Many of you will agree with me, I'm sure, that travel rules for the self employed have to be applied using a certain amount of judgement according to the facts and individual circumstances. The rules are not straightforward. You need a good grasp of case law, and often, unless your case sits on 'all fours' with one of the case precedents, it can be something of a lottery as to whether or not your client can survive a full tax enquiry into their travel expenses unscathed. 

This week, we report what seems to be quite a harsh decision in terms of travel expenses. It features a self-employed exotic dancer travelling in and out of London. She claimed she ran the administrative side of her business and organised it from home. She claimed tax relief for home to nightclub travel. The FTT, with the benefit of being able to read the Upper Tribunal's 2014 decision in Dr Samad Samadian (which is, after all, the only case that really establishes the rules for taxpayers travelling to 'regular and predictable workplaces' and sets a precedent of sorts) decided that the dancer was careless for not knowing the travel rules. Further, the decision suggested that as she was not an itinerant traveller, she should have understood the rules and challenged her accountant! That is really tough reasoning. I mean, fair play if all the tax returns in question were prepared after the UT Samadian decision and the dancer had read that decision but they weren't and she hadn't! Thus penalties for carelessness for 2011 to 13 as well as 2014. 

We have lots of reminders this week and aside from travel, we issue a new health warning on the outcome of the statutory residence test. 

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


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

Quick news (freeview)

Statutory Residence Test Health Warning
We have added a warning note to our Statutory Residence Test (SRT) guides. It may not give the correct result: the new warning will apply to cases where a taxpayer may be resident for tax purposes in more than one country and there is a double tax treaty. 

Requirement to correct and ongoing enquiries
With the 30 September 2018 deadline fast approaching those affected by the Requirement to Correct rules who are already under HMRC enquiry face continued uncertainty about the extent of their risk to future penalties.

Another trust registration deadline
Trustees should be aware that the deadline for registering trusts with a UK tax liability for the first time in 2017/18 is 5 October 2018.

Have you registered for self-assessment?
The deadline for registering for self-assessment is 5 October following the end of the tax year, meaning that anyone who needs to register for 2017/18 has just two weeks left to register.

Disguised Remuneration settlements and Requirement to Correct
On 30 September 2018 two deadlines will pass: one for providing information to HMRC in respect of Disguised Remuneration schemes to enable settlement to be reached by 5 April 2019, the other for correcting the position for undeclared offshore income and gains, yet there remains uncertainty around the interaction of the two settlement opportunities. 

Making Tax Digital (freeview)

Parliament call for evidence: MTD and HMRC powers
The House of Lords Economic Affairs Finance Bill Sub-Committee want to hear from a 'wide range of people' in inviting written contributions for its inquiry on the draft Finance Bill 2018 and examining developments in the balance of powers and safeguards between HMRC and the taxpayer and progress on the ‘Making Tax Digital’ programme

Making VAT Digital tool: who has to join
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Editor's Choice (subscribers)  

Travelling expenses
What expenses can I claim? Avoid disallowed expenses in tax enquiries with this in depth guide for the self employed:

Working from home 
What can you claim and how do you claim a proportion of an expense?

Hairdressers: what expenses can I claim?
UPDATE: when will chair salons include stylists' income as turnover for VAT.

Tax Guides and Updates (subscribers) 

Corporate Interest Restriction
UPDATE: Details added about penalties for late and incorrect returns, and how to make a return.

SDLT & residential property (dwellings): higher rate
UPDATE: what a dwelling is for SDLT and what rate applies to mixed use properties.

CGT 2016: new rates and residential property gains
UPDATE: what a dwelling is for CGT and how to tax mixed use properties.

Dwelling houses & capital allowance
UPDATE: when capital allowances may be claimed in relation to dwelling houses.

Case Update (freeview)

Lack of trust results in Capital Gains Tax
In Mr Darius Soleimani-Mafi v HMRC [2018] TC06629 the First Tier Tribunal (FTT) upheld capital gains tax discovery assessments for the disposal of a property on entering into a declaration of trust; no oral trust agreement already existed, there was a disposal on the date of the declaration and the taxpayer deliberately failed to declare the gain.

Dancer 'careless' for failing to understand the travel rules, clothing was allowed
In  Gemma Daniels v HMRC [2018] TC06640 an 'exotic dancer' was allowed relief for costumes, cosmetics and beauty treatment but was deemed to be careless for her own and her accountant's failure to correctly self assess the travel rules for the self employed.

VAT (freeview)

HMRC clarify VAT rules for property management
HMRC has published updated guidance on the VAT exemption for domestic service charges which has been erroneously relied on by some landlords and property management companies.

HMRC's late registration penalty was correct
In T Hughes v HMRC [2018] TC06609, the First-Tier Tribunal (FTT) found that a pub intending to close part of every year to remain under the VAT threshold had crossed the threshold and had no reasonable excuse for not registering.

Funded education not an economic activity
In Colchester Institute Corporation v HMRC [2018] TC06657, the First Tier-Tribunal (FTT) found that the provision of education to the extent it is funded by funding agencies is not an economic activity for VAT.

VAT (subscribers) 

Private use of goods: VAT and Lennartz
NEW: a new guide on the Lennartz mechanism and how to recover VAT on goods used partly for business use and partly for private use.

Buy-to-lets & VAT
UPDATE: added information on service charges.

Place of supply: services
UPDATE: more examples added, including how to deal with exhibitions.

VAT Groups
UPDATE: substantial rewrite with details on the effects of a VAT group including intragroup supplies, partial exemption, the capital goods scheme, and option to tax.

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Missed last time's update?

Nichola's SME Tax w-update 14 September 2018


  • More late filing penalty appeals
  • Cars and the new finance bill
  • Making Tax Digital: VAT
  • More VAT
  • and much more..

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