Hello,
In this week's tax update, we feature HMRC's new Agent Update, consider the Budget Responsibility Bill and have a Court of Appeal decision on Double Tax Relief. There is more from the tribunals on Research & Development relief (R&D).
Last week’s State Opening of Parliament announced the Budget Responsibility Bill. This will give the Office for Budget Responsibility (OBR) new powers to unilaterally produce reports assessing the costings of ‘fiscally significant measures’ announced by the Government, if not previously included in an OBR economic and fiscal forecast.
This ‘fiscal lock’ intends to reinforce market credibility and public trust by supporting parliamentary scrutiny. This week we take a closer look at the draft Bill.
HMRC have released their latest Agent Update containing several important updates and reminders to be aware of this month. Check out our enhanced version, which links to our detailed guides on each relevant topic.
Topical issues include the Corporation Tax rates on certain non-resident companies, payroll considerations for temporary seasonal workers and clarification of the rules for the workplace nursery tax exemption.
As is so often the case with tax, the devil is in the detail. This is something highlighted by our featured case summaries.
Essential reading for anyone involved in international tax matters is the GE Financial Investments Limited Court of Appeal decision. This considers corporate residence and the availability of Double Tax Relief in the context of the UK/US double tax treaty.
We also look at a Research and Development (R&D) appeal. While the appellant company convinced the First Tier Tribunal (FTT) that it had incurred expenditure in Iran, via a director's loan, it did not provide sufficient evidence that the expenditure was on a valid R&D project, meaning that it could not benefit from R&D relief.
More news, cases and updates are below, including our new guide exploring Corporation Tax relief on employee share awards.
Finally, do remember that 2023-24 second payments on account fall due next Wednesday.
Back soon
Nichola & the Team
Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.
Quick News
Agent update: July 2024
HMRC have published Agent Update 121 for July 2024. Here is our summary of the highlights in direct and indirect tax announcements affecting SME owners and advisers.
The Budget Responsibility Bill
The 2024 King’s Speech announced a ‘fiscal lock’. This is designed to ensure that fiscally significant announcements made by the Government are subject to independent assessment. What will this mean?
Tax Cases
Court of Appeal rules that General Electric was not dual resident in the UK and US
In GE Financial Investments Limited v HMRC [2024] EWCA Civ 797, the Court of Appeal (CoA) overturned the Upper Tribunal’s (UT’s) decision that the UK-incorporated company was also US resident under the UK/US Double Tax Agreement (DTA). The claim for Double Tax Relief (DTR) in the UK was denied.
Insufficient evidence of R&D costs for overseas sub-contractor
In Tills Plus Limited v HMRC [2024] TC9235, a company's director was unable to articulate in sufficient detail that his company's project met the definition of R&D. Its claim was rejected by the First Tier Tribunal (FTT).
Editor's Choice
Corporation Tax relief for awards of shares to employees
Corporation Tax relief for shares awarded to employees? How to calculate the relief? What are the conditions?
Partnerships: Losses
What loss reliefs are available to partners and what restrictions are there? How to calculate a partner's capital contribution? What are the anti-avoidance rules?
Guides & Updates
Self-Employed
Sales/turnover: Tax compliance
All accounts, whatever the size of the business, must be prepared according to Generally Accepted Accounting Principles (GAAP) unless it chooses to use cash accounting. This requirement means that you may need to include some sales income in your accounts earlier than you might think.
Cash or accruals accounting toolkit
Unincorporated businesses can elect to use one of two different methods of accounting for tax: simpler accounting (cash basis) or accruals basis accounting.
Creative Industry Zone
Creative Industries: Film Tax Relief and Television Tax Relief
Film Tax Relief (FTR), High-End TV Tax Relief (HETR), Animation Tax Relief (ATR) and Children’s TV Tax Relief (CTR) are part of the UK's suite of creative industry tax reliefs.
Creative Industries: Video Games Tax Reliefs (VGTR)
What is Video Games Tax Relief (VGTR)? When can a claim for VGTR be made? When will VGTR cease?
Directors & Companies
Research & Development Tax Reliefs
What is R&D Relief? How does it work? Why does the size of the company matter? What is sub-contracted R&D? How do I write an R&D Report?
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
Childcare: Employer provision
UPDATE: HMRC has reported that some scheme operators are falsely advertising their services as HMRC-approved workplace nurseries without meeting partnership requirements. Check if your workplace nursey meets the conditions for exemption using our guide.
Advisory fuel rates (company car drivers)
HMRC have published new advisory fuel rates for company car drivers which will apply from 1 March 2024.
Land & Property
Gardens: selling or developing
What are the tax consequences of selling a garden for development purposes? What if the owner develops the garden?
Joint property elections
When a property is held in joint names it is mainly taxed according to beneficial ownership. There is an exception where married couples and civil partnerships hold joint property. Trusts are also taxed differently.
Penalties & Compliance
Overpayment Relief
What is Overpayment Relief? When can you claim Overpayment Relief? What are the conditions for a claim for Overpayment Relief? What are the time limits for a claim for Overpayment Relief?
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.
Private Client & Estate Planning
Estates: Income Tax and Capital Gains Tax
How do executors deal with income and capital gains arising on the deceased’s estate? What allowances and reliefs are available?
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?
Marriage Allowance (Transferable Married Couples Allowance)
The Marriage Allowance, also referred to as the Transferable Allowance for Married Couples and Civil Partners, was introduced on 6 April 2015. What is it? How can I claim it? Is the timing of a claim important?
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.
VAT News & Cases
Deposit Return Scheme: Drink containers
The Deposit Return Scheme (DRS) is an environmentally ambitious scheme for single-use drink containers. It will now not be introduced until October 2027. How will it operate for VAT purposes?
Fuel scale charges (VAT)
What is the VAT fuel scale charge? What alternatives are there to the VAT fuel scale charge? Does the VAT fuel scale charge apply to vans?
Food, catering and takeaway
What is the VAT rate charged on food? How does this differ depending on hot or cold food and food consumed on or off the supplier's premises?
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 the Last Tax Update?
Ross Martin Tax: SME Tax News 18 July 2024
- HMRC focus on the Persons of Significant Control (PSC) register
- Construction Industry Scheme one-to-many letters
- Authority to act for the personal representatives of an estate
- Welsh LTT reliefs: Consultation outcome
- Highlights (for tax and business) of the King's Speech
- R&D claim: tribunal rules on Open Source AI modelling
- No excuses for landlord's failure to understand joint property rules
- Carried interest rules did not apply
- Management expenses disallowed as capital expenditure ...More
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