Nichola's SME Tax W-update 22 September 2022

Hello,

This time, a new Energy Bill Relief scheme for business, new thinking on cryptoasset tax, the outcome to another case where goodwill was overvalued on incorporation and news of tomorrow's mini-budget.

Two of the leading professional bodies for accounting and tax professionals agree that HMRC should totally re-think the tax rules for cryptoassets and decentralised finance. The rules, as they stand, are unworkable and even advisers struggle with the current regime. HMRC has already been consulting on ideals for making some major structural changes to our tax system and it seems that now is a very good time for a total reset.

Today's news is that interest rates are rising yet again to combat inflation, and there is criticism of the economic ideology followed by the UK's new Prime Minister, Liz Truss. US President Joe Biden recently tweeted: “I am sick and tired of trickle-down economics. It has never worked. We're building an economy from the bottom up and middle out.”

So-called 'Truss-onomics' will be revealed tomorrow by the Chancellor, Kwasi Kwarteng, in his mini-budget and in “The Growth Plan”. Measures to be announced include, we think, relaxing city regulation, removing the cap on city banker’s bonuses, reversing recent and proposed changes in National Insurance, Corporation Tax and Stamp Duty Land Tax (SDLT).

The £150 billion support package for domestic and business energy customers now announced can hardly be described as ‘trickle down’, although, as some critics will argue, it is not means tested and so benefits the better off.

Government plans aim to make the UK an attractive place for investment; we shall see what is on offer, and will cover all the new announcements in a special edition tomorrow.

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) 

Energy Bill Relief Scheme for business
The government has released details of how the proposed Energy Bill Relief Scheme (EBRS) will provide help for non-domestic use customers in Great Britain from 1 October 2022 until 31 March 2023.

ICAEW responds to proposed R&D reform 
The Institute of Chartered Accountants in England and Wales (ICAEW) has published its response to the proposed changes to Research and Development (R&D) tax relief, in which it makes a number of observations and recommendations.

Cryptoasset tax: complete overhaul is required
In their responses to HMRC consultation on Cryptasset taxation, both the Institute of Chartered Accountants of England and Wales (ICAEW) and Chartered Institute of Taxation (CIOT) call for a total re-think of the taxation of cryptoassets in the UK.

Editor's Pick  

Starting in Business: Start here
Starting a new job or starting in business? Save vital cash by following guides which takes you through the key steps in getting started for tax, with links helping you drill down for more detail.

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

Guides & Updates 

Companies

Insolvency FAQs for boards
UPDATE: What issues does the board need to consider when a company is about to go into insolvent liquidation? This guide considers some common FAQs that directors may have about insolvency situations.

Substantial Shareholding Exemption (SSE)
What is the Substantial Shareholding Exemption? When does it apply? How does it interact with de-grouping charges?

Tax Penalties

How to appeal a tax penalty?
Step by step guide, based on a long term analysis of successful and unseccessful appeals cases.

Corporate Criminal Offence: failure to prevent tax evasion toolkit
This is an interactive tool to determine 'At a glance' whether there has been an offence committed under the Criminal Finances Act (2017) in respect of a corporate failure to prevent the criminal facilitation of tax evasion.

Land & property  

Buy-to-let: SDLT on partnership incorporation
What are the Stamp Duty Land Tax (SDLT) implications of incorporating my property partnership? Are there any reliefs available? When do the anti-avoidance rules in s.75A-75C Finance Act 2003 apply to partnerships?

De-enveloping property
How do you transfer a property held by a cmpany to its shareholders? The tax term is ‘de-enveloping’. There is no specific tax relief for de-enveloping: you need to plan the transfer carefully in order to avoid excess tax charges.

Employers 

PAYE: Paying HMRC
UPDATE: From 3 October 2022 (previously 19 September) employers will be able to use a new variable Direct Debit payment plan for PAYE.

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 

CGT: Reporting when & how?
How do you report your capital gains? What return do you use?

Trusts & Estates: Exit charge reporting requirements
UPDATE: What is an exit charge, or proportionate charge and when does it apply?

UK Trusts
UPDATE: What is a trust? What types of trust are there? How are UK trusts taxed?

Tax Cases (Freeview)

60% tax penalties for self-employed landlord
In Anthony Calcutt v HMRC [2022] TC08582, the First Tier Tribunal (FTT) a self-employed taxpayer and landlord failed to provide sufficient information to displace tax assessments and suffered 60% tax penalties as a result.

CoA allows Entrepreneurs' Relief on trust share disposal 
In The Quentin Skinner 2015 Settlements v HMRC [2022] EWCA Civ 1222, the Court of Appeal (CoA) found that Entrepreneurs’ Relief was due on the sale of shares by a trust. The individual did not have to be a qualifying beneficiary throughout the one-year period when the personal company condition was met, only at the time of disposal.

UT: Income tax charge on incorporation
In HMRC v Mr Neil and Mrs Sharon Pickles [2022] UKUT00253, the Upper Tribunal (UT) found a distribution arose when an asset was transferred in excess of its market value on incorporation. The value of the distribution was the benefit received by the taxpayer over and above the market value of the asset transferred.   

VAT Cases & Guides 

Input VAT largely irrecoverable by property partnership 
In Majid and Miah Properties v HMRC [2022] TC08588, the First Tier Tribunal (FTT) found that a property letting partnership could not recover input VAT on the majority of incorrectly addressed purchase invoices.

Registering for VAT
When should a business register for and charge VAT? What are the VAT registration thresholds? What penalties might HMRC issue for late notification of registration? When do you need to file a VAT return? 

CIS: Construction Industry VAT reverse charge
What is the CIS VAT reverse charge? How do you account for VAT? Can you still cash account for VAT? What administrative changes do I need in order to operate the reverse charge?

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 15 September 2022

• Government announces Energy Price Guarantee
• Mini-budget 23 September 2022
• Spotlight 60: Umbrella companies and tax avoidance  
• Penalties: Under-Assessment: At a glance
• A Landlord? Start here
• Settling UK debt not a remittance
• Court confirms UK's group asset transfer rules
• Great British VAT penalty takeaway 
• Books and Printed Matter
• SDLT, LBTT, LTT: What's new 2022-23? 
• Cycles & cyclist's safety equipment
• Gift Aid
• Requirement to Correct (Offshore Evasion)
• CPD: Where are we with Crypto?  ...More 

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