Nichola's SME Tax W-update 9 February 2023

Hello,

This week we are continuing to focus on practical tax planning guides and checklists ahead of the year-end, while our review of decisions from the tax tribunals has yielded some cases on topical subjects. Don't miss the news headlines too.

First up, the Upper Tribunal (UT) confirms that the concept of ‘staleness’, for so long a problematic issue in Discovery Assessment appeals, is dead. There was some confusion over the status of the obiter dicta in the Supreme Court's Decision in the 2021 case, Tooth. We hope that this clears up the matter once and for all, however the UT decision could yet be appealed.

There is barely a dull moment when it comes to Stamp Duty Land Tax (SDLT) appeals. A recent case features a property investor, who was denied SDLT higher rate relief on what he saw as the acquisition of a replacement of his only or main residence. The tribunal found that as he had only lived at a property for a mere ten days, that was not enough to claim that it was a residence and relief was denied. An interesting cross over between SDLT and the Capital Gains Tax (CGT) main residence relief rules.

We have a couple of VAT cases, both of which are worth noting. Your eyes might glaze over at the mention of the Tour Operators Margin Scheme (TOMS), but the one below makes for an interesting read. Who knows whether you can claim a VAT repayment if you operate on a negative margin? Our other VAT case features the VAT DIY Housebuilder scheme. The important take-home about this scheme is that although it is called ‘DIY’ it’s not recommended to make a DIY VAT claim. Please do take professional advice, the rules on this are far trickier than you would ever think.

The proposal to increase the rate of dividend tax and the main rate of Corporation Tax from 19% to 25% from 1 April 2023 certainly puts the ‘cat amongst the pigeons’ when it comes to offering tax planning advice to your average SME and its owners. You will find that many old guides and checklists need to go into the recycling bin. This is a great time to consider subscribing to our tax service. 

If you are not currently a subscriber and would like a demo and trial, let me know and we will show you round. You can contact me via the website, or Steve our subscriptions manager.

More news, updates and handy guides below. 

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)  

Increase in HMRC interest rates 
Following the Bank of England’s announcement on 2 February 2023 that the base rate will rise to 4%, HMRC interest rates are also increasing by 0.5%, to 6.5% for late payment interest and 3% for repayment interest, from 21 February 2023. 

Review National Insurance records by 5 April 2023 
Individuals intending to claim the State Pension should, before 5 April 2023, check their National Insurance Contributions (NICs) record for gaps. Transitional arrangements ending on 5 April 2023 currently mean that voluntary NICs contributions can be made as far back as 2006, rather than the usual 6 years.

Offshore Entities miss registration deadline
Research by the BBC and Transparency International suggests that some 18,000 of the estimated 50,000 Offshore Entities that own UK land and property have failed to meet the 31 January 2023 deadline to register with Companies House under the UK's new Register of Overseas Entities rules.

Editor's Pick 

Tax Planning & Tips: Tax Year End
Our 2023 range of Practical Tax Year-End and Accounting checklists cover individuals, in their private capacity and their business interests. They make essential reading for any business owner or adviser.

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. 

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 

Airbnb: Tax Overview
Our new and improved guide for Airbnb owners covers how they are taxed, what expenses they can claim for tax purposes and the special VAT rules which apply.

Checklist: Year-end Accounts & Tax (self-employed)
This is a checklist to assist you in preparing accounts and completing the Self Employed section of your Self Assessment tax return and to highlight key areas of discussion with your sole trader clients. 

Basis Period reform
What is basis period reform? Who is affected? What is the new basis year for tax? What are the transitional rules?

Land & Property

LBTT: Additional Dwelling Supplement
UPDATE: The Tavendale case. What is the Additional Dwelling Supplement for the Land and Buildings Transaction Tax? When does it apply? 

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.

Employees 

Annual expenses for employees: How to claim
The ways in which employees can claim tax relief for expenses changed on 7 May 2022. This guide explains how employees can claim tax relief for the employment expenses they incur. This is a freeview guide.

Companies

Tax-efficient extraction of profits: toolkit (2023/24)
This toolkit is designed to help a company and its owner decide how company profits are to be extracted.

Year-end tax planning & compliance review
Year-end tax compliance review checklist for a company and its owners.

Private Client & Estate Planning

Overpayment Relief
UPDATE: What is Overpayment Relief? When can you claim Overpayment Relief? What are the conditions for a claim for Overpayment Relief? What are the time limits for a claim for Overpayment Relief?

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

Penalties & Compliance

Alternative Dispute Resolution for SMEs
UPDATE: An At glance guide to Alternative Dispute Resolution (ADR) for small and medium-sized enterprises.

Discovery Assessments
UPDATE: When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? What are your rights of appeal and defences?

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

• NEW: CPD: Directors Tax Update 2022-23
• CPD: Land and Property Update 2022-23
• CPD: Employers' tax update: 2022-2023

More at CPD Index

Tax Cases (Freeview) 

Supreme Court's Tooth obiter dicta sets precedent on staleness
In Paul Harrison v HMRC [2023] UKUT 00038, the Upper Tribunal (UT) considered a challenge to the Supreme Court's dismissal of the principle of staleness. It found that whilst the Supreme Court in Tooth had opined as obiter dicta, there was an intention to create a binding precedent. The appeal was dismissed.

No higher rate SDLT relief, property not main residence
In Benjamin Cohen v HMRC [2023] TC8717, the First Tier Tribunal (FTT) found a property occupied for 10 days was not an only or main residence for SDLT purposes. Higher rates of SDLT were due on the purchase of a further property as it was not the replacement of an only or main residence.

VAT Cases & Guides  

VAT TOMS: No repayment for negative margin 
In The Squa.re Limited v HMRC [2023] TC08700, the First Tier Tribunal (FTT) found that a company operating the Tour Operators Margin Scheme for VAT could not claim a VAT repayment on a negative margin.

Extension ineligible for DIY Housebuilder scheme  
In Daniel Dunne v HMRC [2023] TC8716, the First Tier Tribunal (FTT) denied a DIY housebuilder a VAT reclaim. The building created was considered an extension by the underlying planning application and not a separate dwelling.

Tax Queries?

UK Agent for registration of Overseas Entities
Do you require 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 2 February 2022

• Live Corporate Criminal Offences investigations remain stable 
• HMRC blocks Agents Services Accounts over AML queries
• Campaign: Offshore Companies Owning UK Property
• HMRC's Employment Securities Bulletin 47
• No legal privilege for property lawyers' client account 
• £6 million in 'gifts' were earnings  
• FTT erred in deciding Nakd bars were confectionery for VAT
• Hairdressers: Tax Overview
• Super-deduction & First Year Allowances
• Deed of variation
• IHT Agricultural Property Relief
• Statutory Residence Test (SRT) Toolkit
• Overpayment Relief
• Penalties: Deliberate Behaviour
• NEW: CPD: Directors Tax Update 2022-23 ...More

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