Nichola's SME Tax W-update 1 June 2023

Hello

There is news that the EU is going to introduce a new €7 visitor fee, yet another thing to slow us down at its borders! It has got me wondering just how long it will be before a British government can't resist a similar measure. In terms of administration, surely all anyone needs is a secure QR code at the border?

We have three case reports this week. The one I want to discuss involves HMRC's successful challenge of an employer’s claim for Coronavirus Job Retention Scheme (CJRS) support by proving that a director remained active on her company’s social media account during a period when she should have ‘ceased all work’ for her employer. Her posts were enough to prove that she did not meet the CJRS conditions; she was working during the claim period.

The above case illustrates the changing world of work and how engagement in social media is just part of sales and marketing. How many small business owners record how long they spend on this kind of activity? It could be important to know, as across the taxes we often need to know how active someone is in their business activities, and we must often know about the nature of that activity.

Tax is overcomplicated because most of the different taxes' provisions have slightly different rules. For example, loss relief can be restricted if you are not operating on a commercial basis, Class 2 National Insurance requires you to be ‘gainfully’ employed and most Capital Gains Tax (CGT) and Inheritance Tax (IHT) business reliefs require active trades and not investment activities. Bearing all these in mind, my Editor’s choice for this week is a guide which highlights and explains the differences between ‘a trade, a business or an investment activity’.

Hope you are enjoying the weather.

More news, updates 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)  

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

Gift Aid one-to-many letter
HMRC have recently commenced another one-to-many letter campaign, this time focusing on Gift Aid repayment claims by charities. 

Europe introduces tourist tax
The European Union is going to introduce a €7 visitor visa fee in 2024. Non-EU citizens and travellers from outside the Schengen zone, including the British, will have to pay a €7 application to enter.

Private equity leaders earn £2.7bn in carried interest
Research from law firm Macfarlanes has found that 255 private equity executives earned £2.7bn in Carried Interest for the tax year 2020/2021. Carried interests, due to a quirk in the tax rules are taxed as capital gains.

Tax Cases (Freeview) 

Social media posts invalidated CJRS claims 
In Glo-Ball Group Limited v HMRC [2023] TC08823, the First Tier Tribunal (FTT) found that a director, who had made posts on their company’s Facebook account while furloughed, was working. This made the director ineligible for Coronavirus Job Retention Scheme (CJRS) support.

Lack of loan relationship accounting entries means no tax relief
In Shinelock Limited v HMRC [2023] UKUT 107, the Upper Tribunal (UT) found that a loan relationship debit requires recognition in the Profit & Loss Account in order to be taken into account for Corporation Tax purposes. Instead, the payment was a distribution.

No reversal of ‘evil’ artificial tax avoidance scheme
In Bhaur & Ors v Equity First Trustees (Nevis) Ltd & Ors [2022] EWCA (Civ) 534, an IHT-saving property partnership incorporation scheme involving a complex offshore Employee Benefit Trust could not be reversed on the grounds of a mistake about its tax consequences. 

Editor's Pick (Subscribers)

Is it a trade, a business, or an investment activity?
Starting in business? Is your new or existing business a trade, a business or an investment activity? The distinction is very important for tax purposes. This guide summarises key issues for tax purposes.

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.

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 

Accounting periods and tax basis periods
Are your ready for Basis Year reform? Which date do I choose? Does it matter? Can I change my accounting date?  What changes are made as the result of of basis period reform?

Training and course fees (self-employed)
Can a self-employed trader claim tax relief on their costs of training and on-going professional development? Are training fees capital by nature?

Employers

Training and course fees 
What conditions should be met to ensure that either an employer obtains tax relief on the cost of employee training? Can employees or directors obtain tax relief on training if they incur the cost personally?

Top Tax-free benefits
What are the top tax-free benefits or 'perks' that can be used to incentivise your staff? How should you structure a benefits package?

Directors & Companies

Loan relationships
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? 

Close company loans toolkit (loans to participators)
What is the Corporation Tax treatment when a close company makes a loan to a participator (director-shareholder)? How do the 'bed and breakfasting' rules work?

Land & Property

Airbnb: Tax Overview
What expenses can Airbnb owners claim for tax purposes? How is income taxed? Can you claim Rent-a-Room Relief? How does it affect Private Residence Relief? What are the VAT rules? 

Furnished Holiday Letting
What is Furnished Holiday Letting? How do you qualify for Furnished Holiday Letting? What are the rules for Furnished Holiday Letting?

Capital allowances

Full expensing & First Year Allowances 
NEW: What is full expensing? When does it apply and what is the rate of allowance? How are disposals of full expensing assets dealt with? What assets qualify for the 50% First Year Allowance (FYA)? How do I deal with disposals of 50% FYA assets?

What expenditure qualifies for plant & machinery allowances?
UPDATE: What is plant and machinery? What expenditure qualifies as plant and machinery? What is treated as part of a building?

Private Client & Estate Planning

Trust Registration Service
UPDATE: What is the Trust Registration Service? What trusts does it apply to? What are the requirements and deadlines?

Overseas & Residence

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?

Companies: Permanent establishment & residence
What are the rules for determining a company's country of residence? What is central management and control? When does a company create a permanent establishment in another country?

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

• UPDATE: CPD: Non-Resident CGT: UK Property  
• UPDATE: CPD: Dividend Taxation
• UPDATE: CPD: Stamp Duty Land Tax
• CPD: Navigating the rise in Corporation Tax

More at CPD Index

VAT Cases & Guides

Correcting VAT Errors
UPDATE: What are the VAT error correction time limits? Can you correct errors through the VAT return? Do you have to notify HMRC?

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 25 May 2022

• EIS, SEIS & SITR grow in popularity
• How to submit P11Ds online when you are not the PAYE agent
• ICAEW changes to a verifiable CPD model
• Employed? Claim expenses via HMRC's portal
• Tonnage Tax: New election window
• Crown Dependencies agree to adopt global minimum tax rate
• Advisory fuel rates from 1 June 2023
• Doctor's employment expenses were unevidenced & unnecessary
• Wrong wording rules out CGT negligible value claim
• Sch 55 Late Payment penalty rules continue to confuse
• DIY Housebuilder secures extra VAT refunds
• UPDATE: CPD: Non-Resident CGT: UK Property
• UPDATE: CPD: Dividend Taxation ...More

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