This week we bring some good news if you were unable to settle your 31 January Self Assessment liability by 28 February. There'll be no 5% late-payment penalty as long as you pay by 1 April 2021. We have another warning on more phishing emails, new VtaxP toolkits, updates for landlords (including non-resident landlord companies), and a review of what's been happening in the courts.

Two cases in particular caught my eye this week. They both cover employment status appeals and the result of each was determined, not by any written contract, but by hypothetical contracts constructed by the courts. 

Taxi-tech company Uber lost its appeal in the Supreme Court against three drivers who had claimed they were workers and not self employed. The court found that Uber exerted considerable control over its drivers, and as a result there was no way that a driver could realistically make a profit under the arrangement; a test of the ability to make a profit (or loss) being one of the most useful measures in many employment status cases. A key feature of the case was the lack of contractual documentation between the parties. This meant the court could only establish the working relationship through the facts it was presented with. There is a twist to the story, VAT. The company’s US accounts indicate that Uber is also facing a large VAT bill as a result of this outcome. Paid fares are the company’s taxable turnover and not that of its drivers.

IR35 is unusual because it involves the court or tribunal trying to ascertain the terms of a hypothetical contract that does not exist in reality. In HMRC’s appeal against TV and radio presenter Kaye Adams’ employment status, the Upper Tribunal (UT) constructed the terms of this hypothetical contract from the facts in order to then work through the contract's terms and determine employment status. It found for the taxpayer. Deciding factors in her case being mutuality of obligation and the fact that she was already self employed in her own right. Neither of these issues, it has to be said, are dealt with particularly well by HMRC's check employment status tool. 

HMRC’s SEISS statistics make quite grim reading. 65% of the self-employed population who were eligible to make a claim did so. That means 2.2 million people made a claim, 1.1 million could have claimed but did not, and a further 1.7 million were ineligible to claim and so we cannot tell if they wanted to or not. Covid-19 has not been fair on many levels.

Finally, can I introduce our updated Virtual Tax Partner 'VtaxP' toolkits. If you have not seen these before, these are an original set of tax toolkits, and they are all slightly different. The thinking behind them is that they are written for someone like me. I need to understand difficult rules, but I am working on lots of different things and I don't want to go back and constantly re-check the legislation. Our toolkits concentrate on areas where we receive a lot of frequently asked questions. We will be adding new toolkits week by week.

The Budget is next week and the end of another tax year is in sight. We are not making any predictions. 

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

Self Assessment late payment penalties delayed
HMRC have announced that Self Assessment taxpayers will not be charged the usual 5% late payment penalty if they pay their tax or set up a payment plan by 1 April 2021.

Advisory fuel rates from 1 March 2021
HMRC have published new advisory fuel rates for company car drivers which apply from 1 March 2021. Most remain unchanged from the rates applicable for the previous three months.

Phishing email: 'Your Self-employed Grant for March 2021 has been Approved'
If you are self-employed then you should be careful not to click on any phishing emails. The following email was received on Monday has the header, 'Your Self-employed Grant for March 2021 has been Approved.'  

HMRC publish SEISS 3 statistics
HMRC have published ‘Self-Employment Income Support Scheme statistics: February 2021’. It shows that 2.2 million (65%) of the potentially eligible self-employed population had claimed on the Scheme.

COVID-19: VAT payments
UPDATE: COVID-19 VAT payment deferral measures for VAT registered businesses.

Editor's Pick

VtaxP Toolkits
This range of tax diagnostic tools is designed to help you solve some really complicated tax questions in a matter of minutes. We cover CGT Business Asset Disposal relief, the TAAR, the anti-avoidance rule when you close down your company, R & D Relief. 

Reorganisations Zone
Trying to separate a rental property from a trading activity? Forming a new group? Shareholders wish to split up the business? Confused? Start here. This series of practical tax guides explore the tax treatment of different kinds of company reorganisation and provides step by step instructions with templates for tax clearance.

Guides and Updates (subscribers)

Off-Payroll Working: PSCs & Private Sector Engagers
New rules from 6 April 2021. How to account for Off-Payroll Working? Do you still need a Personal Service Company? What are your options?

Non-resident landlords and offshore investors index
What taxes are relevant for non-resident property investors?  What are the reporting requirements for non-resident investors? What are the transitional rules for company landlords now that they are in corporation tax

Personal Tax Account
UPDATE: What is a Personal Tax Account? How do I get one? What can I do with it?

MTD: Toolkit for accountants
UPDATE: What is the current timetable for Making Tax Digital? How will it work? Which clients will be excluded? What planning needs to be undertaken?   

Short-life assets
UPDATE: What is a short life asset? How to plan for short-life assets, what can be included and what are the exceptions?  

Disposal values & rules
UPDATE: What is a disposal for capital allowance purposes? What is the tax consequence of a disposal? What value needs to be accounted for? 

Tax Cases

Uber's drivers are not self-employed
The Supreme Court has confirmed that Uber's drivers are workers and not self-employed. The taxi-tech business failed to persuade judges in an employment status appeal that it acted merely as an agent when it supplied enabling technology to the drivers via its App as it exerted such complete control over the way in which the driver worked. The company's VAT position is now under consideration.

BBC presenter not an IR35 employee
In HMRC v Atholl House Productions Limited [2021] UT 0037, the Upper Tribunal (UT) upheld the First Tier Tribunal's (FTT) decision that the TV and radio presenter, Kaye Adams, was an independent contractor and not caught by IR35.


CIS: Construction Industry reverse charge
What is the CIS reverse charge? How do you account for VAT? Can you still cash account for VAT? What administrative changes do I need in order to operate the reverse charge? 

Capital Goods Scheme
What is the VAT Capital Goods Scheme (CGS)? When do I use it? How does it work? 

Ancillary supply not separate for VAT
In The Lilias Graham Trust v HMRC [2021] UT 36, the Upper Tribunal (UT) upheld the FTT's decision that a charity's single supply was exempt for VAT as welfare services and the integral supply of accommodation could not be standard-rated.

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 18 February 2021

  • HMRC briefing: supporting organisations on Off-Payroll Working
  • Agent Update February 2021
  • SME Brexit Support: just for the biggest small business
  • COVID-19: Loan funding
  • Entrepreneurs’ Relief denied for trust share disposal
  • Capital allowance claims on power plant upheld but not extended  
  • Directors: Tax Planning Toolkit 2020/2021 
  • CIS: Construction Industry reverse charge
  • Who is an employer for PAYE and NICs?
  • VtaxP Toolkits
  • Influencers: What expenses can I claim?
  • Woodlands: Overview ...More


SME Tax Monthly Summary January 2021

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

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