We have some really outstanding new content for you this week. My highlights are as follows:

The forthcoming restrictions on tax relief for interest appear to have an unintended knock-on effect: they may well affect directors and shareholders who are charging their companies rent. This rather depends on how you interpret the new legislation and so we have sought clarification from HMRC on this point.

Personal service companies (PSCs) working for the public sector and the new 'IR35'. This is messy; there is no other way to describe it. Our guide explains who is affected and who calculates what and when.

Changes to the VAT Flat Rate Scheme affect not only PSCs but many small firms of accountants (although you probably will cease to be a low cost trader once you have to start paying out for all that new software for Making Tax Digital). Our new guide explains how you leave the Flat Rate. 

I won't say anymore other than to urge you to scroll down and have a read. If you haven't seen my suggestions for simplifying Making Tax Digital then have a read and send me feedback. 

Record numbers of you joined us and viewed our webservice in January. Thank you very much for your support and your feedback

Enjoy the guides and updates and the news is below. 

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)

Scottish Income Tax: rates & thresholds frozen
The Scottish Government have confirmed that all Scottish income tax rates will be frozen for 2017/18, and the higher rate threshold will remain at £43,000 (there will be an increase to £45,000 in the rest of the UK).

Real time assistance: HMRCs Online Agent Forum
The December 2016 Agent Update gave details of HMRC’s Online Agent Forum: a pilot digital channel set up to enable discussion of tax issues in real time. 

Making Tax Digital: Let's Simplify Further
Optional annual reporting of expenses is a no-brainer: it would make everyone's life at lot easier.

Case Update (freeview)

Lengthy Sch36 request is valid, but a bit harsh
In Marilyn May Phillipou v HMRC [2017] TC 05586 the First Tier Tribunal (FTT) upheld, but amended information notices issued by HMRC. 

Insurance premiums taxable as earnings
In William Mitchell & Mitchell and Mitchell Contractors Limited v HMRC [2017] TC 05633 insurance premiums paid by a company where the contracts were in a director’s name were taxable as earnings. 

HMRC forced to suspend VAT penalty
In Parklane UK Investments Limited v HMRC [2016] UKFTT 0803 the First Tier Tribunal (FTT) found that HMRC were wrong not to suspend a VAT penalty simply because the company joined a VAT group and was no longer registered in its own name. 

Late NIC payments to boost State Pension allowed
In Richard Thomas v HMRC [2016] UKFTT 0735 the First Tier Tribunal (FTT) allowed the taxpayer to make late Class 2 NIC payments and carry them back to earlier years. 

Editor's Choice (subscribers) 

Charging your company rent: will new interest restrictions apply?
NEW: From April 2017 relief will be restricted for finance costs of property businesses.  Although intended to target buy to let landlords, there is a possibility that these rules could also apply to directors who charge their company rent.

Personal service companies & tax
UPDATED: Further information added on the upcoming changes for PSCs working in the public sector.

Limited cost traders: leaving the Flat Rate Scheme
NEW: A step-by-step guide to leaving the Flat Rate Scheme for those caught by the new 'limited cost trader' rules. 


Practical Tax Guides and Updates (subscribers) 

Pensions: unauthorised payment charges
UPDATED: Added case of O'Mara & O'Mara (TC 05609) in which the First Tier Tribunal found that an unauthorised payments surcharge was just and reasonable.

Sch36 information notices
UPDATED: New cases added on jurisdiction of Sch36 and whether documents were reasonably requested.

Gift Aid
UPDATED: more information added on the new rules for intermediaries.

Main Residence Nil Rate Band (RNRB)
UPDATED: more details added on the transferable RNRB and trusts.

Social Investment Tax Relief
UPDATED: more information added on the changes from April 2017 following the publication of draft legislation.

Pensions: tax rules and planning
UPDATED: Information added on taxation of foreign pensions and the new pensions advice allowance


CPD Webinars

Small Companies Update

Missed last time's update?

Nichola's SME Tax Update 3 February 2017


  • Making Tax Digital: All the updates from HMRC consultation responses as well as our own 'survival guide' and suggestions to make the whole thing much simpler.
  • Cases on child benefit charges, termination payments, what constitutes a caravan for VAT and IHT on pension death benefits.
  • Tax planning for directors.
  • Tax efficient extraction of profits.
  • Share schemes for employees.
  • Death in service benefits.
  • Updates to our EIS and VAT Penalties notes.
  • Changes to the cash basis for the self employed and landlords.

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