As we gear up for Making Tax Digital (MTD) for Income Tax, one question many are asking is whether or not it would be easier for us to end the tax year on a sensible date, such as 31 March, or maybe, as so many other countries do, make it 31 December, the end of a calendar year. The Office of Tax Simplification (OTS) is exploring the issue in a new review.

At present you may only sign up for HMRC’s MTD for Income Tax pilot if you have a 5 April year-end. Whilst this is ideal for landlords, who generally run to that date, it would be good to know sooner rather than later if parliament has the appetite to change the tax year-end for all sole traders and partnerships. As anyone who has ever tried to do some of the complex calculations knows only too well, changing an accounting period end can be a tricky matter when you have to factor in overlap relief or losses, or simply in the first years of trading. 

HMRC’s Employer Bulletin is just out. It is longer than most editions but well worth a read. We have made our usual summary. In addition, we have an update to Employment-Related Securities (ERS) reporting.

We have new guides to Partnership tax reporting and a guide for actors, plus more updates and our review of topical cases.


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

OTS considers moving the end of the Tax Year 
The Office of Tax Simplification (OTS) has issued a new policy paper ‘Potential for moving the end of the tax year - Scoping document’, offering two options to replace 5 April as the end of the tax year, 31 March or 31 December.

Self Assessment 2020-21 returns: Online filing exclusions 
As for previous years, many taxpayers will be unable to file their Self Assessment returns for the year ended 5 April 2021 online due to software specification issues from HMRC.

Employer Bulletin: June 2021
HMRC have published their Employer Bulletin for June 2021. We summarise the key content for you, with links to our detailed guidance on the topics covered.

G7 agreement on CT and sales tax 
Finance ministers agree to a minimum international Corporate Tax rate of 15% under which multinationals pay tax in each country in which they operate.

US tax investigators receive £80bn budget increase
US President Joe Biden expects that enhanced tax compliance is a better way of increasing tax revenue than raising tax rates

Editor's Pick  

MTD for Income Tax Pilot Tool
NEW: Are you eligible to take part in the MTD Pilot?

When does a partnership exist?
When does a partnership exist? Why does it matter? What are the implications for different taxes?

Partnerships: What's new 2021/2022 
NEW: What's new for partnerships in 2021/2022?

Partnerships: How to prepare partnership and partners tax returns  
How to prepare partnership returns?  How are partnership profits calculated?  How are corporate members of partnerships taxed?  What are the differences between the tax treatment of individual and corporate partners?  Are there anti-avoidance provisions to consider?

Guides and Updates (subscribers) 

Which investment relief: IR, BADR, SEIS or EIS?
What is the difference between Business Asset Disposal Relief (BADR) and Investors' Relief? How do they compare to investments in the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS)? 

Employment-Related Securities: Reporting issues
UPDATE: An online return is required by 6 July following the end of the tax year, including details of any reportable events in the tax year. There are special arrangements for those affected by the Coronavirus pandemic.

Actors: What expenses can I claim? 
NEW: What expenses can Actors claim for tax purposes? Are there any special rules for actors and entertainers? What are the VAT rules?  

Gift Aid
UPDATE: What is Gift Aid? How does it work? What are the rules? 

Accounting periods and tax basis periods
UPDATE: Which date do I choose? Does it matter? Can I change my accounting date?

Recordkeeping & tax: What, how and until when?
How long do your need to keep your books and records for tax? Recordkeeping for Income Tax, VAT, Corporation Tax. What if you lose your records?

De-enveloping Property
UPDATE: you incorporated the property business but now you want to transfer the property to the shareholders. There is no specific tax relief for de-enveloping: the result is that it needs to be carefully planned in order to mitigate tax charges.

Tax Cases 

Taxpayer had ghost account to conceal income
In Roger Whitlock v HMRC [2021] TC08136, the First Tier Tribunal (FTT) held that the appellant had clearly under-declared income from his sole trader business in 2015/16. The fact that the pattern was repeated allowed 'the presumption of continuity' that enabled discovery assessments to be raised for the previous five years.

Taxpayer careless despite legal advice  
In Mas Fabrics Hong Kong Limited v HMRC [2021] TC08097, the First Tier Tribunal (FTT) dismissed an appeal against penalties issued by HMRC following the removal of a relief claimed incorrectly. The taxpayer had not taken reasonable care despite obtaining professional advice.

Leased garage did not lead to non-residential SDLT rates 
In Brandbros Limited v HMRC [2021] TC08126, the First Tier Tribunal (FTT) dismissed an appeal against HMRC closure notices which denied an SDLT refund claimed on the basis that a lease of a garage, purchased as part of a residential property transaction, entered into on the date of completion rendered the transaction subject to lower non-residential rates of SDLT.

VAT Guides

Flat rate scheme
What is the VAT Flat Rate Scheme (FRS)? Who can apply? How do you apply? What are the rules? What are the rules for capital expenditure and pre-registration VAT? 

Goods or services for VAT?
What are goods and what are services for VAT? The answer may have an impact on the time of supply, the place of supply and in some cases the rate of the supply. The answer is not always as straightforward as it may seem.

Accounting for a change in VAT rate
How to account for VAT when the standard rate of VAT increased to 20%

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. 

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 3 June 2021 

  • Making Tax Digital for Income Tax pilot Tool
  • Self-Employment Income Support Scheme (SEISS): fifth grant details
  • Don’t repay your Contractor Loans without taking advice
  • Basement annexe not a separate dwelling for MDR  
  • FTT erred: not all information considered 
  • Entrepreneurs’ Relief denied on guarantee rights 
  • Discovery assessments valid, inaccurate loss claims deliberate
  • Leicester City Council 'sports amendment' out of time
  • College finds partial exemption trumps input VAT recovery
  • Funded education is an economic activity
  • R & C Brief 8 (2021): VAT treatment of public funds received by further education institutions
  • Selling the business: Deferred consideration and earn-outs
  • COVID-19: Taxation of Coronavirus Support Payments
  • Penalties: Deliberate Behaviour
  • Subsistence (self-employed)
  • Buy-to-let ownership: personal v company  ...More

SME Tax Monthly Summary May 2021

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

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