I gave a talk on the new Construction Industry Scheme (CIS) reverse charge VAT measures (due to apply in October) this week. My chatty audience asked many questions and we worked through many of the practicalities of implementing the changes that are required to reverse charge your supplies. I am not sure that any of my software currently allows me to use both cash and accruals accounting at the same time and I wonder how many people have actually tried a ‘walk through’ of a typical construction contract under the proposed measures. I recommend that you have a go.

Most large and medium-sized engagers of Personal Service Company (PSC) workers have decided on a blanket approach to the new off-payroll working rules: ‘if in doubt payroll it’. Good news for HM Treasury. Not necessarily the best thing for workers who will potentially lose tax relief on certain expenses. Therein lies a problem; what to do now?

Our guides for IR35 and PSCs work through examples to show how you how to account for, and tax, a PSC either in IR35 or if you are being taxed by your engager.

Read on for our very carefully curated pick of the best news and cases for SMEs. If you have not subscribed to our service, then why not?

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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 & guides (freeview)

Statutory legacy changes
The statutory legacy amount due to a surviving spouse or civil partner when an individual has died intestate has been increased for the first time in over 5 years.

Off-payroll rules will only apply to services provided on or after 6 April
HMRC have announced a change to the extension of the off-payroll rules (IR35) to the private sector which will now only apply to payments made for services provided on or after 6 April 2020.

Law Commission report on signing documents electronically
The Law Commission has published a new report about the use and validity of electronic signatures on documents.

Scottish Budget 2020: Summary
The draft Scottish Budget for 2020/21 was announced by Scottish Public Finance minister Kate Forbes on 6 February 2020. This budget had been delayed due to the general election being scheduled for the same day

Editor's pick (subscribers)

CIS VAT Reverse Charge
UPDATE: start planning now.

IR35 & Off-payroll working
UPDATE: worked examples to show accounts, corporation tax and the deemed payment calculation.

Off-payroll working: large and medium private sector
UPDATE: new rules from 6 April 2020.

Personal service company (PSC) tax
UPDATE: how to account for, and tax, a PSC when the off-payroll working rules apply.

Case Update (freeview)

Home Loan Scheme test case: success for HMRC
In John Leonard McNeill Shelford as Trustee of the Herbert Life Interest Trust Settlement & Ors v HMRC [2019] TC7549, the First Tier Tribunal found that a home loan scheme was not effective IHT planning. The transactions were void and the assets remained in the estate on death.

SAO notification includes dormant companies
In Castlelaw (No 628) Limited and Irene Douglas v HMRC [2020] TC7540, the First Tier Tribunal upheld penalties under the Senior Accounting Officer rules for failures to make notifications about a dormant company; an innocent mistake was not a reasonable excuse.

Mixed partnerships: profits were enjoyed by individual not companies
In Nicholas Walewski v HMRC [2020] TC7554, the First Tier Tribunal dismissed an appeal against a reallocation of the profits of mixed-member LLPs to an individual partner. There was no evidence the profit allocations were for any reason other than the individual’s power to enjoy them.

VAT Cases (freeview)

VAT zero-rating penalty: reliance on counsel was reasonable
In Marlow Rowing Club v HMRC [2020] UKUT0202, the Upper Tribunal (UT) found the club had a reasonable excuse for issuing a VAT zero-rating building certificate. It had sought counsel's opinion and did not need to also seek HMRC's opinion.  

Virtual Tax Partner Toolkits (freeview)

Virtual Tax Partner © Tax Toolkit© Tax Toolkits
NEW: be a winner with our game-changing tax diagnostics tools. Sign up now.

  • 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..

Tax Queries?

Virtual Tax Partner© Support
Have a tax query? Need a second option? Open a ticket and ask a question. A team of tax experts with a very wide range of expertise: covering direct and indirect tax, as well as accounting, R & D claims, reorganisations and much more. 

CPD for lunch 

Byte-sized chunks of CPD for subscribers

More at CPD Index

Missed last time's Web-update?

Nichola's SME Tax W-update 6 February 2020

  • NICs rates change for 2020-21
  • Call for evidence: Extension of the off-payroll working rules to the private sector
  • SME Tax Monthly Summary Jan 2020
  • Tax Planning for the 2019/20 year-end
  • Year-end top ten tips for OMB's 2019/20
  • Tax 'Top Trumps': Closure Notice v Information Notice
  • Upper Tribunal denies farming loss relief claims
  • Taxpayer in difficult circumstances was not 'careless'
  • More...

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