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News in brief: June 2014

11 June 2014

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BILLABLE HOURS

According to new research from the Legal Services Consumer
Panel, less than 10 per cent of all legal work for ordinary consumers is now billed by the hour. Fixed-fee deals are commonest in will writing, where they account for
71 per cent of transactions, and
65 per cent in power of attorney work. However, probate work is
still billed by the hour in about
20 per cent of transactions.

PENSIONS REFORM

Steve Webb, the pensions minister, is proposing rules to allow savers to pool their funds to help smooth out the risks of individual defined contribution schemes. However, Webb has dropped plans to give employers more powers to change the terms of salary-linked schemes, which guarantee employees a certain amount on retirement,
after companies indicated that
they would not take them up.

FAMILY FOUNDATIONS

Uncertainty has arisen as to whether a Liechtenstein family foundation is classed by HMRC as a non-natural person for the purposes of the annual tax on enveloped dwellings. Solicitors seem to be stumped in general,
but it’s been suggestion that the answer will depend on the
wording in the articles.

DIGITAL CURRENCIES

The UK has announced that it will treat Bitcoins like any other form of payment for tax purposes: VAT will be due in the normal way from suppliers of any goods or services sold in exchange for Bitcoins. The EU has passed no specific legislation relative to the status of the Bitcoin as a currency. The authorities in Finland, France, Germany and Estonia have stated that Bitcoin is an alternative means of payment but not an official currency, and as a result revenues generated are subject to taxation.

DEBT COLLECTION

HMRC has doubled its use of private sector bailiffs and debt collection agencies over the last two years, according to tax advisers UHY Hacker Young. HMRC began using debt collection agencies in 2009 and now relies on 13 companies, spending a total of £14.8m on them in 2013 alone.

CONFISCATING LEGACIES

Scotland’s Crown Office has used civil litigation under the Proceeds of Crime Act 2002 to confiscate a £2,000 inheritance on the grounds that the recipient would have used it for unlawful activity. The money was found at Ronald Wright’s home when police raided it for drugs. The Crown Office claimed that Wright did not intend to use the money to buy a car as he claimed. Between 2013 and 2014, the Crown’s Civil Recovery Unit recovered £4.4m from suspected criminal figures.

SUBSCRIBER SHARES

In Finn v HMRC [2014] UKFTT 426 (TC), the First-tier Tribunal (Tax) disqualified shareholders of ProtonStar from income tax relief under the enterprise investment scheme (EIS) because the company was sold to another EIS-qualifying firm that had previously issued shares to investors other than
the first subscribers.

TRUSTEE FRAUD

An investigation by the Charity Commission has found “serious failure” by the former trustees of the Egyptian Community Association to protect the charitable company’s funds. Incompetence led to a £600,000 fraud by one of the trustees who simply transferred the money to
his own bank account. The trustee is serving seven years in jail and
the charity has been wound up.

PRIVACY RIGHTS

Europe’s highest court ruled in
May that search-engine giant Google was responsible as a data controller for the content of web links thrown up by searches.
Privacy specialists have welcomed Google’s decision to respond to
the judgment with a new ‘right
to be forgotten’ procedure.

TAX ENFORCEMENT

HMRC has begun a trial mailing campaign aimed at individuals who assess themselves to pay less tax than HMRC had estimated. The letters request the taxpayers to check that their self-assessment returns are in order. Mike Down from accountants Baker Tilly said they amount to “inappropriate, spurious, bully-boy scare tactics”. However, a HMRC spokesman
said the tax office was only
issuing 1,000 letters in total.

VULNERABLE CLIENT

Former secretary of state for justice, Lord Falconer of Thoroton, re-tabled an Assisted Dying Bill (first reading) in the House of Lords on 4 June. It aims to legalise the choice of assisted dying for terminally ill adults with six
months or less to live. More on this story here.

Categorised in:

Vulnerable Clients Tax & Wealth structuring