In this time's web-update we have a new general income tax disclosure opportunity from HMRC, news of another consultation on a proposed reform of the Close Company Loans to Participators rules and a new Close Company Loans Toolkit. My pick of this time's 'Essential reading'.

Of tax case reviews we have another car benefit case, where a plan to avoid a benefit charge failed and a case which looks at the essential ingredients of what makes a land and property partnership.

I hope that everyone has now got their P11Ds together with share forms EMI 40 and Form 42 in on time this year. We have a guide to penalties if you failed. Many using HMRC online P11D forms may have found it impossible to get the wretched things to submit despite making the recommended changes in Adobe Acrobat. If that made you late in submitting a return then provided that you have outlined your online problems in your covering letter to HMRC when you send in by paper and do not delay paper submission for any other reason, there is without doubt grounds for reasonable excuse should a penalty arise. 

Finally, I was reading HMRC's first Tax Assurance Commissioner's report and was amazed to find that in 2011/12 60% of HMRC's decisions on VAT penalties were overturned on review. The figure for direct tax and other penalties was 25%.

Scroll on down for more news, toolkits, briefings, and updates.

Best wishes


Nichola Ross Martin FCA
Tax Director
Your online Virtual Tax Partner: practical support for accountants, tax advisers and their clients

 News headlines

My Tax Return Catch Up campaign
New Self Assessment disclosure opportunity offers best terms yet.

Consultation: Reform of Close Company Loans to Participator rules
More changes proposed for 2014

Car benefit: another co-ownership plan fails
The Upper Tier Tax tribunal decides that a car is still "made available" by an employer even though the scheme involved the initial purchase of the car by the employee.

More News

HMRC progress in solving tax disputes
In 2011/12 there were 56,228 reviews of HMRC decisions, in over 25% of direct tax penalty and non-penalty cases HMRC's decision was either cancelled or varied. However in VAT 60% of HMRC's decisions was cancelled and 7% varied.

ISA investment in SMEs
From July 2013 an individual saver may be able to invest their ISA allowance directly into SME equity markets and any gains arising from the growth of the investment would be tax-free.

Proposal for new tax breaks for employee shareholders
A new consultation considers how EBTs may be used to hold shares indirectly for employees

NAO verdict on Rural Broadband: not 'hot'...
HOT or NOT? BT is getting £1.2 billion to cherry pick which parts of the country get Super Fast Broadband and the National Audit Office is worrying about value for money as the stable door closes for large parts of the country...

Last time's headlines (in case you missed them)

Flat rate scheme: retrospective authorisation
A Chartered Accountant was successful in a claim for retrospective authorisation to use the VAT Flat Rate scheme.

RTI: relaxation in reporting extended to April 2014
HMRC has announced that its concession to relax the strict timing of submission under Real Time Information (RTI) reporting will now be extended until April 2014.

Missed last time's summary? See Nichola's SME Tax W-update 28 June 2013

Updates and new guides for subscribers

Close Company Loans Toolkit
NEW: this week's essential reading. We have summarised the new rules following the Finance Act 2013 changes which will apply from 20 March 2013 (once the Act receives Royal Assent, with examples, tips and planning points.

Leaving payments and directors
UPDATE: a handy summary that answers many of your FAQs to our Virtual Tax Partner Support line.

Tax penalties: P11Ds
Which penalties apply for late filing and errors in returns.

Limit (cap) on income tax reliefs
NEW: guidance on this Finance Act 2013 measures with examples. 

Wear and tear allowance and renewals basis
UPDATE: HMRC withdrew its renewals basis concession in April 2013, and the wear and tear allowance was enacted in 2011/12. Can you still obtain tax relief on the cost of replacing furniture? We look at the small print: the rules may surprise you.

IHT: Agricultural Property Relief and Farmhouses
An overview to a somewhat complex topic following the much publicised decision in HMRC v Hanson Executor [2013]. We know now that the connection between farmhouse and farm land may be common occupation rather than common ownership. This reverses HMRC's long held view.

IHT: Business Property Relief
UPDATE: the dust has barely settled on the Upper Tier Tax Tribunal's decision that a furnished holiday letting does not qualify for BPR see (HMRC v Nicolette Vivian Pawson [2012]), when we find in The Trustees of David Zetland Settlement v HMRC TC02690 [2013] that the First Tier Tribunal has refused BPR on a very actively managed serviced office business. One would hope that the trustees will appeal. 

 'Simpler' Accounting for tax

Accounting: Simpler Income tax (cash basis) / fixed expenses
Start here (self-employed taxpayers) to decide which of (or both) the new measures to adopt.

Board and lodging adjustments
All change from 5 April 2013. 

Cash or accruals accounting toolkit
At a glance summaries with planning points and examples for all advisers in this new guide.

Flat rate expenses or actual cost toolkit
Essential briefing for advisers and clients.

Top Tips for directors

Converting part of a home into an office 
 How to create a tax-efficient home office.

Directors' tax planning toolkit 2013/14 
Our rolling planner which is updated throughout the year

Employee Shareholder Status - tax & planning
NEW: the new measures introducing a new category of employee share owner are interesting for all sizes of companies. Our guide explains all.

Can I charge my company rent for use of my home? UPDATE: you may consider:

  • Recharging the company, on the same basis as a conventional home working employee for a proportion of your bills and running costs. This is explained in Working from home (directors) or
  • Formalising a licence agreement with your company in order to allow it to occupy part of your property. It then pays you rent and service charges and you then claim all your expenses under self-assessment...More

Working from home (directors)
UPDATE: the same rules apply to home working directors as other employees. However, a directors is more likely to be able to charge rent and there may be some additional issues and complications by virtue of their office.

Do I pay a salary or dividend? 2013/14
UPDATE and re-write of last year's highly popular guide: this is designed to save you having to do all these workings yourself.

Tax masterclass: running an LLP & Co structure 
A guide is for trading companies and professional practices: we see many different structures and so we are constantly updating this guidance.

Disincorporation relief
New: a summary of the proposed rules. You may also sign up for our new Masterclass.

ABC or alphabet shares: directors & employees
UPDATE: essential reading for directors.

Consultation on partnership tax avoidance
Wide ranging measures aimed at catching disguised employment (fixed profit share partners who carry no risk) and inappropriate allocation of profit (aiming to allocate profit to non tax-payers). HMRC says that this is not going to cover cases where family members use partnership structures to allocate profits efficiently, as in the Artic Systems case.

Employee owner status
New briefing note to chat over with clients, with links to detailed guidance.

Editor's choice

Goodwill and the intangibles regime  Update on: case law restriction on purchase of pre 1 April 2002 goodwill from a related party. In Blenheims Estate and Asset Management Limited v HMRC the First Tier Tribunal dismissed a taxpayer's attempt at using a cross option scheme to try and circumvent the restriction for related parties. He claimed at that he was not a participator in the company and so not a related party on the transfer of goodwill. The FTT found otherwise.

Goodwill amortisation challenged HMRC have sought to argue that there can be no deduction under the corporate intangibles regime for goodwill purchased by a company from a related party individual who created it after 1 April 2002 because the individual has not actually incurred any expenditure on the goodwill in question.

Joint income: splitting income within the family
A family tax planning exercise involving joint bank accounts went very wrong when HMRC invoked the Settlement provisions. The tax tribunal seems to have had sympathy with a taxpayer who struggled over the interaction of income tax and trusts anti-avoidance.

Investigations: the presumption of continuity
When the `presumption of continuity' is made during the course of a tax investigation HMRC will take the view that an under-declaration made in one year will have been repeated in other years. The onus of proof is on the taxpayer to disprove this.

Guides and toolkits

Employment related loans
NEW: anti-avoidance measures were announced in the 2013 Budget which may inadvertently catch out some close company owners with partnership interests. Additionally, the exempt limit rises next year.

IR35: changes from 2013
From April 2013 under measures introduced in the 2013 Finance Act office holders will become within the scope of IR35.

NICs on dividends
UPDATE: review of the circumstances (based on case law) in which we would expect HMRC to classify dividends as employment income and commentary on the PA Holdings case.

Employment Allowance: NICs £2,000 relief
The NICs holiday ends in September 2013, this relief applies to all employers from April 2014

CGT Top tips: losses & connected persons
Think twice before selling property to your company at a loss; a cautionary tale of clogged losses.

Adviser planning update: losses
Navigating the new losses minefield in 2013/14

Annual Investment Allowance
NEW: a handy summary with planning points

ABC or alphabet shares: directors & employees
UPDATE: essential reading for directors

ABC or alphabet shares: family companies
UPDATE: issues for the family


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