Nichola's SME Tax W-update 14 October 2021

Hello,

We have a varied and interesting selection of news and cases for you this week, plus we feature Question & Answers from our recent tax conference hot topics, and summaries of the best bits of the latest Employer and Agent Bulletins from HMRC.

We ran our first-ever Virtual Tax Partner Practical Tax Conference earlier this week. It was not without some technological gremlins, but our team was undeterred and excelled in creating and presenting enough material for several conferences! It was a lot to take in but all very useful stuff. Delegates will be delighted to find that both half-day sessions recorded very well and we will send out links to the recordings so you can rewatch your highlights. We will also send out slide packs in the next couple of days. In the meantime, we have summarised questions raised by attendees from four of the main sessions and we have provided written answers to them for you.

In one of the conference sessions we discussed the merits of paying a salary to your spouse and how it was quite possible that HMRC would disallow a deduction for that cost if it was not paid or it was excessive in terms of the work undertaken. I had said that this is often the sort of thing that comes up in a tax enquiry, and by total coincidence, I have just spotted such a case from the tax tribunal where the wages paid by a son to his father were disallowed during an enquiry. A cautionary tale that is worth a read.

Lots more news, updates, and CPD 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)

136 countries agree to global Corporate Tax reform
The OECD has announced a far-reaching global agreement to its 'Two Pillar' proposal for international tax reform. The plans, which include a minimum in-country Corporation Tax rate of 15%, have now received the backing of all OECD members including G20 countries and the EU.

Pandora Papers: Issues for advisers
The Institute of Chartered Accountants in England and Wales (ICAEW) says that the data leaked by the Pandora Papers investigation show how important it is for accountants to ensure that they know their clients for Anti-Money Laundering (AML) purposes.

HMRC to stop benefit payments to Post Office card accounts 
HMRC will stop making payments of Child Benefit, Guardian’s Allowance and Tax Credits into Post Office card accounts from 1 December 2021.

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

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

Editor's Pick (freeview)

VtaxP Practical Tax Conference Q & A: Running the most tax-efficient accounting practice...ever!
Our Virtual Tax Partner practical tax conference ran this week and the first session concentrated on ‘How to run the most tax-efficient accounting practice…ever!'. Speaker, Nichola Ross Martin CTA (fellow) FCA, looked at ways that an accountant can 'Preach what you practice!'

VtaxP Practical Tax Conference Q & A: Capital Gains Tax on selling up and moving on
Ourl tax conference session on Selling Up and Moving On: CGT Reliefs, looked at what capital gains tax (CGT) reliefs are available to individuals looking to sell their business or cease trading. The focus was on Business Asset Disposal Relief (BADR).

VtaxP Practical Tax Conference Q & A: IHT planning for accountants
The IHT Planning for Accountants session at our Virtual Tax Partner practical tax conference provided a comprehensive summary of all available IHT reliefs. We ran through the complexities of the two Nil-rate bands before looking at wider planning options and hints and tips. There were some interesting questions from delegates and we go over these now. 

Guides and Updates (subscribers)  

Self Assessment

Conditionality: taxi, private hire vehicles and scrap licenses 
The renewal of certain licences, to drive taxis and private hire vehicles or deal in scrap metal, will be conditional on applicants confirming that they are appropriately registered for tax.

Partnerships

Transfer of assets and income streams through partnerships
The transfer of assets and income streams through partnerships rules impose an Income Tax charge, in order to counter tax avoidance, when assets or income streams are transferred through or by different members of partnerships, including LLPs, in order to take advantage of their different tax attributes.

Employment status: Partners
What is the employment status of a partner in a partnership or a member of an LLP? Are partners/members employed or self-employed?

Directors & Companies   

Capital reduction: Tax treatment
The repayment of capital on a company capital reduction can be treated in different ways for a shareholder. We review the tax treatment of a capital reduction.

Dividend tax index
How do you tax a distribution or dividend received from a company? What are the rules for non-residents? What are the company law requirements for a valid dividend?

Private Client & Estate Planning

Settlement anti-avoidance rules
What are the settlement anti-avoidance rules? How do these rules catch some common family tax planning? What are the rules for spouses and other family members?

Tax Cases 

No IHT relief for donations to UKIP is justifiable discrimination
In Arron Banks v HMRC [2021] EWCA Civ 1439, the Court of Appeal held that donations to UKIP were not eligible for Inheritance Tax relief. They confirmed there was discrimination under EU law, but as HMRC had proved, this was justifiable and relief must be denied.

Ancillary property did qualify for CGT Private Residence Relief
In Roger Crippin v HMRC [2021] TC8285 the First Tier Tax Tribunal (FTT) allowed Private Residence Relief (PRR) on the gain made on the disposal of a property adjacent to the owner's main dwelling house. The relief can apply to two properties within the same curtilage. 

Wages paid to Dad, not wholly and exclusively incurred
In David Cation v HMRC [2021] TC8253, the First Tier Tribunal (FTT) disallowed £30k of wages paid by a sole trader to his father and upheld £12,400 in tax penalties for error and failure to notify tax. There was no evidence to show that his father has performed the services claimed.

VAT News & Guides

Land & Property: DIY Housebuilders scheme
It is possible to recover VAT on constructing a new residential dwelling, or dwellings, even where there is no planned sale of the property. This recovery can arise under the special refund scheme for DIY housebuilders.

Accountants fees
Can you reclaim VAT on an accountant's fees? Where can HMRC guidance be found? What is the case law?

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

• NEW CPD: Business Asset Disposal Relief
• NEW: CPD: Appeals: How to Appeal a Tax Penalty
• CPD: VAT: Land and Property

More at CPD Index

Missed last time's Web-update?

Nichola's SME Tax W-update 7 October 2021

• Starting a new accountancy practice? What now?
• Trying to automate CGT advice, but not doing very well
• Accountants, make time, IHT isn’t that complex
• Calendar of tax deadlines
• Off-Payroll Working: at a glance
• Diverted profits enquiry did not block closure notice
• NICs & Partnership agreements: what a tangled web
• APNs based on PAYE determinations were validly issued
• Schedule 36 penalties approved by Upper Tribunal 
• Land & Property: Relevant residential & relevant charitable purpose
• Transfer of assets and income streams through partnerships
• Salaried members: When is a partner taxed as an employee?
• Unlawful, illegal or ultra vires dividends
• RTI: Real-Time Information for PAYE
• ABC or alphabet shares: directors & employees 
• PRR: Private Residence Relief
• Divorce & Separation: toolkit
• SDLT: Non-residents' surcharge ...More 

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