Recent press coverage has brought us up to date with residents returning to their homes a year on and some still waiting to go home even now.

The images of The Wicker and Meadowhall, now used in an advertisement for insurance, remain firmly in our minds.

Although the floodwaters receded quickly, the effects continue to be felt by many families and also by businesses, some of which continue to try to recoup lost trade.

The flood was very much in the News at the time and HMRC were quick to publish their policy of being sympathetic to those affected. The Finance Act 2008 formalised this policy by classifying the floods as a ‘disaster´ and therefore giving HMRC the authority to waive interest on late paid tax for companies which were struggling to comply with payment obligations.

Whilst there were the immediate tax payment issues to consider, amongst our clients are a number who suffered significant losses of equipment in the floods. What became an issue for them was the timing of their year end and the accounting and tax consequences of replacing insured assets.

For one client in particular, this had a huge impact on the calculation of capital allowances and significantly increased the tax payment which was due to be made by 1 June this year. I decided that I would test the extent to which HMRC were prepared to be sympathetic and approached the relevant tax office. I was pleased to find that HMRC were true to their word, proving to be sympathetic and, after some discussion, have permitted the calculation of the tax liability on a basis which removes the impact of the timing of the year end. This has a huge cash flow benefit for our client.

From our experience here at gvt, the moral of this story is that there are occasions when common sense can prevail and working with HMRC can achieve a positive result for the taxpayer.

If you´d like more information please contact Ruth Jacobs, Corporate Tax Manager

It´s good to talk!