Hello,
This week we've been looking at what we can all learn from a National Audit Office (NAO) report on tax evasion in the retail sector, there are more 'One to many' letters coming out from HMRC, this time targeting higher rate taxpayers and remittance basis users. Do have a read of our cases, as we pick out ones that we think have good educational value for advisers.
Reading the NAO's new report on HMRC’s approach to tax evasion in the retail sector has been an eye-opener. There was a massive surge in the formation of retail companies in 2023. Most of us don't expect to be experts in tax fraud but it's worthwhile reading our summary of the NAO report as it red flags the areas where there are issues and will help you risk assess your clients.
No adviser wants to get caught up in a fraud case. The tribunal decision in Ancient & Modern Jewellers Limited illustrates weaknesses in both HMRC's VAT inspection systems and the company's accountant's tax preparation. A systematic and wide VAT fraud occurred for years without detection.
Turning to other cases, a long-running dispute over whether visitor passes were tickets or multi-purpose vouchers for VAT might have been decided. A DIY Builder (very unfairly) came a cropper of the appeal's process and there was another failed Coronavirus appeal. We can always help with drafting appeals.
Finally, still on fraud and its prevention, the NAO made a helpful review of the systems introduced in other countries compared to those we have in the UK. Some of us think the Making Tax Digital project has lost its footing and the UK is falling behind in tax technology. There is a piece in Editor's Choice this week covering this; food for thought.
Nichola and the Team
Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.
Quick News
NAO: HMRC not preventing tax evasion in high street or online
The National Audit Office (NAO) pulls no punches in its latest report, 'Tackling tax evasion in high street and online retail'. It concludes that HMRC are slow in preventing phoenixing, disguised residency and electronic sales suppression. Tax evasion is growing in the small business sector and whilst HMRC have identified issues, they've done almost nothing to prevent them.
One-to-many letter for remittance basis charge claimants
HMRC's Wealthy Team are sending a one-to-many letter to individuals whom HMRC believe should have paid a remittance basis charge in 2022-23.
EIS and VCT extension confirmed
The government has confirmed that it continues to support the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme by announcing that both schemes will be extended by ten years to 5 April 2035, as planned.
Oops! A typo resulted in 11,000 letters from HMRC
Over six months starting in September 2022, a large number of VAT-registered overseas businesses changed their registered address to one residential property in Cardiff. The resident received over 11,000 letters from HMRC and debt collection agencies regarding unpaid VAT, reports the National Audit Office (NAO).
Check if a business is AML registered with HMRC
HMRC retains a list of businesses under its supervision for Anti-Money Laundering (AML) purposes. This list can be used by anyone in their customer due diligence process.
Tax Cases
Not voucher, Yes voucher
In Go City Limited (formerly the Leisure Pass Group Limited) v HMRC [2024] TC9263, the FTT gave judgment over a long-running saga, deciding that visitor passes that combined transport with entry to London attractions are multi-purpose vouchers, not tickets, and therefore outside the scope of VAT.
Badly drafted appeal defeats static caravan DIY builder
Gregory Sewell v HMRC [2023] T9269 is a cautionary tale. A taxpayer's tax appeal against HMRC’s decision to refuse a VAT refund was not drafted in a way that allowed the FTT to review that decision. His lack of knowledge of the appeals process led to his appeal being denied
Cross-border cooperation catches VAT second-hand margin fraud
In Ancient & Modern Jewellers Limited & Anor v HMRC [2024] TC9270, HMRC worked with the assistance of foreign tax authorities to assess £8.5m in VAT and penalties on a watch retailer. It used the VAT second-hand margin scheme to avoid tax on the sale of new imported watches.
Not SEISS and Bounce Back Loan looked dubious too
In Ali Sadiq Jaafar v HMRC [2024] TC9279, an appeal to the First Tier Tribunal (FTT) in respect of Coronavirus Support Payments backfired. The evidence revealed that the taxpayer was not trading at the time and that a claim made by his dormant company for a Bounce Back Loan was likely to have been wrongly made too.
Editor's Choice
TAAR: Distributions on winding up (anti-phoenixing rules)
When does the TAAR apply? Who does it affect? Can you apply for tax clearance? Do the rules affect striking off?
UK fails to embrace tax technology
A recent National Audit Office (NAO) report compares measures adopted by other countries to reduce instances of VAT and sales fraud with the UK's approach. It reveals that the UK is seriously lagging in terms of its adoption of technological solutions.
Guides & Updates
Self-employed
Allowances: Trading and Property
What are the trading and property allowances? Who can claim them? What are the restrictions?
Directors & Companies
Do I need to file a tax return?
Do I need to file a Self Assessment tax return? What if I am a director? Can HMRC make directors file tax returns? When should I file a Self Assessment return?
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?
Land & Property
Campsites & Caravans: Tax Overview
UPDATE: The VAT rules for manufacturing caravans have been tweaked for new BSIs & DIY Builder case and VAT commentary updated. 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 rules for caravans and campervans? What are the VAT rules?
Employers
Employment Related Securities (ERS): Share valuation checklist
What information do you need to value Employment Related Securities (ERS)? How are employee shares valued? An Employment Related Securities (ERS) Valuation Checklist
Payrolling of benefits
The value of certain taxable Benefits In Kind can be included in taxable pay when calculating the PAYE deducted from payments of wages and salaries to employees.
PAYE: Starter checklist new employee 2024-25
Freeview PAYE starter checklist. Use this form if you are taking on a new employee. This is our version of HMRC's New Employee Starter checklist, updated for the 2024-25 tax year.
Private Client & Estate Planning
Cultural Gifts Scheme and Acceptance in Lieu
What is the Cultural Gifts Scheme? When does it apply? What are the advantages? What is Acceptance in Lieu?
Capital taxes round-up: 2024-25
A round-up of developments in capital taxes for individuals for 2024-25 including some topical Capital Gains Tax (CGT) and Inheritance Tax (IHT) cases.
Capital Allowances
Annual Investment Allowance (AIA)
What is the Annual Investment Allowance? What are the limits? What expenditure qualifies?
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
Cars & Vans: VAT
What is a car for VAT? What is a van for VAT? What VAT can be recovered on a car that is bought? Leased? What about fuel? Or mileage reimbursements? What is a car for VAT? What is a van for VAT? What VAT can be recovered on a car that is bought? Leased? What about fuel? Or mileage reimbursements?
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?
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 5 September 2024
- Scam emails now target Tax Agents
- Door remains open for landlords
- CGT & Incorporation: At a glance
- Make your Autumn Budget representations now
- Autumn Budget 2024: What might we see?
- Scam Emails now Target Tax Agents
- UT kicks Sky pundit's IR35 case into touch
- VAT: Agents and principals UPDATE
- R&D: Software, licences, cloud computing & pure maths NEW ...More
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