Nichola's SME Tax W-update 25 August 2022

Hello,

We are forecasting record numbers of tax penalties for late filing of residential Capital Gains Tax (CGT) returns as statistics reveal that taxpayers (and their agents) have not fully understood the new filing requirements. We have created a new guide to CGT penalties which explains the basics for you. Penalties can soon mount up and it's important to remain vigilant for reportable events. If in doubt, ask your accountant!

We have a new guide to taxing Restricted Stock Units. This is a topic that, like the taxation of Employment Related Securities, continues to create blind spots for many advisers. At the same time it appears that few of those who receive these types of share award have little idea as to how they are taxed. I hope that our guides to both of these topics can assist in defogging some brain cells!

There are reports that professional footballers continue to occupy a sizeable chunk of HMRC's investigation resources. This may explain why we have seen an overall drop in general tax enquiries, although the Covid lockdown may well account for some of that fall. Analysing our inbox, the signs are that HMRC is far more proactive in directing its resources against higher risk taxpayers. Higher risk, it seems, often equates with higher income.

There is a new Agent Update, changes to authorised fuel rates and more interesting cases to review. Have a good bank holiday.

News, cases 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) 

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

Record numbers of CGT penalties forecast
Statistics published by HMRC indicate that many taxpayers making disposals of UK residential property are still not coming to terms with the UK's Capital Gains Tax (CGT) reporting regime and those who have missed filing and payment deadlines will now be subject to late filing penalties until they file their outstanding returns.

HMRC investigate one-in-twelve footballers
Last year, one in every 12 professional footballers in the UK had enquiries opened into their tax affairs by HMRC, according to research by accountants UHC Hacker Young.

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

Editor's Pick (Freeview) 

Restricted Stock Units: tax reporting
NEW: How to report Restricted Stock Units for UK tax. I am an employee and my employer has granted me stock units or  RSUs. How are they taxed? How do I complete my tax return?

Penalties: Capital Gains Tax
Not filed a residential property CGT return on time? What penalties will apply to you.

Guides & Updates (Subscribers) 

Self-employed

Losses, trade losses and sideways relief
UPDATE: How can trade losses be utilised? What are the restrictions?

Cessation followed by incorporation
UPDATE: This guide explains the tax and accounting treatment of a sole trader or partnership business in its final period before incorporation.

Land & property  

Furnished Holiday Letting
UPDATE: What is Furnished Holiday Letting? How do you qualify for Furnished Holiday Letting? What are the rules for Furnished Holiday Letting?

Incorporation: Property business/Buy-to-let
What relief can I claim if I incorporate my residential property business? What claims and elections do I need to make? What are the VAT and Stamp Duty Land Tax (SDLT) implications?

Companies & Shareholders

Incorporating an existing business
Incorporation of an existing business is the process by which the business of an existing sole trader or partnership is transferred to a new company.  

Employers 

Setting up a share scheme
UPDATE: what are your options when it comes to giving share awards to your employees?

Legal fees
NEW: The cost of legal fees incurred by an employee in taking legal action against their employer can only be deductible for tax in certain circumstances.

Private Client & Estate Planning 

Trust Registration Service
UPDATE: HMRC have published details of when penalties may be charged under the Trust Registration Service. 

CGT: Loans to traders relief
UPDATE: What is loans to traders relief? When can it be claimed? What are the conditions of the relief?

Divorce & Separation: Toolkit
UPDATE: A summary of the tax implications which can arise on divorce and separation. 

Overseas & Residence

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

Profit Fragmentation
A summary of the Profit Fragmentation anti-avoidance rules introduced to tackle tax avoidance schemes which move UK profits outside the UK tax charge, resulting in significantly less tax being paid.

Capital allowances

Fixtures: Overview
What are fixtures? How do I claim lost or unclaimed fixtures? When must fixtures be pooled? 

Tax Cases (Freeview)

SIPP purchase of shares leads to pension surcharge  
In Guy Boardman v HMRC [2022] TC8558, a taxpayer's plan to profit from selling his shares at an inflated price to his Self Invested Pension Plan (SIPP) backfired and resulted in an unauthorised payment charge. Payments from an opaque LLP were chargeable as distributions.

Higher rates of LTT due on adjoining property 
In Carl James v The Welsh Revenue Authority [2022] TC8563, the First Tier Tribunal (FTT) held the purchase of an adjoining property which was then combined with the existing main residence was a higher rate transaction for the purposes of Welsh Land Transaction Tax (LTT).

Sole trade business was not transferred to company 
In Graham Davis v HMRC [2022] TC08566, the First Tier Tribunal (FTT) found that a sole trade business had not been transferred to a company, meaning that losses of that sole trade business could not be relieved against income derived from the company.

Compensation for loss of pension rights was not earnings 
In E.ON UK Plc v HMRC [2022] UKUT 196, the Upper Tribunal (UT) found that payments made by an employer, as part of a package of changes for employees, were compensation for loss of pension rights and not taxable employment earnings. 

VAT Cases & Guides 

Prison healthcare services a single composite supply for VAT
In Spectrum Community Health CIC v HMRC [2022] TC08557, the First Tier Tribunal (FTT) found that the appellant did not make a series of separate supplies but one single composite supply that was exempt from VAT.

Online Marketplaces: Selling goods in the UK
UPDATE: When do you have to register for UK VAT? When is UK VAT payable? What amount is VAT payable on? What information do you have to give the marketplace provider? What will it do with that information?

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: How to avoid the High-Income Child Benefit Charge (HICBC)
• NEW: CPD: MBOs: How should they be structured?
• NEW: CPD: Setting up a corporate group
• More at CPD Index

Missed last time's Web-update?

Nichola's SME Tax W-update 18 August 2022

• An Index to Reorganisations, Demergers & Share transactions
• Oh yes it is! Christmas Spectacular qualifies as dramatic production
• COVID denies stamp duty relief claim
• Euromoney deal was bona fide, not avoidance 
• Deliberate suppression of purchases allows Presumption of Continuity 
• VAT repayment had no legal basis 
• Campsites: what expenses can I claim?
• SDLT: Residential property higher rates
• SDLT: Residential property & dwellings
• Mutual trading, members clubs and community trades
• Liquidation/strike off: Tax returns
• Eye tests and glasses
• PAYE Settlement Agreements
• IHT: Estate planning checklist
• CGT: Deductible expenditure
• Place of supply: Services
• NEW: CPD: How to avoid the High-Income Child Benefit Charge (HICBC) ...More 

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