Nichola's SME Tax W-update 6 July 2023

Hello

Tax-geared news of the sort that we think you might want to know about is quite thin on the ground this week. It's 'the calm before the storm', as 'L-day' (Legislation Day) is on the 18th July. This is the day when the government will unfurl (in the digital sense) the new draft finance bill for 2023. In the meantime, we have been updating our website and devising new tax workshops for you. 

Inheritance Tax (IHT) receipts are up. This is a result of a nasty cocktail that combines excess deaths from COVID-19 and the freezing of IHT allowances. It looks as if the government is going to do quite well in terms of most tax receipts by freezing tax allowances across the board, and therefore even if your pay has gone up as a result of inflationary pressures you are going to be mainly paying more in taxes in general. With this in mind, we have a new IHT planning workout in which we will be looking at what you might try to do to maximise your Nil Rate bands, and we're also going to take a closer look at Family Investment Companies. Are they worth it and will they save any tax?

We have been reviewing some of the latest tax tribunal decisions: would you ever think that you could still be liable to the High-Income Child Benefit Charge (HICBC) following divorce? It transpires that this can be possible if you are unlucky. If you are separating from a partner you might want to read the case reported below.

We also report on another appeal against the claw-back of an employer Coronavirus Job Retention Scheme (CJRS) claim. Even though the employee was employed at the right time, their employer's payroll reporting schedule put their start date in the following month and this disqualified any claim. Unfair or what?

As well as our new IHT workout we also have another Anti-Money Laundering (AML) update, featuring a case study that takes you step-by-step through the AML processes you need to follow. It's all essential these days. Sign-up below.

We have been updating the website, this is an ongoing labour of tax-love and we have pulled out some different guides that you might like. Do scroll on down.

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)  

Non-doms & IHT stats: the COVID-19 effect
HMRC's latest round of tax statistics shows the impact that the Cororonavirus pandemic and government policy on certain elements of taxation. IHT and SDLT receipts are at an all-time high.

VtaxP Tax Workouts: AML & IHT Case Studies
Sign up for our next Tax Workouts. As ever, the focus is on the practical aspects of our subjects and we take you through case studies to illustrate and explain the rules as we go.

Editor's Pick 

Transfer of Assets Abroad (TAA)
UPDATE: Moving your business abroad? Fancy a lower tax jurisdiction? When should you worry about the TAA rules? Fairly recent court rulings illustrate how these rules work day to day. 

Is it a Trade, a Business or an Investment?
Starting in business or running one? Is your new or existing business a trade, a business or an investment activity? The distinction is very important for tax purposes. This guide runs through key issues for tax purposes.

Tax Tools 

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.  

Tax Cases (Freeview)

Divorce did not prevent HICBC charge
In Mr Meades v HMRC [2023] TC088440, the First Tier Tribunal (FTT) found that, despite HMRC’s misunderstanding of the legislation, a taxpayer was subject to the High-Income Child Benefit Charge (HICBC) as he was ‘entitled’ to Child Benefit paid to his divorced wife. 

Late inclusion for RTI denies another CJRS claim
In Sentinel Fire and Security Systems Limited v HMRC [2023] TC08849, the First Tier Tribunal (FTT) confirmed that as the legislative requirements had not been met for the Coronavirus Job Retention Scheme (CJRS), HMRC were able to clawback the claim regardless of any apparent unfairness.

UK/US Treaty residency determined by domestic law
In GE Financial Investments Limited v HMRC [2023] UKUT 146, the Upper Tribunal (UT) held that a UK-incorporated company was also US resident under the UK/US Double Tax Agreement (DTA) although it had no Permanent Establishment (PE) in the US. That was enough to allow a claim for Double Tax Relief (DTR) in the UK. 

Guides & Updates (subscription content)

Plastic Packaging Tax
UPDATE: What is Plastic Packaging Tax? Who does it apply to? Are small businesses subject to Plastic Packaging Tax? 

Self Employed

LLP v Company: which will save me tax?
UPDATE: Different types of trading structures all have their own tax advantages and disadvantages. What are the key issues if you run a Limited Liability Partnership (LLP)? Should I run an LLP instead of a company? Does an LLP save tax?

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

Employers

What is the 2023/24 PAYE tax code?
What is the 2023/24 PAYE tax code? What do the different types of tax code suffixes mean?

Pecuniary liabilities
Where an individual incurs a liability personally but it is paid by their employer special rules apply. This is referred to as the settlement of a Pecuniary Liability.

Directors & Companies

Creating an office at home or converting part of a home into an office
Many company owners work from home, this note looks at how you may obtain tax relief on the cost of converting the spare room or building a deluxe summerhouse to serve as an office in the garden.

Can my company build my house for me?
What are the tax consequences if my company builds a house for me? What are the issues for Income tax, PAYE, NICs, Corporation Tax, ATED, CGT, IHT and VAT.

Land & Property

Welsh Land Transaction Tax (LTT)
UPDATE: What is Land Transaction Tax? How does it operate? What reliefs are available? 

Investment Zones: Tax breaks
UPDATE: What is an Investment Zone? Where are Investment Zones located? What are the tax advantages of running a business from an Investment Zone? When are the reliefs available?

Joint property elections
UPDATE: When property is held in joint names it is taxed according to beneficial ownership. There is an exception where married couples and civil partnerships hold joint property.

Private Client & Estate Planning

IHT Business Property Relief
A guide to what Business Property Relief is and when it can apply and pitfalls and planning points.

How to disclaim the Personal Allowance
UPDATE: Why would I want to disclaim the Personal Allowance (PA)? What are the advantages? How do I disclaim the PA?

A tax guide to investment bonds
UPDATE: How are investment bonds taxed? What are the problems and pitfalls to be aware of?

Overseas & Non-residents

A non-resident owner of UK property? Start here
FREEVIEW: What taxes are relevant for non-resident property owners? What are the reporting requirements for non-resident investors? 

Business Investment Relief 
Business Investment Relief is a special relief for non-UK domiciled individuals designed to encourage them to remit funds to invest in UK businesses.

Penalties & Compliance

Economic Crime Levy
The Economic Crime Levy is a fixed fee paid by medium and large-sized entities that are subject to Money Laundering Regulations. This will include accountants, auditors and tax advisors. Registration, filing and payment are due by 30 September.

Penalties: Offshore Income, CGT & IHT 
What penalties apply for errors and failures relating to offshore Income and Capital Gains Tax (CGT)?

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 all or part of the liability to pay the debt to one of its officers.

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

• NEW: CPD: Maximising Expense Deductions for Businesses
• CPD: Purchase of Own Shares (POS)
• UPDATE: CPD: Non-Resident CGT: UK Property  
• UPDATE: CPD: Dividend Taxation

More at CPD Index

VAT Cases & Guides

Cosmetic treatments standard rated for VAT
In Illuminate Skin Clinics Ltd v HMRC [2023] TC08846, the First Tier Tribunal (FTT) found that supplies of aesthetic, skincare and wellness treatments were standard rated for VAT as they did not constitute medical care. 

Bad debts: VAT recovery
When can you recover VAT on a bad debt? How much VAT is payable to HMRC or recoverable from HMRC when only part of an invoice is paid?

Assessments: Best judgement & time limits
UPDATE: What is a 'best judgement' assessment for VAT? When can HMRC raise one? What are your rights of appeal? How do you displace a best judgement assessment? What are the time limits for a VAT assessment?

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 29 June 2022

• It's P11D time: are your reporting all your Car Benefits?
• 99% increase in additional rate Income Tax payers
• Interest rates: HMRC's further rises
• Behind on complaints handling 
• UK domicile of choice acquired, no evidence of a move to India
• No automatic adjustment for loss carryback
• Unexplained property transactions result in Schedule 36 Information Notice
• Tax Rules for A-Z of different trades, professions and vocations
• Employment-Related Securities: Reporting UPDATE
• Associated companies & test for control UPDATE
• Annual accounting UPDATE
• P11Ds: Employers' checklist & top tips
• Directors' loan accounts: Toolkit (subscribers)
• Making a tax disclosure (Digital Disclosure Service)
• Salaried members: When is a partner taxed as an employee? 
• CPD: Maximising Expense Deductions for Businesses   ...More

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