Nichola's SME Tax W-update 8 September 2022

Hello,

We have a new CPD and some practical tax guides for you this week, focusing on Partnerships and Stamp Duty Land Tax (SDLT). We also have a bundle of appeals against disallowance of tax relief under variations of the Enterprise Investment Scheme (EIS) as well VAT and ATED penalties.

There is welcome news for employers, as HMRC has announced that it is changing its direct debit system to provide a facility to create, view, amend and cancel a direct debit. This means that you can adjust a current payment to take into account, say, an overpayment from the previous month. This is restricted to employers only, there is no scope for agents to do this on their behalf. 

We have seen a few tax appeals this year that concern the rate of SDLT charged on the purchase of an estate. These cases seldom publish detailed tax calculations, which are often very complicated due to the interaction between the rules and reliefs being claimed. We now bring you a case study which examines the issues and provides some of those calculations. 

The First Tier Tribunal (FTT) seems to have been busy over the summer dealing with appeals against HMRC decisions to disallow tax relief for investors under the EIS and its little sister, the Seed Enterprise Investment Scheme (SEIS). It would appear that HMRC is opening enquiries to ensure that core conditions for investment are met, including the risk to capital condition, that the company is indeed undertaking a qualifying trade and that the funds are being used for a qualifying purpose. A reminder to any company raising funds under EIS and SEIS: you should be reviewing your position throughout the qualifying periods of investment

More news, updates and cases 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) 

PAYE: Paying HMRC 
UPDATE: HMRC can now set up variable direct debits to collect PAYE liabilities.

OTS review of hybrid and distance working: Call for evidence 
The Office for Tax Simplification (OTS) has published a call for evidence ‘Review of hybrid and distance working’ which explores the emerging trends in working practices in the UK and across borders, and their interaction with existing tax rules. 

Reopening of Museum and Galleries VAT refund scheme 
The Museum and Galleries VAT refund scheme is to be reopened to new applicants for the first time in over three years. This will enable more museums and galleries which open free of charge to obtain VAT refunds on their expenditure.

Editor's Pick   

Partnerships: What's new 2022-23   
What's new for partnerships in 2022-2023? How are they taxed? What reliefs might apply?

Partnerships: Capital Gains Tax 
NEW: How does Capital Gains Tax (CGT) work for partners and partnerships? What is HMRC’s Statement of Practice D12? How are transactions between partners treated? What if the partners are connected persons for CGT?

SDLT: Case study purchase of an estate
NEW: a walk through SDLT calculations showing how the linked transactions, residential property, multiple dwellings relief and subsidiary dwellings exemption interact for the purchase of an estate consisting of a substantial farmhouse, a smaller dwelling as well as associated outbuildings and land.

Guides & Updates (Subscribers) 

Self-employed

Starting in business: Start here
Starting a new job or starting in business? Our 'At a glance' guide takes you through the key steps in getting started for tax, with links helping you drill down for more detail.

Herd basis: Farming
UPDATE: The 'herd basis' recognises, for tax purposes, the economic nature of animals held for production as capital assets, rather than trading stock. This can be of benefit to some farmers and result in tax savings.

Land & property  

SDLT: Stamp Duty Land Tax, start here
UPDATE: What is SDLT? What are the SDLT rates? What is exempt from SDLT? What reliefs are available? When are returns due? When can you amend a return?

Freeports: Tax breaks
UPDATE: The Welsh Freeport bidding prospectus has been published and the bidding window opened. Bids must be made by 24 November 2022. 

Companies & Shareholders

SEIS & EIS: Investor relief briefing
The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are two similar tax incentivised vehicles, intended to promote external investment in smaller unquoted trading companies.

R&D Tax Relief: Overview 
UPDATE: What is R&D Relief? How does it work? Why does the size of the company matter? What is sub-contracted R&D? How do I write an R&D Report?  

Employers 

Termination, redundancy and leaving payments
How are redundancy and termination payments taxed? What amounts can be paid tax-free? What amounts are taxable as earnings?

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?

Devolved taxes

LBTT: Land and Buildings Transaction Tax (LBTT)
UPDATE: What is Land and Buildings Transaction Tax (LBTT)? What are the rules?

Tax Cases (Freeview)

Keeping horses not a trade for EIS relief
In Valyrian Bloodstock Limited v HMRC [2022] TC08578 The First Tier Tribunal (FTT) denied Enterprise Investment Scheme (EIS) relief to a business that bought and kept horses. The risk to capital condition was not met: there was no qualifying trade so no long-term objective to grow and develop a trade.

Disqualifying arrangements prevented SEIS relief 
In Coconut Animated Island Limited v HMRC [2022] TC08575, the First Tier Tribunal (FTT) held that despite meeting the risk to capital and qualifying activities conditions, there were disqualifying arrangements in place that meant that HMRC were right to refuse to issue a Seed Enterprise Investment Scheme certificate.

ATED penalties: HMRC may issue retrospective notices
In HMRC v Priory London Limited and HMRC v Jocoguma Properties Ltd [2022] UKUT 00225, the Upper Tribunal (UT) overturned controversial decisions on ATED late filing penalties as such confirming that HMRC is entitled to notify schedule 55 late filing penalties retrospectively.

No SEISS grant on incorporation
In Joshua Peter Taylor v HMRC [2022] TC8576, the First Tier Tribunal (FTT) confirmed that a taxpayer who incorporated his business just before the COVID-19 lockdown was not entitled to support payments under the Self-Employment Income Support Scheme (SEISS). 

VAT Cases & Guides 

Ambulance transport services zero-rated for VAT
In E-zec Medical Transport Services Limited v HMRC [2022] TC08574, the First Tier Tribunal (FTT) found that the supply of non-emergency ambulance transport services was zero-rated for VAT purposes. This overrode VAT exemption and allowed the recovery of input VAT.

Football club VAT assessment was raised in time  
In Nottingham Forest Football Club Limited v HMRC [2022] TC8577, the taxpayer failed to meet their burden of proof to displace a VAT assessment allowing the First Tier Tribunal (FTT) to use information provided over a year prior to the assessment that was sufficient for HMRC to identify a tax shortfall.

A beginner's guide to VAT
NEW: VAT: Where do I start? What is VAT? Who has to register for VAT? What rate should you charge? When are your VAT filing obligations? 

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!

Calendar of tax deadlines and new tax measures
UPDATE: This is a freeview 'At a glance' rolling calendar of common recurring tax deadlines, new tax measures and other tax significant events. 

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: Where are we with Crypto?
• CPD: How to avoid the High-Income Child Benefit Charge (HICBC)
• CPD: MBOs: How should they be structured?
• More at CPD Index

Missed last time's Web-update?

Nichola's SME Tax W-update 1 September 2022

• Campaign: Offshore companies owning UK Property
• Reporting rules for Digital Platforms: Consultation responses 
• Sharp practice tax refund firms named to HMRC
• Leap in Scotland's tax deficit
• Consultation on extending NHS pensions relief
• Non-resident landlords and offshore investors index
• Family partnership not trading  
• Treaty advantage was not main purpose in £18 million WHT repayment 
• No valid invoice or supply, no input VAT claim
• A beginner's guide to VAT
• Transfer of a going concern (TOGC)
• Deed of variation
• R&D Tax Relief: Overview 
• Pension contributions: Personal or company?
• Woodlands: Overview
• Subsistence (self-employed)
• Different ways of taxing UK property
• Restricting mortgage interest relief (subscriber guide)...More 

Come and join our Cloud

Subscribe (and UNLOCK the whole site) A single-user annual subscription is £425 (+ VAT).

What do you get?

• We keep YOU up to date in SME tax.
• FULL access to www.rossmartin.co.uk: your firm's favourite TAX INTRANET containing over 3,500 actively maintained tax guides, briefings, toolkits and checklists.
• Want to know more? Commission your own articles and checklists.
• Structured CPD our detailed SME tax updates "for Advisers Only" provide topical summaries and planning notes our webcasts provide you with structured CPD at your desk.
• Regular client tax briefings: these cover the latest business and employment tax issues and are designed to assist you plan meetings and improve your client services.