Nichola's SME Tax W-update 9 December 2021

Hello,

Basis year reform is the biggest and most confusing tax reform to hit Self Assessment, since, well, the introduction of Self Assessment.

Intriguingly, this reform is likely to go unnoticed by many taxpayers and agents: if you prepare your accounts to any date that ends on or between 31 March and 5 April you won’t need to do anything.

If you have any other accounting period-end then it is essential to be clear about what happens in the transitional year of 2023/24. You will also want to weigh up whether the burden and potential confusion of time apportioning profits for the tax years 2024/25 onwards is worth the effort. Although, once we have all embraced quarterly online filing under Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) annual accounting will be a thing of the past. You may like our a new guide to Basis Year Reform. It is packed full of examples and useful tips and we will keep expanding it as the queries come in.

This week we have been continuing our review tax consultations and responses from Tax Administration and Maintainance Day. They cover a broad range of topics.

Christmas parties are in the headlines and we feature our guide to the taxation of the benefit of a staff parties, as well as guides to gifts and giving.

More fascinating tax cases and updates for you, so do please read on.

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)

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

Making Tax Digital for Corporation Tax: Summary of responses
HMRC have published a summary of the responses to the Consultation: Making Tax Digital for Corporation Tax, which closed in March.

Office for Tax Simplification: the show must go on 
HM Treasury has released ‘2021 Review of the Office of Tax Simplification: Final Report’ which summarises its review of the Office of Tax Simplification (OTS) in its role as independent adviser to the Chancellor on simplifying the tax system.

Hidden economy conditionality in Northern Ireland and Scotland: Summary of responses 
HMRC have published a summary of responses to their consultation ‘Hidden economy conditionality – Northern Ireland and Scotland’, which closed earlier this year.

HMRC report: Use of marketed tax avoidance schemes
HMRC have released a new report ‘Use of marketed tax avoidance schemes in the UK (2019 to 2020)' which provides an update on what they know about the tax avoidance market, how big a problem it is and what they are doing to combat it.

Responses on the future structure of the tax system 
HMRC have now published a summary of responses to their March 2021 Call for Evidence ‘The tax administration framework: supporting a 21^st century tax system’.

Consultation: Stamp Duty Land Tax: Mixed-Property Purchases and Multiple Dwellings Relief 
HMRC have published a consultation, Stamp Duty Land Tax: Mixed-Property Purchases and Multiple Dwellings Relief.  Collating views on how to achieve fair tax outcomes and to prevent SDLT abuse for mixed property transactions and for MDR claims.

Research: R&D customer experience
HMRC have published research into how businesses understand Research & Development (R&D) tax relief and their experiences when making a claim.

Editor's Pick 

Basis Year Reform (subscribers)
NEW: What is basis year reform? Who is affected? What is the new basis year for tax? What are the transitional rules?

Christmas parties and gifts (freeview)
Our Practical Tax Guide looks at the tax treatment of parties, including Christmas parties and other annual functions for staff from the perspective of the employer and their business.

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 

Foreign and residency pages: FAQs
How do you complete the foreign and residency pages of the Self Assessment return?

Land and Property   

Property profits & losses: Toolkit (2021-22)
UPDATE: Our Property profits & losses toolkit takes HMRC's version and adds a great deal more information about what you can claim as an individual.

Replacement of Domestic Items Relief (subscriber guide)
What is Replacement of Domestic Items Relief? When can it apply and what conditions must be met? 

Directors and Companies    

Year-end tax planning review
UPDATE: A useful year-end tax planning review checklist. 

Employers

Tax-free benefits and perks
A note with a checklist: "At a glance".

Gifts (to staff, customers & charities)
UPDATE: What is the tax on a gift made to your staff or to customers? Can you obtain tax relief on the cost of a gift to your staff?

Private Client and Estate Planning 

Trust Registration Service
UPDATE: What is the Trust Registration Service? What trusts does it apply to? What are the requirements and deadlines?

Cultural Gifts Scheme and Acceptance in Lieu
The Cultural Gifts Scheme allows a pre-eminent property to be made publically available in return for tax reliefs. What is the Cultural Gifts Scheme? When does it apply? What are the advantages?

Tax Cases

SDLT sub-sale scheme ineffective  
In Victoria Carter & Peter Kennedy v HMRC [2021] UKUT 0300, the Upper Tribunal (UT) concluded that a discovery assessment raised by HMRC had been validly issued rendering a SDLT avoidance scheme ineffective.

Employee Share Options are acquired and taxable when granted 
In John Charman v HMRC [2021] EWCA Civ 1804 the Court of Appeal held that share options were taxable when they were granted not when exercised, and restricted shares were issued by virtue of the taxpayer's employment.

SEISS policy for maternity is discriminatory but justified
In The Queen (on the application of) The Motherhood Plan & Kerry Chamberlain v HM Treasury & HMRC [2021] EWCA Civ 1703, the Court of Appeal (CA) upheld the High Court's dismissal of a judicial review of the lawfulness of the Self-Employment Income Support Scheme (SEISS) on the basis that whilst discriminatory it was justified. 

VAT Cases and Guides 

Matchmaking service was consultancy for VAT 
In Gray & Farrar International LLP v HMRC [2021] UKUT 0293, the Upper Tribunal (UT) upheld the appeal of a matchmaking service. It found that the service provided was that of consultancy and so outside the scope of VAT when dealing with non-EU clients.

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

• CPD: Business Asset Disposal Relief
• 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 2 December 2021

• HMRC issues post-Brexit Christmas shopping warning
• Chancellor responds to OTS’s reports on CGT and IHT 
• Call for Evidence: Umbrella Company Market
• Tax Agents: Raising Standards in the tax advice market
• Unaffiliated tax agents: what type of agent are you?
• Too rich to TiS?
• Non-UK resident not entitled to Child Benefit  
• Simplifying the VAT land exemption: Summary of responses
• Residential Property Developer tax
• Tax Penalties for accountants, advisers and tax agents
• Working from home (self-employed)
• Advisers' guide to Property Business profits
• Transactions in Securities
• Mobile phones & devices
• IHT: Normal Expenditure Out of Income (gifts) ...More 

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