I think this thread demonstrates wonderfully a lack of clear guidance from HMRC. Also, a risk of becoming overly academic - unless substantial estates/income, the actual figures involved may be modest.
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I would suggest that the only way to resolve the query raised was by (as you put it) academic analysis. The difference in opinion required, in my view, such analysis.
Having applied rigorous analysis if as a matter of practice HMRC take a lax view and opt for simple practical expediency (not application of the law), then so be it.
Malcolm Finney
Malcolm as far as I am concerned if I can save as little as a £1 in tax for the client by using the net figures for interest and dividends, then I have achieved something. After all I am only providing the figures in accordance with the HMRC guidance even though it may not make much sense. With interest rates hopefully increasing for savers, the savings will become more worthwhile.
Patrick Moroney
Patrick, I understand. However, if your approach is adopted and you are aware of an argument as I have attempted to set out would you not at least point the possible argument out to the client?
Malcolm Finney
Malcolm, I would say that the average client just wants to ensure that they do not pay more tax than is necessary and are not very interested in the semantics of how the tax is calculated. I do of course accept your argument but it’s really for HMRC to change its guide if it wants to correct the position.
Patrick Moroney