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Following a week of insolvencies, we review a couple of cases where the directors of failed companies have found themselves under attack by insolvency professionals. We have also made a handy summary of HMRC's Covid-19 compliance concessions.

The directors and trustees of the failed Kids Company charity appear to have narrowly avoided a couple of the charges made against them by the Official Receiver. This is part of on-going action and further charges remain to be litigated. One of the new allegations made was that the directors operated an ‘unsustainable business model’. Although that was thrown out, for reasons you can read below, it’s the kind of allegation that does turn heads. Theoretically it can apply to many small businesses, charities and start-ups, and of course large business too. 

We have had a lot of enquiries in the last couple of weeks on purchase of own shares and management buyouts. We see some really curious cases and it's clear that this is one area where you need to have professional guidance. I have featured a case from 2006 this week as a cautionary tale. Again, it features an insolvent company. The resultant action by its liquidator against its directors shows just what can happen when you take short cuts over a purchase of own shares.

We have several VAT cases this week. These were selected as they are topical and worth a quick read. Finally, we have been reviewing and updating topical guides for landlords and doing a re-cap on penalties.

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

www.rossmartin.co.uk

Your Virtual Tax Partner® online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.

Quick News

Kids Company directors: responsible for unsustainable business model?
In the Official Receiver V Camila Batmanghelidjh & others [2020] EWHC 2839 (Ch), the Official Receiver (OR) has been barred from making certain allegations of impropriety against the board of the Kids Company and its trustees. The OR should have raised these matters sooner.

Companies Act: action by a liquidator
In Stuart & Kinlan v Crimmin [2006] EWHC 779 (Ch), a retiring director was pursued by a liquidator who claimed that he had not acted in the company’s best interests when negotiating for it to repurchase his shares and that the repurchase had not been carried out properly. 

COVID-19: HMRC compliance round up
HMRC have introduced a number of concessions this year to help mitigate the burden on taxpayers due to COVID-19. They cover tax payment deferral, late filing, penalties and appeals. 

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

Editor's Pick (subscribers)

Purchase of own shares
When can a company repurchase its own shares? What are the tax consequences for company and shareholder?

Management buy-out via a holding company
What are the steps to organise a buy-out? What are the pitfalls?

Leases: Plant and machinery
A summary of the accounting and tax treatment of leased plant and machinery (P&M).

Guides and Updates (subscribers)

Furnished Holiday Letting
UPDATE: What qualifies as Furnished Holiday Letting? What tax advantages does qualifying for FHL offer? 

Property profits & losses
UPDATE: essential knowhow for any property landlords

Trusts & Tax planning
UPDATE: What is a trust? How can trusts be used in tax planning? What the advantages and what are the pitfalls?

Tax debts and insolvency
UPDATE: This guide looks at the treatment of tax debts to HMRC in insolvency cases.

Client guide: Reasonable care and tax penalties 
This is a guide to print out and discuss with clients. What triggers a tax penalty? What standard of care is expected from a taxpayer? What is reasonable care? When is an error careless?

Tax Cases

COVID-19 not reasonable excuse
In Prime Aesthetics Limited v The Welsh Revenue Authority [2020] TC07948, the First Tier Tribunal (FTT) dismissed the penalty appeal on the grounds that there was no reasonable excuse attributable to COVID-19.

VAT news & cases

Boathouse fails to obtain zero-rating
In Swanage Sea Rowing Club (SSRC) v HMRC [2020] (TC07904), the First Tier Tribunal (FTT) decided that a boathouse constructed by a charity was not intended for a ‘relevant charitable purpose’.

Subway franchisee under-declared output VAT
In Subway (Staines Central) Limited v HMRC [2020] TC07943 the First Tier Tribunal (FTT) upheld HMRC’s assessment of under-declared output VAT and associated inaccuracy penalties.

Holding company was trading for VAT purposes
In Bluejay Mining plc vs HMRC [2020] TC07947 the First Tier Tribunal (FTT) allowed the recovery of input VAT incurred by a holding company.

R & C Brief 19 (2020): Repeal of the VAT (Treatment of Transactions) Order 1992
Revenue and Customs Brief 19 (2020): 'VAT - repeal of the VAT (Treatment of Transactions) Order 1992' announces government's intention to repeal the VAT (Treatment of Transactions) Order 1992 before autumn 2021.

VAT (subscribers)

Is voluntary VAT registration worthwhile?
UPDATE: When can a business voluntarily register for VAT? When would it be beneficial to voluntarily register?

Pre-registration input tax
UPDATE: When can pre-registration input VAT be recovered? What are the time limits and restrictions?

Car or van for VAT?
What is a car for VAT? What is a van for VAT? What VAT can be recovered on a car that is bought? Leased? What about fuel? Or mileage reimbursements? 

Virtual Tax Partner Toolkits (freeview)

Virtual Tax Partner © Tax Toolkit© Tax Toolkits
Be a winner with our game-changing Business Asset Disposal Relief tax diagnostics tools. Sign up now.

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 26 November 2020

  • Statement of Practice 1 (2020): Disguised remuneration loan charge election
  • COVID-19: the virtual office party 
  • Digital signatures allowed for Holdover Relief
  • Advisory fuel rates from 1 December 2020
  • Accountant's death: reasonable excuse
  • COVID-19: VAT payment deferral measures for VAT registered businesses
  • Supply of football and netball pitches exempt from VAT
  • Business Asset Disposal Relief (BADR): Disposal of a business
  • Value shifting...More

 

SME Tax Monthly Summary November 2020

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

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