Hello
The Chancellor kept to his word this week and did not turn his Spring Statement into a mini-budget.
There are some new VAT consultations, and we will take a closer look at those next time..
The pace of change in tax has been overwhelming in recent years and it's a relief to have no new announcements for almost a whole year (next budget expected in November 2018) although, we have got some big changes ahead from April 2018, for example, there are yet more changes to dividends. The dividend allowance is set to reduce down to just £2,000 in 2018/19. Not so much stealth tax as wealth tax!
The 2017/18 tax year will go down in my memory as the year in which the software bubble well and truly 'burst' in public. HMRC have been unable to get some of their specifications right and so in some cases it does not matter what you put into your software you won't ever get the right answer. You still need to use Excel to double check your results. Some of this caught HMRC out, but some of it didn't. They of course know to investigate anyone with substantial claims for foreign tax relief as software does not adjust for tax treaties and double taxation agreements. They also know that that many small companies who claim R & D relief under the RDEC will invariably forget to make the necessary accounting adjustment for the claim. We know that some HMRC 'approved' software simply won't allow you to complete all the RDEC steps anyway. We have seen cases of HMRC's software not agreeing with tax software when it comes to calculation of NICs; and the final straw, which probably a lot of folk don't realise, is that if you, an accountant/adviser do not double check your calculations and are so proved 'careless', HMRC will be allowed to reopen your client's tax return under the discovery provisions.
Where does this leave the small firm trying to earn a living from tax compliance? The answer is that if software is unreliable you probably won't realise until you are in an investigation. You will though need to charge enough to cover the time that is takes to research and deal with some of the more difficult areas of tax. This outburst has been spurred on by a steady stream of technical cases coming in to us where accountants are in trouble due to the inadequacy of software. I think that we need a serious re-think about our tax system and then a really good shake-up in the software industry. It is doubtful that it is in the nation's interest to make tax so difficult that only computers can do the calculations. It is a bit like the apparent myth of Northern Ireland's 'frictionless' border post Brexit. We are clearly several years away from computers doing what we want them to do as no one is sure what they really want. Hopefully the chancellor can reflect on the shortcomings of software over the next few months and hopefully some good will come of the Making VAT Digital trial and working life will become easier...
If you have any tax queries please do try out our Virtual Tax Partner support portal at www.VtaxP.co.uk: subscribers you are entitled to free quick queries so do ask.
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)
Childcare voucher scheme extended
Following the introduction of tax-free childcare for all from February 2018 the childcare voucher scheme was due to close to new entrants in April 2018; this has now been extended by six months.
Agent Update February/March 2018
HMRC have issued the Agent Update for February/March 2018. We have summarised the key content for you with links to our detailed guidance on the topics covered.
Employment Related Securities: What's New March 2018
HMRC have issues a new ERS Bulletin, this is our enhanced version
Case Update (freeview)
No abuse of power by HMRC in denying LDF to EBT users
In City Shoes Wholesale Ltd & Ors v HMRC [2018] EWCA Civ 315 the Court of Appeal agreed there was no conspicuous unfairness leading to an abuse of power by HMRC in denying the Liechtenstein Disclosure Facility (LDF) to users of EBT schemes.
Capital loss defeat for Premier League club owner
In Conegate Limited v HMRC [2018] TC06340 the FTT denied a claim for capital loss relief: market value should have been applied to the disposal and one of the main purposes for entering into the transaction was to secure a tax advantage.
Editor's Choice (subscribers)
Discovery
UPDATE: when can HMRC raise a discovery assessment? What are the time limits? When can your error let your client down?
Statutory Review
UPDATE: when can you ask HMRC to review its decision, what are the limitations of its review powers?
Late Appeals
UPDATE: how to make a case for HMRC to accept a late appeal
Tax Guides and Updates (subscribers)
Corporate Interest Restriction
UPDATE: Further clarification about deadlines for these new rules (the first of which is 31 March 2018), affecting international groups with net interest costs in excess of £2m. The rules are complex and an awareness of them is important if dealing with groups with international members.
Marriage allowance (Transferable Married Couples Allowance)
UPDATE: This allowance can now be claimed on death and backdated to April 2015.It may apply to couples in the year of death who were previously ineligible due to one spouse/partner's income levels being above the basic rate band.
EIS: Entreprise Management Incentive (subscriber guide)
UPDATE: how to claim CGT deferral and re-deferring revived gains.
Employers
Disguised remuneration final settlement opportunity
UPDATE: Where a settlement has been reached and IHT is not included, depending what has since happened with the trust and its assets, there is a risk, because many EBT's are offshore, that an IHT liability has been triggered as a result of an offshore transfer and that the requirement to correct needs to be considered.
Apprenticeship levy (employer's briefing)
UPDATE: the government are intending to introduce a mechanism where up to 10% of the available funds for training can be transferred by a fee paying employer to another employer.
PAYE Settlement Agreements
UPDATE: HMRC are simplifying PSAs by removing the requirement to renew them annually.
CIS: Contractors and Subcontractors
UPDATE: clarification of when the deemed contractor rules do not apply.
PAYE underpayments caused by HMRC delay: ESC A19
UPDATE: clarification on how time limits apply for HMRC overrepayments.
Offshore
Remittance basis (overseas income)
UPDATE: HMRC have indicated that dividend tax credits will not be available for pre 6 April 2016 foreign dividends that are not remitted until after 6 April 2016.
Offshore evasion: Requirement to correct
UPDATE: With just over six months left for UK resident taxpayers to correct their offshore tax affairs before the new penalty regime commences on 1 October 2018 we have updated our guide to clarify the rules about when and how to correct in respect of offshore matters and transfers.
Non-resident trusts
UPDATE: Non resident trustees should re-check the domicile status of settlors, as well as where trust assets are situated for IHT purposes, to see whether they have missed any UK IHT charges (10 year or exit) which could be caught by the new failure to correct penalties, and correct their offshore affairs accordingly by 30 September 2018.
VAT (freeview)
Post-sale planning permission not enough for zero-rating
In Cavendish Green Limited v HMRC [2018] UKUT 0066, it was found that the sale of land on which a new house was to be built and on which a large boundary wall had been built did not have sufficient planning to enable zero-rating.
VAT (subscribers)
What constitutes a valid VAT invoice?
UPDATE: proforma invoices are not VAT invoices.
VAT: Land and property (notes)
UPDATE: our guide on VAT and land and property updated for latest case law.
DIY Housebuilders scheme
UPDATE: our new VAT guide updated for latest case law.
CPD Webinars
Missed last time's update?
Nichola's SME Tax w-update 9 March 2018
Features:
- Non-resident toolkit
- Offshore income toolkit
- Tax-efficient extraction of profits: toolkit (2018/19)
- Directors: tax planning toolkit 2018/19
- Registering for VAT
- IHT estate planning checklist
- and much more..
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