Happy New Year everyone,

We hope that you all had a relaxing break. Although we are starting 2021 in our third national lockdown, we hope to provide you with as much support and assistance as we can.

The unique combination of the global pandemic and Brexit throw up a diverse range of tax issues for the UK and we are all looking forward to March’s budget to see what will happen next. 

The Treasury has opened a portal to receive your budget representations, should you wish to make one. We thought it timely to bring together summaries of which taxes raise the most revenue with tables that show how it is spent. Things were going quite well until I started to try and factor in council tax and business rates. They are both quite expensive taxes but they get omitted from the main summaries produced by HMRC as HMRC does not administer either. This factor could skew most taxpayer's perception of what comes in and goes out. It would take a very brave chancellor to reform council tax, however business rates are surely due for reform. As an online business, I admit that we are unlikely to be enthusiastic about a rates replacement even though one is so obviously overdue.  

Reviewing a Soft Drinks Industry Levy late filing penalty appeal reminds me of how important it is for both government and the tax and accounting profession to not only articulate new measures, but to keep on plugging them. My top penalty ‘hits’ of the past decade, in terms of cases where taxpayers tried to claim ‘ignorance of the law’ as a reasonable excuse for failing to file a return, were; the High Income Child Benefit Tax Charge, non-resident CGT, Annual Tax on Enveloped Dwellings (ATED) and Stamp Duty Land Tax (SDLT). The VAT late-payment surcharge continues to claim the odd scalp. 

Some useful cases to report this week, especially one on the relief formerly known as 'Entrepreneurs' Relief' (now BADR) and company residence. We have received many residence queries post Brexit. Scroll down for news, cases and updates.

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

Budget 2021: representations wanted
HM Treasury is asking for representations ahead of Budget 2021, which will be held on 3 March 2020.

Just how are our taxes are raised and spent?
How does the UK raise its taxes? How does the UK spend its tax revenue? Which taxes raise the most revenue?

COVID-19: £4.6bn new grants
The chancellor has announced a new £4.6bn package of support for the retail, hospitality and leisure sectors.

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

Editor's Pick (subscribers)

Top tips for last-minute tax returns
This guide is a summary of top tips for dealing with last-minute tax returns; what not to forget, and how to protect against enquiries.

2019/20 Self Assessment Tax Return toolkit
A summary of what’s changed since 2018/19 and top tips for 2019/20 tax return completion.

Losses, trade losses and sideways relief
How can trade losses be utilised? What are the restrictions? 

Annual Investment Allowance (AIA)
What is the Annual Investment Allowance? What are the limits? What expenditure qualifies?

Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of a business
When does BADR apply? What is the rate of BADR? How to claim BADR. Case law on BADR. 

Guides and Updates (subscribers)

Valuation: Goodwill
UPDATE: What valuation methods are suitable for valuing a business? What are the issues with goodwill and other intangibles? What does HMRC suggest? What do the courts think?

Valuation: Companies
UPDATE: What are the main principles in valuing unquoted companies? When might a tax valuation be required? 

CGT: Reliefs, disposal of a business or its assets
UPDATE: 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.

Loss relief (Income Tax) disposal of shares
UPDATE: Share Loss relief allows you to offset a loss made on the disposal of shares against income instead of the normal capital treatment.  

Tax Cases

10% cumulative preference shares were not fixed in dividend rate
In HMRC v Stephen Warshaw [2020] UKUT 0366 the Upper Tribunal (UT) dismissed an appeal HMRC against a claim for Entrepreneurs' Relief: 10% cumulative preferential shares qualified as ordinary share capital.

No excuse: soft drinks industry levy filing fail
In Fortune Foods UK Limited v HMRC [2021] TC07952, a plea of 'ignorance of the new law' was not accepted as a reasonable excuse by the First Tier Tribunal (FTT) when it appealed a late filing penalty for a Soft Drinks Industry Levy return.

Jersey SPV managed and controlled by UK parent
In Development Securities plc & Others v HMRC [2020] EWCA Civ 1705, the Court of Appeal (CA) upheld the First Tier Tribunal's (FTT) decision that Jersey subsidiaries were UK resident due to the control exerted by the UK parent company.

VAT news & cases

R & C Brief 1 (2021): The introduction of the zero rate of VAT for Women’s Sanitary Products
Revenue & Customs Brief 1 (2021): 'The introduction of the zero rate of VAT for Women’s Sanitary Products' confirms that from 1 January 2021 women's sanitary products will be zero-rated.

Consultation: VAT and value shifting
HMRC have opened a new consultation 'VAT and value shifting' inviting views on a proposed revision to the rules for apportioning consideration between supplies with mixed liabilities in a single transaction. 

VAT penalty for cash accounting dismissed
In Michael Robinson v HMRC [2020] TC7951, First Tier Tribunal (FTT) dismissed tax penalties for continued use of cash accounting basis after the withdrawal of cash basis by HMRC on the grounds that this was not a deliberate behaviour.

VAT (subscribers)

When do I have to deregister for VAT?  When can I voluntarily deregister?  What penalties might HMRC issue if I am late notifying them of a mandatory deregistration?

Bad debts: VAT 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
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 Tax Annual 2020

  • Budget 2021 date announced
  • Changes to rates of Welsh Land Transaction Tax 
  • Spotlight 57: Selling future business revenues to a trust
  • That evil quiz
  • Can I appeal that? 
  • Importing goods into GB from January 2021
  • Exporting goods from GB from January 2021  
  • A new business? Start here...
  • Directors' responsibilities and duties
  • EMI: Enterprise Management Incentives: at a glance
  • Pensions: At a glance
  • Structures & Buildings Allowance (SBA): At a glance
  • How to work out the High Income Child Benefit Tax Charge
  • Capital allowances: Disposal values & rules...More


SME Tax Monthly Summary December 2020

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

Come and join our Cloud

Subscribe (and UNLOCK the whole site) A single user annual subscription is £399 (+ VAT).

What do you get?

  • We keep YOU up to date in SME tax.
  • FULL access to www.rossmartin.co.uk: your firm's favourite TAX INTRANET containing over 3,500 actively maintained tax guides, briefings, toolkits and checklists.
  • Want to know more? Commission your own articles and checklists.
  • Structured CPD our detailed SME tax updates "for Advisers Only" provide topical summaries and planning notes our webcasts provide you with structured CPD at your desk.
  • Regular client tax briefings: these cover the latest business and employment tax issues and are designed to assist you plan meetings and improve your client services.