Governance & Security
John Sharpe
Corporate Governance
4/52
100 Parliament Street
London SW1A 2BQ
Mr Simpson
Tel
by e-mail
Fax
020 7147 0666
Email [email address]
Date
7 May 2009
www.hmrc.gov.uk
Our Ref
1453/09
Your Ref
________
Dear Mr Simpson,
I refer to your request for information in which you asked:-
1) I would be grateful for clarification on the definitions HMRC uses for person,
company, income and profit, legally speaking.
2) I would also like to know whether a person, as a legal fiction/entity, has the same
duties as a company, another legal fiction/entity, with regards to taxation and the
payment thereof and vice versa.
3) I would also like to know if both legal fictions, ie companies and persons are liable to
taxation, why companies are allowed to subtract operating costs from their accounts,
before taxation, but persons are not. Does a person not have operating costs,
according to HMRC?
Item (1) could be said to be a request for recorded information and so answerable under the
terms of the Freedom of Information Act 2000. Items (2) and (3) are requests for comments
on what you see as legal fictions I answer those outside the terms of the Act.
For item (1), under section 21 of the Act, we are not required to provide information in
response to a request if it is already reasonably accessible to you. The information you
requested is available as follows:-
For ‘person’
• HMRC’s Internet at this link
http://www.hmrc.gov.uk/manuals/CG1manual/CG10702.htm and
Information is available in large print, audio tape and Braille formats.
Type Talk service prefix number – 18001
• On the Office of Public Sector Information’s Internet at this link
http://www.opsi.gov.uk/acts/acts2005/en/ukpgaen_20050011_en_1 see paragraph
110.
For ‘Profit’ & ‘Income’
• On HMRC’s internet at this link http://www.hmrc.gov.uk/ct/basics/glossary.htm
I do not understand what you mean by ‘legal fictions’. Taxation and allowable deductions
are based on the law not because of what HMRC might say. HMRC’s role is to administer
the functions for which it responsible. With those caveats in mind for questions (2) and (3)
both natural living persons and legal entities, such as companies, are subject to direct and
indirect taxation and both may deduct allowable expenses and deductions from their income
or gains. The type of tax to which they are liable and the sort of expenses allowable depend
on the nature of the income or gains and the status of the person chargeable. If you go to
HMRC’s home page http://www.hmrc.gov.uk/index.htm we publish a lot of information. If
you want to find out more I suggest you look under the two main headings ‘
Individuals &
Employees’ and
‘Businesses and Corporations’ and follow the link
s.
If you have any queries about this letter, please contact me. Please remember to quote the
reference number above in any future communications.
If you are not happy with this reply you may request a review by writing to HMRC FOI Team,
Room 4/52, 100 Parliament Street London SWIA 2BQ. You must request a review within 2
months of the date of this letter. It would assist our review if you set out which aspects of the
reply concern you and why you are dissatisfied.
If you are not content with the outcome of an internal review, you may apply directly to the
Information Commissioner for a decision. The Information Commissioner will not usually
consider a case unless you have exhausted the internal review procedure provided by
HMRC. He can be contacted at The Information Commissioner’s Office, Wycliffe House,
Water Lane, Wilmslow, Cheshire SK9 5AF.
Yours sincerely
John Sharpe
