BUSINESSES throughout Britain can thank a York practice of chartered accountants and business advisers for saving them tens of millions of pounds worth of tax.
Senior managers at Garbutt & Elliott in Monkgate are cock-a-hoop at having actually persuaded the tax man to look more kindly on thousands of businesses when it comes to the complicated capital gains tax relief rules introduced by the Labour Government.
John Guy and Adrian Widdowson of the firm's tax department consistently complained to the Inland Revenue's policy-making Capital and Savings division about unfairness in the way the so-called Taper relief was applied, particularly to many family companies which were part of a holding group.
Now the Inland Revenue admits that it was Garbutt & Elliot's influence which has led them to publish an announcement in the June "Tax Bulletin" that the relief will be available to such holding groups.
"This is really exciting news," said Michael Backhouse, the firm's director of taxation. "We have been responsible for reducing in some cases tax bills from 24 or 36 per cent to as little as ten per cent - representing millions of pounds worth of savings nationally.
"Usually these representations are made by quoted mega-companies such as KPMG but we were the first in there, fighting for fairness all the way to victory. It speaks volumes about the strength of our taxation services."
Taper relief was designed to help those who hung on to their investments rather than bought and sold rapidly to make a quick buck. The longer investors hold on to their office or assets the less capital gains tax is paid on a sliding scale when sold.
But there were two types of taper relief, depending on whether you had a business asset, such as a family company, as opposed to owning shares in quoted companies like British Telecom.
Shareholders who hang on to their assets for ten years or more will have their capital gains liability on sale reduced from 40 per cent to 24 per cent.
Until last week those with business assets for four years would have their capital gains tax slashed from 40 per cent to ten per cent. Now the benefit, it was announced last week, will be triggered after just two years.
But this has been complicated and clouded by a difficulty to distinguish what is and what is not a business asset. A firm, for example, which only lets out property cannot benefit from the tax relief.
The difficulty pointed out by Garbutt & Elliott to the tax man was that there were thousands of cases of a number of firms trading under one holding company which owned their property assets.
Because of that the entire holding group was deemed not to be liable for the benefits of business taper relief.
Mr Backhouse, who said that the Inland Revenue had confirmed in a letter that Garbutt & Elliott had brought about the change, said:
"We were concerned that many of our clients whose trading premises were held in a holding company would be affected and John and Adrian insisted it was unfair. I am delighted that their tenacity has been rewarded.
"They have successfully challenged the Revenue's views for the greater good of many taxpayers, and I can tell you that does not happen every day."
David Walker, of Botting & Co of Clifton Moor, president of the York branch of the 119,000-member Institute of Chartered Accountants said: "This success shows the invaluable assistance that can be rendered to firms by the sheer brainpower of chartered accountants. We are not simply bean counters. We really can translate problems into real profits."
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