Hello 

This time we have important news on penalty assessments and PAYE coding, a completely updated guide to Making VAT Digital (MVD) and lots more.

On penalty assessments I need to flag up something important We have just looked at a self assessment late filing penalty issued in August 2018 for a late 2017 return which was unfiled at the date of the penalty assessment. HMRC's computer has assessed a six month penalty as if tax is due and it ignores the interaction rule in para 17(3) Sch55 FA 2009. It means that if you are late filing a nil return, you must appeal the penalty, even if at first glance it seems that you have a penalty. Confusing? Too right! Perhaps HMRC should automatically calculate penalties as if there is a nil return and then add the 6 month one later? Details of the rule are in our Late filing penalties guides and 'How to appeal a tax penalty' guide with links to summaries of cases where this point was first raised. We are told that 'Everywhere (except the www.rossmartin.co.uk site) claims that £300 is the minumum six month penalty. Check those assessment notices and if you want a second opinion you know where to ask. Check your site in case you have the rule wrong.

It seems that HMRC are having yet more problems in trying get PAYE codings updating in real time. This week we learn from the ICAEW that there are faulty interactions with the Self Assessment. It's explained in the news items below.

Making VAT Digital (MVD): nearly all the tax and accounting bodies have released guides on MVD and, as you must know, HMRC have published a VAT notice and stakeholder guide too. That's a lot of reading. We have read it all and created a new and carefully curated summary on MVD. This one comes with our FAQs that certainly answers all the points that I was unsure about together with some useful case law. The latter may be very handy when it comes to considering who can be excluded from the new regime (HMRC guidance on that point TBA). As things stand 66% of our VAT registered clients are at present incapable of VAT filing using their existing software. How is it for you?

It's also time for our Agent Update and Trust Update and there's a Bank Holiday. See you Tuesday and have a good weekend.

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 CTA (Fellow) Tax Director

www.rossmartin.co.uk

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

Quick news (freeview)

'Undynamic' coding and self-assessment
Now that 2017/18 tax returns are starting to be filed, the ICAEW have reported problems between in-year adjustments and self-assessment making the process look less than dynamic.

Agent update August/September 2018
HMRC have issued the Agent Update for August/September 2018. We have summarised the key content for you with links to our detailed guidance on the topics covered. 

Trusts & Estates: What's New? August 2018
HMRC's latest Trusts and Estates newsletter contains some useful information. Here is our enhanced version.

Intesting jobs in tax

Tax editorial and advisory vacancies
We have flexible job vacancies in direct and indirect tax for part-time and home-based employees. If you are within commuting distance of Bridport, Dorset DT6 we also have in-house vacancies, including for a tax manager. 

Editor's Choice (subscribers)  

Making Tax Digital: VAT
UPDATE & REWRITE: we bring together guidance from all the main tax and accounting bodies with a new FAQs section, who, what, why and when? Case law on digital filing exemptions, details of 'functional compatible software'.

Tax Guides and Updates (subscribers) 

Requirement to correct: FAQs
NEW: With the deadline just over a month away we have put together a plain English FAQs on the Requirement to correct.

Optional remuneration schemes & salary sacrifice
UPDATE: Finance Bill 2019 includes amendments to the law which correct errors in how company car benefits were to be calculated under the optional remuneration rules.

High Income Child Benefit Tax Charge
UPDATE: who should claim the child benefits and how it affects low earners.

Case Update (freeview)

Irrecoverable loans are capital in nature
In Jamie White v HMRC [2018] UTUK 0087 the Upper Tribunal (UT) denied income tax relief on irrecoverable loans to a trading company; they were capital in nature and not wholly and exclusively for the taxpayers trade.

Appeal allowed: an e-notice of a notice is not a notice
In Hannah Armstrong v HMRC [2018] TC06606 a late penalty appeal was allowed and late filing penalties quashed by the First Tier Tribunal (FTT); penalty notices and notices to file sent electronically did not meet all of the conditions for electronic communication so were not validly delivered. 

VAT (freeview)

Penalties for underassessment
In Curtises Limited v HMRC [2018] TC06460, the First-Tier Tribunal (FTT) upheld HMRC’s penalty for late filing, finding that payments made on account under the Annual Accounting scheme should be ignored in calculating Potential Lost revenue for penalty purposes.

No exemption from online filing
In Glen Lyn Generations Limited & Exmoor Boat Cruises Limited v HMRC [2018] TC06596, the First-Tier Tribunal (FTT) concluded that the taxpayer did not have satisfactory reasons to fall within the exemption for filing VAT Returns online.

Tax agent admits falsifying purchase invoices
In Colin Rodgers v HMRC [2018] TC06617, the First-Tier Tribunal (FTT) dismissed the tax advisors appeal against a Conduct Notice issued for assisting a client create false purchase invoices.

VAT (subscribers) 

Education and VAT
UPDATE: with additional case law on single and multiple supplies of education and books.

Annual Accounting
UPDATE: if HMRC calculate a penalty for late filing based on potential lost revenue, payments on account made during the year will be ignored. 

 

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Missed last time's update?

Nichola's SME Tax w-update 17 August 2018

Features:

  • Writing off director's loans
  • Electric car rates and plug in vehicle and charging grants
  • August's Employer Bulletin
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  • As far as MTD4VAT (or MVT or whatever it is going to be called) is concerned, I think HMRC should be issuing specific and direct guidance to all VAT Registered traders. As a tax advisor, I know that it is coming next April, but as a VAT Registered business, I don't. This doesn't seem right to me, bearing in mind that there are likely to be many unrepresented businesses 'out there' and even a lot of represented business often deal with VAT themselves.

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  • Good point - we all know what happened when HMRC failed to publicise the Non Resident CGT return, we have numerous FTT decisions where judges are undecided as to whether 'ignorance of the law' can be a valid excuse. Unlike direct tax, the rule in VAT is that you cannot rely on the advice of a third party. I assume that HMRC is assuming that every VAT registered trader goes to HMRC's 'what's new' and reads all the VAT notices however, being that there is such a change I hope that HMRC will notify all traders. I don't want to speculate but I wonder whether MVD will go ahead on the date intended or whether it will go back to 2020 too.

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