Nichola's SME Tax W-update 5 August 2021

Hello,

If you have been confused by the 'off-payroll working' rules then do not fret, it appears, from their newly published accounts, that neither the Home Office nor the Department of Work & Pensions got the hang of them either.

The Home Office had their £4m penalty for failing to take reasonable care over the matter suspended, as they were able to provide evidence that the error would not be repeated. Suspension is a useful tool to remember, although it only applies to tax geared penalties and not to late-filing ones.

Digital platforms and their customers will be interested in a new consultation on reporting rules. The new rules are based on models put out by the Organisation for Economic Co-operation and Development (OECD) which means that certain websites will soon need to gather and manage more data about their sellers for onward tax reporting purposes. I am unsure how these proposals will work when a web platform is based in say, China.

We have a mixed bag of tax case summaries for you, all illustrating why tax can be such a very tricky subject. There was a costly defeat in the Supreme Court for a taxpayer whose accountants had responded to an invalid enquiry notice, a successful challenge to a discovery assessment, an expensive failure to operate the construction industry scheme (CIS) and the court decided that a silo containing potato crisps is plant and not premises.

We are all very excited to be putting on our first Virtual Tax Partner conference in October and this time we have published details of the conference schedules. The emphasis is on practical, day-to-day tax and things that you can sell on. Early bird tickets and more details will be available next week.  

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 (freeview)

2021 Virtual Tax Partner Conference
NEW: our Virtual Tax Partner 'VtaxP' practical tax conference takes place over two half-days on 12-13 October 2021. Make a note in your diaries!

Consultation: Reporting rules for Digital Platforms 
HMRC have opened a new consultation ‘Reporting rules for Digital Platforms’ which considers the implementation of the new Organisation for Economic Co-operation and Development (OECD) Model Reporting Rules for Digital Platforms.

Home Office and DWP £117m IR35 failure 
The Department for Work and Pensions (DWP) and Home Office have recently published their 2020-21 accounts. These disclose that over £117m was payable by the government departments to HMRC, following errors in applying the public sector Off-Payroll Working rules.

IR35 in the private sector: is your business ‘Small’?
The IR35 rules have applied to private sector engagements since April 2021 except where the end-client is small. Part of the test to see if you are small considers the turnover of both the end-client and all ‘connected’ persons.

HMRC concludes research on Family Investment Companies 
HMRC have released notes from their Wealthy External Forum conference call which covered the conclusions to their research into the use of Family Investment Companies.  The research was undertaken with a view to better supporting taxpayers understand and comply with their tax obligations.

HMRC guidance on registering and managing an estate
HMRC have issued new guidance for executors and personal representatives on how to register and manage an estate for Income Tax and Capital Gains Tax purposes.

Treasury review of AML regime with consultation on AML amendments
HM Treasury has published a  consultation on ‘Amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Statutory Instrument 2022' and ‘Call for Evidence: Review of the UK’s AML/CFT regulatory and supervisory regime’.

£15m to support local government audit changes
'Government response to the consultation on changes to the audit fees methodology for allocating £15 million to local bodies’ has been published. Some 548 principal bodies will have access to £15m in grant funding to assist them in financing increased audit fees as the government attempts to improve audit standards.

First round of Community Ownership funding opens 
The government has opened bidding in the first round of funding under the Community Ownership Fund. £150 million is being provided over four years to support community groups take ownership of assets and amenities at risk of being lost.

Editor's Pick  (subscribers)

Finance Act 2021: tax update & rolling planner
UPDATE: use this tool to check what's new and what changes are planned for any different tax, this also tracks consultations, and proposed legislation for the next tax year. Don't miss the Tax Basis Year consultation.

Calendar of tax deadlines
UPDATE: This is a freeview 'At a glance' rolling calendar of common recurring tax deadlines. 

Guides and Updates (subscribers) 

Self Assessment

Cash or accruals accounting toolkit
UPDATE: Unincorporated businesses can elect to use one of two different methods of accounting for tax: simpler accounting (cash basis) or accruals basis accounting.

Which trading structure is best for me?
UPDATE: What are the key tax and legal differences between the different trading structures of self-employed, a partnership or a company.

COVID-19: Taxation of Coronavirus support payments
UPDATE: This guide summarises the tax treatment of grants paid during the Coronavirus pandemic.

Directors & Companies

Pension contributions: Personal or company?
UPDATE: Is it more tax efficient to pay pension contributions personally or via your own company?

Capital allowances

What expenditure qualifies for plant & machinery allowances?
UPDATE: What is plant and machinery? What expenditure qualifies as plant and machinery? What is treated as part of a building? 

Employers

Off-Payroll Working: PSCs & Private Sector Engagers
UPDATE: What is Off-Payroll Working? Who does it apply to? What are the new rules?

Private Client & Estate Planning

IHT: Main Residence Nil Rate Band (RNRB)
UPDATE: What is the Main Residence Nil Rate band? When was it introduced? How does it work? Who can claim it?

Client Briefing: Making gifts & IHT
UPDATE: What gifts can you make without triggering Inheritance Tax (IHT)? What are the rules on making tax-effective gifts for IHT purposes?

Land & Property

SDLT: Signpost (freeview)
This is a freeview summary of various topics which will need consideration when determining the Stamp Duty Land Tax (SDLT) that may arise on the purchase of land or property along with links to our guides.

Profits from dealing in or developing land
UPDATE: these rules have replaced the old 'transactions in land provisions' and now extend UK taxation to all profits from trading in and developing UK land, regardless of residence. 

Land: future consideration (overage)
A guide to the tax treatment of future consideration payable on the disposal of land. 

Tax Cases 

Capital Allowances: Potato storage facility is plant 
In JRO Griffiths Ltd v HMRC [2021] TC08203, the First Tier Tribunal (FTT) found that a potato storage facility was both a silo for temporary storage and a cold store. It was plant and was eligible for capital allowances.

Discovery invalid, no carelessness and out of time  
In Alan Loughrey v HMRC [2021] TC08198, the First Tier Tribunal (FTT) allowed a taxpayer to appear against discovery assessments. He was not careless and the HMRC's 'hypothetical officer' should have considered Real-Time Information (RTI) to ascertain there was a shortfall of tax within the normal enquiry deadline.

Agent action validated enquiry notice 
In Tinkler v HMRC [2021] UKSC 39 the Supreme Court (SC) concluded that complying with an enquiry notice which had not been validly opened rendered that enquiry and subsequent closure notices valid.

CIS: Failure of reasonable care costs contractors £1.7m 
In North Point (Pall Mall) Limited & China Town Development Company Limited v HMRC [2021] TC8205, the First Tier Tribunal (FTT) dismissed appeals against determinations for tax not deducted under the Construction Industry Scheme (CIS). The contractors had failed to take reasonable care in making gross payments to their sub-contractor.

VAT News, Cases & Guides

COVID-19: Option to tax deadline extended
Due to the Coronavirus pandemic, HMRC temporarily extended the deadline for notifying of an option to tax on land and buildings to 90 days. This notification extension ended on 31 July 2021.

Opting to tax land and property
UPDATE: What is an option to tax? What do I need to do to opt to tax? What happens if I buy an opted property?

How to reclaim VAT on business expenses in the EU?
UPDATE: How to reclaim VAT on purchases abroad: refunds of VAT incurred by UK businesses in the EU from 1 January 2021. 

EU VAT e-commerce package: From 1 July 2021
UPDATE: On 1 July 2021 a number of European Union (EU) VAT changes took effect, including the introduction of two new One Stop Shops. What are the changes? Who is affected? 

Tax Toolkits 

Tax Tools
Be a winner with our game-changing tax diagnostics tools for Business Asset Disposal Relief, SDLT & annexes/subsidiary properties, Company reorganisations, R & D Zone and TAAR on winding up. 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 29 July 2021 

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