Nichola's SME Tax W-update 20 April 2023

Hello,

We have something of an 'Employers' Special' this week, with a new Employer Bulletin from HMRC and an Employers What's new 2023-24 guide. There is something for everyone though, as we also have several new season guides for Landlords, Company Directors and other taxpayers.

Several recent tribunal decisions have covered appeals against the clawback of payments made under the Coronavirus Job Retention Scheme (CJRS). Remembering back to 2020, just after the time of the first lockdown, I remember fielding several urgent enquiries from employers who were unable to meet the qualifying conditions of the scheme. They had employees at the relevant time but for whatever reason they were just slow in putting those employees onto their payrolls in the relevant month. As such they missed the mid-March cut-off. It might seem unfair that an administrative oversight should deny relief under the CJRS, but the rules were the rules. The First Tier Tribunal (FTT) has just considered such a case and come to exactly that conclusion.

It's the time of year when employers will be gathering data to complete form P11D, the return of benefits and expenses. Many of you keep it simple and pay HMRC's scale rates. Of course, you can agree your own bespoke rate, if you agree on them with HMRC. What happens if HMRC changes its mind about the arrangement? The FTT examined this issue and concludes that it's 'too bad'. HMRC cannot revoke a dispensation, not if the employer has met all its conditions. 

Another case caught my eye and is worth a mention as it involves the valuation of small company intellectual property (IP) which is always a novelty. This one was a co-joined appeal following similar appeals against pensions' Unauthorised Payment Charge assessments. A firm of financial advisers created a scheme to provide emergency cash funding for employers by enabling them to dip into pension fund cash. The details of the scheme were that the employer would sell its IP to its self-administered pension fund and then lease it back, presumably the leaseback was so that the employer could keep trading using that asset. The problem was in the quality of the IP, which often was just a domain name or a photo of a director and that it was overvalued. The net result was that the employer received pension fund cash for the sale of very little, which created an unauthorised payment. The FTT found that the valuation experts' approach lacked commercial reality and the pension trustees received a sanction charge for their 'cavalier' approach to due diligence. 

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)  

Half of director disqualifications due to COVID-19 fraud
Figures published this week by the Insolvency Service show that directors guilty of COVID-19-related misconduct made up nearly half of the 932 director disqualifications obtained by the Insolvency Service in 2022-23. Disqualification lengths have also increased.

Employer Bulletin: April 2023
HMRC have published their Employer Bulletin for April 2023. We have summarised the key content for you, with links to our detailed guidance on the topics covered.

Focus on Employers

CJRS to be repaid: employees were not added to RTI 
In Oral Healthcare Limited v HMRC [2023] TC8781, a company had to repay £35,739 after it failed to meet the conditions of the CJRS. Employees were employed in March 2020 but were not added to PAYE RTI submissions until after the 19 March cut-off deadline.

PAYE dispensation binding on HMRC   
In NWM Solutions Ltd v HMRC [2023] TC8788, the First Tier Tribunal (FTT) found that as an employer met all the conditions imposed according to a PAYE dispensation covering subsistence expenses, HMRC was bound by that agreement and could not seek to change its view later. 

Sale of overvalued IP to pension results in scheme tax charges
In Morgan Lloyd Trustees Limited  & Others v HMRC [2023] TC08779 seven companies were hit with pensions unauthorised payment charges and their financial adviser fined when a scheme to release employer's pension funds as loans back to the companies secured on their overvalued intellectual property backfired.

Editor's Pick (subscription content)

Employer’s What’s On: 2023/24
NEW: This is a Finance Act 2023 employer update for advisers and their clients. 

Company cars
Company car tax. How do you work out car benefits? How do you work out car fuel benefits? Are there savings for low-emissions vehicles? How do you reduce car benefits? Cars and the tax tribunals and Top Tax Tips.

Tax Tools 

2023-24 Tax Data Card
FREEVIEW tax data at a glance

Tax calculators
FREE for subscribers: 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 (subscription content)

Self-Employed 

Sole trader v. limited company: Tax differences & savings (2023/24) 
NEW: 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?

Self Assessment Return 2022/23: What's new? 
2023 Self Assessment toolkit: top tips for completing tax returns for the year ending 5 April 2023.

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

Employees 

Subsistence (employer's guide)
Subsistence is the tax term for food and drink. What can be claimed? What are the rules for employer intermediaries? How do claims affect VAT, NICs and Income Tax?

Termination, redundancy and leaving payments
How are redundancy and termination payments taxed? What amounts can be paid tax-free? What amounts are taxable as earnings?

Directors & Companies

Do I pay a salary or dividend? 2023/24
NEW: This guide explores the tax-planning points and pitfalls of using dividends to create a tax-efficient pay package.

Land & Property

Incorporating a property/buy-to-let business
UPDATE: What relief can I claim if I incorporate my residential property business? What claims and elections do I need to make? What are the Capital Gains Tax (CGT) and Stamp Duty Land Tax (SDLT) implications?

Private Client & Estate Planning

National Insurance: What's the maximum payable?
UPDATE: How are National Insurance Contributions (NICs) limited? What is the maximum payable? What different rules apply to employment and self-employment income? 

Dividend tax (subscriber guide)
UPDATE: This practical tax guide explains how dividends are taxed on or after 6 April 2016. It includes HMRC's own examples, more detailed examples, including an Owner Managed Business (OMB) section together with tax planning tips.

Capital Allowances

Super-deduction & First Year Allowances
UPDATE: What is the Super-deduction? When does it apply and what is the rate of allowance? What is the SR Allowance? What if I dispose of an asset on which the Super-deduction or SR allowance has been claimed? What happens when an accounting period straddles 1 April 2023? 

Penalties & Compliance

Statutory Review (by HMRC)
UPDATE: What is a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review? 

Making a tax disclosure (Digital Disclosure Service)
UPDATE: A practical guide to making a tax disclosure using HMRC's online system.

Materiality and tax
What is materiality and how does it apply to tax?

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

More at CPD Index

Tax Cases (Freeview) 

Scottish law not to be treated as a foreign law
In Spring Capital Limited v HMRC [2023] UKUT 91, the Upper Tribunal (UT) rejected the claim that Scottish law was 'a matter of fact', agreeing instead with the First Tier Tribunal (FTT) which ruled that it was a matter of judicial knowledge and any tribunal judge was eligible to hear the case.

Trust liabilities reduce estate value without reducing IHT charge
In James Charles Pride as Trustee of the Estate of the Late Geraldine Jill Pride v HMRC [2022] TC08776 the First Tier Tribunal (FTT) found that loan notes issued by a trust of which the deceased was life tenant, were a liability of her death estate. Their value was reduced to nil as she had provided the consideration for the note so there was no reduction in the inheritance tax due.

Special Dividend causes assessment chaos
In John Buckingham v HMRC [2023] TC08782, the First Tier Tribunal (FTT) found that a Special Dividend paid as part of a merger was taxable partly as income and partly as capital. In making its decision, the FTT was highly critical of HMRC and noted that a statutory review decision was given out of time. 

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 13 April 2022

• New registration and planning to stem Airbnbs and holiday lets
• State Pension age review 2023
• What is the 2023/24 PAYE tax code?
• Incorporation? Start here...
• Employment tax: Reporting, dates & deadlines 2022-23 
• SEISS grants not due despite HMRC invite to claim
• Vandalised property was residential for SDLT purposes
• GAAR Panel finds IHT option planning unreasonable
• GAAR Panel finds SDLT planning unreasonable 
• PAYE: Starter checklist new employee 2023-24 
• Directors: Tax planning toolkit for 2023/24
• Managed Service Companies (MSCs)
• LBTT: Land and Buildings Transaction Tax
• Airbnb Host: tax overview
• CPD: Acting for a UK trust: Start here...
• Transfer of Assets Abroad ...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.