As we head towards 31st January, don’t forget to put in a Time to Pay agreement with HMRC if you are unable to settle your tax bill. We have updated our guides to ‘Reasonable excuse’ and ‘Insufficiency of funds’ this week. It is probably best to review these before the end of the month if it is likely that you or your clients are going to have any potential filing or late payment tax failure.

Our case reports this week, cover a range of popular topics, including company car benefits in kind, Entrepreneurs' Relief (now BADR), Research & Development Relief (R&D) and VAT. Common to all the direct tax cases is the issue of poor underlying record-keeping. By record-keeping, I am not referring to records in terms of the debits and credits of day-to-day bookkeeping, rather to the range of other types of records that are required to evidence particular areas of tax compliance and which also provide vital evidence of your tax claim to the tribunal. It is overly simplistic to think that once you have set up your online accounting system you are compliant. Record-keeping obligations take many different shapes and form, and now maybe a good time to review those with your accountant or tax adviser. 

We have also summarised the Disguised Remuneration Cartref judicial review and have further details on spreading the Loan Charge. Do visit our Disguised Remuneration Zone for full details of our guidance on these topics.

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

Consultation on Small Brewer’s Relief
HM Treasury has published ‘Small Brewers Relief (SBR): technical consultation’. The consultation calls for further industry input on technical issues surrounding the first and second-stage reviews.

Employers NIC holiday for employers of veterans
HMRC have concluded their consultation entitled 'Supporting veterans' transition into civilian life through employment' and released both comments and draft legislation for further consultation.

That evil quiz: the answers
Our 2020 Evil Quiz lived up to its reputation. No one managed to answer all the questions correctly. To put you out of your misery, here are the answers. 

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

Covid-19: Coronavirus Job Retention Scheme (CJRS) from 1 November 2020
A freeview guide to the CJRS from 1 November 2020.

Editor's Pick (subscribers)

COVID-19: Landlords & tenants
UPDATE: Landlords and tenants: the government measures to support landlords and tenants during the Coronavirus crisis.

Website and e-commerce costs 
NEW: Can I claim tax relief for costs relating to designing, creating, and maintaining a website? What needs to be considered?

Grounds for Appeal: Reasonable Excuse
UPDATE: We compare HMRC's latest guidance with case decisions and consider current issues including the knock-on effects of the coronavirus for professional firms and their clients. 

Guides and Updates (subscribers)

Disguised remuneration loan charge  
UPDATE: Further guidance from HMRC on spreading the Loan Charge. Plus, the impact of the independent review on the Cartref judicial review case (see below for case summary).

UPDATE: Is sponsorship an allowable expense for tax purposes? When is it disallowed? What is the case law?

Board and lodging adjustments
UPDATE: What private use adjustment should be made for board and lodging where a taxpayer lives at the business premises?

Grounds for Appeal: Insufficiency of Funds
UPDATE: Can't pay tax on time? When can insufficiency of funds be claimed as a reasonable excuse? What are the alternatives?

Time to Pay
UPDATE: How to make an agreement to spread payment of your tax liability with HMRC

Tax Cases

No CGT Entrepreneurs' Relief for former director
In Peter Kennedy v HMRC [2021] TC7987, the First Tier Tribunal (FTT) dismissed a claim for Entrepreneurs’ Relief by a shareholder was not an employee or officer of the company for the year prior to the share disposals.

R&D claim fails key criteria
In Hadee Engineering Co Ltd v HMRC [2020] TC07969, the First Tier Tribunal (FTT) upheld the appeal in part for closure notices regarding R&D claim enquiries. In the main, the appellant failed to meet the qualifying criteria.

Sports show cars were available for private use
In Tim Norton Motor Services v HMRC [2020] TC7973, the fact that a Maserati and Ford GT40 had a Statutory Off-Road Notice (SORN) and management permission was required for any private use, were not sufficient as restrictions to prevent private use and a taxable car benefit applied.

Judicial Review: Loan Charge not in breach of Human Rights Act
In Cartref Care Home Ltd & Ors, R (on application of) v HMRC [2020] EWCA Civ 1744, the Court of Appeal refused permission to appeal against a judicial review that found that imposition of the loan charge on outstanding loans did not breach the Human Rights Act 1998.

Non-domiciled taxpayer did not transfer assets abroad
In HMRC v Andreas Rialas [2019] UKUT 0140, the Upper Tribunal (UT) dismissed an appeal by HMRC, finding the Transfer of Assets Abroad rules did not apply to dividend income as Mr Rialas was not the transferor, or sufficiently involved in the transfer, of shares acquired from his former business partner by his family trust.

VAT news & cases

VAT cost-sharing exemptions limited to same-state entities
In Kaplan International Colleges UK Ltd (KIC) v HMRC (C 77/19), the European Court of Justice (CJEU) ruled that HMRC was correct to deny a cost-sharing exemption to its subsidiary in Hong Kong.

No VAT deduction if importer not owner
In Weindel Logistik Service (Weindel) VAT case C-621/19, the European Court of Justice (CJEU) ruled that there is no right to deduct import VAT if the importer of record is not the owner of the goods.

ECJ allows input VAT for goods/services on abandoned projects
In ITH Comercial Timişoara (ITH) VAT case C-734/19, the European Court of Justice (CJEU) ruled that the right to deduct input VAT on goods and services acquired with a view to carrying out taxable operations is maintained when the investment projects initially planned have been abandoned due to circumstances beyond the control of the taxable person.

VAT (subscribers)

Registering for VAT
UPDATE: How and when to register for and charge VAT? VAT registration limits, VAT rules after Brexit. Plus, what penalties might HMRC issue for late notification of registration?

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

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 7 January 2021

  • Budget 2021: representations wanted
  • Just how are our taxes are raised and spent?
  • COVID-19: £4.6bn new grants
  • COVID-19: Government Support Tracker
  • 10% cumulative preference shares were not fixed in dividend rate
  • No excuse: soft drinks industry levy filing fail
  • Jersey SPV managed and controlled by UK parent
  • R & C Brief 1 (2021): The introduction of the zero rate of VAT for Women’s Sanitary Products
  • Consultation: VAT and value shifting
  • VAT penalty for cash accounting dismissed
  • Loss relief (Income Tax) disposal of shares...More


SME Tax Monthly Summary December 2020

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

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