This week we have a mixed bag with a new guide for brewers, microbrewers and gin makers, updates to several of our capital allowance guides, some interesting cases and latest Coronavirus tax news.

We have two cases which indicated that HMRC officers are operating under some extreme pressures. In one they issued PAYE determinations under the wrong legislation. Probably the most shocking was the failure of ‘VAT best judgement’. HMRC assessed under-declared fuel sales with absolutely no evidence. Indeed, as the FTT discovered, every bit of evidence uncovered pointed to the contrary.

The current leading case on pensions has now been heard by the Supreme Court who found that a transfer between pension schemes made by a terminally ill mother to protect the fund from her ex-husband and ensure her sons received the money, was not subject to Inheritance Tax (IHT). Whilst there was a taxable transfer of value because she did not take income benefits during her lifetime, the overall IHT liability for the estate was significantly reduced by the decision. This provides clarity for pension savers who are in ill-health and are looking to sort out their pension position to help their family once they have passed away.

Much like COVID-19 itself, there has been a sudden flare-up of pandemic-related news. HMRC has started checking claims under the Coronavirus Job Retention Scheme (CJRS) with its first tranche of 3,000 companies as recent headlines report that millions of furloughed employees have been asked to work by employers despite this being against the conditions, and spirit, of the scheme.

Ironically, it also seems that all this preoccupation with COVID-related support has meant that many employers who submitted their P11Ds on time are getting penalty warning letters. It seems HMRC do not currently have enough staff available to process them. HMRC has reassured the ICAEW Tax Faculty that employers should ignore a penalty warning letter if they filed forms P11D and P11D(b) online or in paper form on time. 

As children return to school it is worth noting that there are temporary changes to the tax-free childcare rules to ensure those working fewer hours and earning less due to the current situation do not cease to be eligible. Mindful of some of the issues employers and their staff are currently having to deal with, we have updated our notes on the supply of medical benefits and health care to employees, as well as employer-provided death-in-service benefits.

Finally, a reminder that you have just one day left to 'Eat out to Help Out' on Bank Holiday Monday, and the next change to the CJRS comes in from Tuesday with employers needing to contribute 10% of their furloughed employees' wages during the month of September. We were wondering how many businesses still have staff on furlough: the official HMRC figures show that the peak was reached in mid-July with 9.5m employees put on furlough by 1.2m employers and these figures have barely changed up to the middle of August.

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

Back soon 

Nichola Ross Martin FCA CTA (Fellow)
Tax Director


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Quick News

COVID-19: New payment for people self-isolating in highest risk areas
The government has announced a new payment scheme for people living in areas with a high incidence of COVID-19 who are on low incomes, need to self-isolate and cannot work from home.

COVID-19: HMRC contacts 3,000 employers about CJRS compliance
HMRC have started the next phase of compliance activity on the Coronavirus Job Retention Scheme (CJRS). It has written to around 3,000 employers it believes may have been overpaid. 

COVID-19: Delays for CJRS claims if the data are not right
HMRC have warned employers that those using its template to upload their CJRS information should make sure the data are in the correct format. If not applications may be rejected.

HMRC penalty warning letters for forms P11D and P11D(b)
It has been reported that employers and agents who have submitted forms P11D and P11D(b) on time are receiving penalty warning letters from HMRC.

Advisory fuel rates from 1 September 2020
HMRC have published new advisory fuel rates for company car drivers which apply from 1 September 2020. Most remain unchanged from the rates applicable for the previous three months.

Editor's Pick

Structures & Buildings Allowance (SBA)
This is a guide to the Structures and Buildings allowance, who can claim, what expenditure is eligible and how to make a claim.

Time limits for making claims & adjustments
What is the time limit for making a claim for capital allowances? What is the time limit for amending a capital allowances claim?

AIA & WDA: Rules where there is a change of rate
How do you apply hybrid rates when there are changes in the rate of allowances? How does this work for Written-Down Allowances (WDA) or Annual Investment Allowances (AIA)?

Guides and Updates (subscribers)

Tax-Free Childcare
UDPATE: There are some temporary changes to the tax-free childcare rules to take account of reduced incomes and working hours whilst parents are furloughed or having to take sick or unpaid leave during the coronavirus pandemic.

Brewers: What expenses can I claim?
This guide outlines what expenses brewers, microbrewers and distilleries can claim for tax purposes.

Medical benefits and health checks
What are the tax implications if an employer provides an employee with a medical health check and associated medical treatment?

How are employer-provided death-in-service benefits taxed? Are the premiums tax-deductible for the employer? What are the conditions?

Case Update (Freeview)

HMRC use wrong legislation for PAYE determination
In Sci-Temps Limited V HMRC TC07796, the First Tier Tribunal (FTT) allowed a company's appeal against a PAYE determination. HMRC had issued the determination under the wrong PAYE regulation and the employer took reasonable care.

Ill-health pension transfer not subject to IHT
In HMRC v Parry and others [2020]UKSC 35, the Supreme Court found that a pension scheme transfer was not a transfer of value subject to IHT but not taking lifetime benefits from the scheme was.

VAT Update

HMRC failed to show ‘best judgement’
In FW Services Ltd v HMRC [2020] TC 07636, the First Tier Tribunal (FTT) concluded the ‘best judgment’ assessment made by HMRC was excessive in the absence of supporting evidence. 

Occupational health services are exempt from VAT
In RPS Health in Business Limited, RPS Consulting Services Limited T/A RPS Business Healthcare v HMRC [2020] TC 07643, the First Tier Tribunal (FTT) held that occupational health services were exempt from VAT as supplies of medical care, not standard-rated as supplies of advice to employers.

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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?
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  • Making Tax Digital for VAT: when do you need to join.

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Missed last time's Web-update?

Nichola's SME Tax W-update 21 August 2020

  • Employer Bulletin: August 2020
  • Agent update August/September 2020
  • HMRC issue final guidance on the loan charge
  • Consultation on cryptoassets promotion
  • HICBC: Can ignorance ever be a reasonable excuse?
  • Illness no excuse in RTI payment delays
  • Accountants’ error costs taxpayer money ...More

Nichola's SME Summaries for July 2020

Links to all of July's web-updates...More 

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