Nichola's SME Tax W-update 18 May 2023

Hello,

One of our case reports this week concerns a partially successful appeal against a clawback of an employer Coronavirus Job Retention Scheme (CJRS) payment. The First Tier Tribunal (FTT) accepted evidence of physical payment of wages after HMRC rejected what appeared to be a late claim due to a delay in PAYE payroll reporting.

It's all about the evidence when it comes to the FTT. This case might provide a useful pointer if you had a similar issue. 

In our other case report, involving a sizeable claim for a hydro-electric power station, the Supreme Court has ruled on the meaning of 'a tunnel or aqueduct' for Capital Allowances. HMRC was the loser in this appeal with the Court of Appeal finding in favour of the power generation company. Given the amount of tax at stake, HMRC presumably had little option but to take the case to the top.

How do you feel about Making Tax Digital (MTD) for VAT? Has it helped or hindered your practice or business? If you happen to have any views on the successes or failures of HMRC's MTD program, the House of Commons Public Accounts Committee (PAC) would like to hear from you. It's quite easy to submit evidence, you simply send an email (see article below). 

In terms of CPD, we have an Employment Related Securities What’s New for subscribers. This one does what it says on the packet, plus it contains some useful thoughts when considering whether or not a share award is in fact ‘employment related’ and reviews some topical cases.

We also have some recently updated guides that might interest you. If you are not 're-wilding' but re-developing your garden we have a guide that considers your options. Our Loan Relationships guide is expanding at a fast rate inspired by the many different FAQs that come in on that subject via our sister company the Virtual Tax Partner (VtaxP) service. Likewise our guide to tax reporting and non-resident directors.

There was quite a flurry to meet the January 31^st deadline for offshore UK property owners to apply to the Register of Overseas Entities, and we dealt with some late registrations. Journalists at the BBC have discovered that the government is being very slow to issue fines for non-compliance, which is curious.

More guides and updates and news 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)  

VAT Registration Helpline switches to email
HMRC close their VAT registration helpline on Monday 22 May 2023. They say that 85% of callers to the helpline were just ringing to track the progress of VAT registration applications

HMRC increases interest rates
Following the Bank of England’s announcement on 11 May 2023 that the base rate will rise to 4.5%, HMRC interest rates are also increasing by 0.25%, to 7% for late payment interest and 3.5% for repayment interest, from 31 May 2023.

How is MTD for you?
The Public Accounts Committee (PAC) has launched a new call for evidence ‘Progress with Making Tax Digital’ as part of an inquiry in which they will question Jim Harra, Chief Executive at HMRC about progress made towards MTD and whether the latest plans provide confidence that the programme will deliver value for money.

Delay in fining Overseas Entities
The government is being accused of being slow to issue some £1billion in fines to Overseas Entities who own UK property and have failed in their UK reporting obligations under anti-money laundering and transparency measures.

A new company? Start here
You have decided to trade via a company: what now? A handy walk through the decision making and compliance process for start-ups.

Tax Cases (Freeview) 

Bank statements prove CJRS wages were paid
In Zoe Shisa Events Limited v HMRC [2023] TC8805, the First Tier Tribunal (FTT) found that backdated payslips could be used for an employee Coronavirus Job Retention Scheme (CJRS) claim as the pay was evidenced by bank statements for that period. A director's salary increase could not be evidenced and the CJRS claim was restricted for that part of the claim.

CAs allowed on hydro-electric power station 
In HMRC v SSE Generation Limited [2023] UKSC 17, the Supreme Court found that items constructed for the collection and transmission of water in connection with a hydro-electric power station were not a tunnel or aqueduct. The expenditure qualified for capital allowances.

Editor's Pick (Subscribers)

Employment Related Securities: What's New May 2023
NEW: Our round up of changes affecting the award and issue of shares and share options to directors and employees with tips and a review of topical cases on the meaning of 'employment related'.  

Business Rates: What's new?
The government is exploring different methods for the reform of business rates. Proposals, including three-year rating valuations, have been set out in several different consultations and are examined below.

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 

Wholly and exclusively…toolkit
When is an expense allowed for tax purposes? What does 'wholly and exclusively' mean? How do you determine if a cost is wholly and exclusively incurred for the purpose of a trade? What cases are there?

Employees 

ABC or alphabet shares: directors & employees
Can you set up different classes of shares? How do you create Alphabet or ABC shares? What are the rules in giving different classes of shares to directors and employees? 

EMI: Enterprise Management Incentive Scheme (subscriber guide)
What is the Enterprise Management Incentive (EMI) scheme? What's the difference between EMI and an unapproved share scheme?   

Directors & Companies

Loan Relationships
UPDATE:  What is a loan relationship? How are profits and losses made from loan relationships taxed? What happens if loans are written down or written off? What is the difference between a trading and non-trading loan relationship? What are the rules for connected party loans?

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? Should they be paid via PAYE?

Purchase (repurchase) of Own Shares
UPDATE: How can a company repurchase its share capital? What are the Companies Act requirements? What are the tax consequences for the company and shareholders? 

Land & Property

Gardens: selling or developing
What are the tax consequences of selling a garden for development purposes? What if the owner develops the garden? With a handy flowchart to take you through your options.

Property Profits & Losses Toolkit
 Our Property Profits & Losses toolkit takes HMRC's version and adds a great deal more information about what you can claim as an individual.  

Private Client & Estate Planning

Trusts & Estates: Exit charge reporting requirements
UPDATE: What is an exit charge, or proportionate charge, and when does it apply?

Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of shares or securities in a company
When can you claim Business Asset Disposal Relief (BADR) on a share sale? What is the rate of Business Asset Disposal Relief (Entrepreneurs' Relief)? How do you claim BADR? What case law is there on BADR? 

Penalties & Compliance

Personal Liabilty Notices (PLNs)
UPDATE:  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 all or part of the liability to pay the debt to one of its office  

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

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

More at CPD Index

VAT Cases & Guides

VAT Registration Helpline switches to email
HMRC closes its VAT registration helpline on Monday 22 May 2024. It is moving call handlers to be redeployed in processing VAT registration applications instead.  

A beginners guide to VAT
VAT: Where do I start? What is VAT? Who has to register for VAT? What rate should you charge? How do you calculate VAT? When are your VAT filing obligations?

VAT: Transfer of a business as a going concern
Buying a business and VAT, do you take over the old owners' VAT registration? What is a Transfer Of a Going Concern (TOGC)? What conditions must be met? What are the consequences of a TOGC? 

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 11 May 2022

• Time to re-think MTD ITSA
• Counsel's opinion is worthless 
• Online filing exclusions for 2022-23 Self Assessment returns  
• HMRC staff strike until June
• Government supports demutualisation protection bill
• HMRC extends trial of SMS redirection service
• VtaxP Tax Workouts 2023
• Doctor's company had to provide details of its income to HMRC
• RSUs employment reward not capital
• Mixed supplies: Single or Multiple supply?
• VAT fraud: What is the Kittel principle?
• Property profits & losses: Toolkit (2023-24) 
• Loan relationships
• Tax rules: Different trades
• Tax-free benefits and perks
• Dividends: Formalities for companies
• Client Briefing: Making gifts & IHT
• How to appeal an HMRC decision
• NEW CPD: Navigating the rise in Corporation Tax ...More

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