The Office of Tax Simplification (OTS) has launched a Capital Gains Tax (CGT) review and call for evidence. Perhaps the chancellor has his eye on reforms in this area ahead of an Autumn budget.

Looking at all the taxes, I would say that as a group of taxpayers, individual property investors have the toughest time of it when it comes to complicated interactions of taxes. Let me explain. You have Stamp Duty Land Tax (SDLT) for properties located in England and the Scottish version, Land and Buildings Transaction Tax (LBTT), or the Welsh version, Land Transaction Tax (LTT) when you make your purchase elswhere in the UK. You may also have to work through the higher rate rules that apply for residential properties. If you are collecting rents you have the ongoing restriction for tax relief on financing costs, and also the rules on replacement of furniture and repairs etc are not so easy. When you sell, you may be within CGT (with all of its accelerated new reporting deadlines) otherwise you may fall into being taxed within Income Tax thanks to the ‘profits in dealing in or developing UK land’ provisions (if you have heard of them, although ignorance of the law is no excuse!). For Inheritance Tax (IHT), things are not much easier, as there are the various nil rate bands and transferable bands to consider. Now when someone asks me 'Do I sell and spend it now or try and take it to the grave', in respect of a property porfolio, I say, 'give me a couple of weeks and I'll do the workings'. 

If you have any tax-specific queries, please post them up to our sister site, details are here: www.VtaxP.co.uk. We apologise that we are asking everyone to upload their ID when they ask a question, it just seems to be the only cost-effective way of performing some of the necessary checks for anti-money laundering purposes.

Back soon 

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

Millionaires plan to deal with the costs of COVID-19
A group of millionaires from around the world called ‘Millionaires for Humanity’ have signed an open letter urging governments to charge them more tax to help with economic recovery from the COVID-19 pandemic.

Capital Gains Tax Review: Call for evidence
Following a request from the Chancellor the Office of Tax Simplification (OTS) has launched ‘Capital Gains tax review - call for evidence’ plus an online survey, to hear from taxpayers and their advisers about which areas of capital gains tax are complex and hard to get right, and suggestions for improvements.

FRC finds audit firms' performance unacceptable
The Financial Reporting Council (FRC) has criticised the performance of the UK’s biggest audit firms

COVID-19: Tracker
UPDATE: Start here to track the latest government measures and announcements aimed at supporting businesses and individuals during the pandemic. Watch out for: NICs calculations for flexibly furloughed staff and time limits for all claims.

Editor's Pick 

Tax and employment status: director or non-executive director
What is the tax status of a director? How are non-executive directors taxed?

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 
Suite of topical guides for all directors

Directors' responsibilities and duties
Thinking about becoming a director? This note outlines your role

Tax Guides and Updates (subscribers) 

CGT: Reliefs, disposal of a business or its assets
This guide provides an outline of the main Capital Gains Tax (CGT) reliefs which may apply when an individual or company replaces or disposes of a business asset, or a business, or shares in a company.

Property profits & losses toolkit 2020/21
Our toolkit guides you through all the key tax issues and planning points for landlords and property owners. 

Stamp Duty Land Tax: Higher rates
A guide to the Stamp Duty Land Tax (SDLT) higher rate charge on residential property, when it applies and what reliefs are available to exempt buyers from the charge.

AML: Record Keeping
Anti-Money Laundering: what records should you request and retain?

AML: Identification and Verification, Entities
A subscriber guide to Anti-Money Laundering (AML) identification for entities. What checks are required under AML rules for identification and verification? 

Permanent establishment and company residence
UPDATE: HMRC says that a non-resident company will not automatically have a taxable presence by way of permanent establishment after a short period of time i.e. temporary home-working under COVID-19 is unlikely to affect taxable presence in the UK.

Case Update (Freeview)

£100 penalty trumps ignorance of Scottish LBTT
In Shu Fang Yang v Revenue Scotland [2020], the First Tier Tribunal (FTT) for Scotland Tax Chamber held that ignorance of the law is not a reasonable excuse for late submission of the three-year LBTT Lease Review Return (LBTT return).

No trust between family members makes property transfer taxable
In Asif Bhikhi v HMRC [2020] TC7728, the First Tier Tribunal (FTT) held that a property transferred to a relative to raise funds was a chargeable disposal for Capital Gains Tax.

Bonuses paid to partners are earnings from previous employment 
In Charles Tyrwhitt LLP v HMRC [2020] TC7756, the First Tier Tribunal (FTT) held that bonus payments received after becoming a member of the LLP were not self-employment income. 

VAT Update

Input VAT disallowed on an opted to tax commercial property with no rent
In Colin and Susan Slaymark v HMRC [2020] TC7709, the First Tier Tribunal (FTT) found that input tax on a commercial property where the occupants had no obligation to pay rent should be disallowed.

Is a release of a call option to buy land taxable or exempt supply?
In Landlinx Estates Ltd v HMRC [2020] TC7706, the First Tier Tribunal (FTT) found that release of an option to buy land (which did not opt to tax) was exempt supply and in line with EU legislation and HMRC's long-standing guidance. HMRC failed in its attempt to advance an argument to the contrary.

NHS Trust's car leasing VAT mismatch
In HMRC v Northumbria Healthcare NHS Foundation Trust [2020] EWCA Civ 874, the Trust was able to fully recover VAT on cars supplied to its employees whilst also not charging VAT on the leases. 

VAT: Bad Debt Recovery
When can you recover VAT on a bad debt? How much VAT is payable to HMRC or recoverable from HMRC when only part of an invoice is paid?

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 9 July 2020

  • Summer Economic Update: Live speech highlights
  • Summer Economic Update: SDLT reduction
  • Summer Economic Update: VAT reduction
  • Plan for Jobs: Job Retention Bonus
  • A Plan for Jobs: Helping the unemployed
  • A Plan for Jobs: Green measures
  • Eat Out to Help Out
  • UK launches Sustainable Innovation Fund
  • Review of the Women in Finance Charter
  • Audit: October deadline for Big Four's plans for separation
  • Sole trader v. limited company: Tax differences & savings 2020/21
  • Directors' Tax Planning toolkit 2020/21
  • COVID-19: Tracker



Nichola's SME Summaries for June 2020

Links to all of June's newswires


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