Hello
A warm welcome to those of you who are receiving our news update for the first time after meeting us at the Accountex exhibition last week. Special thanks also to all the subscribers who stopped by our stand to introduce themselves. It was great to meet you in the 'real' world and your enthusiasm for what we are doing is genuinely inspiring.
It's been a relatively quiet week for tax news as HMRC and the government approach pre-election blackout in the run up to the EU referendum, although we have some interesting items on going digital, PAYE and VAT.
This week we feature a batch of cases where the taxpayer's entitlement to valuable capital gains tax reliefs depended on whether or not shares met the definition of ordinary share capital. It is relatively easy to set up new share classes in a company, and to draft your own bespoke share rights at the request of a lender or an investor. Take care though that by doing so no bridges are accidentally burned in terms of tax relief on those or other shares.
Following a case where the taxpayer was subject to a penalty for not properly checking his accountant's completion of his Tax Return we review situations where reliance on an adviser can and can't constitute a reasonable excuse. We also include a guide with tips on how to successfully appeal tax penalties.
The two sections of my talk at Accountex will go online next week; apologies for the delay, we have had a technical issue. The further instalments of "How to run the most tax efficient accounting practice...ever" will go online in forthcoming weeks.
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 (freeview)
Making Tax Digital: consultations delayed
HMRC has announced that a planned series of consultations on Making Tax Digital will not now begin until after the European Union referendum on 23 June.
HMRC update guidance on selecting a Flat Rate Scheme percentage
Following criticism from professional bodies and a number of unsuccessful visits to the First Tier Tribunal (FTT) HMRC has issued a revised version of VAT notice 733 to update their guidance in accordance with the FTT decisions.
HMRC Spotlights
HMRC have issued Spotlight 30 which features remuneration schemes using gold bullion to avoid employment taxes.
Statutory pay and directors
The rules determining entitlement to statutory pay are different for directors, casual / agency workers and certain other employment types: a freeview mini-guide by us based on new guidance from HMRC.
Case Update: Ordinary shares
Entrepreneurs' Relief: the dangers of unusual share rights
In M & E McQuillan v HMRC [2016] TC05074 redeemable non-voting shares carrying no right to a dividend were not ordinary shares for CGT Entrepreneurs’ Relief on the basis that no right to a dividend amounted to a fixed rate dividend of 0%. This is contrary to HMRC's manuals: an appeal is possible.
Share loss relief: shares not 'ordinary'
In Colin Bielckus, Mark Arnell and Kevin Taylor v HMRC [2016] TC05044 the addition of bespoke voting rights attaching to fixed rate preference shares were not enough to make them ordinary shares for the purposes of share loss relief.
Share loss relief allowed for loan converted into shares
In John Lewis v HMRC [2016] TC05029 share loss relief was allowed when an undocumented loan was converted to shares and the company ceased to trade shortly after.
Case Update
Accountant's error leads to tax penalty
In Bernard Bediako v HMRC [2015] TC05054 an accountant's misunderstanding of self assessment and the appeals procedure resulted in a tax penalty for the taxpayer. The taxpayer should have checked his return before signing.
CGT: confusion over deductions on disposal of a sole trade
In Kevin Mulloy v HMRC [2016] TC05019 deductions were denied in calculating the CGT on the disposal of a sole trader business for various amounts previously treated as revenue expenses as well as a payment to the taxpayer’s wife as a result of their separation.
New to us? Take a tour of the site (freeview)
A new business? Start here
A selection of guides and checklists for new clients and their businesses
Tax Planning for Directors
Guides to cover all elements of remuneration, dividends, extraction of funds and tax reliefs.
Practical Tax Guides & Updates
(for subscribers)
Share capital: what's an ordinary share?
NEW: it is essential to know whether a share is ordinary as this sets the qualifying conditions for numerous tax reliefs ranging from income tax share loss relief, SEIS, EIS, CGT Entrepreneurs' Relief and Investor Relief to corporation tax etc.
Entrepreneurs' Relief
UPDATE: our favourite CGT relief is becoming more complex with every Finance Act. Our tabbed guide takes you through its different forms with worked examples and case summaries to illustrate how the relief applies in practice.
Penalties: mistake by an adviser
UPDATE: A review of contrasting cases highlighting when taxpayers may be able to use reliance on accountants or advisers as a reasonable excuse for a failure or errors.
How to appeal a tax penalty
Practical tips as to what to include in your appeal notice.
VAT Flat rate scheme
UPDATED: Following the isue of HMRC's revised VAT notice 733: Flat Rate Scheme for small businesses.
VAT: pre-registration input tax
UPDATED: handy guide for business start-ups.
Editor's choice
Finance Bill 2016: tax update and rolling planner
Keep up to date with all developments and announcements for the 2016/17 tax year and beyond with our rolling planner.
Property profits & losses: toolkit (up to 5 April 2016)
UPDATED: Our revised toolkit for advisers preparing property business accounts for the 2015/16 tax year.
Property profits & losses: toolkit (from 6 April 2016)
NEW: Our up-to-date toolkit for advisers looking ahead to 2016/17.
Missed last time's update?
Nichola's SME Tax Update 6 May 2016
Features:
- Land & Property Update
- CGT: New rates and residential property gains
- VAT: Land & property
- Languard Homes VAT case
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