If a property is let furnished – with sufficient furniture, furnishings and equipment for normal residential use – landlords can only claim tax relief for the furniture and equipment by way of the WTA. Prior to April 2013, landlords had the option of claiming the cost of replacement furniture instead.

 The WTA is calculated as 10% of the gross rents less any tenant’s costs (e.g. water rates and council tax) met by the landlord.

WTA does not cover repairs, which continue to be tax deductible. The question is then raised can replacement of an item be counted as a repair? In this respect, landlords that let furnished property need to distinguish between:

1. Replacement of items that are integral to the building, and
2. Replacement of items that are not integral to the building.

 Needless to say there are grey areas!

 Replacement of items that are integral to the building

 Fixtures integral to the building are those that are not normally removed by either tenant or owner if the property is vacated or sold. Examples include:

• Baths
• Washbasins
• Toilets
• Immersion heaters
• Fitted kitchens and fitted white goods.

This list is not intended to be complete but gives an idea of the assets that are integral to the building and fall outside the wear and tear allowance. As these items are integral to the building, the cost of replacing these items is normally an allowable expense as a repair to the building.

 Replacement of items that are not integral to the building.

 Expenditure of this type will be covered by the WTA. Examples given on HMRC’s website in this category include:

• movable furniture or furnishings, such as beds or suites,
• televisions,
• fridges and freezers,
• carpets and floor-coverings,
• curtains,
• linen,
• crockery or cutlery,
• beds and other furniture

Unfortunately, these examples are not definitive: is a carpet glued to the floor a permanent fixture, or not part of the integral features?

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 It would seem that HMRC are making progress in their efforts to make larger concerns more responsible when paying tax.

Google have been criticised in the past for using complex arrangements to reduce their UK tax liabilities. Google have responded that they have only taken advantage of tax strategies that are legal – in effect Google are saying that if the law has created scenarios that were not intended by Parliament, then the law should be changed.

Recent press commentary has speculated that Google is about to be hit by a £24m tax demand. Apparently, Google’s UK staff in London are given shares by the US parent company as part of their remuneration package. In the past these share issues have been used to reduce Google’s UK tax bill.

HMRC, it would appear, are on the case. They seem to be clamping down on aggressive share schemes. Google have released the following comment:

“This is a matter the company is discussing with HMRC in an ongoing review initiated in 2010. The company has made a provision of £24 million for potential corporation tax for the years under review (2005-11).” 

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Although the UK tax year runs from 6 April to the following 5 April, there is another which ends 31 January each year – it’s the online filing deadline for self assessment purposes.

The 31 January 2014 is also the date on which any outstanding self assessment tax unpaid for the tax year 2012-13 falls due for payment, together with any payment on account due for 2013-14.

The lead up to the filing deadline is a busy period for tax practitioners, who work hard to complete and file outstanding returns. If by chance you, the reader, have not yet submitted your paperwork to your advisor, now would be a good time to get things together.

There are automatic penalties if you fail to file on time, even if you manage to pay any outstanding tax before the 31 January.

The following penalties applies to self assessment returns that are filed late:

• From day one: taxpayers will be charged a £100 penalty even if they have no tax to pay or have paid any tax due on time.
• From 3 months late: taxpayers will be charged an automatic daily penalty of £10 per day up to a £900 maximum.
• From 6 months late: taxpayers will be charged additional penalties which are the greater of 5% of tax due or £300.
• Over 12 months late: there are additional penalties based on greater of 5% of tax due or £300. In serious cases this penalty may be increased up to 100% of tax due.