Nichola's SME Tax W-update 28 July 2022

Hello,

The government’s extremely tardy response to its 2018 consultation on Employment Status reveals that it’s apparently too difficult to legislate to create a statutory employment test. A great opportunity lost, in my humble opinion.

Our existing rules on employment status are based on years and years of case law, and the result is that its pretty near impossible for anyone other than a dedicated expert to determine employment status. HMRC has of course, produced its Check Employment Status Tool (CEST). You can reverse engineer that if you want to work out what HMRC has put into it. However, if HMRC can produce a tool then of course it created a list of rules. If it has created a set of rules, then why not put those into law and help everyone out.

The other major casualty of the Employment Status consultation is that the government lacks the ambition to do anything about ‘limb B’ workers. This is a 'sub-class' of workers who do not have full employment rights. The reason for keeping up with the added complication of an extra type of employee is flexibility.

We have a new Agent Update this time and also HMRC has confirmed, in case it was not already known, that a 60-day Capital Gains Tax (CGT) return must be filed even if you are also reporting your gains under Self Assessment.

More cases and news 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) 

Agent Update: July 2022 
HMRC have issued their Agent Update for July 2022. We have summarised the key content for you with links to our detailed guidance on the topics covered. 

60-day CGT returns required despite reporting under Self Assessment
HMRC confirms that declaring a capital gain on the disposal of a UK residential property under Self Assessment does not remove the requirement to file a 60-day property disposal return.

2018 Employment Status consultation outcome is bad news for workers
It has taken the government four years to publish 'Employment status consultation: government response'. It was barely worth the wait. To date, a large number of the recommendations of the 2017 Taylor Review of Working Practice have been ignored. 

Consultation on improving the data collected by HMRC 
HMRC explore options for improving the range of data collected directly from taxpayers. Proposals include measures requiring directors/shareholders of close companies to separately identify, on their tax return, the dividends they receive from their company. 

Helping taxpayers get offshore tax right, Consultation outcome
HMRC have published the outcome of the consultation, 'Helping taxpayers get offshore tax right'. The March 2021 consultation sought views on how to improve offshore tax compliance and prevent mistakes. It formed part of HMRC's 'No Safe Havens 2019' strategy.

Editor's Pick (Freeview) 

Directors' responsibilities and duties
UPDATE: This is a freeview 'At a glance' guide to directors' duties and responsibilities. 

Time to Pay agreement
Business and self-employed taxpayers with outstanding tax liabilities may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

Guides & Updates (Subscribers) 

Land & property  

Register of Overseas Entities
The Register of Overseas Entities goes live on 1 August 2022. It requires overseas owners of UK property to register and report their beneficial ownership to Companies House if they own, buy or sell UK property. Agents must register now to report. 

Start-ups

Record-keeping & tax: What, how and until when?
How long do your need to keep your books and records for tax? Record-keeping for Income Tax, VAT, Corporation Tax. What if you lose your records?

Will I pay less tax if I trade in partnership?
Will I pay less tax if I trade via a partnership or a LLP compared to if I trade via a company or as a sole trader?

Companies & Shareholders

GAAR: Repayment of a participator loan through transactions involving group companies (freeview) 
The General Anti-Abuse Rule (GAAR) Panel has issued its opinion on the use of group loans to avoid the s455 loan charge, finding that although there was a gap in the legislation, its exploitation was not enough to apply the GAAR and the steps remained a reasonable course of action for the group.

An Index to Reorganisations, Demergers & Share transactions
What is a company reorganisation or reconstruction? What tax reliefs apply to a company reorganisation, a share for share exchange, reconstruction or other transaction involving shares? The super-practical tax guides in this index provide an outline of the tax treatment together with step guides and tax clearance templates.

Ceasing trading: What are your options?
What are your options if you are going to cease trading? What processes must be followed if you want to close down a company? What are the tax, company and insolvency law requirements? 

Employers 

ABC shares: setting up share classes with different rights for directors & employees
Can you set up different classes of shares? How do you create Alphabet or ABC shares? What are the rules in giving different classes of shares to directors and employees?  

Private Client & Estate Planning 

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

Joint property: legal v beneficial ownership
UPDATE: What is the difference between legal and beneficial ownership? What are the tax consequences? Are the rules different for married couples?

Overseas and Residence

Offshore Income Tax Toolkit
This toolkit provides an outline of the tax issues for UK resident individuals with offshore income and investments.

Overseas Workday Relief (OWR)
What is Overseas Workday Relief (OWR)? When does it apply?

Non-resident directors: earnings, expenses and reporting requirements
Do non-resident directors have to complete a UK Self Assessment return? When and how is their remuneration taxable in the UK? What expenses can they claim?

Capital allowances

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)

Chaotic records lead to tax on unexplained payments 
In Martyn Arthur and Denise Arthur v HMRC [2022] TC08539, the First Tier Tribunal (FTT) found that unexplained payments made to two companies’ shareholders should be subject to tax as self-employment income.

No Business Property Relief for apart-hotels
In Mr Bruce Firth & Mrs Rita Firth as Trustees of the L Bately 1984 Settlement v HMRC [2022] TC8542 the First Tier Tribunal (FTT) dismissed a claim for Business Property Relief. The services provided by the apart-hotels in question were not sufficient to prevent it from being an investment business.

FTT reluctantly denies CJRS claim 
In Carlick Contract Furniture Limited v HMRC [2022] TC08543, the First Tier Tribunal (FTT) ruled that Coronavirus Job Retention Scheme (CJRS) claims for two employees were not qualifying costs, whilst acknowledging that denying the claims seemed to be contrary to the spirit of the scheme.

VAT Cases & Guides 

Land & Property: DIY Housebuilders scheme
UPDATE: 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.

Is voluntary VAT registration worthwhile?
UPDATE: When can a business voluntarily register for VAT? When would it be beneficial to voluntarily register?

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

• NEW: CPD: MBOs: How should they be structured?
• NEW: CPD: Setting up a corporate group
• NEW: CPD: VAT update 2022

More at CPD Index

Missed last time's Web-update?

Nichola's SME Tax W-update 21 July 2022

• Finance Bill 2022-23: at a glance
• Another OTS Review of tax simplification
• Successful year for HMRC in tax avoidance litigation
• HMRC's 2021-22 Accounts
• Crypto-crash? There are warning signs
• Making Tax Digital: Survival guide (for the self-employed & landlords)
• No partnership no tax relief     
• Capital Losses allowed despite lack of evidence
• UT: FTT VAT decision flawed 
• Invalid invoices prevent VAT recovery 
• Land: future consideration (overage)
• Farming: Overview
• EMI: Enterprise Management Incentive Scheme
• Employment-Related Securities & Share Schemes
• CGT: Date of acquisition or disposal
• R&D: Capital allowances
• Super-deduction & First Year Allowances
• NEW: CPD: MBOs: How should they be structured?
• NEW: CPD: Setting up a corporate group ...More 

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