Nichola's SME Tax W-update 10 November 2022

Hello

This time we are looking at UK landlords and the tax issues for different types of taxpayers who want to claim relief for accommodation costs. We have updates on rises in tax interest rates and details of HMRC's new range of tax disclosure campaigns.

Our accommodation and rental content is inspired by the news that HMRC is taking advantage of the way that business makes use of and is mandated into using digital technology by sending out ‘nudge’ letters to different types of business. An example of HMRC's joined-up approach is that it can use data provided by landlord deposit schemes, and then cross reference a landlord’s details to the land registry as well as to their Self Assessment registration.

We have also been expanding our guides on different tax rules for different trades and professions, and we now have a new guide to taxing 'Trades people'. There are now 20 guides in this series, each one looking at what expenses can be claimed, how to account for income, VAT regulations and more.

There are a couple of reminders; for employers, if you are running a payroll that requires manual updating, you will need to update it for the changes to National Insurance rates that went through on 6 November.

For Self Assessment taxpayers, HMRC has issued a reminder on Time to Pay agreements. If you want to arrange one to pay off tax liabilities by instalment, then these need to be set up before the looming January 31 deadline.

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)  

HMRC interest rates increase again
Following the Bank of England’s announcement on 3 November 2022 that the base rate would rise to 3%, HMRC interest rates will also increase by 0.75%, to 5.5% for late payment interest and 2% for repayment interest, from 22 November 2022. 

HMRC's increasing use of data harvesting powers 
HMRC is making good use of its data-gathering powers to harvest data from online sources as it opens a stream of new nudge letter campaigns. HMRC has the power to request bulk data in the form of lists of users of suppliers and their customers from websites and app platforms.

NICs changes: don’t forget to update your payroll software   
On 22 September 2022, the government announced a reversal of the 6 April 2022 1.25% increase in National Insurance rates, with effect from 6 November 2022, or as soon as payroll systems can be changed, if later.

Time to Pay arrangements: reminder
The Income Tax Self Assessment 31 January 2023 filing and payment deadline is rapidly approaching. HMRC note an increase in individuals using its Time to Pay (TTP) facility. The facility allows taxpayers to pay tax in instalments. Taxpayers must make a TTP with HMRC before the deadline for tax payment passes.

Editor's Pick  

How to appeal an HMRC decision
UPDATE: Under the principles of open justice, a third party may request copies of skeleton arguments of ongoing or past tribunal hearings if they are interested in understanding the detail of a case. This can be very useful to an adviser.

Tradespeople: What expenses can I claim?
What expenses can Tradespeople claim for tax purposes? What are the VAT rules? What are the rules for sub-contractors?

Guides & Updates  

Self-employed

Accommodation costs
Can accommodation costs be claimed for tax purposes? When are they disallowable? What is the relevant case law? 

Board and lodging adjustments
What private use adjustment should be made for board and lodging where a taxpayer lives at the business premises?

Landlords

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

Property profits & losses: Toolkit (2022-23)
Our Property profits & losses toolkit takes HMRC's version and adds a great deal more information about what you can claim as an individual.

Directors & Companies

Can I charge my company rent for use of my home?
Can I charge my company rent? Under what circumstances, and what expenses can I claim? Can I offset my mortgage? This is a guide to the tax considerations and implications of charging your company rent for the use of your home.

Family Investment Companies
UPDATE: What is a Family Investment Company? Why use a Family Investment Company? What is the tax treatment of a Family Investment Company?

Land & property  

PRR: Private Residence Relief
UPDATE: What is Private Residence relief (PRR)? What are the qualifying conditions? Can you claim relief on two homes? How do you claim PRR? Can you claim PRR if you develop your garden?

Cash basis for property businesses
UPDATE: When should landlords use the cash basis? How are profits calculated? Is there an alternative? 

Employers 

Accommodation benefit 
When is accommodation a taxable benefit? What are the exemptions? How is the benefit calculated? Can accommodation be claimed as part of business travel?

Working from home (employee guide)
What expenses can employees claim for homeworking? Are the rules the same for the self-employed? How do you make a claim? How does the COVID-19 easement work?

Private Client & Estate Planning 

IHT Business Property Relief
A guide to what Business Property Relief is, when it can apply and pitfalls and planning points.

IHT: Investment company shares
What are the Inheritance Tax (IHT) implications for transferring shares in an investment company? What charges will arise? What reliefs are available?

Tax Cases (Freeview) 

SDLT return amendments can't be made out of time
In Christian Peter Candy v HMRC [2022] EWCA Civ 1447 the Court of Appeal (CoA) found that the 12-month amendment window could not be extended to recover SDLT where a contract was incomplete beyond that date.

VAT Cases & Guides 

HMRC have an implied power to refuse VAT credits 
In DCM (Optical Holdings) Ltd v HMRC [2022] UKSC 26, the Supreme Court (SC) found that a VAT best judgement assessment was made in time and that HMRC’s obligation to pay a VAT credit arises only when it is established that the VAT credit is due.

Supreme Court rejects historic input VAT claims 
In HMRC v NHS Lothian Health Board [2022] UKSC 28, the Supreme Court (SC) dismissed NHS Lothian's historic input VAT claims on the grounds that there was insufficient evidence to support the value claimed.

Assessments: Best judgement
UPDATE: What is a 'best judgement' assessment for VAT? When can HMRC raise one? What are your rights of appeal? How do you displace a best judgement assessment?

UT: Hospital parking VATable  
In Northumbria Healthcare NHS Foundation Trust v HMRC [2022] UKUT00267, the Upper Tribunal (UT) found the provision of car parking by an NHS trust was subject to VAT.

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?

UK Agent for registration of Overseas Entities
Announcing the launch of a new service to provide assistance in the registration and verification of an overseas entity that owns UK land or property.

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: Double tax treaties: where do I start?
• CPD: Making Tax Digital
• CPD: Where are we with Crypto?
• CPD: How to avoid the High-Income Child Benefit Charge (HICBC)

Missed last time's Web-update?

Nichola's SME Tax W-update 3 November 2022

• Campaign: Offshore companies owning UK Property
• OTS review of residential property income
• HMRC Charter performance drops
• Energy Price Guarantee announced for Northern Ireland 
• A Non-Resident Owner of UK property? Start here 
• CoA: Celebrity Enterprise Zone expenditure out of time
• Online Marketplaces: Selling goods in the UK
• Non-resident directors: earnings, expenses and reporting requirements
• Annual Tax on Enveloped Dwellings (ATED)
• Laundry costs
• CGT: Rollover (Incorporation) Relief
• Negligible value claims
• NEW CPD: Double tax treaties: where do I start?...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 cover the latest business and employment tax issues and are designed to assist you plan meetings and improve your client services.