It looks as if HMRC and HM Treasury have new batteries! We have a collection of new policy papers and announcements from the Treasury: all measures tabled for the next finance act. I have a feeling that it will be a whopper.

The long-awaited announcement on the start date of Making Tax Digital for Corporation Tax confirms that this will not commence until 2026, however you can get clients started on the pilot scheme from 2024. If the sign up is anywhere as difficult as it was for VAT the pilot might be a double-edged sword, but we sincerely hope not.

We had seriously planned for a ‘no tax week’ this week, just for a change. Sadly, that dream faded as we started to read through the various collections of policy papers relased and destined for Finance Bill 2021. I recommend reading up on the Construction Industry Scheme (CIS) changes as the amendment to the rule on deduction for materials will affect many of your smaller sub-contractors. We also have confirmation of policy on the R & D PAYE cap and extension of £1 million to the Annual Investment Allowance (AIA) limit too.

There has been some cause for concern that some of the anti-avoidance measures added to the Off-payroll working rules for Personal Service Company (PSC) owners in Finance Act 2020 were too broad and would hit umbrella companies. The government has confirmed that this is an error. Our PSC guide offers you a clear explanation of what has changed and what will apply, when the rules are corrected.

We have been hearing from people who have received 'nudge letters' from HMRC in respect of allegedly missing items on their Self Assessment returns. It seems that in many cases the taxpayers are left confused as they think that they have declared all their income. Conversely, we are noting some feedback in terms of errors made in claims for the Coronavirus Job Retention Scheme (CJRS), we have listed them for you.

In terms of tax cases, there is something for everyone this week. My favourite case this time comes from the Upper Tribunal who have just decided the VAT rate for meal replacement juices. 

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

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

5 Common Errors in Coronavirus Job Retention Scheme (CJRS) claims
HMRC are contacting an increasing number of employers who may need to repay some, or all, of the grant they received under the Coronavirus Job Retention Scheme (CJRS).

AIA spending limit extended
The expenditure amount has been extended to £1 million until 31 December 2021. 

Tackling CIS fraud consultation & new policy
New policy reveals several changes to the CIS rules including new limits for deemed contractors, clarification as to when subcontractors may claim a deduction for the cost of materials and penalties for tax agents and directors.

R & D Relief: new cap rules
A new PAYE cap is being introduced to prevent abuse of the R&D payable tax credit from April 2021.

Consultation: Making Tax Digital for Corporation Tax
HM Treasury have opened a new consultation "Making Tax Digital for Corporation Tax" inviting views on how the principles of Making Tax Digital (MTD) could be implemented for Corporation Tax.

Raising standards in the tax market: next steps
HMRC have published ‘Raising standards in the tax advice market, Summary of responses and next steps’. It aims to raise standards, work with the professional tax bodies and root out advisers who are incompetent and those who actively bend or break the rules.

COVID-19: Government Support Tracker
We try and keep this updated in real-time for you.

Editor's Pick

How to start a company
A practical guide on how to form (incorporate) a private limited company and the points you need to consider.

Creating a group
UPDATE: What are the steps for creating a group by way of a share for share exchange?

Stamp duty: Share for Share exchanges
UPDATE: What relief is available from stamp duty on a share for share exchange? What are the new conditions? 

Construction Industry Scheme
UPDATE: Review of the new rules proposed for Finance Bill 2021.

Guides and Updates (subscribers)

Off-payroll working: PSCs and private sector engagers
UPDATE: From April 2021 the conditions for falling within the rules will broaden for both the public sector and medium or large private sector end clients.

Capital reduction: Distributing capital reserves
UPDATE: A capital reduction allows the previously non-distributable share capital and reserves of a limited company to be distributed to shareholders, without the need for a court order. 

Capital reduction: Tax treatment
UPDATE: What is the tax treatment of a capital reduction? 

National Insurance: what's the maximum payable?
NEW: Where individuals have multiple employments and/or self-employment there is a limit to the National Insurance Contributions (NICs) that are payable.

Interest: peer-to-peer lending
Peer to peer (P2P) loans are loans made by private lenders to other businesses via an online intermediary platform. How is this income taxed? What relief is available for bad debts?


Private Residence Relief in just 8 weeks
In Stephen and Lisa Core v HMRC [2020] TC07917, the First Tier Tribunal (FTT) allowed the taxpayers’ private residence relief claims despite their occupation of the dwelling only lasting six to eight weeks.

Late claim for pension enhanced protection allowed
In Dr J Gibson (deceased) vs HMRC [2020] TC07916 the First Tier Tribunal (FTT) allowed the taxpayer’s late claim for pension enhanced protection finding the taxpayer had a reasonable excuse and had notified HMRC of the claim without unreasonable delay.


R & C Brief 18 (2020): VAT liability of school holiday clubs
Revenue & Customs Brief 18 (2020): ‘VAT liability of school holiday clubs’ clarifies HMRC’s position on the VAT treatment of school holiday clubs following the First Tier Tribunal's decision in RSR Sports Limited vs HMRC [2019] TC07450.

VAT cases

Meal replacement juices are zero-rated food: Upper Tribunal
In HMRC v The Core (Swindon) Limited [2020] UKUT 0301 (TCC) the Upper Tribunal (UT) upheld the First Tier Tribunal (FTT) decision that fruit and vegetable juices sold as a meal replacement were food and not beverages, therefore, were correctly zero-rated for VAT.

VAT fraud: metal trader 'knew or should have’ test
In Crow Metals Ltd HMRC [2020] TC07900, the First Tier Tribunal (FTT) dismissed allegations by HMRC that Crow knew or should have known that its transactions were connected with a fraud.


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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 12 November 2020

  • PAYE RTI reporting: Christmas exception to the rules
  • OTS Capital Gains Tax Review: Simplifying by design
  • Inconclusive report on corporate economic crime
  • COVID-19: Grant Funding for Business
  • COVID-19: Loan funding
  • COVID-19: Coronavirus Job Retention Scheme (CJRS) from 1 November 2020
  • COVID-19: Taxation of Coronavirus Support Payments
  • Furnished Holiday Let: an investment for IHT
  • No ATED relief where redevelopment is not a trade
  • VAT DIY claim refused: not a new build
  • New build blinds: building materials for VAT
  • Farming: Capital allowances...More


SME Tax Monthly Summary October 2020

Links to all of October's newswires...More 

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