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Summer 2004 Bulletin

Two More Grumbles

We also have two other quarrels with the Inland Revenue. The first is that they have issued a large number of £100 penalty notices for Tax Returns which were in fact filed by the statutory deadline of 31 January 2004. The Revenue has conceded that some penalty notices were issued incorrectly, but has refused to confirm the number, estimated by leading accountancy firms at between 250,000 and 500,000 – at the top end of that range, penalties of £50 million are at stake.

The Revenue has refused to go back and check all the penalty notices issued, on the grounds it ‘would require a huge amount of time and effort’. Any individual who believes he or she has been wrongly charged must appeal against the penalty. Obviously, we shall be taking the necessary action where a client has been wrongly charged, but this is something you may wish to draw to the attention of friends or family members.

Secondly, the Inland Revenue has issued ‘guidance’ stating that, when a new company is formed, the founders are allocated their shares because they are directors, so that the whole arrangement constitutes a ‘share scheme’ for which a special Return must be filed. Frankly this is nonsense – the founders can appoint themselves directors because they are the controlling shareholders, not vice versa – but if you have formed a company, please let us know, because it is quicker to file the form than argue about it.