Nichola's SME Tax W-update 11 May 2023

Hello,

This week we have a new 2023-24 guide for Landlords, the ICAEW calls for a re-think on Making Tax Digital for Income Tax (MTD ITSA) and film scheme investors fail in their attempts to sue for negligence.

Someone advises you on a tax planning idea, which is supported by the written opinion of a leading tax counsel. Would that influence your decision-making? It is definitely a great selling tool, a fact clearly evidenced by the thousands of people who have, over the last thirty-odd years, invested in marketed tax avoidance schemes. The problem has been that many of these schemes did not work. A group of investors who lost their money in film partnership loss schemes attempted to sue a KC (Kings Counsel) for negligence. The Court of Appeal struck out their claim: the KC owed no duty of care to investors. They should have taken their own independent advice. Simply put, 'caveat emptor' or buyer beware prevails.

It was noted by one of the judges that the counsel's opinions might have included an express disclaimer of responsibility to third parties. It's a bit late now but it seems that this would not be a bad idea going forward. 

One of our case reports this week features an unsuccessful appeal by a taxpayer against an information request made to his personal service company (PSC) by HMRC. HMRC required information to check against the taxpayer's return and the tribunal had no problem granting that request. The case perfectly illustrates why HMRC want to expand their information-gathering powers: if they can make such requests automatically both parties are spared the cost of an appeal.

That's all for now; more cases, news and guides are below and do sign up for our new season of Tax Workouts. If the rain does not stop we will swap tax for boat-building courses for accountants.

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)  

Time to re-think MTD ITSA
The ICAEW have written to HMRC with new views on the introduction of Making Tax Digital for Income Tax Self Assessment (MTD ITSA). Concluding that quarterly reporting is a disproportionate administrative burden, it echoes the concerns of other leading tax bodies, it now calls for a re-think.

Counsel's opinion is worthless 
In David McLean & Ors v Andrew Thornhill KC [2023] EWCA Civ 466, the Court of Appeal held that a barrister advising promoters of a film partnership tax scheme owed no duty of care to investors who used the scheme. The investors should have taken their own independent tax advice. 

Online filing exclusions for 2022-23 Self Assessment returns
Some taxpayers will be unable to file their Self Assessment returns online for the year ended 5 April 2023, due to software specification issues from HMRC. Lists of filing exclusions for individuals, partnerships, trusts and estates have recently been published.

HMRC staff strike until June
Four hundred members of the Public and Commercial Services (PCS) union will strike at HMRC's offices in Newcastle and East Kilbride until 2 June 2023. This is likely to affect some employers.

Government supports demutualisation protection bill
The Co-operatives, Mutuals and Friendly Societies Bill is currently passing through parliament. The government has announced that it is supporting this legislation seeking to protect the assets of mutual entities, by making them non-distributable and only available for prescribed purposes.

HMRC extends trial of SMS redirection service
HMRC say they're extending the trial of using text messages to redirect helpline callers to online services. They claim this method is a successful one as 38% of taxpayers do not phone back.

Editor's Pick 

Property profits & losses: Toolkit (2023-24) 
NEW: Our 2023-24 Property Profits & Losses toolkit takes HMRC's version and adds a great deal more information about what you can claim as an individual.

Loan relationships
UPDATE: What exactly is a loan relationship? How are loan relationship profits and losses taxed? What are the tax consequences of writing off an intercompany loan or a loan to a director? 

Tax Tools 

VtaxP Tax Workouts 2023
BOOK NOW: Tax planning for Digital Nomads & OMB tax update 2023: Our new season of Virtual Tax Partner ®;Tax (VtaxP) Workouts commences with an exploration of exciting new innovations in working and the workplace.

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 

Tax rules: Different trades
How are different types of businesses taxed? What special rules apply to different types of business income and expenses? What about VAT? We summarise the different rules for taxing income and expenses of a large selection of different trades, professions and vocations.

Employees 

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 benefits schemes?

Employee Shares & Employment-Related Securities
What are the tax consequences when a company gives shares to an employee or director? What are employment-related securities? What is best: shares or share options? How do you set up a share scheme? 

Directors & Companies

Dividends: Formalities for companies
This is a briefing note for discussion with directors about the formalities of declaring and paying dividends.

Dividend tax (subscriber guide)
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.

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.

Private Client & Estate Planning

Client Briefing: Making gifts & IHT
UPDATE: What gifts can you make without triggering Inheritance Tax (IHT)? What are the rules on making tax-effective gifts for IHT purposes?

Divorce & Separation: Toolkit
A summary of the tax implications which can arise on divorce and separation.

UK Trusts
What is a trust? What types of trust are there? How are UK trusts taxed?

Penalties & Compliance

Personal Liability Notices (PLNs)
A Personal Liability Notice (PLN) may be issued by HMRC in the event of a company's or a Limited Liability Partnership's (LLP's) failure to pay its tax debts or tax penalties to HMRC. A PLN will transfer the liability to pay the debt to one of its officers.

How to appeal an HMRC decision
UPDATE: Disagree with an HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

• NEW CPD: Navigating the rise in Corporation Tax
• CPD: Company cars: 2023
• CPD: Acting for a UK trust: Start here...
• CPD: CGT Reporting and payment deadlines

More at CPD Index

Tax Cases (Freeview) 

Doctor's company had to provide details of its income to HMRC
In Edward Lam Shang Leen v HMRC [2023] TC8812, the First Tier Tribunal (FTT) dismissed an appeal against a Schedule 36 information notice that required a doctor's Personal Service Company to provide it with details of consultancy income received via the company.

RSUs employment reward not capital
In Louis Daniel Moore v HMRC [2023] TC8806, the First Tax Tribunal (FTT) dismissed a claim that an award of Restricted Stock Units (RSUs) was received as consideration for the disposal of shares in a takeover. The evidence revealed that they were no more than an incentive offered to retain senior employees of the business and as such they were employment-related securities options. 

VAT Cases & Guides

Mixed supplies: Single or Multiple supply?
UPDATE: Is a mixed supply a single or multiple supply for VAT purposes? What tests and case law apply?

VAT fraud: What is the Kittel principle?
What is the VAT Kittel principle? What happens when the Kittel principle applies? What tests do HMRC and the tribunals apply? How can I protect my business?

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 4 May 2022

• Tax Administration and Maintenance Day: At a glance  
• Tax Administration: New Powers for Information & Data condoc
• Views sought on Off-Payroll Working non-compliance
• Promoting tax avoidance will be a criminal offence
• Help to Save Reform consultation
• Construction Industry Scheme (CIS) reform
• Cryptoasset tax proposals aim to simplify
• Charities tax compliance consultation
• VtaxP Tax Workouts 2023
• No Child Benefit Charge discovery: father took reasonable care
• R&C Brief 5 (2023): VAT on medical services carried out by supervised pharmacy staff
• Italian place of supply for €4 million football transfer fee
• Agricultural show entry exempt from VAT
• Herd basis: Farming
• Payrolling of benefits UPDATE
• Transactions in Securities UPDATE
• CGT: Connected persons UPDATE ...More

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