This calculator can be used to estimate the amount of Income Tax (not other taxes such as Capital Gains Tax) and National Insurance contributions you can expect to pay on your income – and find out how this money gets spent by the UK Government.  It is aimed at people who pay tax through Pay As You Earn (the system used by employers and pension providers to deduct tax from your wages or pension). 

More on this can be found here.

Let’s start with the recent local government election.  I was disappointed that none of the main parties, of which Scotland now only appears to have three, put forward any serious proposals for reforming how we pay for our local services.  There is though one body actively campaigning on this issue and that is the think tank, Reform Scotland.  An article in the Scotsman on this can be found here.  Reform Scotland want our local authorities to have the power to decide whether to adopt a property tax such as the Council Tax or a land value tax or instead opt for an income tax, a consumption tax or a number of different local taxes.

Now to fiscal powers and the fact that National Insurance turns 100 in July.  100 not out but for how much longer?  The idea of combining income tax and National Insurance was considered by a working party as long ago as 1993.  The main reason for this is the erosion of the link between National Insurance contributions and welfare benefits.  This issue is again being looked at.  Do I think we will see a complete merger?  No, unless both income tax and National Insurance are controlled by the Scottish Parliament.  This is an example of how a Scottish tax system could create a more simplified system.

Again on fiscal powers.  I was not surprised to see a number of Conservative MPs arguing for a “Devo Plus Bill” as part of an “alternative Queen’s Speech”.  This was published on the Conservative Home website.  Conservative Home support the Reform Scotland proposal which would devolve all taxes to Scotland except VAT and National Insurance.  More on this can be found here.

Now to a group of people termed “High Net Worth”.  HMRC has announced that its High Net Worth Unit’s tougher approach on wealthy taxpayers has resulted in an extra £200m of tax revenue.  David Gauke, Exchequer Secretary to HM Treasury, said: “The Unit’s approach ensures that HMRC is working as effectively as possible with the very wealthy and that they are contributing a fair share”.  This was reported in the Financial Times on 6 May.  The article also claims that the amount collected by this Unit has doubled since it began operations in 2009-10.  The aim is for £560m by 2014-15.  This does though beg the question: why was this Unit only set up in 2009?

Now to a claim that the UK Government Minister for Civil Society, Nick Hurd, was never consulted about the cap on charitable tax relief announced by HM Treasury in March.  More on this from the STEP journal can be found here.  The UK Government has been at sixes and sevens on this policy.  I will be surprised if it survives the summer.  Unless of course summer is already behind us.

Again from the STEP Journal.  1.6 million people should have received letters by now from HMRC warning them that they have been undercharged tax under the PAYE system and will have to pay extra.  Another 3.5 million people will be given a tax refund.  The STEP article can be found here.  An example of the sheer scale of the UK tax system and the problems it faces.

Good to see that the Scottish Government’s prosecution service has passed 20 cases of large scale tax avoidance to HMRC for investigation.  An article on this from the Scotsman can be found here.  The referencing of Al Capone must be compulsory when journalists write about this subject.

Sometimes an argument just makes you shake your head.  The Scottish Government has announced that the minimum price for alcohol will be 50p.  Although this proposal has received a huge amount of support, the leader of the CBI in Scotland has warned that supermarkets are likely to receive millions in extra revenue from drink sales.  That of course is true.  So why is this organisation against the devolving of control of alcohol duty to the Scottish Parliament and the Scottish Government’s Public Health Levy (also known as the “Tesco tax”)?  There is of course no need to answer that question.  An article from the Scotsman on this can be found here.

It seems that top rates of personal income tax across the Organisation for Economic Cooperation and Development (OECD) countries have begun to rise again in recent years after three decades of steady reductions.  The OECD press release can be found here.  Let’s not forget one of the main reasons for the reduction.  Politicians decided that “stealth taxes” were a better option.  For “better option” read “will help me get elected”.  The economic crisis put paid to that “cunning plan”.

“A serial killer is stalking the wealthy suburbs of Athens with an idiosyncratic choice of victims. They are all rich Greeks who have failed to pay their taxes, and their corpses have been left scattered among the ruins of the ancient city, dead of hemlock poisoning, the means of Socrates’ execution.”  This is the plot of the latest bestselling novel by Petros Markaris, who has combined the roles of thriller writer and social commentator in Greece to such an extent that he has become one of the most widely quoted voices in the crisis.  The article on this from Business insider can be found here.

Now to a story that combines sport, tax and the financial crisis.  Diego Maradona is suing the Italian government for £40m, despite owing it £32m in unpaid taxes.  Only in Italy!  The article from the Metro can be found here.

Lastly, an update on an issue I wrote about recently.  Co-founder of Facebook, Eduardo Saverin, is one of the thousands of wealthy Americans to have renounced his citizenship recently in order to avoid the country’s international taxation regime.  An issue for those planning a Scottish tax system to ponder.  An article on this from the STEP journal can be found here.

Have a good week.

A reminder to charities and Community Amateur Sports Clubs (CASC) from HMRC to use form R68(i) to claim tax repayments on Gift Aid donations.  More information on this from HMRC can be found here.

Further update from Office of the Public (Scotland) on processing times for powers of attorney.  The update can be found here.

Cameron & Ors v Revenue & Customs [2012] EWHC 1174 (Admin)

A taxpayer is entitled to rely upon a statement made in a formal HMRC publication unless and until the statement was revoked, withdrawn or altered with reasonable notice to all relevant taxpayers.  This applies even if a tax inspector had expressed a contrary view.  This matter concerned the application of concessionary treatment for seafarer’s earning deduction relief.

This decision appears to contradict the Supreme Court’s finding in the Gaines-Cooper residence case.   The full report from the England & Wales High Court administrative division  can be found here.

Orsman v Revenue & Customs [2012] UKFTT 227 (TC)

HMRC cannot introduce an additional argument in its statement of case to a tribunal that it had not included in its closure notice.   A “closure notice” is usually a letter issued by HMRC to the customer that its enquiry has ended.  The purpose of the “statement of case” is also to tell the customer what HMRC’s case is and is submitted to the tax tribunal.  

This matter concerned a Stamp Duty Land Tax return. 

The full decision of the First-tier Tax Tribunal can be found here.

This case concerend an actor working away from home and whether his accommodation, subsistence and travel expenses were “wholly and exclusively” incurred for the purpose of his profession.

Healy who is based in Cheshire was contracted to appear in the West End of London in the musical, Billy Elliot.  Healy claimed tax relief on the costs of his accommodation, subsistence and travel to and from the theatre.

The First-tier Tribunal held that the cost of his accoomodation was allowable but that his subsistence expenses and taxi fares were not.  The accommodation was allowable primarily because the actor had not moved to London.  He was only there during the week for the purposes of performing on stage.   That therefore met the “wholly and exclusively” test.

Healy’s subsistence expenses and taxi fares were disallowed on the basis that there was insufficient evidence to show the nature of the expense.

The full decision of the Tribunal can be found here.

Where to start?  Tax and morality seems as good a place as any.

Cardinal Keith O’Brien has accused David Cameron of acting immorally by favouring the rich ahead of ordinary citizens affected by the recession.  The cardinal also denounced David Cameron’s opposition to a “Robin Hood tax” on financial institutions.  Those arguing for a European financial transaction tax have gone a bit quiet recently.  The cardinal’s interview has though brought this proposal back into the news.  Whether a tax such as this is introduced is though only part of the debate.  As with most taxation debates the secondary debate involves how the revenue should be spent.  The cardinal would like it spent helping the poor and vulnerable at home and abroad.  Others want an emergency fund for the next banking crisis.  An article from the BBC new website on this can be found here.

Now to the London mayoral debate. Included in Boris Johnson’s manifesto for a second term is a proposal to set up a commission that would explore the possibility of a “Barnett” style formula for London.  Johnson wants to keep more of the tax raised in London to be spent in London.  An article on this from the Guardian can be found here.  This is further evidence of how quickly the fiscal powers debate is moving.

The Scotland Bill has received its Royal Assent.  An article on this from the BBC news website can be found here.  A missed opportunity?  I think so.  That said, even under the Scotland Act (2012) we are going to have a Scottish tax system.  I am of course looking forward to the Scottish Government’s consultations on the tax powers being devolved but why stop there?  It is surely now obvious that we need to start thinking about the type of tax system we want.  That must include a review of all government tax, law and registration services and the creation of a Scottish Exchequer.

Good to see an article in the Herald on something I have written about recently.  Businesses in new Scottish enterprise zones will be able to claim up to 100% business rates relief as part of new incentives to stimulate investment in the economy.  Other measures announced by the Scottish Government include more efficient planning procedures, improved broadband, targeted capital allowances and international marketing.  The article in the Herald can be found here.

Another article from the Herald, this time on an “unprecedented” number of business rates appeals.  The article reports that court cases have been launched by retailers in Edinburgh, Glasgow, Dundee and Kirkcaldy and elsewhere as firms contest the size of their rate bills.  The article from the Herald can be found here.  The main argument being used is that the current rates were calculated in 2008, before the extent of the downturn became apparent.

For those of you interested in tax statistics, the relevant HMRC page can be found here.  For those of you interested in tax consultations, current HMRC consultations can be found here and current HM Treasury consultations here.  There will be many more consultations added over the next few months as the UK Chancellor in his Budget made reference to approximately 45 consultations.

Approximately 12,000 people who had been told that they no longer needed to fill in self-assessment tax forms have been sent penalty notices in error.  To put this in context, 130,000 people were taken out of the self-assessment process for this tax year.  Some 850,000 people were sent penalty notices for failing to submit their tax returns on time this year.  This is 550,000 fewer than a year ago.  An article on this from the BBC news website can be found here.  As mentioned in this article it is likely that “HMRC’s resources” played a part in this latest error.

Nearly 60,000 more Scottish pensioners than first thought will be hit by the UK Government’s decision to freeze age related personal allowances according to new figures published by HM Treasury.  The figures show the so called “granny tax” will impact 423,000 pensioners in Scotland by 2015-2016.   The article from the Herald can be found here.

David Cameron has backed proposals for an “airline levy” to ease waiting times at London Heathrow Airport border control.  Airlines using London Heathrow would pay higher landing fees to pay for additional UK Border Force staff to help remedy the long queues currently occurring.  You would be forgiven for thinking there was an election in London this week.  The UK Government is not making many friends in the airline industry just now.  The spat over increases in Air Passenger Duty continues.  More information on this can be found in an article on the BBC news website found here.

Now to Europe and the “debt crisis” debate.  Financial Times journalist, Gideon Rachman continues to argue against European countries trying to spend their way out of their debt crisis.  This is a quote from his article:  “There is, of course, scope for argument about the pace of deficit reduction.  But in a highly-taxed, highly-regulated, highly-indebted continent like Europe, more state-funded public works would simply build another road to nowhere”.  The full article can be found in the Financial Times on 1 May.

I will finish on a matter I have blogged on before.  More than 2,000 public sector workers could be avoiding the full rate of income tax through special contracts, UK Government research has found.  An article on this from the BBC news website can be found here and my earlier blog here. This is an incredible figure as it does not include those in the NHS or local government.  Danny Alexander is seemingly “shocked”.  It seems that “shock” is becoming the default reaction for UK Government Ministers.  You may remember George Osborne’s was also recently “shocked” at the extent of tax avoidance.  Tax and morality it was ever thus.

Have a good weekend.  “Tax land” will be back in three weeks time.

Hanson v HMRC [2012] UKFTT 95 (TC)

Given the amount that has been written on this decision over the last few weeks I thought I would put up my earlier blog on this again.  My earlier blog can be found here.

We still do not know if HMRC are to appeal this decision.

The First-tier Tax Tribunal held that agricultural property relief can be obtained on a farmhouse even when ownership of the farmhouse and the farm land were held separately.

The report from the First-tier Tax Tribunal can be found here.  There is also an excellent report on this case in the latest edition of the Solicitors Journal.

Given it is local election time I think the level of funding for council tax benefit is an appropriate place to start.  The Scottish Government and the Convention of Scottish Local Authorities have decided to provide £40m to make up a shortfall of council tax benefit funding.  An article on this from the Scotsman can be found here.  The figure that stands out is the 558,000 people in Scotland who receive this benefit.

The Confederation of British Industry has denied that big companies are benefiting from “sweetheart deals” with the taxman.  HMRC has faced criticism over alleged secret deals with the likes of Vodafone and Goldman Sachs over unpaid tax.  The CBI briefing note is well worth reading and can be found here.

The campaign trying to make the UK Chancellor think again over the latest increase in air passenger duty continues.  The latest claim from this group of aviation and business organizations can be found here in an article on the Herald.  Part of this claim is that overseas tourists have been put off coming to the UK during the Olympics because of punitive air taxes.   The group says bookings from Australia and New Zealand are down by 25% compared to the same period in 2011.

The furore surrounding the UK Chancellor’s tax relief cap and how it might impact on charities continues.  I liked this opinion piece found on the website of the Scottish Council of Voluntary Organisations.  The piece can be found here.  Although I see the need for tax caps and/or investment limits in certain circumstances, for example under the Enterprise Investment Scheme or Venture Capital Trust relief, I would be surprised if this policy in its present form survives the summer.

It seems that mortgage lending rose sharply in March as buyers rushed to complete sales.  The stamp duty land tax exemption for first-time buyers who bought homes valued at between £125,000 and £250,000 came to an end after two years on 24 March.  The UK Government do not think that this relief has been effective in increasing first-time buyer numbers.  A report on this from the BBC news website can be found here.  I continue to be surprised that our politicians fail to campaign for a change to the 1% and 3% stamp duty land tax rates and bands.

A study by the Taxpayers’ Alliance has revealed that 3,000 council employees across the UK were paid six-figure sums in 2010-11, a rise of 13 per cent on the previous year.  The highest paid was in Glasgow where Ian Drummond, formerly executive director of special projects who has since left the post, received a £450,628 package.  Reports like this confirm the view held by some in the private sector that our local authorities completely lost the plot over senior salaries.  An article on this from the Scotsman can be found here.

Scotland appears to be moving towards charging shoppers around 5p every time they use a plastic bag.  This if often referred to as a “plastic bag tax”.  Scottish ministers have again indicated that it will consult on the matter in the near future.  Wales, Northern Ireland and the Republic of Ireland already have such a charge.  It does seem that the Scottish Government is dragging its feet on this.  A plastic bag tax was thrown out by MSPs during the last parliament when Liberal Democrat Mike Pringle tried to push through a 10p levy.  An article on this from the Daily Express can be found here.

A tax fraudster, who fled the UK four years ago after telling a judge in a note that he was unprepared to go to jail and found the idea frightening and upsetting, has been extradited from France and is beginning a six year prison term.  Mark McGovern had pled guilty to laundering £278,340.87 of criminal proceeds in April 2008, following a wider HMRC investigation into VAT fraud.  More on this can be found here.  I would have thought that most people would find the thought of being locked up frightening and/or upsetting.  Not surprisingly that is not a good enough reason to avoid being sent to prison.

New figures from the Office for National Statistics have shown that the UK Government has met its borrowing target for the year, despite borrowing more than expected in March.  An article on this from the BBC news website can be found here.  Worryingly these figures also show that most of the cuts to public spending have yet to be made.

Now to the USA and the announcement of a dramatic increase in citizenship renunciations.  According to Internal Revenue Service figures, at least 1,800 Americans renounced their USA citizenship in 2011, an all-time record at eight times the 2008 number.  The main reasons given are the USA’s worldwide taxation system, the Foreign Bank and Financial Accounts rules and  the Foreign Accounts Tax Compliance Act regime.  An article on this from the Daily Mail online can be found here.  The USA is one of a handful of countries to tax its citizens on income earned while abroad.

Then there were two.  Francois Hollande defeated Nicolas Sarkozy in the first round of France’s presidential elections.  The tax and fiscal policies of the final two candidates, in particular Hollande’s, have received a great deal of international press coverage.  An example of this coverage, from Bloomberg’s Paris correspondent, can be found here. 

Now to a Budget statement from 1940.  “New British budget announced: higher income tax, increased duty on alcohol, tobacco & matches, to raise an unprecedented £2bn for war costs.”  Thanks to @RealTimeWWII.  Notwithstanding duty on matches interesting to see how little has changed.

Finally I was very sad to hear of the death of Stephen Maxwell.  I got to know Stephen very well over the last few years and he is a great loss to those arguing for greater fiscal powers and the wider independence movement.  A real gentleman at all times.

Have a great weekend.

This is a Note by Sheriff A G McCulloch in the matter of a petition for the appointment as executor dative by Dennis Murray.

Mr Murray is one of four children of the deceased.  The widow of the deceased was made the subject of a guardianship order.  Mr Murray was appointed as her guardian.

As the widow’s prior rights would exhaust the whole estate of the deceased, the normal procedure would have been for the widow or her guardian to be appointed as executor dative.   However, the guardianship order in this case unusually did not contain a power for the guardian to make an application for appointment as executor dative.

The Sheriff explained in his Note that the problem here was the current commissary practice.   The current practice is to treat the surviving spouse whose prior rights exhaust the whole intestate estate as the sole person with the right to be appointed executor.   The Sheriff noted that this appeared “to be a misunderstanding, or misreading, of the provisions of section 9(4) [of the Succession (Scotland) Act.]“

The Sheriff’s Note which can be found here outlines the relevant part of  section 9(4).

The Sheriff held that “… those other than the surviving spouse may seek in these circumstances to be decerned executor dative.”