As we mentioned back in January, the tax tribunal will soon be charging fees and this will make the task of appealing a minor penalty prohibitively expensive.

As advisers, we appreciate that taking any case to the tribunal is an expensive business and so it is not surprising that many taxpayers, particularly those who are loss making, decide to ditch their advisers and go it alone. Whilst this may be a good strategy, particularly in "reasonable excuse" minor penalty appeals, in many others one reviews the decision and one can see that the appeal is quite hopeless. It seems quite obvious that if someone other than HMRC were the final reviewer that these case could be weeded out. So there is the flaw in the process: a supposedly independent officer from HMRC (independent to the officer who has raised the assessment/made the decision) reviews your case. You, the taxpayer do not believe HMRC, because quite obviously the reviewer is from HMRC and so must be biased, and off you go on appeal. One solution would be to have HMRC fund an independent reviewer, the other might be to use the tribunal fees to fund an independent reviewer. There would be cost savings because HMRC would not then have to fight the hopeless cases that are weeded out. See the first two cases below.

With the chancellor's next Budget just around the corner (it's on the 16th) we are now all waiting to see the outcome of this winter's various consultations. Most of you runnning family businesses will be about £5k worse off in 2016/17 and if you believe the tabloids you will never receive a state pension and that 25% tax free lump sum in your pension is next on the chancellor's list. As far as I can see the UK's econony is not as good as we have been continually led to believe. It is all very well talking things up in order to get the credit rating agencies off your back but we are now "robbing Peter (small business) to pay Paul (the gap left by failing to tax big business)". I still don't see any advantage to the self employed quarterly reporting for tax either; if cashflow is an issue introduce quarterly tax payments on account.

Oh good it's snowing too!

Back soon.

Nichola Ross Martin FCA Tax Director


Your Virtual Tax Partner®: online PRACTICAL support for accountants & tax advisers BY accountants & tax advisers

Quick news

Trusts: your ten years are up!
22 March 2006 saw a major change in the tax treatment of trusts, and as we head towards the tenth anniversary of this change many trusts created since that date will have reporting obligations and potential IHT liabilities to consider for the first time.

Class 2 NICs changes may catch out lower earners
The Low Incomes Tax Reform Group (LITRG) has urged the government to delay the proposed changes to self-employed NIC contributions which could be introduced as early as April 2017. Lower earners may not realise that they will have to top up with Class 3 contributions or lose benefits.

Steep increases for probate fees planned
The Ministry of Justice (MoJ) has launched a consultation “Fee proposals for grant of probate”. Its proposes a new banding structure.

New Company Register
New companies are being duped into paying for an online directory listing by a webservice that displays a coat of arms that is not unlike that of Companies House. 

Case Update

Hotel, B & B or just a FHL?
In Julian Nott v HMRC [2015] TC04897 the First Tier Tribunal (FTT) decided that the letting of holiday units, with optional breakfast was different to operating a B & B or a hotel and so did not amount to a trade for the purposes of NICs or sideways loss relief.

Yet another uncommercial trade: no sideway's loss relief
In C Lucy v HMRC [2016] UKFTT TC04878 the First Tier Tribunal (FTT) found that the taxpayer was not conducting any trade and disallowed a claim to set off losses against general income.

IHT lease carve out scheme a GWR
In Viscount Hood, executor of the estate of Lady Diana Hood v HMRC [2016] T04858 an IHT avoidance scheme in granting a reversionary lease failed: the lease was a gift with reservation of benefit (GWR).

Practical Tax Guides & Updates 

Trusts: ten year reporting requirements - the details
NEW: 22 March 2006 saw a major change in the tax treatment of trusts, and as we head towards the tenth anniversary of this change many trusts created since that date will have reporting obligations and potential IHT liabilities to consider for the first time.

Tax Planning for directors
UPDATE: an index to our key subscriber tax guides, toolkits and checklists for directors and companies.

Residence v non-residence
UPDATE: side by side comparison of the different tax treatments across the taxes.

Self-employed: cash basis and fixed expenses
UPDATE: the difference schemes and their interactions are explained in clear tables.

Editor's choice

Finance Acts 2015/16: rolling tax planner
UPDATE: this is our favourite place for staying up to date with what's new across all the taxes.

Dividend income (subscriber guide)
Detailed guidance on the new tax regime, updated to include the new rules on the application of the £5,000 nil-rate band taken from the draft legislation.

Savings income: tax on interest
UPDATE: we have included detailed working to show how the new 2016/17 savings allowance and savings band will interact with the new dividend allowance and other income.

Employers: What's on from April 2016
A comprehensive guide to the major changes affecting the processing and taxation of employee benefit and expenses from April 2016, including voluntary payrolling of benefits, exemption for paid and reimbursed expenses and the trivial benefits exemption.

Private Client: Tax planning for the 2015/16 year end
Our unique year-end and new tax year tax checklist for "Private Clients", it can be used in conjunction with our checklists for Directors, Employers and Self-employed individuals.

Buy-to-let ownership: personal or limited company
UPDATE: What works better, holding a buy-to-let property investment personally or via a company?

Missed last time's update?

Nichola's SME Tax Update 22 February 2016

Features updates and guides for:

  • Tax planning for directors and companies
  • Savings income: tax on interest 
  • Pensions auto-enrolment
  • Stamp duty proposals for 2016/17 
  • Digital tax accounts

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