Hello
This time we have a self employed special: we are focusing on sole trader and partnership clients.
With the rise of the so-called gig economy, there has been a lot of muttering that self employment is rising and that the self employed don't pay enough tax. The chancellor's Autumn Statement and Budget are a matter of weeks away and clearly something is afoot with National Insurance: the government has decided that changes to Class 2 NICs will not now go ahead as planned. Perhaps we are at last heading for joined up tax and NICs. However, as one of the factors of the gig economy is that a lot of people are barely even on on a living wage and another structural issue is that people are living longer then taxing those on already low incomes may not make the sort of impact that a chancellor desires.
Tax or lack or it, draws me onto the topic of the so-called 'Paradise Papers'. A law firm was hacked and its clients' details and some of their tax planning details were distributed around the world's media. As you have probably noted, details have been revealed in the press over the last couple of weeks. Whilst it is not illegal to own an offshore company, or invest in an offshore fund, it is illegal to conceal your assets and not declare your offshore income or gains.
By co-incidence, the Land Registry have just published (for free) complete lists of all commerical property held in the UK by corporates. Now you can see who owns your local high street except that, and here is the irony, you can't find the identity of the shareholders if the company is registered in a 'paradise' island (they have no public registers). The question is why do we not make it a condition of UK property ownership? That brings to me to filing with Companies House. We now have a register of significant control so we can tell who might beneficially own a UK company, but on the other hand we have no public shareholder lists. What happened to shareholder lists? You must all, like me, find them very useful for tax planning advice, share schemes, for checking off SEIS, EIS etc, and I guess HMRC find them as helpful too. Why did they go and can we have them back on the public record please?
If you have any tax queries please do try out our Virtual Tax Partner support portal at www.VtaxP.co.uk
Enjoy the guides and updates and the news is below.
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Nichola Ross Martin FCA Tax Director
Your Virtual Tax Partner®: online PRACTICAL support for accountants & tax advisers BY accountants & tax advisers
Quick news (freeview)
Company accounts: you must use IXBRL
HMRC have announced that from 1 November 2017 they will no longer be accepting forms CT600 where the attached accounts or tax computations are not in iXBRL format.
Trust registration deadline extended again
HMRC have announced that they are extending the deadline for the new online trust registration service again.
Class 2 NICs to stay for one more year
The government have announced that Class 2 NICs, which were due to be abolished from April 2018, will remain for one more year, until April 2019.
Phone scammers pretend to be HMRC
Scammers are checking IDs and demanding tax payments.
Simple Assessment
HMRC were due to start sending out Simple Assessment calculations 'SAC' to taxpayers from September 2017: these set out their tax liability without the need for them to submit a self-assessment return.
Case Update (freeview)
Hustle fails
In Big Bad Wolff Limited v HMRC TC06143, the First Tier Tribunal (FTT) considered the interaction of IR35 and the special rules for actors prior to 6 April 2014.
Non-residents may take no notice of Schedule 36
In Tony Michael Jimenez v FTT and HMRC [2017] EWHC 2585 the High Court found that a Schedule 36 information notice is an enforcement provision; it could not be given to a non-resident British national and should be quashed.
FTT has no jurisdiction over HMRC
In Ismail Miah, Ala Uddin and Abdul Zalil v HMRC TC06175, the First Tier Tribunal (FTT) held that it did not have jurisdiction to close an enquiry opened under COP9.
Editor's Choice (subscribers)
2016/17 self-assessment tax return toolkit
NEW: As tax return season is well underway we have created a helpful new toolkit to assist with the preparation of returns. It highlights changes to both the rules and the forms for 2016/17. Keep an eye on our CPD section for a webinar on this.
Tax Guides and Updates (subscribers)
Self-employed Accounts Health Check
UPDATE: an essential toolkit if you are preparing accounts for self employed sole traders.
Accounting periods and tax basis periods
UPDATE: for MTD: Which date do I choose? Does it matter? Can I change my accounting date?
Extracting profits (self-employed)
UPDATE: can you charge yourself rent? is it worth employing your spouse or partner? what expenses can you deduct?
Partnerships: changes to tax rules since 2013/14
UPDATE: the Finance Bill 2017-18 includes draft legislation which determines how partnership profits will be allocated for tax purposes.
Losses, sideways relief, uncommercial trades
Update: its complicated deciding how to use losses if you are self employed and there are restrictions for uncommercial trades and hobbies too.
Penalties and appeals
Appeal: grounds for appeal
UPDATE: do you have a right of appeal against a decision of HMRC? This guide summarises some successful and unsuccessful grounds for appeal in relation to penalties and compliance. We recommend you also read How to appeal a tax penalty to obtain some practical tips on what to include in your appeal notice.
Grounds for appeal: reasonable excuse (Freeview)
Handy guide with links to
Special relief (Freeview)
A statutory special relief applies in cases where it would be unconscionable for HMRC to seek to recover an amount of tax or refuse repayment (if already paid). This relief only applies in a set of defined circumstances.
Penalties: Enables of Tax Avoidance (Freeview)
UPDATE: new penalties for enablers of defeated tax avoidance schemes are included in the Finance Bill 2017-19, to the penalties for enablers of offshore evasion. See also our more detailed subscriber version.
An inspector calls...
Disguised Remuneration 2017 Settlement Opportunity (Freeview)
NEW: No sooner did we issue our EBT update than HMRC issued details of new terms for settling disguised remuneration schemes before the 2019 loan charge comes in. It's very detailed so we have summarised it in plain English!
VAT
Business splitting and VAT (single business directions)
UPDATE: when a business is artificially split into two in order to avoid VAT registration, this is known as disaggregation, and HMRC may treat both as a single business for VAT purposes. This may often affect spouses who run their own self employed businesses in tandem.
VAT: land & property (notes)
UPDATE: HMRC has revised its policy on care homes. Treatment facilities can now also be zero-rated if 95% or more used by residents.
Goods or services for VAT?
UPDATE: what are goods and what are services for VAT? The answer may have an impact on the time of supply, the place of supply and in some cases the rate of the supply. The answer is not always as straightforward as it may seem.
Place of supply: services
UPDATE: the place of supply of B2C telecommunication services changed on 1 November. The place of supply is now in the country that the customer 'belongs'.
CPD Webinars
Missed last time's update?
Nichola's SME Tax w-update to 3 November 2017
Features:
- Director's Tax Planning updates
- What investment relief is best?
- R & D Zone
- Trust update
- VAT and catering
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