Nichola's SME Tax W-update 30 March 2023

Hello,

The headline grabber in tax this week was TV broadcaster Gary Lineker's victory in an IR35 appeal, which almost overshadowed the publication of Sir Keir Starmer's tax return data. 

HMRC had made the unusual decision to challenge a partnership under the Employment Intermediaries legislation. The tax at stake was high, some £4.9 million. The selection of a partnership as a target was dubious as partnerships are, after all, taxed transparently. It remains to be seen whether HMRC will appeal the decision.

Many companies have March year-ends, so this is the time to review directors' loan accounts and vote dividends or salaries to cover any overdrawn balances. Can I draw your attention to our useful guide to avoiding tax at marginal rates in our Private Client section of this week's news?

Also, a reminder: if you have a 31 March year-end and you are wishing to pay employer pension contributions, these need to clear your bank account by 31 March to ensure that they are allowable for Corporation Tax in the present year. 

We have a new Agent Update and an Employment Related Securities (ERS) bulletin out from HMRC this week, we look at some of consultations published during the Spring Budget and we have another politician's tax return to analyse. 

We have found that analysing the tax return data provided by Rishi Sunak and Sir Keir Starmer to be quite an enjoyable exercise from a purely geeky standpoint. Both published key data over the last two weeks, and the papers have enjoyed a lot of speculation as to what rates and allowances have been claimed. In Sir Keir's case it was actually very easy to work out both his Income Tax (IT) and Capital Gains Tax (CGT) bills as you can just put the figures through some basic tax return software. 

That's all for now, more cases, news and guides 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)  

Keir Starmer's Income Tax returns explained
Sir Keir published details of his taxable income and gains last week, following similar disclosure by the Prime Minister last week. Keir's income and gains are straightforward and we ran them through our software to reconcile back to give you an exact breakdown of his tax liability. 

Say ‘bye-bye’ to paper tax returns
Eleven years after announcing a policy Digital by Default, HMRC finally axes the paper Self Assessment return.

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

Employment Related Securities Bulletin 49
HMRC have released their March edition of the Employment Related Securities Bulletin.  Here is our enhanced version.

Consultation response on Income Tax on low-income trusts and estates
HMRC have published the responses to their Consultation ‘Income tax on low-income trusts and estates’ which sought views on legislative proposals to remove Income Tax liabilities from low-income trusts and estates and how proposed changes might impact beneficiaries.

Consultation: Tax administration framework
As part of Spring Budget 2023, a consultation has been issued entitled, 'Simplifying and modernising HMRC’s Income Tax services through the tax administration framework'.

HMRC increases interest rates
Following the Bank of England’s somewhat unexpected announcement on 23 March 2023 that the base rate will rise to 4.25%, HMRC interest rates are also increasing by 0.25%, to 6.75% for late payment interest and 3.25% for repayment interest, from 13 April 2023. 

Editor's Pick 

Close company loans toolkit (loans to participators)
This guide takes a detailed look at the Corporation Tax treatment when a close company makes a loan to a participator (director-shareholder). It also provides links to our guides for individuals on the making of loans to companies.

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. 

Salary or salary plus dividend combinations calc
Calculator of the week: This week's calculator works out whether to pay a small salary with a dividend or not. What is the optimal salary to pay in 2022-23  or 2023-24? What is the advantage of claiming the Employers' NICs allowance? Compare payment of a salary to payment of a dividend, compare payment of dividend to payment of a dividend with also a small salary.

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 

Influencers: Tax Overview
What expenses can online influencers claim for tax purposes? How is their income taxes? Are there special tax or accounting rules for influencers? What are the VAT rules for online influencers? 

Training and course fees (self-employed)
Why can't a self-employed trader claim tax relief on their costs of new training? What above on-going development? Are training fees capital by nature?

Land & Property

Buy-to-let ownership: personal v. company?
What is the most tax-efficient option to own buy-to-let property? Personally or via a company? What are the income and Corporation Tax, CGT, IHT, ATED, SDLT or VAT issues? With tips on profit extraction and other planning points, case studies and links to further guidance.

SDLT: Amending returns and refunds
How do I amend an SDLT return?  When can I amend an SDLT return?  How do I claim and SDLT refund?  How do I deal with contingent consideration?

Employees 

P11D: Reporting benefits and expenses
UPDATE: How do you report benefits and expenses? What is the P11D deadline? 

Directors & Companies

Directors’ loan accounts: Toolkit 
HM Revenue & Customs (HMRC) have a director's loan accounts toolkit for advisers. This is our enhanced version with planning points. 

A new company? Start here
This 'At a glance' freeview guide is essential reading for anyone thinking about starting up a new company.

Energy Bill Relief Scheme for business
UPDATE: The government has released details of how its new Energy Bill Relief scheme will provide help for business customers in Great Britain from 1 October 2022 until 31 March 2023. This is to be replaced with the Energy Bills Discount Scheme from 1 April 2023 until 31 March 2024.  

Private Client & Estate Planning

Tax planning for income at marginal tax rates
At what levels of income do higher marginal rates of Income Tax apply? What tax planning can be undertaken?  

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

Overseas & Residents

Non-domicile status, deemed domicile & tax
Who is non-UK domiciled? What does this mean for UK Income Tax, Capital Gains Tax and Inheritance Tax? What reliefs are available to non-doms?

Non-resident directors: earnings, expenses and reporting requirements
Do non-resident directors have to complete a UK Self Assessment return? When and how is their remuneration taxable in the UK? What expenses can they claim?

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

• CPD: Acting for a UK trust: Start here...
• CPD: CGT Reporting and payment deadlines
• CPD: Taxation of couples in 2022-23
• CPD: Associated Companies

More at CPD Index

Tax Cases (Freeview) 

HMRC fails to score: Lineker outside IR35
In Gary Lineker & Danielle Bux t/a Gary Lineker Media v HMRC [2023] TC8774, HMRC incorrectly challenged broadcaster Gary Lineker's contract with the BBC and BT. It lost a tax appeal against assessments for £4.9m. The First Tier Tribunal (FTT) found that while partnerships can be subject to IR35, the intermediaries legislation, those rules did not apply as Mr Lineker had contracted with the Broadcasters personally. 

Partnership planning subject to Income Tax  
In HFFX LLP and Ors v HMRC [2023] UKUT73, the Upper Tribunal (UT)  found that allocations by a corporate member of a mixed member partnership to individual members should be subject to Income Tax under the miscellaneous income provisions.

Directors' loan written off at date repayment agreement not date of repayment 
In Simon and Debra England v HMRC [2023] TC8770, two directors made an agreement to repay their outstanding directors' loans following the insolvency of their company over two years. They claimed that the write off was over two years for Income Tax purposes. The First Tier Tribunal (FTT) agreed with HMRC: the effective date of write off was the date of the settlement agreement.

Share losses not trading 
In Nicholas Henderson v HMRC [2023] TC8755, the First Tier Tribunal (FTT) found the buying and selling of shares did not amount to a trade.  Losses from that activity could not be offset against other income.

VAT Cases & Guides 

Bad debts: VAT recovery
When can you recover VAT on a bad debt? How much VAT is payable to HMRC or recoverable from HMRC when only part of an invoice is paid? 

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 23 March 2022

• Rishi Sunak's Tax returns explained
• Budget 2023: Voiding assignments of Income Tax
• Budget 2023: Restriction of Charitable Reliefs 
• Consultation responses on Audio-visual tax relief  
• Taxation of ecosystem service markets and extension of APR consultation 
• EMI call for evidence response summary
• Accountant's error costs taxpayer COVID-19 support 
• Option to tax not disapplied, seller was not a developer 
• VAT due on services invoiced after supplier leaves group 
• CPD: Acting for a UK trust: Start here...
• CPD: CGT Reporting and payment deadlines
• Barristers: Tax Overview 
• Farming: Tax Overview
• Buy-to-let ownership: personal v. company?
• Accommodation benefits
• Dividend index
• CGT: Share-for-share exchanges
• Estates: Income Tax and Capital Gains Tax  ...More

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