Hello
The tribunals are back for a new term and we have some fascinating tax tales to share with you this week.
If you act for any family companies you might be interested in considering the CGT planning in the Olivia Wilkinson case below. Taking advantage of the rules as they stand, a company owner gifted some shares to his daughters, before selling his company to a third party to allow them to claim Entrepreneurs' Relief (the relief subsequently renamed, 'Business Asset Disposal Relief'). The twist in the tale was that the only way they could qualify was via a share-for-share exchange, and becoming shareholders in the buyer. HMRC tried (unsuccessfully) to block this arrangement.
Of course, there is a much simpler route and that is to give potentially BADR-qualifying shares (and directorships if they are not employees) to your children earlier on in life, and they might sell with you on a takeover. You do then run the risk that the children might vote against you and so you can see why it might not always be a good idea.
We also have an Upper Tribunal decision on the deemed employee rules for Limited Liability Partnerships (LLPs) which is one to note, being a decision that sets the law. We also feature a case confirming the extended time limits for Discovery Assessment in relation to certain offshore matters.
Following the announcement that the government is changing its Net Zero targets, I have also included a little piece on a Private Members Bill, the Local Electricity (No. 2) Bill, which aims to pave the way for small generators of low-carbon energy to sell their energy locally and to sell power back to the grid. This is an idea that comes up time and time again in every community. It’s technically challenging to those in charge of the national grid, although anyone who has PV panels connected to the grid under the different feed-in tariff arrangements knows that that system allows us to generate and send power back without any outage issues. One wonders if the reasons for not supporting local electricity are merely political.
Back soon,
Nichola Ross Martin FCA CTA (Fellow)
Tax Director
Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.
Quick News (Freeview)
Business survey finds no benefits to HMRC digitalisation
The Administrative Burdens Advisory Board has released 'Tell ABAB report 2022 to 2023', which shows that businesses are finding compliance with Off-Payroll Working rules and Making Tax Digital is an increasing burden and they have seen no benefits from digitalisation.
Local Electricity for local people
A Private Members Bill, the Local Electricity (No. 2) Bill, aims to pave the way for small generators of low-carbon energy to sell their energy locally and to sell power back to the grid. To most people this idea seems like a 'no brainer' however there are considerable hurdles in its path.
Payroll reporting for salary advances consultation
HMRC have published a new consultation 'Draft regulations: proposed amendments in respect of salary advances'. It is seeking views on the changes to secondary legislation to allow employers to delay the reporting of such advances to employees.
Longer waiting times to come on HMRC agent phone lines
HMRC has announced that from 2 October they will be removing the ten-minute average wait time standard on their Agent Dedicated phone line.
Tax Cases
Portfolio manager influence prevents deemed salary ruling
In HMRC v Bluecrest Capital Management (UK) LLP [2023] UKUT 110, the Upper Tribunal found that one of the three conditions that categorise LLP members as deemed employees, the lack of significant influence over the affairs of the LLP, was not met by the traders and portfolio managers, meaning they were not subject to PAYE and NICs.
CGT family planning not abusive on company sale
In Olivia Wilkinson and others v HMRC [2023] TC 08887, the First Tier Tribunal (FTT) decided that HMRC was not able to deny Capital Gains Tax (CGT) relief on a share-for-share exchange that subsequently allowed the daughters of a company's owner to claim Entrepreneurs' Relief (ER) relief after a take-over. The CGT planning exercise was not one of the main purposes, nor the main purpose, of the deal.
Offshore extended time limits applied
In James Scott v HMRC [2023] TC08784, the First Tier Tribunal (FTT) confirmed the extended time limits for Discovery Assessment applying to the Requirement to Correct (RTC) rules.
Editor's Choice (subscribers)
Purchase of Own Shares
UPDATE: check out our POS tool! How can a company repurchase its issued share capital? What are the Companies Act requirements? What are the tax consequences for the company and shareholders?
Time limits for assessment (Discovery): offshore
UPDATE: What are the time limits for assessment for offshore matters? When do the Discovery rules apply?
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.
Guides & Updates (subscription content)
Start-ups
A new business? Start here...
Starting a new job or starting in business? Will you be Self-employed? Our 'At a glance' guide takes you through the key steps in getting started for tax, with links helping you drill down for more detail.
Self-Employed
Extracting profits (self-employed)
What tax planning tips will help you to run a tax-efficient business? We review your different options. The majority of businesses in the UK are run by sole traders. This guide looks at profit extraction from the perspective of the unincorporated business.
Mixed members: Partnerships with company members
What is a mixed-member partnership? How are the profits of a mixed-member partnership taxed? What tax adjustments are required? Are there any relieving provisions?
Employers
Employee Shares: the Employment-Related Securities rules
Tricky rules explained simply: 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
Issuing new shares (planning and pitfalls)
A practical guide on how to issue new shares in a company together with a summary of some of the pitfalls if an issue fails to qualify for tax purposes.
An Index to Reorganisations, Demergers & share transactions
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?
Private Client & Estate Planning
At a glance: Reporting CGT when & how?
How do you report your capital gains? What return do you use? There are different ways for individuals to report capital gains depending on whether you are resident or non-resident, and whether you are in or out of Self Assessment.
Common Reporting Standard (CRS)
Unreported offshore income or gains or IHT? What is the Common Reporting Standard (CRS)? What are the consequences of the CRS?
Land & Property
Buy-to-let ownership: personal v. company?
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.
Penalties & Compliance
Mandatory Disclosure (DAC6): Do you need to make a report?
The Mandatory Disclosure rules will replace DAC6 as the reporting requirement for those involved in aggressive tax planning or avoidance through cross-border arrangements. Who might have to make a report? What arrangements are caught? What are the reporting requirements?
Penalties: Offshore Income, CGT & IHT
What penalties apply for errors and failures relating to offshore Income and Capital Gains Tax (CGT)?
VAT News & Cases
Essay writing fees fully VATable
In All Answers Limited v HMRC [2023] TC08920, the First Tier Tribunal (FTT) found that a company using third-party writers to supply bespoke academic work to individuals was not acting as an agent. VAT was due on the full amount paid by the customer.
Health and welfare: VAT
UPDATE: When does reduced rating, zero rating and VAT exemption apply to services relating to medical care, health and welfare? What are the rules?
Reconcile your output VAT to your turnover
FREEVIEW: Why should you reconcile your output VAT to your VAT returns? How can you perform such a reconciliation?
Correcting VAT errors
What are the VAT error correction time limits? Can you correct errors through the VAT return? Do you have to notify HMRC?
Vacancies
Tax writer and Tax adviser vacancies
Enjoy working from home? Looking for a flexible career change? If you are experience in advising in OMB and SME tax, feel that you will enjoy writing and updating our tax resources at www.rossmartin.co.uk, as well as making CPD webinars we would love to hear from you.
CPD for Lunch
Byte-sized chunks of lunchtime CPD for subscribers
- CPD: Landlords Update 2023
- CPD: VAT Penalties Update
- CPD: Maximising Expense Deductions for Businesses
- UPDATE: CPD: Non-Resident CGT: UK Property
More at CPD Index
CPD Workouts
Two hours of CPD: Unravelling the diverse tax rules over a range of topical subjects
- VtaxP Tax Workouts 2023: AML Essentials update & IHT and Family Investment Company case studies
- VtaxP Tax Workouts 2023: Tax Update for OMBs & Taxing the Digital Nomad
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 14 September 2023
- HMRC's Overlap Relief form now available
- Gift Relief one-to-many letters
- You're Fired! Sugar's advisers miss vital residence rule
- Government 'flying blind' on levels of fraud and corruption
- Apartment reservation agreements didn't reduce SDLT
- Garages and right to use a garden: residential for SDLT
- Energy company denied deductions for £28 million
- Taking company money is not deliberate behaviour for s.455
- HMRC changes VAT agent authorisation rules
- Residential Property & SDLT UPDATE ...More
Come and join our Cloud
Subscribe (and UNLOCK the whole site) A single-user annual subscription is £519 (+ VAT).
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 5,000 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 and 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.
Are you enjoying our content?
Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.
Register with us now to receive our receive our FREE SME Topical Tax Update & newletter.
