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As you might have seen, HMRC has now published details of Income Tax and NICs rates and allowances for next year. We also have the details for calculating car and van benefits. These are free for all to view in the Tax Data section of our website.

The goal of so many of the mass marketed tax schemes of the past was tax-free profit extraction by the alchemy of transmuting distributable profits into tax-free income. This time we have both a new GAAR panel opinion on a scheme to eradicate an overdrawn directors' loan account and a tribunal case featuring a type of scheme we have seen from time to time, where a settlement is created in order to deliberately trip up the 'revert to settlor' rule. The loan repayment scheme unsurprisingly fell foul of the GAAR and like the GAAR Panel, the First Tier Tax Tribunal (FTT) rejected the profit extraction scheme. This decision may yet be appealed.

Don’t forget, devising or marketing aggressive tax avoidance schemes not only breaks ‘Professional Conduct in Taxation’ but may also invalidate your Professional Indemnity insurance.

In terms of acceptable tax planning, we are featuring our year-end top tips for owner managers together with updates to our Covid-19 and Brexit guides.

If you need cheering up and are interested in using filters for your Zoom meetings do check out the ‘I am not a cat lawyer’ video. A very funny cautionary tale. Much more exciting than CPD on a very cold day. If you would like lots more CPD and tax, then please keep reading.

If you have any queries do post them on our Virtual Tax Partner advice service at www.VtaxP.co.uk scroll down for more news and updates.

Back soon 

Nichola Ross Martin FCA CTA (Fellow)
Tax Director

www.rossmartin.co.uk

Your Virtual Tax Partner® online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.

Quick News

GAAR catches director's loan repayment scheme
The GAAR Advisory Panel have released an opinion on 'artificial repayment of a loan or advance to a participator' concludes that entering into and carrying out the scheme was not a reasonable course of action.

Employer Bulletin: February 2021 
HMRC have published their Employer Bulletin for February 2021. We summarise the key content for you, with links to our detailed guidance on the topics covered.

What is the 2021/22 PAYE tax code?
What is the 2021/22 PAYE tax code? HMRC have released details of the proposed PAYE codes for 2021/22.

Time to Pay arrangements and Class 2 NI warning
Certain contributory benefits can be negatively impacted if payments made under a Time to Pay arrangement with HMRC are not allocated correctly.

COVID-19: Loan funding
UPDATE: The government announced extensions to repayment conditions on Bounce Back loans. Our guide to COVID-19 business loan funding.

Editor's Pick

Year-end top tips for OMB 2020/21
NEW: Last-minute advice for clients? What should you focus on as the 2019/20 tax year-end approaches?  What should you do before 5th April and what could you leave until later? 

COVID-19: Company directors & shareholders
UPDATE: Many small companies are run by just one or two directors and have no other employees. What government financial support is available to directors/shareholders during the coronavirus crisis?

Brexit: working abroad/working in the UK
Brexit: what are the rules for working abroad, what are the Brexit changes to tax and national insurance?

Brexit: Exporting goods from GB
What do the new rules mean? How do you now avoid double tariffs? What applications need to be made in order to continue trading smoothly? Do you need to set up shop in the EU?

Guides and Updates (subscribers)

IHT Agricultural Property Relief
What is Agricultural Property Relief? When does it apply? What are the conditions and restrictions of the relief?

CGT: Loans to traders relief
If a UK resident individual or company makes a loan to another taxpayer and it becomes irrecoverable, capital loss relief may be claimed under s.253 TCGA 1992 (relief for loans to traders) if the qualifying conditions are met. 

Wholly and exclusively…toolkit
What does 'wholly and exclusively' mean? How do you determine if a cost is wholly and exclusively incurred for the purpose of a trade? What cases are there? 

Permanent establishment & residence
UPDATE: Due COVID corporate residency may be an issue. HMRC have updated their guidance and consider that the existing rules provide sufficient flexibility to deal with the situation.

Non-resident landlord scheme
UPDATE: COVID update on the allowed format of signed returns and updated guidance on the new requirement to register for UK Corporation Tax.

Tax Cases

Withdrawal of CIS gross payment status disproportionate
In RMF Construction Services Ltd v HMRC [2021] TC07995, the First Tier Tribunal (FTT) allowed the company’s appeal against the withdrawal of Construction Industry Scheme (CIS) gross payment status eight years after associated compliance failures.

SDLT: annexe not a separate dwelling
In Edward and Clare Partridge v HMRC [2021] TC7991, the First Tier Tribunal (FTT) denied SDLT Multiple Dwellings Relief on the purchase of a house with an annexe. It was a single dwelling.

Settlement income scheme a distribution
In Sharon Clipperton & Steven Lloyd v HMRC [2021] TC07998, the First Tier Tribunal (FTT) found that profit extraction scheme that aimed to trigger the Settlements legislation's revert to settlor rule was really just a distribution to the settlor's shareholders. The 'Ramsay principle' applied.

CGT tax loss scheme was artificia
In Simon Padfield & Ors v HMRC [2020] TC07983, the First Tier Tribunal (FTT) held that a tax avoidance scheme involving derivative trading to generate an allowable loss and a tax-free gain in separate transactions had to be viewed as a whole, with the gain cancelling out the loss.

VAT news and cases

Safestore acted as insurance principal not intermediary
In Safestore Ltd v HMRC [2020] UKUT 322, the Upper Tribunal (UT) confirmed Safestore acted as an insurance principal when selling products for its Guernsey business.

VAT distance selling rules caught out vitamin mail-order
In Healthspan Limited v HMRC [2020] TC07979, the First Tax Tribunal (FTT) held that supplies of goods by a business established in Guernsey to consumers in the UK were liable to UK VAT under the distance selling rules. 

Virtual Tax Partner Toolkits (freeview)

Virtual Tax Partner © Tax Toolkit© Tax Toolkits
Be a winner with our game-changing Business Asset Disposal Relief tax diagnostics tools. Sign up now.

Tax Queries?

Virtual Tax Partner© Support
Have a tax query? Need a second option? Open a ticket and ask a question. A team of tax experts with a very wide range of expertise: covering direct and indirect tax, as well as accounting, R&D claims, reorganisations and much more. 

CPD for lunch 

Byte-sized chunks of CPD for subscribers

More at CPD Index

Missed last time's Web-update?

Nichola's SME Tax W-update 4 February 2021

  • Scottish Budget 2021: Summary
  • Consultation: Tax and the use of third-party data 
  • Brexit: VAT implications of NI trade
  • Restricting mortgage interest relief (freeview)
  • Off-Payroll Working: At a glance
  • EIS relief denied: shares had preferential rights
  • News Corp e-newspapers were standard rated for VAT 
  • No VAT teaching exemption for Ceroc dancing
  • Construction Industry Scheme VAT Reverse Charge
  • COVID-19: Company directors & shareholders
  • Self-employed: Extracting profits
  • Losses, trade losses and sideways relief ...More

 

SME Tax Monthly Summary January 2021

Links to all of December's newswires...More 

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