Nichola's SME Tax W-update 3 March 2022

Hello,

As Russia's dangerous dictator, Vladimir Putin, continues his violent plans to wipe out the democracy that is Ukraine, all we can do in the UK is to lend support to Ukraine and its people in any way possible. One of the best ways to assist is by making a direct financial donation to the Disasters Emergency Committee (external link). The UK government says it will match our donations, pound for pound up to £20 million.

Back in the world of business and ahead of next month's Budget, our chancellor is considering the merits of an Online Sales Tax (OST), aimed at tackling the ‘potential tax imbalance’ between in-store retailers and online. In reality, a new tax is only a revenue raiser, as the government notes that it has spent ‘around £400 billion’ on pandemic support, a sum so great that it will never be repaid by many of those old fashioned, high street retailers who received the support in the first place.

There are some big questions to consider over the scope of OST, our newest potential tax. Is it actually an indirect tax, like VAT which will simply add to wage/price inflation? Should small businesses be exempted? After all, small business rate relief has existed for some time. Should the sales tax apply to your Ocado or Deliveroo order? Is an online business that requires a fleet of delivery vehicles actually really any better off than a rate paying store?

Finance Act 2022 received Royal Assent on 25 February 2022. 

More news, views and CPD updates below, 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)

Online Sales Tax consultation
HM Treasury has published 'Online sales tax: Assessing an option to help rebalance taxation of the retail sector'. It asks whether using indirect taxation is a viable alternative to business rates.

Advisory fuel rates from 1 March 2022
HMRC have published new advisory fuel rates for company car drivers which apply from 1 March 2022. 

Chancellor & PM receives honorary fellowship
Gordon Brown, the former Prime Minister and Chancellor of the Exchequer, has been awarded an Honorary Fellowship of the Chartered Institute of Taxation (CIOT) for his outstanding contribution to taxation.

Unpaid student loans set to top £500bn: new repayment structure proposed
The Department for Education has announced structural changes to student loans, including a reduction in the repayment threshold, a longer repayment term, lower interest rates and the stripping out of poor quality courses.

OTS evaluate tax simplification for tax agents
The Office of Tax Simplification (OTS) has issued a new policy paper 'Simplification issues affecting tax agents and other intermediaries'. It considers HMRC’s agent strategy and the barriers faced by paid agents and those who are appointed informally to act on behalf of a taxpayer.

Not so simple: new review of taxation of residential property
The Office of Tax Simplification (OTS) has published 'Property Income Review Scoping Document', this review aims to identify opportunities to simplify the taxation and administration of individuals, partnerships and micro-companies that receive residential rental income.

Finance Act 2022 
Finance Bill 2022 received Royal Assent on 25 February 2022 and became Finance Act 2022. 

Editor's Pick 

Sanctions on Russia: guidance for accountants and advisers
NEW: Following Russia’s decision to invade Ukraine, the UK has increased the level of its economic sanctions against Russia by extending The Russia (Sanctions) (EU Exit) Regulations 2019. Professional firms need to ensure that they are familiar with the new measures.

Guides & Updates (subscribers)  

Self Assessment  

MTD: Toolkit for accountants
UPDATE: Run for the tills! Are you up to date with the current timetable for Making Tax Digital (MTD)? How will it work? Which clients will be excluded? Does your client need a better till or takings system? What planning do you need?

Buy-to-let ownership: personal v. company? (Subscribers)
TOP RATED Guide: What is the most tax-efficient option to own buy-to-let property? Personally or via a company? What are the income Tax, Corporation Tax, CGT, IHT, ATED, SDLT, or VAT issues? With tips on profit extraction and other planning points, case studies and links to further guidance. undertaken?  

Land & Property   

Non-Resident Landlord Scheme (Subscriber)
UPDATE: What is the Non-Resident Landlord scheme? How does it work? Who does it apply to?  How can I apply to receive rents without a withholding tax deduction?

Non-resident landlord scheme: At a glance
Our freeview 'At a glance' guide to the Non-Resident Landlord scheme.  Under the Non-Resident Landlord (NRL) scheme, non-UK resident landlords have the tax on their UK rentals collected by their UK letting agent or tenant. They can apply to HMRC to receive rents gross

Directors & Companies 

Year-end top tips for OMB's 2021/22 
NEW: Last-minute year-end tax planning advice for owner-managed businesses and clients. What should you focus on as the 2021-22 tax year-end approaches? What should you do before 5 April and what could you leave until later?

Employers

Staff Suggestion Schemes
UPDATE: Employee suggestion schemes can provide tax-free benefits. How should they be structured? Who is eligible? How much can be claimed?

Recreational benefits
UPDATE: Employers can provide sporting or recreational benefits tax-free to employees. What is excluded? How should an employer structure benefits?

Private Client & Estate Planning 

How are Bitcoin, cryptocurrencies or cryptoassets taxed in the UK?
UPDATE: How do you tax Bitcoin? Are cryptocurrency or cryptoasset gains or profits, taxable? We have updated this guide for HMRC's view on how the tax rules apply to the lending of cryptoassets.

Tax Cases 

£84 million Discovery Assessment valid  
In John Hargreaves v HMRC UKUT 00034, the Upper Tribunal (UT) dismissed an appeal against discovery assessments. The appeal had been made on the basis that HMRC's discovery was stale however the Supreme Court quashed that concept in another case, Tooth. The UT was obliged to follow the reasoning of the higher court and then consider the discovery on its own merits.

Accountant's personal leisure complex was not a trade 
In Graham Michael Wildin v HMRC,  the First Tier Tribunal (FTT) dismissed the appellant's appeal against income tax and VAT liabilities, penalties and VAT surcharges totalling £297,630, as there was no evidence that a trade was being carried on against which capital allowances, input VAT and income tax loss relief could be claimed.

VAT Cases & Guides 

Upper Tribunal rules on VAT grouping conditions 
In HSBC Electronic Data Processing (Guangdong) Ltd & Ors v HMRC [2022] UKUT 00041, the Upper Tribunal (UTT) found that in terms of VAT grouping, ‘established’ and ‘fixed establishment’ should be interpreted in accordance with CJEU case law concerning the place of supply rules, although their meaning is highly fact-sensitive.

Revenue and Customs Brief 4 (2022): End-customer claim refunds of VAT wrongly charged 
HMRC have published Revenue and Customs Brief 4 (2022): ‘End-customer claim refunds of VAT wrongly charged’. This brief details how end-customer claims to HMRC for refunds of VAT which has been overpaid to a supplier are impacted following the UK’s withdrawal from the European Union (EU). 

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 24 February 2022

• Agent update: February 2022
• HMRC'New take on Purchase of Own shares via multiple completion contracts 
• Taxpayer exposed to long-term risk from COVID fraud 
• A sole trader? Start here...
• A new director? Start here...
• 'Pony paddocks' are residential for SDLT purposes
• HMRC AML visit costs £16k+ penalty for small firm
• Revenue and Customs Brief 3 (2022): Postponed VAT accounting and the Flat Rate Scheme 
• Input VAT on delivery charges was not recoverable 
• VAT Tool: when do points-based penalties apply?
• Basis year reform
• Herd basis: Farming
• Annual Tax on Enveloped Dwellings (ATED)
• Disguised Remuneration loan charge
• Accommodation benefit
• Pensions: Tax charge for excess contributions
• IHT: Loans and restrictions on liabilities against the estate ...More 

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