The draft clauses for the Finance Bill 2020 were published this week, items of key interest to SME advisers include the introduction of 'off-payroll working' to the private sector and restrictions on Capital Gains Tax (CGT) Private Residence Relief (PRR).

There are also plans for a 2% Digital Services tax which will apply to large online platforms and HMRC is to obtain preferential creditor status again on insolvency. Plans for a 1% Stamp Duty Land Tax (SDLT) surcharge for overseas buyers seem to have been dropped.

Do not be fooled by the brevity of the Finance Bill as it is probably too much to hope that a new prime minister will not tinker with the tax system. It does feel as if a perfect storm is approaching and we are now in the 'tropical disturbance' phase. This means that the winds are not too high, but it is becoming unsettling! I do not want to sound over-dramatic, but look what is ahead:

Obviously the uncertainty that is Brexit. We have the unfurling drama of Making VAT Digital. HMRC seems to be struggling to find enough staff to man the VAT helpline. Many personal service company (PSCs) owners and their engagers need to plan ahead for off-payroll working before next April. In October it's 'all change' for VAT registered Construction Industry businesses when the VAT under the reverse charge mechanism applies. Property owners who are letting out their house for the exclusive use of guests will also need to consider what records to retain for their owner occupation from April 2020, as going forward this may well impact on claims for PRR. This may affect your decision to take deposits now. Will this affect the Airbnb market? It will be interesting to see. The Digital Service tax is not going to affect SMEs directly although if the US is not keen on France's version of the tax, which is 1% higher, then this is going to be interesting for the UK. 

All in all, turbulent times ahead for many businesses and there will be a lot of pressure on advisers to try to keep up with all the changes but to also resource their own practices. It remains to be seen whether the next stage of the storm will be that the new PM decides that the UK is going to be a tax haven for large business! 

On Making Tax Digital for VAT: As 'R' writes," Houston! We have a problem at HMRC!" Check out the reader comments in our MTD blog if you want to learn some useful fixes on re-entering VAT numbers. In this time of deep political unrest it's good to have something to make you laugh. 

The tax gap caused by VAT is now confirmed at £3billion. HMRC previously said that £1billion of this will be fixed by MTD for VAT. I still have not managed to sign up one of our businesses, just wait another 72 hours, it says. I will keep waiting and not counting the cost.

If you have not checked out our new Virtual Tax Partner Toolkits then sign up to hear more. If you have tried to read over the latest version of Entrepreneurs' Relief you will find that our share disposal tool is brilliant. The sole trader rules are actually even more complicated, with many different permutations. We are going to formally launch our new tools at the Professional Accountancy exhibition in Birmingham on 18-19 September, so please add that to your diary and come and see us.

If you have tax queries contact the Virtual Tax Partner support portal at www.VtaxP.co.uk.

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Nichola Ross Martin FCA CTA (Fellow) Tax Director


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

Quick news (freeview)

Draft Finance Bill 2020 published
The first draft of Finance Bill 2020 has been published. 

OTS publishes second report on Simplifying Inheritance tax
Following a request from the Chancellor the Office for Tax Simplification (OTS) have completed their review into ways to simplify Inheritance Tax and have now published the second part of their report.

IHT does not influence lifetime giving
HMRC have published a new research report ‘Lifetime Gifting: Reliefs, Exemptions, and Behaviours’ into taxpayer awareness of the inheritance tax (IHT) rules and how it influences the making of lifetime gifts.

VAT helpline fails to meet targets
HMRC reports its statistics to the Treasury Sub-Committee, what do 'Adviser Attempts' mean?

MTD for VAT blog
Making Tax Digital for VAT: Reader comments: more useful work arounds, a problem with FreeAgent and has anyone got the answer as to why something works one minute and not the next?

Editor's Choice 

Construction Industry Scheme: VAT reverse charge, (FREEVIEW) At a glance
NEW: if you are VAT registered and in construction this is likely to affect you.

Contruction Industry Scheme: VAT reverse charge
NEW: Step by step guide to advising your clients on the new regime, with planning points, examples, checklists and templates.

Entrepreneurs' Relief
UPDATE: our comprehensive guides to the different versions of relief. Whats' New: pre29 October 2018 rules, and your post 6 April 2019 rules

Tax Guides & Updates (subscribers)

IHT: Gifts
NEW: A new guide to gifts and exemptions for inheritance tax.

IHT: Estate planning checklist
UPDATE: We have updated this handy checklist to help you navigate clients through planning their estate to mitigate inheritance tax.

IHT: Gifts with reservation
UPDATE: What are gifts with reservation of benefit and when do the rules apply? How can they be avoided?

IHT: normal expenditure out of income (gifts)
When is a gift classed as normal expenditure out of income and how do you prove it?

Topical guides for companies

Personal Service Companies (PSC)s
UPDATE: all the new and proposed tax rules affecting PSCs and their owners. 

Transactions in Securities (TIS) Index
(Freeview) What's new? What is a TIS? Case studies and illustrations

Targeted Anti-Avoidance Rule (TAAR) Tool
Ceasing trading? Phoenixing? Unsure? Do you understand the Transactions in Securities rules? Try the TAAR tool.

Exit strategies Index
Are selling your company or just ceasing trading? Start here.

Reorganisation Zone: Start here
(Freeview) NEW: You can reorganise or separate company activities and different subsidiaries using a variety of different methods. This series of super practical tax guides provide an outline of the tax treatment together with step guides and tax clearance templates.

VAT freeview

MTD for VAT: when to join
UPDATE: new version of this tool includes new registrations.

VAT (subscribers)

Was behaviour deliberate and concealed?
In Anthony Leach v HMRC [2019] TC 7180, the first tier tribunal found that a trader’s excessive claims for VAT refund of VAT was as a result of “deliberate and concealed” behaviour. The consequence is that HMRC can claim tax for the previous 20 years rather than four, and that the highest rates of penalty apply.

VAT wrong rate
In JCA Seminars Ltd v HMRC [2019] TC 6964, the FTT found that HMRC is not obliged to tell a taxpayer that she is using the wrong flat rate of VAT. Also a payment to HMRC is made when received by them, not when posted to the correct VAT number.

Virtual Tax Partner Toolkit 

Virtual Tax Partner © VtaxP© Tax Toolkit
NEW: be a winner with our game-changing tax diagnostics tools: 

  • Entrepreneurs' Relief: Sole traders: sale of a business, incorporation, sale of assets
  • Entrepreneurs' Relief: Company owners: rules for sales pre 29 October 2018, sales between 29 October 2018 and 5 April 2019 and after.
  • TAAR: closing your Personal service company? Will your final dividends be taxed as income?
  • Salary or dividend, or a mixture of both. Better to claim the Employers' Allowance?
  • Making Tax Digital for VAT: when do you need to join.

TaxKeep Apps
NEW: these Apps are currently free for subscribers. For a small fee they can be customised with your logo and then distributed to your clients. Complete the form to sign up for your own App.

CPD for lunch (free for subscribers)

Byte sized chunks of CPD for subscribers

Student Loan repayments
NEW: when and how

Understanding PAYE tax codes
NEW: what, why and how

...More CPD for lunch

Missed last time's Web-update?

Nichola's SME W-update 5 July 2019

  • 2019/20 payment on accounts problems
  • HMRC strategy for offshore avoidance
  • Virtual Tax Partner: new tools for ER.
  • Cases:
  • IR35: hospital locums
  • Loan scheme administator was not a promoter
  • No lawful daily penalties in Scottish LBTT regime
  • VAT: payroll services covered by heath care
  • VAT: quasi director receives personal penalties
  • and much more..

Catch up with last month in tax 

May 2019: the month in summary
NEW: a summary of the newswires for the last month

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