SME tax news 5


Some concerns have been raised about the accuracy of historic National Insurance Contributions (NICs) records now that taxpayers have much easier access to their records via HMRC’s new Check Your State Pension Forecast Service. See what you think. If a record is materially wrong it could be nigh on impossible to reconstruct missing records. Truly a job for AI.

Want to stay on top of tax? We feature a range of new CPD guides for 2024-25 out this week, covering Capital Allowances and Land and Property as well as an Adviser's special guide. If you are after structured CPD then I recommend our updated CPD webcast on Basis Period Reform. We take a detailed look at the transitional year rules and your options for spreading transitional profits.

As you may have seen in the news and on social media, the First Tier Tribunal (FTT) has heard details of a VAT and NICs tax appeal test case featuring 'Mini-Umbrella Companies (MUCs)' run by Filipino directors. The BBC exposed the abusive use of MUCs back in 2021, reporting that HMRC has closed down at least 22,000 MUCs. That is probably the tip of the iceberg and the number of companies involved in this is quite staggering. The PAYE/NICs and VAT avoidance scheme was created by UK advisers who have well over a decade of considerable ‘form’ in this area.

Why are these promoters not being prosecuted? Perhaps they are. The process is long and this is just one of several complex investigations. HMRC has just issued a new spotlight warning employment agencies about the dangers of umbrella companies. It could be as a reaction to the MUC decision, but that horse has long bolted the stable. It might reveal that HMRC considers that PAYE avoidance is actively being orchestrated and its current deterrents are not working. 

Good news! Our tax software is working again. Thank you to everyone who has messaged me about this, much appreciated. 

As I mentioned last time we are gearing up for Accountex 2024 on 15th/16th May and my talk for that is nearly done. Our whole team are going and it would be great to meet you if you can make it up there. We will see the return of our Virtual Tax Partner Practical Tax Conference in June. More details in due course. 

More news and cases below.

Nichola & the Team

Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.

Quick News (Freeview)  

HMRC launches digital National Insurance service 
On 29 April 2024, HMRC introduced a new digital service, enabling taxpayers to conveniently check their State Pension forecast and make voluntary contributions to address gaps in their National Insurance (NI) record.

Spotlight 64: Employment agencies using umbrella companies
HMRC has issued another 'Spotlight', this time aimed at employment agencies and staff bureau warning them that if an umbrella or other payrolling company is offering them seemingly wonderful rates of take-home pay and cut price processing costs, this is very likely because there is tax avoidance (or just plain fraud) and they are not applying PAYE and National Insurance as the government intends.

Unexpected Class 2 NIC refund?
Some self-employed taxpayers who made voluntary class 2 National Insurance (NI) contributions for 2022/23 have received a refund from HMRC.

Welsh Food and Drink Festivals and Events Fund 2024 
The Welsh government has announced that the Food and Drink Festivals and Events Fund 2024 is now open for applicants. The small grant scheme aims to support festivals and events that enhance the Welsh food and drink industry. Successful applicants could secure funding of up to £15,000.

Tax Cases (Freeview)

Variable-rate employees not fixed-rate for CJRS 
Attempts to make Coronavirus Job Retention Scheme (CJRS) claims using calculations for fixed-rate employees were rejected by the First Tier Tribunal (FTT). The employees did not meet the definition of a fixed-rate employee.

Filipino director mini-umbrella fraud schemes collapse at the FTT
The First Tier Tribunal (FTT) has heard details of a VAT and NICs tax appeal test case featuring 'Mini-Umbrella Companies (MUCs)' run by Filipino directors. The scheme, created by UK advisers, after taking the opinion of a KC was promoted on Facebook and facilitated the making of fraudulent claims for agency workers after setting up VAT and PAYE records and taking advantage of HMRC's systems.

Loan by pension scheme a costly mistake
A loan made to a taxpayer by his pension scheme produced an unexpected unauthorised payment charge together with an unauthorised payment surcharge as the pension scheme member had received a benefit before his normal retirement age.

Annexe under construction not a dwelling
An unusual claim for Stamp Duty Land Tax (SDLT) Multiple Dwelling Relief focused on a curious aspect of the rules: could a garage in the process of being constructed or adapted at completion qualify as a separate dwelling?

Editor's Choice  

A sale of the company's shares? Start here
If one or more shareholders are considering selling their shares what are their options?

Land & Property: an Adviser's Tax Update 2024-25
NEW: Land and Property taxes: a comprehensive review of the sector offering a topical CPD update.

Property Profits & Losses: Toolkit (2024-25)
NEW: Our Property Profits & Losses toolkit takes HMRC's version as its starting point and adds a great deal more information about what you can claim as an individual landlord

Tax Tools & Calculators

Tax tools & calculators
UPDATE: 2024/25 versions available now. We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes. 

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)


Making Tax Digital 
As HMRC reopens its pilot test scheme for MTD for Income Tax we have updated all our guides in our MTD section.

Starting Work 5. Agency or Umbrellas
Working via an agency: how to spot whether you are being paid correctly. This guide shows you what to expect.


Running an LLP in tandem with a company
It is possible to run a Limited Liability Partnership (LLP) or another form of partnership in tandem with a company. Partnerships can also have corporate partners. What needs to be considered?

Directors & Companies  

Losses: Trading and other losses
When can a company offset its losses? What restrictions are there? How are loss claims made?

Promoters of Tax Avoidance Schemes
UPDATE: Who is a Promoter? What are the Promoters of Tax Avoidance Scheme rules? What does this mean for promoters, intermediaries and clients? IPS Progression Ltd was fined £900,000 earlier this year for failure to declare its PAYE/NICs avoidance scheme.


Agency Workers: Employment intermediaries' rules
Subscriber guide: How the Agency tax rules apply? What are the tax rules for Employment Intermediaries and Agencies? Are agency workers subject to PAYE?  

Private Client & Estate Planning

Investment bonds & tax
How are investment bonds taxed? What is an investment bond? What is a chargeable event gain and how is it calculated? How do notional tax credits work? How is top slicing relief calculated? What is deficiency relief?

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

Capital Allowances

Capital Allowances: What's new 2024-25 
What's new in Capital Allowances for 2024-25? A summary of the different types of capital allowances currently available to UK businesses.

Disposal values & rules
What is a disposal for capital allowance purposes? What is the tax consequence of a disposal? What value needs to be accounted for on a disposal? 

VAT News & Cases

Basic supply description adequate for VAT 
Purchase invoices describing a supply simply as ‘building works’, along with giving the site address, provided sufficient detail to comply with the VAT regulations and allow input VAT recovery.

VAT repayment fraud 
HMRC has cautioned that Form 484 has been used to fraudulently access VAT repayments.

Deposit Return Scheme: Drink containers
UPDATE: The Deposit Return Scheme (DRS) is an environmentally ambitious scheme for single-use drinks containers. It will now not be introduced until October 2027. How will it operate for VAT purposes?  

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers 

More at CPD Index

CPD Workouts

Two hours of CPD: Unravelling the diverse tax rules over a range of topical subjects

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 25 April 2024

  • Agent Update Issue 119
  • Hospitality sector needs to prepare for 'fair tips' rules
  • MTD for Income Tax testing has now re-opened
  • Accountant should have avoided conflict of interest
  • Improving the effectiveness of the Money Laundering Regulations
  • Garden development date of disposal dilemma
  • Entrepreneurs’ Relief allowed on 4.99998% shareholding
  • Negligible Value claim rejected
  • Capital loss allowed on loan converted to shares
  • FTT told to revisit issue of mutuality of obligation 
  • Significant victory for HMRC in Remuneration Trust 
  • Revenue and Customs Brief 4 (2024): Interpretation of VAT and excise law from 1 January 2024 
  • Revenue and Customs Brief 5 (2024): Tour Operators' Margin Scheme for B2B wholesale supplies
  • Loan relationships: Connected Companies NEW
  • Online filing exclusions for 2023-24 tax returns NEW
  • Capital taxes round-up: 2024-25 NEW
  • Named tax avoidance schemes, promoters, enablers UPDATE  ...More

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