 per hour
• Apprentice – £2.68 per hour*

 *This rate for apprentices is for the under 19s or those in their first year. Apprentices over 19 years and past their first year qualify for the rate appropriate to their age.

The following notes are copied from the GOV.UK website.

Employees entitled to the NMW are:

Workers must be school leaving age or over to get the minimum wage. (They must turn 16 by the last Friday in June of the school year)

Contracts for payments below the minimum wage are not legally binding. The worker is still entitled to the minimum wage.

Workers are also entitled to the minimum wage if they are:

• part-time
• casual labourers, e.g. someone hired for 1 day
• agency workers
• workers and home workers paid by the number of items they make
• apprentices
• trainees, workers on probation
• disabled workers
• agricultural workers
• foreign workers
• seafarers
• offshore workers

And don’t forget that apprentices under 19 or in their first year get an apprentice rate.

A new list of deliberate tax defaulters has been published by HMRC on 12 November 2013. It includes a number of food retailers, hairdresser, wholesalers, a yacht brokerage, construction industry firms, haulage operator and a property rental owner.

HM Revenue & Customs (HMRC) publishes details of deliberate tax defaulters – people who have received penalties either for:

• deliberate errors in their tax returns or
• deliberately failing to comply with their tax obligations

The law that allows this is Section 94 Finance Act 2009.

HMRC may publish information about a deliberate tax defaulter where:

• HMRC have carried out an investigation and the person has been charged one or more penalties for deliberate defaults
• those penalties involve tax of more than £25,000

However, their information will not be published if the person earns the maximum reduction of the penalties by fully disclosing details of the defaults.

HMRC will publish sufficient information to identify the deliberate tax defaulter, the penalties imposed for their deliberate defaults and the amount of tax on which those penalties are based.

The online rogue’s gallery is intended to encourage defaulting tax payers to pay up. Their details cannot be published for longer than 12 months.

 There are still many families in the UK whose assets will be distributed in accordance with the intestacy rules – and all because a deceased member of the family did not prepare a Will.

What are the intestacy rules?

Let’s say that the family breadwinner dies leaving a surviving spouse or civil partner and two children. Without a Will the estate will pass as follows:

1. The surviving spouse receives: all the deceased’s personal property; a statutory legacy of £250,000; and a life interest in any excess over £250,000, the residue.
2. The children receive the other half of the residue in equal shares.

These rules may reflect the wishes of the deceased person, but they may not. The problem is, without a Will, the letter of the law will apply.

This month many solicitors across the UK support a charity called Will Aid (www.willaid.org.uk). Instead of paying a solicitor you make a donation of £90 for a basic Will or £135 for a pair of “mirror” Wills. The proceeds are distributed to one of nine major UK charities.

Those of us with aging parents may also need to consider Power of Attorney options.

Sorting out these basic items, a properly prepared and executed Will and Powers of Attorney (if required), will save you anxiety and stress when you have to deal with the practicalities of bereavement or loss of competence to manage one’s affairs. Don’t leave either eventuality until it’s too late.

 There are still many families in the UK whose assets will be distributed in accordance with the intestacy rules – and all because a deceased member of the family did not prepare a Will.

What are the intestacy rules?

Let’s say that the family breadwinner dies leaving a surviving spouse or civil partner and two children. Without a Will the estate will pass as follows:

1. The surviving spouse receives: all the deceased’s personal property; a statutory legacy of £250,000; and a life interest in any excess over £250,000, the residue.
2. The children receive the other half of the residue in equal shares.

These rules may reflect the wishes of the deceased person, but they may not. The problem is, without a Will, the letter of the law will apply.

This month many solicitors across the UK support a charity called Will Aid (www.willaid.org.uk). Instead of paying a solicitor you make a donation of £90 for a basic Will or £135 for a pair of “mirror” Wills. The proceeds are distributed to one of nine major UK charities.

Those of us with aging parents may also need to consider Power of Attorney options.

Sorting out these basic items, a properly prepared and executed Will and Powers of Attorney (if required), will save you anxiety and stress when you have to deal with the practicalities of bereavement or loss of competence to manage one’s affairs. Don’t leave either eventuality until it’s too late.