Nichola's SME Tax W-update 28 September 2023

Hello

HMRC has just brought out a rather long Agent Update. As usual, we have made a summary of the 'highlights' with some helpful links. I recommend that all tax agents read the update as it does contain a lot of useful information.

As HMRC notes in the Update, advisers have a role to play in ensuring that clients do not get caught up in tax schemes. This is often easier said and done. After all, it can be tricky when a scheme promoter applies heavy selling tactics directly to a client. Invariably, agents are not given enough information to allow them to understand fully the planning proposed and are therefore ill-equipped to persuade the client whether to get involved or not. To this end, there has been adverse publicity of late in respect of a property scheme which markets a ‘get rich quick’ incorporation scheme (which no one thinks works). I recently highlighted some of the more dubious sounding Research & Development (R&D) claims that some non-R&D businesses are persuaded to make and then finally, there are the Stamp Duty ‘specialists’ who also are seen to make some optimistic claims about refunds. One of the cases this week features such ‘specialists’ who caused something of an upset when they suggested that only a surveyor could decide whether a property was a dwelling for tax purposes. The First Tier Tribunal (FTT) judge made it quite clear that this was incorrect: that decision lies with the tribunal.

As the Autumn Statement approaches, the Treasury is asking for representations: take up their offer! What do you want to change?

More news and cases and updates below. Do check out Editor's Choice.

I normally sign off 'back soon' but I am actually just off taking extended leave, my excellent team are taking over for the next few weeks.

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)  

Agent Update: September 2023 
HMRC have issued their Agent Update for September 2023. We have summarised the key content for you with links to our detailed guidance on the topics covered.

Representations wanted for Autumn Statement 2023
HM Treasury is inviting representations from stakeholders ahead of the 2023 Autumn Statement, which will be held on 22 November 2023.

New 2023-24 CPD programme 
We are pleased to announce our 2023-24 season of Continuing Professional Development (CPD) webcasts. This 'CPD for lunch' programme for 2023-24 follows hot on the heels of our popular 2022-23 programme, which remains accessible for subscribers.

£1m each for top 1% on IHT abolition says IFS
A new report from the Institute of Fiscal Studies, 'Reforming Inheritance Tax', suggests that abolishing Inheritance Tax will return £1 million to the richest one per cent of UK estates, while losing the Treasury £7 billion in tax revenues.

Tax Cases

No Stamp Duty savings for dilapidated house
In Henderson Acquisitions Ltd v HMRC [2023] TC08922, HMRC's argument that for SDLT purposes a property that was a dwelling will continue to be a dwelling unless it is so uninhabitable that it requires demolition allowed the FTT took a more nuanced view. It nevertheless ruled a run-down property retained its character as a dwelling.

Contributing to EBT after enquiry opened was deliberate behaviour
In Delpha Derivatives Limited v HMRC [2023] TC8912, the First Tier Tribunal (FTT) dismissed an appeal against penalties for inaccuracies in PAYE returns for contributions to an Employee Benefit Trust (EBT). The taxpayer had acted carelessly initially and then deliberately by continuing to contribute after HMRC had already opened an enquiry into the scheme as well as issuing a Spotlight about their views on the scheme.

Generous treatment for persistent failure to declare eBay profits
In Vitalie Milasenco v HMRC [2023] TC 08862, the First Tier Tribunal (FTT) confirmed HMRC's actions as reasonable on Income Tax assessments and penalties for the deliberate failure to declare income by a long-time online seller who persistently failed to declare his income. 

Editor's Choice (subscribers)

Case Study 2: Tradeco, demerger of its investment business
How to transfer an investment property out of a trading company before sale?

Woodlands: Overview
Woodlands and forestry ownership carry significant tax reliefs, including Income Tax, Capital Gains Tax (CGT) and Inheritance Tax (IHT). This is a guide to those reliefs.  

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

Is it a trade, a business, or an investment activity?
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.

How to start a company
How do you go about creating a company? What do you need to do start a company? A practical guide on how to form (incorporate) a private limited company covering the key points that you need to consider.

Self-Employed  

Registering for Tax: Self-employment
You are self-employed, you have started working for yourself, what do you need to do now? How to register for tax.  The registration deadline is 5 October, now just a week away, and you will be charged a penalty if you register late.

Campsites: tax overview
What expenses can campsite owners claim for tax purposes? How is income taxed? Are there special tax and accounting rules when land is used for camping on a seasonal basis? What are the VAT rules?

Employers

Employment-Related Securities: Reporting
If an employer gives shares to an employee or sets up a tax-advantaged share or share option scheme, the benefit is taxed within the Employment-Related Securities (ERS) regime. The employer will then have a requirement to register a share scheme with HMRC and file an annual return by 6 July following the tax year-end.

Scale rates, bespoke rates and fixed rate expenses
What expense allowances can be paid to employees? What are HMRC's scale rates and bespoke scale rates?

Directors & Companies 

Calculating Corporation Tax & Checklist
How do you calculate Corporation Tax? What is the small profits rate? How do you calculate Marginal Tax relief? How do you adjust for Associated Companies? What is meant by Control? What are Augmented profits? 

A share scheme for directors & employees: Index
What type of share scheme is best for a director or employee? Is it a good idea to set up different share classes? What about share option schemes?

Private Client & Estate Planning

Acting for a trust? Start here…
UPDATE: This is an essential guide for advisers and trustees on how to manage the tax affairs of a UK trust and how to avoid common pitfalls.

Trust Registration Service
UPDATE: What is the Trust Registration Service? What trusts does it apply to? What are the requirements and deadlines?

Land & Property 

SDLT: Residential property higher rates
What Stamp Duty Land Tax (SDLT) rate applies for the purchase of a second home? What is the SDLT higher rate? Are there any reliefs from the SDLT higher rate?

VAT News & Cases

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?

Three-year delay too serious for late appeal
In Bull Brand Ltd v HMRC [2023] TC8928, the First Tier Tribunal (FTT) refused the application for an out-of-time appeal against HMRC's rejection of an error correction notice in relation to the correct VAT rate for e-cigarettes. The prejudice to the appellant did not outweigh the seriousness of the delay. 

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 21 September 2023

• Business survey finds no benefits to HMRC digitalisation 
• Local Electricity for local people
• Payroll reporting for salary advances consultation
• Longer waiting times to come on HMRC agent phone lines
• Portfolio manager influence prevents deemed salary ruling 
• CGT family planning not abusive on company sale 
• Offshore extended time limits applied 
• Essay writing fees fully VATable
• Mandatory Disclosure (DAC6): Do you need to make a report?
• Penalties: Offshore Income, CGT & IHT
• Common Reporting Standard (CRS)   ...More

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