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From the 6 April 2016 most companies, LLPs and SEs will be required to hold a register of people with significant control (PSC). The register cannot be blank.
Companies, SEs or LLPs that fail to comply with their legal duties could be committing a criminal offence and could be fined; officers of companies and designated members of LLPs who are in default could be committing a criminal offence and could be fined and/or imprisoned. If your circumstances are complex you might wish to contact us on 02085191800 or seek professional advice

On behalf of your company, you:
Must take reasonable steps to find out if there are people who have significant control over the company. PSCs are people who meet one or more of the five conditions outlined below
Should contact these people, or others who might know them, to confirm whether they meet one or more of the conditions and, if they do, get the relevant information to go on the company’s PSC register. PSCs, or anyone you have contacted on the basis they might know about a PSC, must respond to your requests for information. 
• Must put the information on your company’s own PSC register
• Must file the information at Companies House to be made available on the central public register
• Must keep the information up-to-date; see Chapter

Identifying People with Significant Control (PSCs)
PSC is an individual who meets one or more of the following conditions in relation to your company
1. Directly or indirectly holding more than 25% of the shares
2. Directly or indirectly holding more than 25% of the voting rights
3. Directly or indirectly holding the right to appoint or remove a majority of directors
4. Otherwise having the right to exercise, or actually exercising, significant influence or control
5. Having the right to exercise, or actually exercising, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual
You must take reasonable steps to identify your company’s PSCs. Some companies will not have anyone who meets any of the conditions, whereas other companies will have several people who meet one or more of the conditions and are PSCs. A company which has identified that it does not have any PSCs will still need to keep a register.

HMRC issued assessments on benefits in kind to a director who used his company credit card for personal expenses. He claimed he had reimbursed the company for them but a tribunal ruled against him.What’s the full story?

Director’s expenses = taxable benefit

Mr Mark was a director of Midwest Ltd. He was in the consultancy business and travelled a great deal. He charged the costs to his company credit card. He also used the card for personal expenditure. Midwest ran into financial trouble and went under. HMRC reviewed its records and assessed Mark on the value of the personal card expenses, treating them as perks. Mark appealed to the tribunal.

Counter argument

Mark’s appeal was that he had paid large amounts of his own money into Midwest and these should count as a reimbursement towards the personal expenses charged to the credit card. The legislation, s.203(2) Income Tax (Earnings and Pensions) Act 2003 , calls this making good and its effect is to reduce the taxable amount of the perk. In principle we can’t see anything wrong with Mark’s approach, so why didn’t the appeal succeed?

HMRC tactics

This case is interesting because it shows HMRC’s tactics where company credit cards are used for personal purchases. The main thrust of its argument was that:

“Section 203(2) ITEPA does not grant any right to retrospectively make good a benefit. Income tax is an annual tax, and the value of the benefit depends upon what is made good in that tax year.”
“Any “rewriting” [to reflect the money reimbursed to Midwest] would have retrospective effect on the Company accounts.” HMRC implies this is not allowed.

Poor tactic 1

On the first point, s.203 says nothing about the timing of making good. It doesn’t say or imply that it must take place within the same tax year in which the perk arises. HMRC’s instruction manuals confirm this. They say making good can be done within any reasonable time, usually up to the 31 January following the end of the tax year, e.g. for a 2014/15 perk making good is effective until 31 January 2016.

Poor tactic 2

On the second point, rewriting the accounts to show the amount reimbursed by Mark simply reflects the financial transactions that actually happened. That’s what accounts are for! Changing them isn’t altering history, as HMRC implies, it’s just putting your records right.

Why did he lose?

Despite the inadequacy of HMRC’s case the tribunal ruled in its favour simply because Mark’s and Midwest’s records were a shambles. The tribunal couldn’t glean enough information from them to show that Mark had made good the value of the perks. Tip 1. Keep good records. That’s half the battle in winning against HMRC. Tip 2. Making good can be done within any reasonable time, despite what your local tax inspector might say. If they disagree point them towards HMRC’s own instruction manual.

HMRC said reimbursement wasn’t made soon enough to cancel the benefits. In fact it’s effective when made within any reasonable time frame, even HMRC’s manuals say so. The tribunal only ruled against the director because his records were a shambles and so reimbursement couldn’t be proved.

With effect from 6 April 2017 the following organisations count as government bodies for the purpose of the intermediaries legislation (IR35). From April 2017 they will be responsible for determining whether IR35 applies to any company or other intermediary that provides them with personal services of a worker.

• Government departments, legislative bodies, armed forces

• Local government, e.g. city and town councils

• NHS

• Schools and further and higher education institutions

• Police

• Other public bodies (listed in a Schedule (yet to be finalised) including bodies such as the British Museum, BBC, Channel 4)

• Publically owned companies (wholly owned by the Crown and/or the wider public sector such as Transport for London).