Hello
We have something for everyone this week! We look at remittances, IR35, closing tax enquiries, electronic sales suppression, company size changes affecting over 40,000 companies and HMRC changes impacting response times for VAT. Don't forget to sign up for our live CPD webinars: there are two next week. See more information below.
The First Tier Tribunal (FTT) has considered two appeals by non-domiciled taxpayers which both test the rules as to what is a remittance for tax. The Remittance Basis of taxation will be reformed by whoever wins the election, but until then any clarity on these rules is always useful.
Very bad news for TV presenter Adrian Chiles who has been stuck with a £1.7m tax bill after falling foul of the IR35 employment intermediaries legislation. I am not alone in suggesting that we need to have a Statutory Employment Test. It’s all very well HMRC creating a Check Employment Status Tool (CEST) but this means that anyone who really wants to understand HMRC’s decision-making process has to reverse engineer the tool. That is not transparent and does not simplify the position.
What do you know about Electronic Sales Suppression (ESS)? It’s hardly something that comes up in regular conversations with clients. HMRC has issued a one-to-many letter on this form of fraud. I thought I would take a deeper look and am interested to know why the UK did not go down the ‘Fiscal till’ route, a system even adopted by Brazil and Russia. It seems that the Making Tax Digital policy program could be to blame.
As noted, there is some good news for around 40,000 companies: the government is considering reducing reporting obligations for medium-sized companies. This will mean that some 2,000 companies will no longer be classified as large, based on employee size but also remove the need for a non-financial Strategic Report.
Our June 2024 live CPD slots start running next week. These all take a long time to write and research and are filled with fascinating essentials for advisers and their clients.
Back soon
Nichola & the Team
Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.
Quick News (freeview)
Is a fiscal till solution the way to prevent ESS?
Over 30 countries have created and implemented so-called 'Fiscal Till Systems' to crack down on tax fraud by Electronic Suppression of Sales (ESS), but the UK shows no sign of following suit. Is the slow-burning rollout of Making Tax Digital into a direct tax to blame?
Finance (No 2) Act 2024
UPDATE: the second Act of the year with links to our guides on the relevant topics. With a general election held on July 4th, 2024 is all set to be a year of three Finance Acts
Electronic Sales Suppression one-to-many letter
Continuing their current campaign of one-to-many letters, HMRC have begun issuing another, this time concerned with Electronic Sales Suppression (ESS).
HMRC update List 3, approved organisations and societies
HMRC has regularly been updating ‘List 3’; its list of approved professional organisations and learned societies. Many new organisations have been added over the last six months.
Simpler reporting for medium-sized companies
A consultation on ‘Simpler corporate reporting’ considers amending the scope of the company size definitions. This aims to benefit up to 43,000 medium-sized companies and 2,000 large companies. These are separate proposals to the Companies Act changes already announced for implementation in October 2024.
Tax Cases (freeview)
IR35 costs Childs £1.7m
In HMRC v Basic Broadcasting Limited [2024] UT 00165, the Upper Tribunal (UT) decided that presenter Adrian Chiles' Personal Service Company, Basic Broadcasting Limited was within IR35. This leaves the presenter exposed to a combined Income Tax and National Insurance Contributions liability of over £1.7m.
HMRC’s fishing expedition shut down
In HMRC v Jonathan Hitchins & Ors [2024] UT 00114, the Upper Tribunal (UT) found that the First Tier Tribunal (FTT) was entitled to direct HMRC to issue closure notices. HMRC’s enquiries amounted to a ‘fishing expedition’.
FTT tests the Remittance Basis
In Afzal Alimahomed v HMRC [2024] TC09178, the First Tier Tribunal (FTT) found that a taxpayer had accidentally converted 'clean capital' into mixed funds in terms of the remittance basis and then had accidentally remitted funds by using an offshore credit card in the UK by purchasing goods in the UK and paying for them from an offshore account.
Director's loan debits caused Remittance
In Mr Benoit d’Angelin v HMRC [2024] TC09186, the First Tier Tribunal (FTT) dismissed the appeal on the grounds there was an extraction of value under the legislation on the Remittance Basis.
Editor's Choice
VtaxP: Virtual Tax Partner Tax Workouts: June 2024
Our Virtual Tax Partner Workouts aim to keep you up to date with your tax know-how but also to inspire you by introducing some new topics including:
- AML Update & Making your firm-wide risk assessment: live on 18th June
- How to run the most tax-efficient business...ever 2024/25: live on 19th June
- Corporation Tax: Purchase of Own Shares: case study: live on 26th June
Guides & Updates
Self-Employed
Accounting periods and tax basis periods
Update: Which date do I choose? Does it matter? Can I change my accounting date? What changes are made as the result of basis period reform?
Practical Tax Toolkits & Checklists: signpost
Our Practical Tax Toolkits for self-employed traders are designed to ADD VALUE for tax advisers and accountants. We have also created Toolkits for companies.
Partnerships
Salaried members: When is a partner taxed as an employee?
In some circumstances, LLP members are taxed as employees under PAYE. When does this apply?
Overseas & Residence
Remittance basis (overseas income)
What is the remittance basis? Who can claim it and when? What are the advantages of claiming the remittance basis and how much is the remittance basis charge?
Directors & Companies
Calculating Corporation Tax & Checklist
How do you calculate Corporation Tax? What is the small profit rate? How do you calculate Marginal Tax relief? How do you adjust for Associated Companies? What is meant by Control? What are Augmented profits?
Directors' loan accounts: Toolkit (subscribers)
HM Revenue & Customs (HMRC) have a director's loan accounts toolkit for advisers. This is our enhanced version with planning points.
Employers
P11D: Reporting benefits and expenses
Its that time of year. How do you report benefits and expenses? What is the P11D deadline?
Land & Property
Different ways of taxing UK property
This guide summarises the different ways of taxing income and gains in respect of the exploitation of UK property.
Private Client & Estate Planning
Notice to file a tax return: section 8(1) TMA 1970
UPDATE: HMRC is writing to taxpayers who are late in submitting 2020-21 and 2021-22 tax returns. If outstanding returns are not submitted by 12 July 2024, HMRC will issue a determination.
IHT Business Property Relief
UPDATE: A guide explaining what Business Property Relief is, when it can apply and pitfalls and planning points.
IHT: Gifts with reservation
UPDATE: What are the Gift With Reservation (GWR) rules? When do they apply?
IHT: Loans and restrictions on liabilities against the estate
UPDATE: When are loans deductible from the estate on death? What restrictions are there? What anti-avoidance rules do I need to consider?
Pensions: Tax rules and planning
What tax rules apply to pensions? What tax relief is available? What tax charges can arise? What planning opportunities are there?
Penalties & Compliance
Named tax avoidance schemes, promoters, enablers
UPDATE: HMRC publishes a list of named tax avoidance schemes, promoters, enablers and suppliers. It is not recommended that taxpayers use any of these schemes, as HMRC does not consider that they work and you may end up with a significant tax liability if you engage with the scheme suppliers.
Discovery Assessments
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? Can HMRC issue two alternative assessments for the same period? What are your rights of appeal and defences?
Closure notices
When does HMRC issue a Closure Notice? Can a taxpayer demand one? Are there appeal rights?
VAT News & Cases
HMRC score against Nottingham Forest
In Nottingham Forest Football Club Limited v HMRC [2024] UT 145, the Upper Tribunal (UT) found that a VAT assessment made by HMRC was in time. The club was liable for VAT errors arising from a change in its accounting system.
VAT application response times extended
The expected time for HMRC to respond to applications for deregistration and group registration has been extended to 40 working days.
CIS: Construction Industry reverse charge
What is the CIS VAT reverse charge? How do you account for VAT? Can you still cash account for VAT? What administrative changes do I need in order to operate the reverse charge?
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.
CPD for Lunch
Byte-sized chunks of lunchtime CPD for subscribers
- NEW: CPD: Change of basis periods: Transitional rules 2023-24 Returns
- CPD: VAT Penalties Update
- CPD: CGT Reporting and payment deadlines
More at CPD Index
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 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 June 2024
- Talking tax: CTAs address the impact of AI and tax
- Scottish tourist tax bill passed
- HMRC-recognised payroll software
- BADR one-to-many letters
- CJRS claim rejected: Employees were not added to RTI
- CGT confusion over jointly owned property
- No late claim for EIS Income Tax relief ...More
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