In this issue we try to avoid ‘death by (very long) Agent Update'. HMRC is now issuing these updates monthly, and we try to ‘skip to the good bits’ and bring you the highlights of each issue.

Finance Act 2021 received Royal Assent last week and we are now working through our guides and able to finalise our 2021 updates. That’s always an interesting task and we will be featuring updated guides weekly over the next month or so. 

Our case highlights this week bring more topical cases from the First Tier Tribunal (FTT). We look at the tax treatment of the write-off of a connected company loan. Rather than go down the distribution route, HMRC assessed a loan to a participator. The FTT discovered bookkeeping errors: the case is something of a cautionary tale. There is also another IR35 case, one involving a Personal Service Company (PSC) rather than a media presenter, for a change.

In terms of highlights of what’s new in HMRC, it says that it is reviving the agent dedicated phone line, and also  running a new pilot for an enhanced agent services account. Another matter, not reported by HMRC, but according to the Institute of Chartered Accountants in England and Wales (ICAEW), is that HMRC is having difficulties automatically processing Self Assessment returns when people put their SEISS grant claims in the wrong boxes.

We have a new guide to the capital allowances Super Deduction plus more updates as 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

Finance Bill 2021: Royal Assent 
Finance Bill 2021 received Royal Assent on 10 June 2021 and became Finance Act 2021. 

Agent Update: June 2021
HMRC have issued their Agent Update for June 2021. We have summarised the key content for you with links to our detailed guidance on the topics covered. 

HMRC relaunch agent dedicated line
HMRC have announced a trial relaunch of the Agent Dedicated Line (ADL) from 14 June 2021, providing priority access for agents.

Slight drop in Corporate Criminal Offences figures 
HMRC data on cases investigated and reviewed under the Corporate Criminal Offences (CCO) for the failure to prevent the facilitation of tax evasion legislation.

Spotlight 58: Unfunded pension arrangements
Spotlight 58 concerns a tax scheme aimed at company owners exploiting pension benefits.

SEISS reporting errors cause Self Assessment delays
Reporting in the wrong box! Inconsistencies in recording SEISS grants can mean that HMRC is unable to automatically correct and process the returns.

Editor's Pick  

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

Super-deduction & First Year Allowances
NEW: What is the new Super-deduction allowance? When does it apply and what is the rate of allowance? What other First Year Allowances (FYAs) are available?

Landlords: Capital expenditure allowances - signpost
What allowances can I claim in my property rental business?

Guides and Updates (subscribers) 

Construction Industry Scheme (CIS)
UPDATE: Finance Act 2021 changed the rules and threshold for deemed contractors and for deductions for materials.

CIS: False registration penalty
UPDATE: Finance Act 2021 extends the False Registration penalty, well and truly 'piercing' any corporate veil, a penalty may now apply to tax agents, as well as directors or company officers.

Disguised remuneration loan charge
UPDATE: What is disguised remuneration? What is the loan charge? When does the loan charge apply? Will the loan charge affect me?

Loan Relationships
How are loans made to and by a company taxed? What are the rules when loans are written down? What is the difference between a trading and non-trading loan relationship? What are the rules for connected party loans?

Close company loans toolkit (loans to participators)
This guide takes a detailed look at the Corporation Tax treatment when a Close Company makes a loan to a participator (director-shareholder). It also provides links to our guides for individuals on the making of loans to companies.

COVID-19: Taxation of Coronavirus support payments
This guide summarises the tax treatment of grants paid during the Coronavirus pandemic.

Tax Cases 

Loan write-off neither allowable nor loan to participator 
In WT Banks & Co (Farming) Ltd v HMRC [2021] TC08124, the First Tier Tribunal (FTT) found amounts paid by one company to another with a common shareholder were neither non-trading loan relationship debits when written off, nor loans to the controlling participator of the lender.

Upper Tribunal confirms IR35 applies to PSC 
In Northern Light Solutions Ltd v HMRC [2021] UKUT134, the Upper Tribunal (UT) agreed that IR35 applied to a Personal Service Company (PSC). The control and mutuality tests were met and an obligation for personal performance made the right of substitution almost theoretical.

VAT News & Cases 

Deferred your VAT? Take action now
VAT registered businesses were able to defer VAT payments, due to the arrival of Covid-19 for the periods from 20 March 2020 to 30 June 2020. Businesses that have not repaid this VAT are required to take action by 21 June 2021 to avoid a penalty.

HMRC to cancel direct debits if no email address 
HMRC will be writing to VAT-registered businesses this month to tell them that any VAT direct debits will be cancelled if HMRC does not hold an email address for them.

R & C Brief 9 (2021): VAT liability of daycare services supplied by private bodies in England and Wales 
HMRC have published Revenue & Customs Brief 9 (2021): ‘VAT liability of daycare services supplied by private bodies in England and Wales’ following recent Court of Appeal cases.

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 Update 10 June 2021

  • OTS considers moving the end of the Tax Year 
  • Self Assessment 2020-21 returns: Online filing exclusions 
  • Employer Bulletin: June 2021
  • G7 agreement on CT and sales tax 
  • US tax investigators receive £80bn budget increase
  • Taxpayer had ghost account to conceal income
  • Taxpayer careless despite legal advice  
  • Leased garage did not lead to non-residential SDLT rates 
  • MTD for Income Tax Pilot Tool 
  • Partnerships: What's new 2021/2022 
  • Employment-Related Securities: Reporting issues
  • Actors: What expenses can I claim? 
  • Accounting periods and tax basis periods
  • Recordkeeping & tax: What, how and until when?
  • Accounting for a change in VAT rate  ...More

SME Tax Monthly Summary May 2021

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

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