Hello,
We have our enhanced version of HMRC's Agent Update for you this time and several topical case decisions and news, including three cases on claims about share disposals, two on employment taxes and one on selling off a garden to a developer.
SME Tax News
In Andrew Nunn v HMRC [2024] TC09127, the decision to sell off part of a garden to a developer resulted in the owner unwittingly becoming a developer, a fact not missed by the tax tribunal, which found in his favour in terms of Capital Gains Tax (CGT) Private Residence Relief (PRR).
The First Tier Tribunal allowed relief for a capital loss on an irrecoverable loan to a trader, despite the loan having been converted into shares before the loss relief claim was made.
On 22 April 2024, HMRC issued updated guidance on Making Tax Digital (MTD) for Income Tax. After a pause in the pilot in February 2023, HMRC has now confirmed the expansion of the pilot from April 2024.
In HMRC v RALC Consulting Limited [2024] UKUT 00099 (TCC), the Upper Tribunal (UT) overturned a 2019 decision by the First Tier Tribunal (FTT) about the intermediaries legislation commonly referred to as IR35 which originally found in favour of the taxpayer. The case has been remitted back to the FTT which must now reconsider the arguments.
An attempt to claim negligible value relief was rejected by the First Tier Tribunal (FTT). It was found that the shares were already of negligible value at the time of acquisition.
The Department for Business and Trade's response to its consultation 'Distributing tips fairly: draft statutory code of practice' includes the implementation of the Code of Practice, and the Employment (Allocation of Tips) Act 2023. Workers in tipping industries will be protected from unfair employers pocketing money meant to go to them in recognition of good service.
HMRC published Agent Update 119 on 17 April 2024. Here is our summary of the highlights in direct and indirect tax announcements affecting SME owners and advisers.
A Norfolk-based accountant has been severely reprimanded, excluded from membership of the ICAEW, and ordered to pay costs of £55,645 for favouring one party over another in a dispute following a divorce.
HMRC appealed a decision by the First Tier Tribunal (FTT) relating to a tax avoidance scheme. They won on two of three grounds with the result being that the loans made are taxable as earnings but not deductible for Corporation Tax.