Nichola's SME Tax W-update 19 January 2023

Hello

HMRC have just published a new Agent update and, amongst other things, this includes new guidance on the Transfer of Assets Abroad (TOAA) provisions. It is only speculation on our part, but these anti-avoidance rules might have been one reason why a government minister is reported to have made a seven figure tax settlement with HMRC this week. His visable tax planning as shown on Companies House was to place his shares in a UK company into an offshore trust. Either he fell under the TOAA or the settlor interested trust rules, we guess, as both prevent individuals avoiding UK taxes.

Trusts can be complicated things and by popular demand, we have created a new advisers' guide for those acting for trusts. We hope that you will find it useful. The guide also has links to our other trusts' material.

Our case summaries this week cover a late-filing appeal of Soft Drinks Industry Levy return and a useful judgment on denial of EIS relief which takes you step-by-step through some of the qualifying conditions; always helpful. We also review a case that looks at an appeal against excise penalties for smuggling and what happened when a scheme identified in one of HMRC's Spotlights reached the tribunal.

HMRC are furthering their campaigns to ensure that everyone signs up for Self Assessment, by writing to online sellers and content creators.

If you are struggling under the pressure of the Self Assessment season we have a tiny bit of light hearted relief with a caption competition for you.

That's all for now,

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)  

Consultation on R&D Tax Reliefs as a single scheme 
The government has published a new consultation, 'R&D Tax Reliefs Review: Consultation on a single scheme'. Following the steps to equalise the relief provided by the two existing regimes, the government is seeking views on the schemes being merged into one. 

HMRC targets online sellers and content creators    
HMRC have issued two one-to-many letters covering those they believe are trading and have taxable income connected with online marketplaces or online content creation.

Agent Update: January 2023
HMRC have issued their Agent Update for January 2023. We have summarised the key content for you with links to our detailed guidance on the topics covered. 

Editor's Pick 

Top tips for agents with last-minute tax returns
UPDATE: it's been noted that the point on Gift Aid was not quite correct, we have updated it.

Caption competition
This week's competition asks you to come up with an amusing title or caption for one of our case write-ups. 

Tax Tools 

Full details of our tax calculators
We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes. 

Self Employment Calc
Calculator of the week: This week's calculator works out Income Tax, Class 4 and Class 2 National Insurance payable on profits from self-employment. If you are doing your own tax return using HMRC's software use it to double-check your tax liability. Or use it to get an idea of what tax you will owe this time next year so you can plan for it.

Tax Tools
FREE add-on for subscribers, or available separately

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

Self-Employed 

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

Artists: Tax Overview
UPDATE: Our new and improved tax overview guide for artists looks at how their income is taxed, what expenses they can claim for tax purposes and the special VAT rules which apply.

Employees 

Working from home (employees)
What expenses can employees claim for homeworking? Are the rules the same for the self-employed? How do you make a claim?

Directors & Companies

Loss relief (Income Tax) disposal of shares
Share Loss relief allows you to offset a loss made on the disposal of shares against income instead of following normal capital loss treatment. 

Private Client & Estate Planning

Acting for a trust? Start here….
NEW: This is an essential guide for advisers and trustees on how to manage the tax affairs of a UK trust and what pitfalls to look out for.

A tax guide to investment bonds
UPDATE: How are investment bonds taxed? What are the problems and pitfalls to be aware of?

Limit (cap) on Income Tax reliefs
UPDATE: What are the limits and restrictions for Income Tax relief? When do they apply?

Negligible value claims
What is a negligible value claim? When and how can a claim be made?

Land & Property

Annual Tax on Enveloped Dwellings (ATED)
UPDATE: ATED returns are due on 30 April 2023.  Properties will need to be valued as at 1 April 2022 for this return.

Adviser's Guide: Property Business, profits and losses
What is property income? How is it taxed? How are profits calculated? How are losses relieved? Is NI paid on property income? Is property income classed as a business activity?

Freeports: Tax breaks
UPDATE: What are Freeports? Where are they located? What are the tax advantages?

Partnerships

Partnerships: How to prepare partnership and partners tax returns
How to prepare partnership returns. How are partnership profits calculated? How are corporate members of partnerships taxed? What are the differences between the tax treatment of individual and corporate partners? Are there anti-avoidance provisions to consider?

Partnerships: Capital Gains Tax
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?

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

• NEW: CPD: Land and Property Update 2022-23
• CPD: Employers' tax update: 2022-2023
• CPD: The Targeted Anti-Avoidance Rule (TAAR)
• CPD: Sole trader update: 2022-23

More at CPD Index

Tax Cases (Freeview) 

No excuse for late filing of Soft Drinks Industry Levy return 
In Shivsagar Enterprises Ltd v HMRC [2022] TC08681 the First Tier Tribunal (FTT) dismissed an appeal against penalties for the late filing of a soft drinks industry levy return. The taxpayer did not have a reasonable excuse and even if they did they did not remedy the failure without unreasonable delay.

No EIS relief due to subcontractor relationship
In Hoopla Animation Limited v HMRC [2023] TC08683, the First Tier Tribunal (FTT) found that a subcontracting company's involvement in the allocation of funds raised under an EIS share subscription was a disqualifying arrangement. As a result, EIS relief was blocked despite the subcontracting being on commercial terms.

Up in smoke: a smuggler's tale
In Nikola Polakova v HMRC [2023] TC8690, the First Tier Tribunal (FTT) found that 29,800 cigarettes brought to the UK were not for personal use. While a late appeal was considered, it was struck out. The penalties based on deliberate behaviour were upheld.

Spotlighted Gold Bullion scheme fail
A profit extraction tax avoidance scheme involving gold bullion, which aimed to beat the Disguised Remuneration rules and was first identified by HMRC back in 2016 in its Spotlight 30, has been tested by the First Tier Tax Tribunal (FTT) who found that it did not work.

VAT Cases & Guides 

A tax inspector calls...

Spotlight 58: Unfunded pension arrangements
UPDATED to include GAAR Panel opinion which concluded the transfer of future pension obligations to a third party was not a reasonable course of action.

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.  

Missed last time's Web-update?

Nichola's SME Tax W-update 12 January 2022

• Register for Self Assessment
• Finance Act 2023 receives Royal Assent
• Strengthened Standard for Agents
• Top Tips for agents with last-minute tax returns
• Full details of our tax calculators
• No travel and subsistence for agency workers   
• Loan from pension fund is unauthorised payment
• Date of incorporation determined by facts and intention
• Penalties (VAT)
• Discounts, Reward Schemes & Vouchers: VAT
• Year-end top tips for OMB's 2022/23 
• Farming: Tax Overview
• Employment-Related Securities: Reporting issues
• IHT Business Property Relief
• High-Income Child Benefit Tax Charge
• How to disclaim the Personal Allowance
• Registration of Overseas Entities: Agent Guide
• CPD: Land and Property Update 2022-23
• CPD: Employers' tax update: 2022-2023 ...More

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