I have been updating our Construction Industry Scheme (CIS) Reverse Charge VAT guide over the last day or two. The new regime is due to commence in April, and to help explain some of the trickier aspects of the proposed regime we have added some examples. Construction firms should now be making changes to their VAT accounting systems and training staff as necessary. There is a lot to take on board.

If CIS VAT not enough, we also have an update to the main CIS guide, with measures proposed for Finance Bill 2021, all designed to combat fraud in the industry. A new rule on deduction for materials on payments to sub-contractors is probably the main one to watch as a subcontrator; there are changes to the criteria which makes you a deemed contractor, these apply for larger clients.

This week we also feature a range of useful tax planning guides for the self employed looking at profits, losses and tax risk. Talking of risk, we are also highlighting some of the freeview articles that attract the most comments. It is unsurprising to see that the High Income Child Benefit Charge (HICBC) seems to be one of the most commented items on the site. Also changing in April are the off-payroll working rules, so worth reading up on those too if you have the time.

In our review of cases, the court of appeal had decided that electronic newspapers are not the same as paper, the Upper Tribunal meanwhile has been looking at Ceroc dancing tuition. It turns out that this is not educational, but a purely recreational activity. We also have another case on shares carrying preferential rights, this was enough to disqualify them from EIS relief. 

If you have any queries do post them on our Virtual Tax Partner advice service at www.VtaxP.co.uk scroll down for more news and updates.

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

Scottish Budget 2021: Summary
Scottish Finance Secretary Kate Forbes announced the draft Budget for 2021-22 on 28 January 2021.

Consultation: Tax and the use of third-party data 
The Office for Tax Simplification (OTS) has published 'Third-party data reporting review - call for evidence'. It wants to hear from individuals, their agents and potential data providers about how tax can be made easier through the better use of third-party data. 

Brexit: VAT implications of NI trade
The Northern Ireland Protocol means that while the UK has transitioned out of the EU, Northern Ireland (NI) has kept closer links to the EU. What is the impact of those links on trade between Northern Ireland and the rest of the UK?

Freeview Guides

Restricting mortgage interest relief (freeview)
How is mortgage interest relieved for landlords? A freeview guide considering the restricted relief available to buy-to-let landlords for the costs of finance, such as mortgage interest.

Off-Payroll Working: At a glance
What is Off-Payroll Working? What is IR35? What are the tax rules for Off-Payroll Working or IR35? How do you check employment status? What is a personal service company?

High-Income Child Benefit Charge
How do you calculate this charge? How do you report it?

Editor's Pick

Construction Industry Scheme VAT Reverse Charge
UPDATE: We have picked our way through HMRC's guidance to provide a super practical guide with lots of examples as to how the new regime will work.

COVID-19: Company directors & shareholders
UPDATE: Many small companies are run by just one or two directors and have no other employees. What government financial support is available to directors/shareholders during the coronavirus crisis?

Loan relationships 
UPDATE: What are the rules when loans are written down or written off? What are the rules for connected party loans? What are the rules for interest-free loans? 

Guides and Updates (subscribers)

Construction Industry Scheme
UPDATE: new measures propose restrictions for deductions for materials there are changes to the deemed contractor rules.

Self-employed: Extracting profits
What tax planning tips will help you to run a tax-efficient business? We review your different options.

Losses, trade losses and sideways relief
You are making a loss. What can you do with it? Can you carry it back, forwards or sideways? 

Self-employed: Tax risk Review
Some businesses are more likely to be investigated for tax purposes than others. It is sensible to try to assess tax risk, and build up a profile for each business. It may save your client thousands of pounds in tax penalties.

Tax Cases

EIS relief denied: shares had preferential rights
In Foojit Ltd v HMRC [2021] UKUT 0014, the Upper Tribunal (UT) confirmed that HMRC were right to refuse to issue compliance certificates allowing EIS relief on shares with preferential dividend rights. Although advanced assurance had been given, the company later changed its articles.

News Corp e-newspapers were standard rated for VAT 
In HMRC v News Corp UK & Ireland Limited [2021] EWCA Civ 91, the Court of Appeal reversed the decision made by the Upper Tribunal (UT), finding that electronic versions of newspapers should be standard rated for VAT.

No VAT teaching exemption for Ceroc dancing
In HMRC v Anna Cook [2021] UKUT 0015, the Upper Tribunal (UT) allowed an appeal by HMRC against the FTT decision to treat Ceroc dance classes as exempt from VAT as the supply of private tuition in a subject ordinarily taught at school or university.

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 28 January 2021

  • 2019-20 Tax return penalties delayed to 28 February
  • Employer Bulletin: UK Transition Special Edition 
  • Agent Update: January 2021 Brexit edition 
  • Companies House paused strike-off again
  • SDLT: Residential property higher rate: At a glance
  • No penalties for HMRC's bad advice and delays
  • Reliance on HMRC’s decision for sister company not reasonable excuse
  • No excuse for failure to action Follower Notice
  • VAT on loan: far from best judgement
  • Insulated roofing system not insulation for VAT
  • VAT penalties: lack of evidence 
  • NHS Pensions: Scheme pays elections ...More


SME Tax Monthly Summary January 2021

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

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