Nichola's SME Tax W-update 19 August 2021

Hello

This week we look at employee share schemes, a new Agent update, whether a land sale is capital or revenue, an IR35 appeal clears its first huge hurdle and many more fascinating tax things, plus you can buy tickets to our first-ever Virtual Tax Partner practical tax conference.

One knock-on effect of the COVID-19 epidemic is that some employers have been reviewing their succession planning, and our Virtual Tax Partner sister company has received a lot of queries on the benefits and tax consequences of setting up employee share schemes in recent months. In general, the scope of the ‘Employment Related Securities’ regime is a frequently misunderstood area of tax and setting up an employee share scheme is quite a complicated matter. You need to consider not only the tax rules but also the provisions of the Companies Act 2006, and then if you have separate shareholder agreements you will also need to fully understand how they interact with your company’s Articles of Association.

When I help set up a share scheme, I take directors through their Articles, line by line. Rarely does a new director ever do this, and if you think about it why would you bother when the government gives you so-called Model Articles? People invariably think that this is a very dull and boring task, but I always find that they learn a great deal and ask a lot of questions as they start to understand the potential issues; most are grateful for this service. I have featured our guide to taxing on share schemes this week as my Editor’s pick. I am working on a new set of guides that explain what you might want to change in your Articles.

HMRC has been busy putting out a new Agent update and an Employment Related Securities (ERS) bulletin this week and we have reviewed and summarised this to save you time. We will review their Stamp Taxes update next week.

We also have a ‘transactions in land’ tribunal case for you this week, if you sell off building plots to fund the refurbishment of your stately home, can you expect capital gains treatment? 

Lots more news and interesting cases below.

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
Our Virtual Tax Partner 'VtaxP' practical tax conference takes place over two half-days on 12-13 October 2021. Buy your early bird tickets now to gain access to our pre-conference tax workouts.

Agent update: August 2021 
HMRC have issued their Agent Update for August 2021. We have summarised the key content for you with links to our detailed guidance on the topics covered.

Employment-Related Securities: What’s New? August 2021 
HMRC have issued their latest Employment-Related Securities Bulletin which includes some useful tips. Here is our enhanced version with links to our guides.

Over 80% businesses unaware of packaging tax
A survey by the waste management company Veolia has found that 83% of UK companies don't know about the Plastics Packaging Tax due to come in next year. 

UK scraps EU plans for a central bank account register 
The government has decided not to go ahead with plans to introduce a centralised register of bank account and safe deposit box ownership due to the high costs involved compared to the potential benefits.

Loan charge: Claim your refund by 30 September
Taxpayers entitled to a refund of amounts paid to settle a Disguised Remuneration (DR) scheme which fell out of the loan charge following the December 2019 independent review, must ensure their claims are with HMRC by 30 September 2021.

Asking Companies House to extend filing deadline 
Did you know that since 2019 you can ask Companies House to extend your filing deadline for company accounts? You can apply to extend your deadline if you cannot send your accounts because of an event that is outside of your control.

Editor's Pick  (subscribers)

Setting up an employee share scheme
UPDATE: What are the tax consequences when a company gives shares to an employee or director? What are employment-related securities? What is best: shares or share options? How do you set up a share scheme?

Guides and Updates (subscribers) 

Self Assessment

Self-employment: Registering for tax
NEW: You are self-employed, you have started working for yourself, what do you need to do to now? How to register for tax.

Partnerships: How to prepare partnership and partners tax returns
UPDATE: How to prepare partnership returns. How are partnership profits calculated? How are corporate members of partnerships taxed? What are the differences between the tax treatment of individual and corporate partners? Are there anti-avoidance provisions to consider?

Directors & Companies

Companies: Filing & payment deadlines
UPDATE: What are the filing and payment deadlines for companies? What penalties apply? If you run a UK business via a UK-registered company you will have the following ongoing filing & payment deadlines. 

Interest relief: Making a loan to a close company
UPDATE: In certain circumstances, individuals can claim tax relief for interest paid on a loan where the funds are used by a close company. Which loans qualify? What is a business purpose? 

Capital allowances

Super Deductions & First Year Allowances
UPDATE: What is the new Super-deduction allowance? When does it apply and what is the rate of allowance? What other First Year Allowances (FYAs) are available?

Employers

Payrolling of benefits
UPDATE: The value of certain taxable benefits in kind can be included in taxable pay when calculating the PAYE deducted from payments of wages and salaries to employees.

PAYE: Starter checklist new employee 2021-22
NEW: Note that this is our (improved) version of HMRC's New Employee Starter checklist, updated for the 2021-22 tax year. 

Private Client & Estate Planning

National Insurance: What's the maximum payable?
UPDATE: What are the maximum limits for National Insurance Contributions (NICs)?

CGT: Value shifting
UPDATE: What is Value Shifting? When do the rules apply and what are the implications?

Land & Property

Rent-a-room Relief
Rent-a-room Relief gives a form of relief from Income Tax where a taxpayer provides furnished residential accommodation in their only or main residence.

Cash basis for property businesses
When should landlords use the cash basis? How are profits calculated? Is there an alternative?  

Tax Cases 

Building plots in mansion's grounds were appropriated to trading stock 
In Heather Whyte v HMRC [2021] TC08215, the First Tier Tribunal (FTT) found that six building plots in the grounds of a listed mansion house had been appropriated to trading stock with no Private Residence Relief available. 

Locum IR35 appeal clears first hurdle
In George Mantides v HMRC [2021] UKUT 205, a hospital locum successfully challenged part of the First Tier Tribunal’s (FTT) reasoning in his ongoing IR35 appeal as to the terms of the hypothetical contract. The Upper Tribunal (UT) found that the FTT was not entitled, on the evidence, to make certain findings as to the notice periods and working hours. 

VAT News, Cases & Guides

Badly worded VAT registration form did not stop assessment
In KSM Henryk Zeman SP Z.o.o. v HMRC [2021] UKUT 0182, a Polish company was caught out by a badly worded VAT registration form and HMRC rejected its registration. It should, in fact, have been registered and HMRC later raised a VAT assessment. Did it have a legitimate expectation to expect fairness?

PPI claims company commissions were subject to VAT 
In Claims Advisory Group Limited v HMRC [2021] UKUT 0199, the Upper Tribunal (UT) confirmed the previous decision made by the First Tier Tribunal (FTT). A company claiming Payment Protection Insurance (PPI) compensation on behalf of individuals was not making a VAT exempt supply of insurance services.

Partial exemption & input VAT
UPDATE: How do you calculate the amount of input tax you can recover under the VAT partial exemption rules? What are the de minimis rules?

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 12 August 2021 

 

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