Nichola's SME Tax W-update 13 July 2023

Hello

Is it time to reform the tax rules on employee expenses? There are some very harsh rules that determine whether an employee can obtain tax relief for the costs expended for the purposes of an employment.

Last week the Upper Tribunal confirmed that a junior doctor could not obtain tax relief for a proportion of the costs of renting a room two nights a week close to a hospital to enable him to be on call when required. The test, as set out in the legislation at s.336(1) ITEPA 2003, kills off 99.9% of claims for tax relief by default! Unless you have the requirement to rent accommodation hard-wired into your employment contract, and you have a job where renting can be said to be ‘in performance’ of duties of employment, you have no hope of making a successful claim. If an employer has incurred this type of cost and made the accommodation available to those on-call, it receives tax relief and there is no tax charge for the employee. It does seem very unfair that the employee might never obtain tax relief.

HMRC has announced that it has issued fines and sanctions to 419 businesses for falling short of their obligations under the Money Laundering Regulations in the last six months. The businesses ‘named and shamed’ are mainly Accountancy Service Providers who are not members of any of the professional bodies, Estate Agency Businesses and Money Service Businesses. If you are running a business or just feel that you need an update on the rules, do join me for an Anti-Money Laundering workshop in a couple of weeks. We are following that with an Inheritance Tax Planning workshop in which we look at the pros and cons of creating family investment companies. Something for everyone!

As noted below, we are now looking for a tax technical adviser/writer/editor to join our team. Do please send in a CV if you are interested.

More tax guides and updates below, including a new Partnership update for 2023-24.

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)  

Overlap relief information available from end of August 2023 
HMRC have advised that sole trader and partnership businesses and their agents will soon be able to use an online form to request details of overlap relief available for offset during the transition to the new tax year basis period rules.

Online agent facility trialled for old postal queries 
As part of a new trial, HMRC has launched a new issue resolution service to process postal correspondence over 12 months old for agents.

HMRC fines 419 businesses for AML non-compliance 
In the six months to 31 December 2022 HMRC has issued fines of £3.2 million to 419 businesses for failures to follow the anti-money laundering (AML) regulations, and has 'named and shamed' 240 of the worst offenders. 

Proposals remove professional bodies as AML supervisors 
A review of Anti-Money Laundering (AML) supervision by HM Treasury has concluded that although technical compliance with AML Regulations (MLRs) has significantly improved, the effectiveness of supervisory interventions across Professional Body Supervisors (PBSs) is inconsistent and there is a big case for reform.

Editor's Pick 

Jobs in tax: tax adviser/writer/editor wanted
We are looking for a qualified tax adviser/writer/editor to join our team. You need to have broad practical experience in advising in SME tax, enjoy the technical aspects and writing in updating our tax resources at www.rossmartin.co.uk and advising our Virtual Tax Partner clients.  

VtaxP Tax Workouts: AML & IHT Case Studies
Sign up for our next Tax Workouts. Over the course of the morning we have an Anti-Money Laundering Update and then we take a deep dive into IHT planning. 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.

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)

Car allowance payments were not fully subject to NICs
In Laing O’Rourke Services Limited v HMRC & HMRC v Willmott Dixon Holdings Limited [2023] UKUT 155 the Upper Tribunal (UT) held that Class 1 NICs paid in respect of car allowance payments to employees were refundable where the employees had undertaken business mileage.

Doctor's accommodation fails wholly & exclusively test
In HMRC v Jayanth Kunjur [2023] UKUT 154, the Upper Tribunal (UT) confirmed no tax relief is available for the accommodation expenses paid by a junior doctor. While renting accommodation close to his hospital enabled him to perform some of his duties, the expense was not incurred in the course of the performance of his duties.

Guides & Updates (subscription content)

Self Employed

Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of a business
Entrepreneurs' Relief (ER) was renamed Business Asset Disposal Relief (BADR) by Finance Act 2020. When does BADR apply? What is the rate of BADR? How do you claim BADR? What BADR case law is there?  

Allowances: Trading and Property
What are the trading and property allowances? Who can claim them? What are the restrictions?

Partnerships

Partnerships: What's new 2023-24? 
NEW: What's new for partnerships in 2023-24? What is the latest case law?

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? 

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

Register of Persons with Significant Control (client briefing)
What is the Register of Persons with Significant Control (PSC)? Who must complete it? How must it be completed? Who is a Person with Significant Control?

Business Asset Disposal 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?

Land & Property

SDLT: Residential property & dwellings
What is residential property for Stamp Duty Land Tax (SDLT)? What tax rate applies? What garden and grounds are subject to higher rates of SDLT?

Buy-to-let ownership: personal v. company? (Subscribers)
What is the most tax-efficient way 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

IHT Agricultural Property Relief
What is Agricultural Property Relief (APR)? When does it apply? What are the conditions and restrictions of the relief?

CGT: Deductible expenditure 
What expenditure is allowable for Capital Gains Tax (CGT)? What about loan interest, early redemption fees etc?

Overseas & Non-residents

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?

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?

Penalties & Compliance

AML: Anti-Money Laundering glossary
Do you know your ASP from your EAB? Do you have a PBS or are you a BOOM? Anti-Money Laundering (AML) guidance loves an abbreviation. Here is a useful list.

Statutory Review (by HMRC)
What is a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review?  

How to appeal an HMRC decision
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: 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

Capital Goods Scheme
UPDATE: What is the VAT Capital Goods Scheme (CGS)? When do I use it? How does it work?

Cars & Vans: VAT
UPDATE: What is a car for VAT? What is a van for VAT? What VAT can be recovered on a car that is bought? Leased? What about fuel? Or mileage reimbursements? 

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 6 July 2022

• Non-doms & IHT stats: the COVID-19 effect
• Divorce did not prevent HICBC charge
• Late inclusion for RTI denies another CJRS claim
• UK/US Treaty residency determined by domestic law
• Cosmetic treatments standard rated for VAT
• Transfer of Assets Abroad (TAA) UPDATE
• Plastic Packaging Tax UPDATE
• LLP v Company: which will save me tax? UPDATE
• What is the 2023/24 PAYE tax code?
• Welsh Land Transaction Tax (LTT) UPDATE
• Investment Zones: Tax breaks UPDATE
• Joint property elections UPDATE
• How to disclaim the Personal Allowance UPDATE
• A tax guide to investment bonds UPDATE
• Economic Crime Levy
• NEW: CPD: Maximising Expense Deductions for Businesses   ...More

Come and join our Cloud

Subscribe (and UNLOCK the whole site).

What do you get?

• We keep YOU up to date in SME tax.
• FULL access to www.rossmartin.co.uk: your firm's favourite TAX INTRANET containing over 3,500 actively maintained tax guides, briefings, toolkits and checklists.
• Want to know more? Commission your own articles and checklists.
• Structured CPD our detailed SME tax updates "for Advisers Only" provide topical summaries and planning notes our webcasts provide you with structured CPD at your desk.
• Regular client tax briefings: these cover the latest business and employment tax issues and are designed to assist you plan meetings and improve your client services.