Nichola's SME Tax W-update 24 November 2022

Hello

The Autumn Finance Bill was published this week and we have combined that with all the previous proposals to create a new Finance Act update and rolling planner for 2023-24. Our rolling planners are extremely handy in a year when there have been so many changes in tax.

A couple of our reported tax cases caught my eye this week. In Marcus and Karen Jays, a company's decision to vote higher final dividends than it was capable of actually paying caused the tribunal to review board minutes and dividend warrants in order to determine when a final dividend was to be treated as paid. It's quite rare, we think, for HMRC to question dividend paperwork. Luckily, the taxpayers had the correct paperwork in place. The general rule is that if you declare a final dividend this creates an immediately enforceable debt, which in turn creates 'payment', unless the company choses to defer the payment date. If payment is deferred the dividend is not paid until the date specified. Under pressure from their lenders, the company was forced to defer the payment according to the bank's terms. This meant that there was no taxable payment when the dividend was declared, and the taxable amount became the  amount physically paid.

Under the Property Act 1925, no more than four people can hold an interest in land. This presents a problem for partnerships of more than four people who have to resort to arrangements whereby land and property is held on trust for the partnership or is held via an associated company, itself owned by the partnership. In a case featuring the latter arrangement, HMRC tried to deny a partnership recovery of VAT charged on leases and the tribunal allowed recovery by looking through the arrangement. Worth a read. 

New CPD for you: we are having a look at what's hot or not for sole traders in 2022/23. We also have HMRC's new Agent Update for November.

More news, updates and cases below, and don't miss our new range of tax calculators and tools.

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

HMRC trawls PSC register at Companies House
HMRC are writing to individuals who have ceased to be Persons with Significant Control in the 2021/22 tax year reminding them that disposals can lead to reporting requirements and Capital Gains Tax to Pay.

Autumn Finance Bill 2022: Contents 
The Autumn Draft Finance Bill 2022, the second Finance Bill for 2022, was published on 22 November 2021. This is a summary of its contents.

Editor's Pick 

Finance Act 2023: tax update & rolling planner 2023-24
This rolling planner tracks the key tax announcements that impact the 2023-24 tax year and beyond. This planner is updated on an ongoing basis. 

Dividend Index
How are dividends taxed? What are the rules for non-UK residents? How do you vote a dividend? When is a dividend paid? When can a dividend be unlawful?

Autumn Statement: At a glance
FREEVIEW: a summary of all the key announcements made in the third fiscal event of the year.

Tax Tools 

Tax Tools
FREE add-on for subscribers, or available separately. Be a winner with our tax calculators, which include: Salary v Dividend v combinations of the same, Sole Trader tax & NICs, VAT, Adjusted Net Income (for the Higher Income Child Benefit charge or Pensions relief). 
Our game-changing tax diagnostics tools now cover CGT 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. 

Guides & Updates  

Directors & Companies

How to gift your shares to the family
How can you gift your private company shares to members of your own family? What are the tax implications? What reliefs apply?

Starting in Business

Sole trader v. limited company: Tax differences & savings (2022/23)
UPDATED: Is it better from both a tax and legal point of view to run your business as a sole trader or as a company? Are there tax advantages in running a business as a company? What legal protections apply?

Employers 

Tax-free benefits and perks
What are the key tax-free benefits or 'perks' that can be used to incentivise your staff? How should you structure them?

Company cars
UPDATED: Company car tax. What will be the new rates on electric cars? How do you work out car benefit? How do you work out car fuel benefit? Are there savings for low-emissions vehicles? Cars and the tax tribunals and Top Tax Tips.

Penalties & Compliance

DOTAS: Disclosure of Tax Avoidance Schemes
UPDATE: updated for HMRC's letter to STEP commenting on some more common IHT planning arrangements. 

Overseas & Residence

Certificates of residence
UPDATE: What is a certificate of residence? Why are they needed? How can I get one? 

Land & Property: an Adviser's Tax Update
Land and Property taxes: a comprehensive review of sector offering a topical CPD update for subscribers. 

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

• NEW: CPD: Sole trader update: 2022-23
• CPD: Double tax treaties: where do I start?
• CPD: Making Tax Digital
• CPD: How to avoid the High-Income Child Benefit Charge (HICBC)

Tax Cases (Freeview) 

NDA taints tax treatment of compensation payment
In Mrs A v HMRC [2022] TC8640, the First Tier Tribunal (FTT) held that a compensation payment made to an employee who agreed not to pursue her grievances at the Employment Tribunal was fully taxable as a payment for a restrictive undertaking. The £30,000 termination payment exemption did not apply.

Expenses of management disallowed as capital in nature
In HMRC v Centrica Overseas Holdings Limited [2022] EWCA Civ 1520, the Court of Appeal confirmed that professional fees incurred in the run-up to the disposal of a subsidiary were expenses of management but also agreed with HMRC that they were also capital in nature as so to be disallowed.

Unpaid final dividends not taxable   
In Marcus and Karen Jays v HMRC [2022] TC8639, the First Tier Tribunal (FTT) found dividends that were declared but unpaid were not subject to Income Tax. The stipulations surrounding their payment meant there was no enforceable right to obtain the funds.

VAT Cases & Guides  

Partnership recovers VAT on associated company’s lease 
In Ashtons Legal v HMRC [2022] TC08641, the First Tier Tribunal (FTT) found that a partnership was able to recover input VAT on property leases entered into by an associated company. The economic and commercial reality was that the partnership was the recipient of the supply.

CIS: Construction Industry reverse charge
UPDATE: 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? 

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

Tax Queries?

UK Agent for registration of Overseas Entities
Announcing the launch of a new service to provide assistance in registration and verification 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.  

Missed last time's Web-update?

Nichola's SME Tax W-update 17 November 2022

• Autumn Statement: At a glance
• Rollover relief for residential property?
• Review of company loss discrepancies
• EIS deferral claims under scrutiny
• Unreported loan charges: New assessments
• Alternative Dispute Resolution for SMEs
• Date of incorporation? Income belongs to company not partners
• FTT: Gilt loss scheme ineffective 
• A beginner's guide to VAT
• Substantial Shareholding Exemption (SSE)
• Succession planning: Buyouts
• Rollover Relief: Exchanges of joint interests in land
• What is the 2022/23 PAYE tax code?
• How are Bitcoin, cryptocurrencies or cryptoassets taxed in the UK?
• IHT: Estate planning checklist  ...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.