Nichola's SME tax W-update 25 January 2019

Hello

It's nearly over, that's the Self Assessment 'season', if only we could say the same about Brexxxk. We're reporting some fascinating stuff this week. Read on.

If you are not quite up to speed with Making VAT Digital, we have an update. I don't mind admiting that I do not understand the new Agent Services Account. I sure hope that mine will start doing something soon.

We have this time a couple of cases which look at directors and their pay.

In one case, (that's Febrey), there were unusual circumstances: clearly some horrendous accounting issues. A salary was credited to a director's loan account by persona unknown however it was not paid. The director appears to have been incredibly lucky in avoiding a Regulation 72 determination (this is where HMRC assess an employee personally for a company's PAYE liability). The FTT relied heavily on the judgment in Hochstrasser v Mayes [1960] AC 376 (a House of Lords decision), 'Disregarding entirely contracts for full consideration in money or money’s worth and personal presents, in my judgment not every payment made to an employee is necessarily made to him as a profit arising from his employment.' Thus it is possible that an accounting entry is not always pay. I would not wish ever to argue these points!

In another case (Petrol Services), the directors extracted their pay as self-employed consultancy fees so they could split income with their wives. The planning failed because there were no other employees, and the consultancy businesses had no other business and so the fees had to surely relate to their services in running the company. The moral of the story is that you can't have your cake and eat it. If you want to split income with a spouse then you need to make them a full equity shareholder in the main business.

There is an interesting paper out from the Office of Tax Simplification (OTS) on Tax Tech'. The OTS admit that 'the likelihood of any effective, wholesale reform of the current tax code seems a distant and difficult objective', so the question is whether we just want machines to do all the tricky stuff without us having to think about it. I suggest that if we don't like the tricky stuff, then we probably do. I have old motorbikes, they are great. You can strip them down and rebuild them: I'm an enthusiast and part of the fun of these things is fixing them. I have a new motorbike, it's so complex that when it doesn't start they have to be transported to a dealer to fix it. That's annoying but I never for one moment worry that I don't understand its computerised engine managment system, the important thing is that I have a nice modern bike.

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. 

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)

OTS technology review: a vision for tax simplicity
The Office of Tax Simplification (OTS) have published “A vision for tax simplicity”, to consider how to use technology to achieve a simpler and better “user experience” without taking away taxpayer understanding and responsibility for their tax affairs.

Diverted profits tax: £388m raised in 2017/18
HMRC have announced the opening of a new Profit Diversion Compliance facility to allow large international groups using arrangements targeted by Diverted Profits Tax (DPT) to bring their UK tax affairs up to date.

Making Tax Digital (freeview)

Making VAT Digital: What's on January 2019
With the mandation of MTD for VAT less than 3 months away we look at recent developments and updates from HMRC ahead of the 1 April 2019 deadline.

Making Tax Digital: Agent Toolkit
UPDATE: if you have missed the recent developments catch up here and learn more.

Editor's Choice (subscribers) 

Self Assessment late filing and penalties
UPDATE: what penalties apply if you can't file or pay on time.

Last minute tax returns: What expenses can I claim?
Don't panic! These guides take you through all the difficult ones from Accommodation to Travel expenses and Working from Home

Directors Service contracts: tip tips
What do you put in a service contract? Do you need one? Can it double as an employment contract?

Tax planning for directors 
Our unique suite of topical guides for all directors.

Tax Guides and Updates (subscribers) 

New: TAAR Tool Beta testers wanted
Need to check that you have correctly completed your tax return? Apply to beta test a new tool.

Corporation tax: Goodwill and the Intangibles Regime
UPDATE: with so many recent changes this guide summarises the rules.

Non-resident trusts
UPDATE: UK resident beneficiaries of offshore trusts are not just taxed on cash distributions, interest free loans and rent free accommodation are taxable benefits and are often overlooked.

Annual Tax on Enveloped Dwellings (ATED)
UPDATE: The 2019/20 ATED returns will soon be due and the rates have gone up, see our guide for the new amounts.

Case Update (freeview)

Director avoids Reg 72: accounting records unclear
In Michael John Febrey v HMRC [2018] TC6897 a director was lucky to avoid a reg 72 determination making him personally liable for unpaid PAYE. The FTT found that accounting entries for a salary paid before a company went into liquidation were not actual paid earnings.

Directors were not self employed consultants
In Petrol Service Limited v HMRC [2018] TC06907 the FTT found that 'self employed' consultancy fees paid to the company’s directors were taxable employment income in respect of their directorships.

VAT (subscribers) 

International goods
Brexit might be looming but the old rules keep running: our guide on current rules for imports, exports, EU acquisitions and dispatches.

Making Tax Digital: VAT (subscriber guide)
UPDATE: for deferrals and pilot.

CPD & Webinars

Private Client Update - January 2019

NEW: A webinar covering private client news, legislative changes and interesting cases from the past few months.

Budget 2018: subscriber guide & CPD
UPDATE: key announcements at a glance

See CPD for Lunch

Missed last time's Web-update?

Nichola's SME tax W-update 18 January 2019

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