Comments for The Olswang Tax Blog

Comment on Patent box confirmed by Jenn

Jenn — Wed, 04 May 2011 14:39:01 +0000

What a joy to find someone else who thknis this way.

Comment on Income tax and NICs to become one ? by Natasha Kaye

Natasha Kaye — Fri, 01 Apr 2011 07:47:35 +0000

Thanks for your comment. Yes, I understand the Government are planning to have a very long consultation period in relation to this proposed change as they recongnise it will be very difficult. It is this contributory principle that is going to be very challenging to effectively maintain if the two are merged.

Comment on REITs update by Graham Chase, Tax Partner, Olswang

Graham Chase, Tax Partner, Olswang — Mon, 28 Mar 2011 14:03:43 +0000

I agree that this is the purpose of the rule, but I would say that (i) the rule does not achieve its goal and in any event (ii) why have the rule anyway.

So far as item (i) is concerned consider two examples. First, ownership of three properties on the same industrial estate or retail park. All of which involves taking essentially the same location and use risks. Second, ownership of diversely sited properties but all let to the same tenant – such as occurs in the context of sales and leasebacks with a supermarket or bank. In this example the tenant risk is the same.

In addition, the definition of “property” gives rise to curious results. A shopping centre comprises separate units and so multiple properties. On the other hand a department store (think Harrods) is one property.

So far as item (ii) is concerned it seems to me to be better to let investors choose what sort of risk and hence REIT they want to invest in. So for example investors might consider the relative merits of London West End or City, industrial, retail or residential specialists. Given that a company needs to be of a certain value to justify listing then the number of properties it owns should simply be a function of commercial factors.

I think that multiple share classes is more difficult, given debt restrictions and dividend obligations.

I agree with you about cash – the greater the flexibility on this the better it is for the investor.

Thank you.

Graham

Comment on REITs update by Satwaki Chanda

Satwaki Chanda — Mon, 28 Mar 2011 10:03:29 +0000

I am not so sure that the three property and property value rules are as pointless as you suggest. They are designed to protect retail investors by ensuring that the portfolio is diversified.

Having said that, perhaps the three property rule isn’t that effective after all. Holding four properties may still make for a concentrated portfolio. However, I would still say that the property value rule is sensible on normal investment grounds – are you saying it is better to leave it to the fund managers/investors to judge this issue on its merits, rather than have specific legislation to enforce the position?

One rule that I would suggest abolishing is the requirement for only one class of ordinary shares. Other types of vehicle don’t have this restriction – TR Property the investment trust recently introduced a second class of sigma shares – so why can’t a REIT do likewise?

A greater flexibility on cash assets would be welcome. A number of investment trusts moved heavily into cash during the financial crisis – some are still very liquid. One shouldn’t be forced to make an investment when there aren’t many good properties to be had at attractive prices.

Comment on Income tax and NICs to become one ? by Stephen Tustin

Stephen Tustin — Fri, 25 Mar 2011 11:07:26 +0000

This will be extremely difficult to achieve in the UK. People over pension age do not pay National Insurance, and the N.I. payments are the basis of some benefits. It was done successfully in New Zealand about 30 years ago.

Comment on Incentives Update by 2011 UK Budget doubles lifetime limit for entrepreneurs’ relief | Watching the Connectives

Thu, 24 Mar 2011 14:00:46 +0000

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Comment on Video Games Tax Relief gets axed by Paul Sinnett

Paul Sinnett — Sat, 26 Jun 2010 05:51:49 +0000

One or more of the big foreign owned game publishers lobbied to get this scrapped:

http://www.develop-online.net/news/35231/Cecil-Cultural-concern-sparked-tax-break-doubts

Comment on Bank Levy by Hartley Foster, Tax Partner, Olswang

Hartley Foster, Tax Partner, Olswang — Wed, 23 Jun 2010 08:24:56 +0000

Although the precise details of the banking levy have yet to be released, the intention is that banks will pay an annual charge. There will be a lower rate of 0.04 per cent in 2011, but the rate then will increase to 0.07 per cent. The levy will be paid on the total liabilities (i.e. both short and long term liabilities) of the bank. The aim is to seek to reduce “risky lending” by banks, and so Tier 1 capital, insured retail deposits, repos secured on sovereign debt, and policyholder liabilities of retail insurance businesses within banking groups will be excluded from “total liabilities” for the purpose of the bank levy calculation.

Comment on Bank Levy by William Sunnucks

William Sunnucks — Wed, 23 Jun 2010 07:18:23 +0000

Great blog – many thanks.

However I can’t pick up from your description of the bank levy what the .07% will be calculated on (is it aggregate short and long term liabilities?), and whether it will be an annual charge or once off.

William Sunnucks

Comment on SDLT and partnerships – some further thoughts by Graham Chase, Tax Partner, Olswang

Graham Chase, Tax Partner, Olswang — Thu, 25 Mar 2010 13:17:22 +0000

There is no mention of SDLT changes with retrospective effect, so that transactions which completed prior to the Budget are unaffected. Having said this I should make the general point that the Stamp Office have become more active in challenging avoidance structures, there are currently a number of appeals pending.