Nichola's SME Tax W-update 8 June 2023

Hello

Following research and consultation, HMRC is consulting on new proposals for tackling PAYE non-compliance by ‘Umbrella companies’. Quite why we need more new rules when we could surely just sweep up any stragglers by broadening the Agency rules in Chapter 7 Part 2 ITEPA 2003 is beyond me. We will keep following the consultations for you and see what comes out.

My pick of the week for all our subscribers is a new Capital Allowances 'What's new?'. There have been multiple changes to the rules in recent years as most Chancellors cannot resist making tweaks to the First Year and Annual Investment Allowance rules. Now we have Expensing too. 

Stamp Duty Land Tax (SDLT) is another self-assessed tax that has become an important revenue raiser for the Government. As a result, we see an increasing number of appeals against challenges made to claims by HMRC. A spate of decisions have ruled that 'pony paddocks' may well be classed as residential grounds for SDLT purposes. This week we finally have a decision to the contrary. Favourable judgments on this topic have been thin on the ground for buyers of 'landed' estates. I have added a few comments on our write up below if you are interested in these cases.

We have more cases on loans and loan relationships too this time. They seem to come up like bad pennies!

We continue to have a lot of queries to our sister Virtual Tax Partner (VtaxP) service concerning buyouts via a new holding company. Do read our Reorganisations Index as this has a useful tool to show you where to start and what route you might need to use. See link under 'Directors and Companies' below.

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)  

Spotlight 62: Dividend diversion scheme used to fund education fees
HMRC have published tax avoidance Spotlight 62 ‘Dividend diversion scheme used to fund education fees’.

HM Treasury review of SAYE and SIP schemes  
HM Treasury has launched a new call for evidence on Non-Discretionary Tax-Advantaged Share Schemes which looks at Save As You Earn (SAYE) and Share Incentive Plan (SIP) schemes.

Named tax avoidance schemes, promoters, enablers
UPDATED: HMRC publishes a list of Named tax avoidance schemes, promoters, enablers and suppliers. It is not recommended that taxpayers use any of these schemes. The most recent update was on 7 June 2023 with the new additions.

Tax Cases (Freeview) 

Restructuring did not change commercial reality of loans
In Hargreaves Property Holdings Limited v HMRC [2023] UKUT120, the Upper Tribunal confirmed that the restructuring of the group’s loans failed to alter the underlying nature of the loans, meaning withholding tax was payable. 

Lack of knowledge not reasonable excuse for late ATED
In Hughes Property Partners Limited v HMRC [2023] TC08829, the First Tier Tribunal (FTT) found that a tax agent’s lack of knowledge of Annual Tax on Enveloped Dwellings (ATED) law did not amount to a reasonable excuse for a return filed late.

Wider business purpose prevents £34 million P&L deduction
In Swiss Centre Limited [2023] TC08825, the First Tier Tribunal (FTT) denied a deduction in the P&L of £34 million paid as it was not a loan relationship debit, nor was it enhancement expenditure for a capital asset. 

Pony paddock not residential for SDLT
In Mr Taher Suterwalla and Mrs Zahra Suterwalla v HMRC [2023] TC8826, a paddock acquired on the purchase of a residential property was let out commercially on the same day as the purchase was completed, so for Stamp Duty Land Tax (SDLT), was the paddock required for the reasonable enjoyment of the dwelling having regard to its size and nature or not?

Editor's Pick (Subscribers)

 Capital Allowances: What's new 2023-24
What's new in Capital Allowances for 2023 and 2024? A summary of the different types of capital allowances currently available to UK businesses.

Agency Workers
What are the tax rules for Employment Intermediaries and Agencies? Are agency workers subject to PAYE? 

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 

Reasonable care: How do you pick a tax agent?
Tax penalties are charged according to a tariff but this is modified to take into account the taxpayer’s behaviour. When it is agreed that the taxpayer has taken 'reasonable care', no penalty will be charged. This is a brief summary to consider if you are picking a tax agent.  

Employers

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?

Golden handshakes, signing on fees and unusual payments
How are golden handshakes, signing-on fees and unusual payments taxed?

Directors & Companies

Reoganisations Index: Start here
What is a company reorganisation or reconstruction? What tax reliefs apply to a company reorganisation, a share for share exchange, reconstruction or other transaction involving shares?

Employee Ownership Trusts: An exit route for owner-managers
UPDATE: What is an Employee Ownership Trust (EOT)? When are they a good exit route for owner-managers? What are the tax benefits?

Penalties & Compliance

Sch 36 Information Notices
What is a Schedule 36 Information Notice? When can HMRC issue one? What rights does the taxpayer have when an information notice is issued?

Penalties: Annual Tax on Enveloped Dwellings (ATED)
What penalties apply to the Annual Tax on Enveloped Dwellings (ATED) regime? When can they be charged?

Capital allowances

Structures & Buildings Allowance (SBA)
UPDATE: Who can claim the Structures and Buildings allowance? What expenditure is eligible? How to make a claim? 

Private Client & Estate Planning

Estates: Income Tax and Capital Gains Tax
UPDATE: How do executors deal with income and capital gains arising on the deceased’s estate? What allowances and reliefs are available?

Scottish Income Tax: Am I a Scottish taxpayer?
UPDATE: To whom does Scottish Income Tax apply? Am I resident in Scotland? What constitutes a residence and the 'main' residence?

Overseas & Residence

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?

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

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

More at CPD Index

VAT Cases & Guides

Leaving the Flat Rate Scheme
A step-by-step guide to leaving the VAT Flat Rate Scheme (FRS).  

Energy-Saving Materials
The supply and fitting of energy-saving materials in residential accommodation attract a reduced rate of VAT. What does it apply to? What are the qualifying conditions? What case law is there on this topic? 

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 1 June 2022

• Agent Update: May 2023
• Gift Aid one-to-many letter
• Europe introduces tourist tax
• Private equity leaders earn £2.7bn in carried interest
• Social media posts invalidated CJRS claims 
• Lack of loan relationship accounting entries means no tax relief
• No reversal of ‘evil’ artificial tax avoidance scheme
• Is it a trade, a business, or an investment activity?
• Full expensing & First Year Allowances NEW
• What expenditure qualifies for plant & machinery allowances? UPDATE
• Trust Registration Service UPDATE
• Non-domicile status, deemed domicile & tax
• UPDATE: CPD: Non-Resident CGT: UK Property  ...More

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