Hello,

The government has published policy papers and draft legislation with its new proposals for the 2022-23 Finance Bill. You may have heard of some of the new measures but as always in tax, 'the devil is in the detail'.

New measures include a top-up scheme for lower-paid workers who are contributing to their workplace pensions under net-pay arrangements and are at a tax disadvantage. Some 1.2 million workers are affected and they are being asked to wait two years for the start of correction to receive a tax refund. Even then the top-up will not be back-dated. Well done to the Low Income Tax Reform Group (LITRG) for putting so much work into backing this change.  Another key measure benefits wealthy divorcing couples who may soon be substantially better off due to the government's plans to make a relaxation in the Capital Gains Tax (CGT) rules, which will extend the no gain/no loss disposal rules on separation by three years, or indefinitely if under a court settlement. There are further details of other key new proposals below.

HMRC has published its accounts for 2021-22 together with a lot of other data. The tax gap is still hovering around 5%, which is about £32 billion and its income from compliance operations (i.e investigations) is slightly more than that, coming in at a cost of something just over £2 million. The net result is that HMRC's compliance operations are good value for money for taxpayers compared with say, whatever department it was that spent an estimated £37 billion on the not-fit-for-purpose 'track and trace' app.

We have also a useful bunch of case reports which are well worth a quick browse as they cover some real business ‘basics’ that continue to trip up taxpayers.

Finally, new HMRC research on crypto-asset ownership published this week reveals from those surveyed, that most 'investors' (or should we say 'crypto-gamblers') are likely to be young and mainly male. Like one or two others I am concerned that blockchain technology has created a massive shadow banking system, and there is also not much difference between a new crypto-asset launch and a Ponzi scheme. Food for thought, as they say. 

Lots more exciting content, new CPD and updates 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) 

Finance Bill 2022-23: at a glance
Wednesday was Legislation Day "L-day" when the government published some of the draft legislation and consultations that will form Finance Bill 2022-23. Key highlights include measures to relax the CGT rules for divorcing couples, and for LLPs and Scottish partnerships, the tax treatment of farmers' Lump Sum exit schemes, reforms to net pay pensions, tax relief on homes for Ukraine and changes to Research & Development relief.

Another OTS Review of tax simplification
The Office of Tax Simplification (OTS) has published a new policy paper ‘OTS Review of tax simplification’ setting out what drives tax complexity and how officials making tax policy can work to prevent or mitigate that complexity.

Successful year for HMRC in tax avoidance litigation 
HMRC have published their list of tax avoidance litigation decisions for the 2021-22 year. This identifies the results in litigation decisions where HMRC considered that tax avoidance was involved. The summary indicates a high win rate for HMRC. 

Editor's Pick (Freeview) 

HMRC's 2021-22 Accounts
HMRC have published their Report and Accounts and other documents for 2021-22. The accounts report revenues of £731.1 billion, a 20.1% increase since 2020-21, although 23.8% of this (£173.8 billion) remained unpaid at the year-end. Its audit was qualified due to high levels of error and fraud.

Crypto-crash? There are warning signs
A growing number of commentators are noting that investing in a crypto-asset, such as, for example, bitcoin or stablecoin is in reality no different to investing in a 'get rich quick' Ponzi scheme. There are also darker things afoot, decentralised finance (DeFi) based on blockchain technology has created a massive shadow banking system.

Guides & Updates (Subscribers) 

Land & property  

Land: future consideration (overage)
Land sale agreements that provide for the payment of further consideration to the vendor require careful analysis for tax purposes.

Self-employed

Farming: Overview
What is farming? What are the tax consequences and tax considerations of farming? What are the features of agricultural tenancies?

Making Tax Digital: Survival guide (for the self-employed & landlords)
This is a freeview 'At a glance' guide for the many self-employed taxpayers, company owners and property landlords who are unaware of HM Revenue and Custom's radical plans to transform the tax online filing system. 

Companies & Shareholders

EMI: Enterprise Management Incentive Scheme
UPDATE: The COVID-19 extension which applies to HMRC valuation letters expires on 1 December 2022.  Valuation agreements issued after that date will be valid for 90 days.

Employment-Related Securities & Share Schemes
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?

Employers 

EMI: Enterprise Management Incentive Scheme: at a glance
UPDATE: The COVID-19 extension which applies to HMRC valuation letters expires on 1 December 2022.  Valuation agreements issued after that date will be valid for 90 days.

Private Client & Estate Planning 

CGT: Date of acquisition or disposal
UPDATE: When is the date of acquisition or disposal of an asset for Capital Gains Tax (CGT) purposes? When do special rules apply? Why does it matter?

When does a partnership exist?
UPDATE: When does a partnership exist? Why does it matter? What are the implications for different taxes?

Capital allowances

R&D: Capital allowances
What are R&D capital allowances? When can they be claimed and how do they work?

Super-deduction & First Year Allowances
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? What is the SR Allowance? What if I dispose of an asset on which the Super-deduction or SR allowance has been claimed?

Tax Cases (Freeview)

No partnership no tax relief     
In SC Properties Limited and Richard Cooke v HMRC [2022] TC08537, the First Tier Tribunal (FTT) decided a property was sold by individuals not a partnership. The partnership did not exist which meant the CGT and SDLT relief that was claimed was not available.

Capital Losses allowed despite lack of evidence 
In Altan Goksu v HMRC [2022] TC08536 the First Tier Tribunal (FTT) allowed a deduction for capital losses brought forward despite no evidence that they had been notified to HMRC over twenty years earlier. The tribunal reduced the amount as it could not be supported by the taxpayer.

VAT Cases & Guides 

UT: FTT VAT decision flawed 
In Conservatory Roofing UK Ltd v HMRC [2022] UKUT 00182, the Upper Tribunal (UT) found the First Tier Tribunal (FTT) had not considered all the relevant information in dismissing an appeal finding that roofing works should be standard rated for VAT purposes.  The UT remitted the decision to the FTT to be remade.

Invalid invoices prevent VAT recovery 
In Tower Bridge GP Limited v HMRC [2022] EWCA Civ 998, the Court of Appeal (CoA) found that a company could not recover input VAT on transactions connected to fraud. The company did not hold valid VAT invoices and HMRC was right not to exercise discretion. 

Groups (VAT)
What are the conditions for forming a VAT group? What rules apply once a VAT group is in place?

Tax Tools 

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 14 July 2022

  • Executors: have you claimed the correct transferable IHT RNRB?
  • Committee inquiry into crypto-asset industry  
  • Crypto & Decentralised Finance Consultation  
  • Sanctions against Russia: update for accountants & advisers
  • Climate Change Committee urges Treasury to use tax to achieve Net Zero
  • CBI pleads for serious and credible tax plans from Tory candidates 
  • CGT: Reporting Obligations
  • Personal Liability Notices
  • Penalties: PAYE and late payment
  • Neglect by director leads to £63k NICs bill
  • Salaried members' rules hit hedge fund bonuses 
  • UT confirms football pitch hire was an exempt composite supply 
  • Flat rate scheme
  • Joint property elections
  • Extracting profits
  • Issuing new shares (planning and pitfalls)
  • Travel (employer's guide)
  • How to calculate a capital gain or loss
  • Grounds for Appeal: Legitimate Expectation
  • Grounds for Appeal: Reasonable excuse ...More 

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