Nichola's SME Tax W-update 20 July 2023

Hello

Legislation Day, or L Day, was last Tuesday. This is the day that the government publishes draft legislation for the next Finance Act. At first glance it all looked quite dull, but that changed upon closer inspection.

There were a number of changes proposed to the rules for Employee Benefit Trusts (EBTs) and Employee Ownership Trusts (EOTs). None of these are particularly controversial. Perhaps the real question is, why has it taken so long to make them? There is no space in this editorial to cover them all, but I have included a summary with a commentary in this week's Editor’s Choice.

HMRC is also proposing some changes to the rules on data collection and will, from some time after 2025, require company owners to declare dividend income received from their own companies separately to other dividend income. Owners will also need to report their percentage shareholding in their company too. This will not make sense to many company owners who already include this kind of information for Companies House. We are, it seems, still a very long way from joining up our compliance systems in the UK.

In our editorial 'newsroom' we had a bit of a conversation about the post-Brexit proposals to restrict the geographical scope of Agricultural Property Relief (APR) and Woodlands Relief for Inheritance Tax (IHT) purposes to property in the UK. It means that opportunities for investing in cheaper land in the European Economic Area (EEA), or more expensive land(!) in the Channel Islands and the Isle of Man, ceases from 2024. It seems that this soon-to-be-closed quirk in the relief may well have gone unnoticed for many years.

In our case review we have the conclusion of the tax outcomes when you overvalue your business on incorporation, and in VAT cases, an accommodation App was found to be a tour operator! 

Do book up now for our next tax workout. We are spending the morning on an Anti-Money Laundering Update and case study together with an IHT planning and family investment companies special. Our three hour workouts, which are all verifiable CPD, are included in the subscription price for all new subscribers today. Click here to for details and to book.

Scroll down for our latest Land & Property Update 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)  

Legislation Day: At a glance
We review the new measures proposed for Finance Bill 2024 there are some quite important changes that affect a range of different taxpayers.

Phone helplines: Customers love 'em, but HMRC has other ideas
Despite an upbeat and confident executive review of HMRC's annual report and accounts 2022 to 2023 the results of HMRC's annual customer satisfaction survey reveal that taxpayers are increasingly dissatisfied with the HMRC's performance and there is still widespread demand for phone contact with HMRC.

Enquiryinto Sexism in the City
The Treasury Committee has launched a new call for evidence ‘Sexism in the City’ looking again at the barriers faced by women in the financial services sector.

Tax avoidance litigation success for HMRC
HMRC have published their list of tax avoidance litigation decisions for the 2022-23 year. This identifies the results in litigation decisions where HMRC considered that tax avoidance was involved. The summary indicates increased litigation and a high win rate for HMRC.

HMRC's approach to tackling £1 billion annual R&D fraud
HMRC have published a report detailing their current approach to handling Research & Development (R&D) tax relief claims. The number and value of claims are rising and so is the associated non-compliance with it standing at nearly 25% for the SME scheme.

Where is Finance (No2) Act 2023?
Finance (No 2) Act 2023 was given Royal Assent on 11 July 2023. To date, the Act itself has not been published by the government.

Tougher sanctions for promoters of tax avoidance
HMRC have published a response to their Consultation ‘Tougher Consequences for promoters of tax avoidance’ which set out proposals for a new criminal offence for promoters of tax avoidance schemes who fail to comply with HMRC stop notices and to expedite the disqualification of directors who promote tax avoidance.

14-year prison sentences for tax fraud
As part of the government’s Legislation Day (L-Day) on 18 July 2023 HMRC have issued a policy paper setting out new proposals to double the maximum prison term for individuals convicted of serious tax fraud. Draft legislation is included in Finance Bill 2023-24.

Editor's Pick 

Consultation to close EOT and EBT loopholes
FREEVIEW The government is consulting on measures changing the rules two types of employee trusts: Employee Benefit Trusts (EBTs) and Employee Ownership Trusts (EOTs). The proposals are not particularly controversial, perhaps the real question is, why it has taken so long to make some of the proposed changes.

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.

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.  

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)

Designer's business was overvalued on incorporation
In HMRC v Jasper Alexander Thirlby Conran & JC Vision Ltd v HMRC [2022] UKUT 166, the Upper Tribunal found that the value of the designer's optical business on incorporation was £1 and not £8m. The difference was taxable as a distribution and not as a capital gain. Intangibles relief claimed by the purchasing company was also reduced to the market value of £1.

Guides & Updates (subscription content)

Self Employed

Motor expenses (self-employed)
What expenses can you claim for motor and travel if you are self-employed? Why are there different versions of the rules?  Which method is most beneficial for me?

Partnerships

Partnership agreements: What should be considered?
Partnership agreements can be invaluable to clarify everyday matters and settle disputes within a partnership. What sort of things should be discussed for inclusion in a partnership agreement? Why are they important?

Employers

Off-Payroll Working: PSCs & Private Sector Engagers
What is Off-Payroll Working? Who does it apply to? What are the rules?

Directors & Companies

R&D: 'Large Company' Scheme (RDEC) Guide
What is the R&D Expenditure Credit (RDEC) Large Company Scheme for R&D relief? How does it work? 

Land & Property

Land & Property: an Adviser's Tax Update 2023-24
NEW: Land and Property taxes: a comprehensive review of the sector for the current tax year offering a topical CPD update. 

Private Client & Estate Planning

How Post Office Horizon Compensation receipts are taxed
UPDATE: As part of the fallout of the Post Office Horizon scandal, many sub-postmasters and sub-postmistresses are receiving compensation. How are these receipts taxed? 

Overseas & Non-residents

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 Procedures and Checks 
A subscriber guide to Anti-Money Laundering (AML) procedures and checks, including what factors to consider when taking on a new client and conducting your 'know your client' procedures.

AML: Risk Assessment (Accountants)
A checklist for Anti-Money Laundering (AML) purposes to assist with risk assessing prospective clients operating in the Accountancy sector. For use by non-credit/financial institutions and non-FCA regulated firms.

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

Accommodation App was a tour operator for TOMS
In Sonder Europe Limited v HMRC [2023] TC08853, the First Tier Tribunal (FTT) agreed that the onward supply of rented apartments meant the appellant was a tour operator within the scope of the Tour Operator’s Margin Scheme (TOMS).

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 13 July 2022

• Overlap relief information available from end of August 2023 
• Online agent facility trialled for old postal queries 
• HMRC fines 419 businesses for AML non-compliance 
• Proposals remove professional bodies as AML supervisors  
• Car allowance payments were not fully subject to NICs
• Doctor's accommodation fails wholly & exclusively test
• AML: Anti-Money Laundering glossary
• Partnerships: What's new 2023-24? NEW
• Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of a business
• Termination, redundancy and leaving payments 
• Register of Persons with Significant Control (client briefing)
  
• SDLT: Residential property & dwellings
• IHT Agricultural Property Relief
• Companies: Permanent establishment & residence
• Statutory Review (by HMRC)
• NEW: CPD: Maximising Expense Deductions for Businesses ...More

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