This time: interesting stats on R & D and Patent Box relief, more conundrums on late filing tax penalties and much more.

According to official statistics, the lion's share of the total amount of Research & Development and Patent Box corporation tax reliefs are claimed by large companies. What is surprising though is the volume of R& D claims made by SMEs: there are over 34,000 so far for 2016/17. I personally wish that the claim mechanism was bit easier. We see a steady trickle of cases where there are calculation errors, but the most common mistakes occur when people put the wrong figures in the wrong places in the accounts and tax returns. In some cases we see people missing out on claims altogether because they don't know what they can claim and get their time limits wrong. Hopefully our R & D resources can assist with that. 

Onto penalties. The papers this morning are very annoyed that David Beckham has got off a speeding fine on a technicality. His fine reached him one day late and that was enough to invalidate his penalty. Anyone working in 'technical tax' won't be surprised by that type of decision, if the law sets out a clear direction, such as a time limit then it must be applied. What is surprising about the Beckham case is that it required a top lawyer to spot what seems to be such an obvious technical defect on a speeding fine. I must be missing something but then again I suppose there are not a lot of websites that have easy to read sections on motoring law! 

HMRC's guidance on Self Assessment: the legal framework 'SELF208A' sets out in some detail the different types of late filing penalties under Schedule 55 FA 2009. It curiously still fails to mention that the very first paragraph of that schedule tells you to apply para 17(3) if you are issuing multiple penalties. We have mentioned this in previous weeks, there is a technical defect in HMRC's penalty programming (algorithm) and the error keeps coming up in FTT decisions typically in late filing penalty appeals for Self Assessment but also for the Non-Resident CGT return. Just to make things even more complicated, I note that some judges are not sure what sch' 55 means by tax liability and some just disagree with each other (see cases below). 

Lots of VAT stuff this week and a great new guide which looks at the vexed question of what constitutes a dwelling.

Finally, I can see from our VtaxP inbox that offshore disclosure is at the forefront of many peoples' minds. Don't overlook the fact that you can extend your disclosure deadline under the Requirement to Correct if you use the World Wide disclosure facility. It seems that some at HMRC are unaware of this too.

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)

HMRC admit R40 refund errors
The CIOT have reported that there have been a number of errors on R40 computations prepared by HMRC.

R & D Claims: on the increase 
HMRC have released their latest statistics on Research & Development (R & D) tax relief. Of the 39,960 claims so far received for 2016-17, 34,060 are for the SME scheme and 5,900 in the RDEC scheme.

Patent Box 
HMRC’s latest statistics reveal that 1,025 companies claimed £942.5m in Patent Box relief in 2016/17. Three quarters of those claims were made by SMEs however in terms of claims' value, large companies claimed 96% of the relief.

Last Shout out: Requirement to Correct 
Don’t forget to notify HMRC by midnight on 30 September if you need to correct your tax position in respect of any offshore assets.

Making Tax Digital (freeview)

Making VAT Digital: toolkit
Are you excluded from April 2019 proposals?

Editor's Choice (subscribers)  

Discovery Assessments
UPDATE: how far back can HMRC go? HMRC to appeal stale assessment decision.

R & D Relief: an introduction (freeview)
What can you claim and how?

R & D Relief: subscriber guide
UPDATE: if you are not one of the 34,000 claimants and you are innovating then why not claim now? 

Tax Guides and Updates (subscribers) 

Welsh Income Tax: Welsh Taxpayers
UPDATE: added more information on what should and should not be considered for the close connection test.

What expenses can I claim? Self Employed
UPDATES: essential reading for anyone advising small business: a suite of guides that are updated in real time for your FAQs and case developments.

Employment Related Securities
UPDATE: giving or awarding shares to a director or employee? Thinking about an EMI share option scheme? Start here.

Case Update (freeview)

Penalties: HMRC calcs wrong again
In Shaun C Long v HMRC [2018] TC06563 is another case where the FTT has decided that HMRC had been incorrectly overcharging six and twelve month late filing penalties for nil liability late self assessment return.

Penalties: calculation conundrum
In Mark Butterworth v HMRC [2018] TC05276 the FTT was confused by what is meant by a 'tax liability' when it comes to Self Assessment and PAYE. As a consequence it did not reduce six and twelve month late filing penalties on a 'nil' liability return. 

VAT (freeview)

Unreasonably refusal for late option to tax
In Rowhildon Ltd v HMRC [2018] TC06669¸the First-Tier Tribunal (FTT) decided that HMRC were unreasonable to refuse a belated notification of an option to tax, as there was sufficient evidence of the positive decision to opt.

White goods VAT block was correct
In Taylor Wimpey PLC v HMRC [2018] UKUT 55, the Upper Tribunal (UT) concluded that the majority of the kitchen goods included in houses sold were subject to the ‘Builder’s block’ on recoverable VAT.

Tuition and books found to be separate in HMRC's absence
In BPP University College of Professional Studies Limited v HMRC [2018] TC06632¸ the First-Tier Tribunal (FTT) found that printed materials was a separate zero-rated supply to tuition courses provided by another group company.

Single supply cannot be split for partial reduced rate
In A N Checker Heating & Service Engineers v HMRC [2018] UKUT 292, the Upper Tribunal (UT) found that a single supply cannot be artificially split to allow reduced rate to apply to one component of that supply.

VAT (subscribers) 

Online Marketplaces: selling goods in the UK
NEW: When do you have to register for UK VAT? When is UK VAT payable? What amount is VAT payable on? What information do you have to give the marketplace provider? What will it do with that information?

Land & Property: Dwellings
NEW: a new guide covering, in more detail, the VAT rules relating to the construction, conversion, renovation, sale, and rent of dwellings, including what a dwelling is for VAT. 

CPD Webinars

New CPD click here

Missed last time's update?

Nichola's SME Tax w-update 21 September 2018


  • Tax relief on travel expenses: carelessness
  • Call for evidence on MVD
  • Health warning on Statutory Residence Test
  • VAT and Group
  • Making Tax Digital: VAT
  • More VAT
  • and much more..

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