This week we take a closer look at the criteria for the sign up to the Making Tax Digital (MTD) for Income Tax pilot, we summarise details of the fifth Self-Employment Income Support Scheme (SEISS) grant and we report on some bad news for people with unsettled disguised remuneration loans.

Some tax advisers might be slightly taken aback to find that HMRC is apparently recommending 'a legal adviser or solicitor' as the person to consult if you have 'issues' with Inheritance Tax (IHT) and taxes on buying and selling property rather than a tax adviser. This apparent bias is found in HMRC's 'Appoint a tax agent' guide. Happily the same bias does not appear on the guidance for new residential Capital Gains Tax (CGT) reporting. I would think that this all stems from the fact that the basic tax agent authority form 64-8 does not cover capital taxes or IHT, and although HMRC has always accepted that if you are an agent for Income Tax you are also an agent for CGT, up until 2014 probate was an activity legally reserved to lawyers.

It may be very difficult to find clients who wish to sign up for the MTD for Income Tax pilot. HMRC's eligibility criteria are extremely narrow. Check out our new Tool below and see if you can take part.

More news and interesting cases below. 

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

Making Tax Digital for Income Tax pilot Tool
Are you eligible to take part in HMRC's pilot for the new service that commences in 2023?

Self-Employment Income Support Scheme (SEISS): fifth grant details
HMRC have published a policy paper giving details of the fifth Self-Employment Income Support Scheme (SEISS) grant which will be available from late July 2021. 

Don’t repay your Contractor Loans without taking advice 
Recent reports suggest that some Disguised Remuneration scheme and Contractor loans are being called in for repayment following changes to the lenders. Taxpayers affected are advised to seek specialist advice before agreeing to repay their loans. 

Editor's Pick  

Selling the business: Deferred consideration and earn-outs
When a company is sold via a share purchase the buyer may hold back or defer paying the whole of the purchase price until certain agreed conditions are satisfied or profit targets are met.

Subsistence (self-employed)
What is subsistence? Is subsistence allowable for tax? What are the considerations?

Buy-to-let ownership: personal v company?
What is the most tax efficient option to own buy-to-let property?  Personally or via a company? What are the income and corporation tax, CGT, IHT, ATED, SDLT, or VAT issues? With tips profit extraction and other planning points, with case studies and links to further guidance. 

Guides and Updates (subscribers) 

COVID-19: Taxation of Coronavirus Support Payments
UPDATE: This guide summarises the tax treatment of grants paid during the Coronavirus pandemic.

Penalties: Deliberate Behaviour
UPDATE: What penalties apply to deliberate behaviour? What is Deliberate Behaviour?

Wholly and exclusively…toolkit
What does 'wholly and exclusively' mean? How do you determine if a cost is wholly and exclusively incurred for the purpose of a trade? What cases are there? 

Non-Domiciles Tax Toolkit
This toolkit provides an outline of the tax compliance issues for non-UK domiciled (non-dom) individuals.

Gardens: selling or developing
What are the tax consequences of selling a garden for development purposes? What if the owner develops the garden?

Tax Cases 

Basement annexe not a separate dwelling for MDR  
In James and Barbara Mobey v HMRC [2021] TC08103, the First Tier Tribunal (FTT) dismissed an appeal against HMRC closure notices denying Multiple Dwellings Relief on the purchase of a substantial property with a basement annexe. The annexe did not offer the required facilities to be a dwelling in its own right and compromised the privacy of the main house.

FTT erred: not all information considered 
In Golamreza Qolaminejite (aka Anthony Cooper) v HMRC [2021] UKUT 0118, the Upper Tribunal (UT) found the FTT had not considered all the relevant evidence in determining that unexplained receipts were subject to tax as business income.  It also concluded that the FTT had considered a contract appropriately and that an input VAT claim was blocked as there was no evidence of a supply being made.

Entrepreneurs’ Relief denied on guarantee rights 
In John Tenconi v HMRC [2021] TC08088 the First Tier Tribunal (FTT) found that the transfer of a beneficial interest in guarantee rights was a chargeable disposal subject to Capital Gains Tax and the rights could not be considered shares for the purposes of Entrepreneurs’ Relief.

Discovery assessments valid, inaccurate loss claims deliberate
In Anthony Outram & Ross Outram v HMRC [2021] TC8107, the First Tier Tribunal (FTT) dismissed appeals against discovery assessments relating to a tax avoidance trading loss scheme. The taxpayers were not trading, deliberately filed inaccurate returns and the discovery assessments were valid.

VAT News & Cases 

R & C Brief 8 (2021): VAT treatment of public funds received by further education institutions
HMRC have published Revenue & Customs Brief 8 (2021): 'VAT treatment of public funds received by further education institutions' which provides interim guidance following the Colchester Institute Corporation decision until the position is further tested. 

Funded education is an economic activity
In Colchester Institute Corporation v HMRC [2020] UKUT 0368, the Upper Tribunal held that funding provided to a college by government agencies constitutes an economic activity.

College finds partial exemption trumps input VAT recovery 
In Kingston Maurward College (KMC) v HMRC [2021] TC8108, the First Tier Tribunal (FTT) found that the provision of free education/vocational training to students where funding is provided by government agencies is an economic supply of services for consideration. KMC was entitled to input tax recovery but failed under the partial exemption rules.

Leicester City Council 'sports amendment' out of time
In Leicester City Council v HMRC [2021] TC8060, the First Tier Tribunal (FTT) dismissed the Council's appeal that a VAT claim was an amendment to an earlier claim.  The claim was considered a new claim and thus was made out of time.

VAT Guides

Education & VAT
What rate of VAT applies to education? What sort of services are classed as education? What do you do if you have multiple supplies including education? What cases are there on VAT and education?

Mixed supplies: Single or Multiple supply?
Is a mixed supply a single or multiple supply for VAT purposes? What tests and case law apply?

Transfer of a going concern (TOGC)
What is a TOGC? What conditions must be met? What are the consequences of a TOGC? What case law is there? 

Tax Toolkits 

Tax Tools
Be a winner with our game-changing tax diagnostics tools for Business Asset Disposal Relief, SDLT & annexes/subsidiary properties, Company reorganisations, R & D Zone and TAAR on winding up. 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 27 May 2021 

  • Statistics: EIS, SEIS and SITR
  • Trusts and Estates: What’s New? May 2021 
  • OTS review of CGT: Simplifying practical, technical and administrative issues 
  • Lump-sum retirement scheme for farmers: Consultation
  • Advisory fuel rates from 1 June 2021 
  • ECJ rules that Amazon did not underpay tax by €250 million
  • No evidence of mileage: No deduction allowed
  • No ER for partnership preparing to trade  
  • MDR unavailable on annexe as not a separate dwelling 
  • Morrison tastes £1m VAT defeat as snack bars are not cakes 
  • R & C Brief 7 (2021): VAT liability of charging electric vehicles
  • Index to reorganisations and demergers
  • Finance Bill Tax Update and Rolling Planner 2021-22
  • EMI: Enterprise Management Incentives
  • SDLT: Multiple Dwellings Relief for Annexes Tool
  • When can a company be reinstated?
  • Management recharges (holding companies)
  • NEW CPD: Agricultural Property Relief
  • NEW CPD: IHT: Transferable Nil Rate Band ...More


SME Tax Monthly Summary May 2021

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

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