The government has concluded its review of off-payroll working and made a couple of modifications to the rules which commence in April 2020. Importantly, there are no radical changes and the new measures commence on the original start date of 6 April 2020.

We have had a lot of queries as to how Personal Service Companies (PSCs) should be dealing with their expenses and accounting for those, day-to-day. The trouble is that there is no ‘one size fits all’ solution, as it very much depends on what the end client is dictating and what the PSC is planning for the future. Our PSC guides explore different options.

HMRC are alerting PSCs to tax avoidance schemes that apparently don’t work. PAYE fraud is big business and HMRC have also been consulting on the transfer of PAYE liabilities in the event of default by the ‘Payer’, the person in the off-payrolling supply chain who is responsible for deducting PAYE from the worker.

I do wish that some of HMRC’s guidance was not so ‘random’ in this area. For example, in one part of the current guidance for intermediaries, they suggest that if there is more than one employment intermediary in a supply chain then the one closest to the end client operates PAYE. Shortly after, the same page also advises that the one to operate PAYE is the employer. We feature a tax case this week where HMRC pursued the same sort of irrational approach. It would help everyone if we had clear and concise primary legislation.

What a year. First floods and then ‘plague’ and now more floods. In our 'virtual' office, we are pretty much resilient to all these things except power failure. This has some rewards. Instead of worrying about our impending doom we can now turn our attention to the prospect of the Budget and look forward to reviewing and commenting on that next week.

Finally, watch out for the last-minute planning schemes on Entrepreneurs’ Relief. The Transactions in Securities rules are pretty wide and if they fail there is always the GAAR.

If you have any tax-specific queries, please post them up to our sister site www.VtaxP.co.uk

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Quick news & guides (freeview)

Trusts and Estates: What’s New? Spring 2020
HMRC's latest Trusts and Estates newsletter contains some useful information. Here is our enhanced version.

HMRC warns about off-payroll working tax avoidance schemes
HMRC have issued new guidance on ‘Tax avoidance schemes aimed at contractors and agency workers’ ahead of the extension of the off-payroll working rules to the private sector.

Report on review of changes to the off-payroll working rules
HM Treasury have published 'Review of changes to the off-payroll working rules: report and conclusion'. It is their response to the review of the proposed changes to the off-payroll working rules applying them to the private sector for the first time.

Editor's pick (subscribers)

EMI: Enterprise Management Incentive scheme
UPDATE: What is an EMI scheme? What are the rules? Who does it apply to and what are the benefits?

ABC or alphabet shares: directors & employees
UPDATE: Why create different share classes? What are the advantages and pitfalls?

Employment-related securities (share scheme basics)
UPDATE: What are the tax consequences when a company gives shares to an employee or director?

Subscriber updates 

Company Cars
UPDATED: Company car tax. How do you work out car benefit? How do you work out car fuel benefit? Are there savings for low emissions vehicles? How do you reduce car benefit? Cars, tax tribunals and Top Tax Tips.

CO2 emissions: ultra-low emissions
UPDATED: How to catch the 0% employee tax benefit. Our complicated-looking table should help new car purchasers.

How to appeal an HMRC decision 
UPDATED: What type of decision is appealable? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

VAT Best Judgement Assessments
UPDATED: What is a 'best judgement' assessment for VAT? When can HMRC raise one? What are your rights of appeal? How do you displace a 'best judgement' assessment?.

Construction Industry VAT reverse charge: at a glance
UPDATED: The Construction Industry Scheme (CIS) VAT reverse charge applies to construction services from 1 October 2020.

Record-keeping & tax: what, how and until when?
UPDATED: How long do your need to keep your books and records for tax? Record keeping for income tax, VAT, corporation tax. What if you lose your records?. 

Cases (freeview)

Scheme to transfer pension into residential property funds results in 40% tax charge
In Gareth Clark v HMRC [2020] EWCA Civ 204, the Court of Appeal (CoA) upheld the decisions in the two earlier appeals. It held that a transfer from an authorised pension scheme into another fund in order to enable pension cash to be invested in residential property amounted to an unauthorised payment.

Sale of shares was capital but company was not trading
In Assem Allam v HMRC [2020] TC7532, the First Tier Tribunal (FTT) dismissed a claim for Entrepreneurs' Relief on a sale of shares to the seller's own company. It found the disposal to be of capital, not income. The non-trading activities in the company being sold were substantial. The purpose of the transaction was not income tax avoidance.

Recruitment agency not liable for payroller's PAYE
In Direct Personnel Midlands Limited v HMRC [2019], the First Tier Tribunal decided that a recruiter did not automatically take over an employment agency’s PAYE liabilities when it paid the agency’s staff directly. The payments made also offset the agency’s charges for VAT.

VAT Cases (freeview)

DIY Builder's VAT claim allowed despite certification delay and change of use
In Simon & Joanne Cotton v HMRC [2020] TC07553, the First Tier Tribunal (FTT) allowed a VAT DIY Builder's Scheme refund. HMRC had refused the claim on the grounds that there was a change of use and it was out of time.

Developer's lack of records results in VAT assessment
In Gareth Bertram v HMRC [2020] TC07524, the First Tier Tribunal (FTT) held that HMRC were entitled to raise a ‘best judgement’ assessment against a taxpayer. The taxpayer also qualified for VAT relief on some of his expenditure.

Virtual Tax Partner Toolkits (freeview)

Virtual Tax Partner © Tax Toolkit© Tax Toolkits
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  • 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?

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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 27 February 2020

  • HMRC confirm policy on VAT treatment of digital publications
  • Advisory fuel rates from 1 March 2020
  • Agent update February/March 2020
  • What is the 2020/21 PAYE tax code?
  • Supply of GPs was a service and VAT exemption upheld
  • VAT due on payment handling services
  • More...

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