Beth fydd yn digwydd os byddwn wedi talu gormod o gredydau treth i chi? Eh?

Those of us who peruse the HMRC site will have noticed from time to time additions to the news site in Welsh – there’s one today, Beth fydd yn digwydd os byddwn wedi talu gormod o gredydau treth i chi? – Now not being a Welsh Speaker I wondered why this was so selective.

It would be understandable, I suppose, if every HMRC document was produced in Welsh as well as English – after all it is the other official language of the UK but it isn’t – it conspicuously isn’t.  Sometimes it seems months pass with nothing, and then maybe a flurry but… they bear no resemblance to the other documents that appear in the news site.  This document is the first this month in Welsh.

So what is it?  If you download a copy you might be lucky and it might have a reference – this one says it is COP26 and a quick search shows this to be a 2004 revenue code of practice document relevant to persons claiming tax credits who have been overpaid – mystery solved but… is this a new version that only the Welsh have?  If not what have they been doing for the last 8 years – there are some people who only speak Welsh and I assume some of them may be paid tax credits – but in June there are 87 announcements on the What’s New? section of the HMRC site and only one, this one, in Welsh.

So how do you feel, as a Welsh speaker, to be overwhelmed with English News stories? How do you feel, as English speakers, to see these occasional mysterious messages which seem to bear no resemblance to anything else being concurrently produced by HMRC?


Olympic Torches

Ever wanting to be topical HMRC have issued a press release concerning the taxation treatment of Olympic Torches – how so?

It seems that the lucky 8,000 selected to run with the torch, many of whom seem strangely to be celebrities and apparently more yet are entered by Olympic Sponsors, can purchase the torch to keep as a souvenir. Cost – about £200 which seems like a bargain.  Now what can be bought can be sold and an active market has developed on eBay for people selling their Torches, often with the uniform which goes with it.

The Torch is a chattel in law – tangible moveable property – and so is exempt from CGT if sold for less that £6,000.  HMRC point out that if sold for more than this sum there will be a gain.  They also point out that if someone is a regular buyer/seller on eBay this activity could constitute trading and so attract an Income Tax liability.

How likely is a tax liability?  At the moment the torches are selling on eBay for about £3,000 so there seems to be no danger of a CGT liability.  What about income tax?  As a single transaction it would be unlikely to create an income tax liability as it would not be ‘an adventure in the nature of trade’ to quote from old cases, although there have been some cases where a single transaction was held to be such an adventure.  The case that is often quoted concerns a Mr Rutledge who, in the 1930’s, bought and sold a large quantity of toilet paper.  The court decided that the only explanation for a person both buying and selling goods of this nature was as a trading transaction.  Interestingly some people have suggested that the toilet paper never existed, this was, it is said, a convenient fiction to represent the substance actually being bought and sold – allegedly cocaine!

However, even if someone is an active trader on eBay it is probably unlikely, because of the selection process, that they entered into the transaction of running with the torch as a business acquisition, even if they then changed their mind and decided to sell it as part of their trade.  In this case the special rules on appropriation into trading stock would apply, the torch would be deemed to be sold for it’s market value – presumably about £3,000 – this would still be within the CGT rules and so exempt, and would become trading stock at the market value of £3,000 – if it then sold for more than that figure the excess could be charged to income tax.

Of course if someone who wasn’t a runner bought it from a runner and then sold it it may be more likely that it was motivated by a desire to trade.

If the market price rises above £6,000 a gain could arise and this story highlights the fact that the £6,000 limit was last set 23 years ago – the value of the exemption has been severely eroded by the effect of inflation over that period.