Hello
Wales set its Budget for 2025-26 this week, the CIOT and ICAEW create a benchmark for HMRC service standards, and as Managed Service Companies (MSCs) hit the headlines again we consider why MSCs are a problem for accountancy firms.
In Scotland, the Land and Buildings Transaction Tax (LBTT) rules require taxpayers to submit a '3-year lease review return'. Don't panic! This is not required elsewhere in the UK. The Scottish tribunals have been hearing appeals against late filing penalties, as many taxpayers were unaware of this requirement. Ignorance of the law is not valid defence, but one cannot help feeling deep sympathy for taxpayers caught out.
Wales increased its higher rate of Land Transaction Tax (LTT) by 1% from the date of its budget this week. It did not, however, follow England and NI in deciding to abolish Multiple Dwellings Relief (MDR), despite consulting on this last year.
The 'Managed Service Company' (MSC) legislation is PAYE anti-avoidance legislation. As such it's broadly drafted. Given the way that many accountancy service providers (ASP) operate there can be a very narrow dividing line between whether an entity is operating as an MSC or is just an ASP. The deciding factor should be a tax avoidance motive, however when it comes to tax mitigation, advising on, enabling and assisting on the maintenance of a tax efficient business structure is what ASPs do. HMRC has just issued Spotlight 67 which attempts to explain the difference between ASPs and MSCs. See what you think; I would suggest more examples are required.
The CIOT and ICAEW have published the results of a survey on service standards which will be useful reading for HMRC. My take is that it appears that valuable cost savings for both HMRC and its customers (including tax agents) can be made by deploying a simple 'ticketing' system (a bit like the one we use for our Virtual Tax Partner support service - at www.VtaxP.co.uk). Just a thought.
More news and updates below. If you have not already done so, book onto our Christmas Quiz and we will see you tomorrow. Christmas jumpers are optional!
Nichola and the Team
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Quick News
Wales sets its 2025-26 Budget
Mark Drakeford, Cabinet Secretary for Finance and Welsh Language set out the 2025-26 Welsh Budget on 10 December 2024.
HMRC could save £36m in call efficiencies
The CIOT and ICAEW have completed a survey of HMRC’s service levels with some uncomfortable findings: well over a third of calls to HMRC are unproductive. The data harvested sets a new baseline standard for improvement and, future monitoring has now been established.
Spotlight 67: Managed Service Companies (MSC)
HMRC's second Spotlight offers limited guidance on how to identify Managed Service Companies (MSCs) and MSC Providers, including how to recognise their role in tax avoidance schemes.
Tax Cases
FTT's EBT decision set aside due to error of law
In MR Currell Ltd v HMRC [2024] UT 00404, the Upper Tribunal (UT) set aside a decision made by the First Tier Tribunal (FTT) due to an error of law. This resulted in the UT concluding that a payment from a company to an employee benefit trust was not earnings.
Transfer of beneficial interest did not need to be in writing
In Frenkel v LA Micro Group (UK) Ltd & ors and LA Micro Group Inc v LA Micro Group (UK) Ltd & ors [2024] UKSC 42, the Supreme Court found that an oral agreement between the legal and beneficial owners of shares was enforceable, and created a constructive trust. This meant that the transfer of beneficial ownership to the legal owners did not need to be in writing.
Input tax relief denied
In Beigebell Limited (No. 2) v HMRC [2024] UKUT 382 (TCC), the Upper Tribunal (UT) found that purchases of memory cards were connected to VAT fraud, which the taxpayer should have known about, causing its claim for input tax to be denied.
Editor's Choice (subscribers)
Managed Service Companies
UPDATE: What is an MSC? How to avoid being a MSC? What's new for MCSs? What are the top tips for accountancy firms to avoid being caught out by these rules?
Festive CPD
Festive Fun: Christmas Tax Tips
There's nothing quite like...Christmas CPD. Add more points to your CPD records by joining us for a FREE festive tax tips webinar.
Guides & Updates
Self-employed
Self Employed: Accounts & tax checklist
A handy checklist to assist you in preparing accounts and completing the Self-Employed section of a Self Assessment tax return and to highlight key areas of discussion with your sole trader clients.
Tax Rules for the different trades and professions
How are different types of business taxed? What special rules apply to different types of business income and expenses? What about VAT? We summarise the different rules for taxing income and expenses of a large selection of different trades, professions and vocations.
Self Assessment Return 2023/24: What's new?
2024 Self Assessment toolkit: top tips for completing tax returns for the year ending 5 April 2024.
Partnerships
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?
Directors & Companies
Directors: 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?
Pre-trading expenses (companies)
What are pre-trading expenses? What tax relief is available for pre-trading expenses? What are the restrictions to relief? What expenses will not qualify? What about pre-incorporation expenses?
Compliance
Notice to file a tax return: section 8(1) TMA 1970
A guide to explain the implications of a notice sent to an individual under s.8(1) TMA 1970 to file a tax return.
Employers
Staff parties and annual functions
This Practical Tax Guide looks at the tax treatment of parties, including Christmas parties and other annual functions for staff from the perspective of the employer and their business.
Private Client & Estate Planning
Divorce & Separation: Toolkit
A summary of the tax implications which can arise on divorce and separation.
Client Briefing: Making gifts & IHT
What gifts can you make without triggering Inheritance Tax (IHT)? What are the rules on making tax-effective gifts for IHT purposes?
Trust Registration Service
What is the Trust Registration Service? What trusts does it apply to? What are the requirements and deadlines?
Land & Property
Property Profits and Losses 2023-24
Our Property Profits & Losses toolkit takes HMRC's version and adds a great deal more information about what you can claim as an individual.
Property Profits and Losses 2024-25
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.
CPD
CPD for lunch: Byte-sized chunks of lunchtime CPD (free for our Subscribers)
- CPD: Income Tax and Trusts
- Free Study Skills Session - Preparing for Your Tax Exams
- CPD: Change of basis periods: Transitional rules 2023-24 Returns
- How to run the most tax-efficient business 2024/25.
- Purchase of Own Shares: all the details.
- Anti-money Laundering Update and Firm-Wide Risk Assessment ...More...
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
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Missed the Last Tax Update?
Ross Martin Tax: SME Tax News 5 December 2024
- Scottish Budget 2025-26
- The Corporate Tax Road Map
- Two Consultations: Carried Interest and Alternative Finance
- SA Filing Requirements
- Partnerships what's new 2024/25
- Employment Related Securities: what's hot ...More
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