Nichola's SME Tax W-update 26 August 2021

Hello

As we near the final bank holiday of the year we bring you a bank holiday bumper tax web-update. 

The national lorry driver shortage has inspired us to create a new tax guide for lorry drivers (or their accountants). We now have 19 guides that deal with different trades and professions, from Accountants to Wood Owners. If you would like to commission a guide, do let us know.

House sales may have slumped in July following the end of the reduction in the Stamp Duty Land Tax (SDLT) nil-rate band, but Stamp Taxes remain a hot topic. HMRC has brought out another of their Stamp Taxes news and we have converted this into our deluxe version. We continue to analyse SDLT Multiple Dwellings Relief and annexes decisions. These rules catch out a lot of house buyers, and as a result we have developed a tool that determines whether your annex will qualify for relief or not, and if so, which type. We have also reviewed another SDLT case where over 15 acres of woodland qualified as the grounds of a residential property and proved expensive in terms of SDLT..

SDLT can often be confusing but the Employment Related Securities (ERS) regime in Part 7 ITEPA 2003 is something else altogether. The starting point is that Part 7 is actually anti-avoidance legislation, notwithstanding that we all are forced to work with it on a day-to-day basis when there is no actual tax avoidance in mind. Accountants and advisers may be interested in the result of an ERS decision by the Scottish Court of Session this week. A company gave an adviser share options in lieu of his fees. The company later got into difficulties and the adviser became a director and the options were replaced with a different and less valuable option award. Two out of three judges found that the ERS regime did not apply.

Interesting news that did not make it into our newswire this week is as follows:

Interesting news that did make it: read on.

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Back soon 

Nichola Ross Martin FCA CTA (Fellow)
Tax Director

www.rossmartin.co.uk

Your Virtual Tax Partner® online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.

Quick News (Freeview)

Tax bodies urge re-think on timing of MTD for Income Tax
The leading professional bodies have written to the Financial Secretary of the Treasury asking the government to reconsider the timing of proposals to implement a change to tax basis periods alongside the introduction of Making Tax Digital (MTD) for Income Tax in April 2023.

HMRC update List 3, tax-relief on subscriptions to approved organisations and societies
There do not appear to be any newly added bodies for 2021, 2020 was something of a bumper year and even includes a Berlin-based German IT body.

Advisory fuel rates from 1 September 2021  
HMRC have published new advisory fuel rates for company car drivers which apply from 1 September 2021. Petrol and diesel rates have increased from the rates applicable for the previous three months.

Film industry snaps up 50% of creative sector tax relief 
HMRC has released official statistics covering the creative industries tax reliefs. For the year ending March 2021, a total of £1.31 billion was paid out across the segment with nearly 76% paid out to the film and TV sectors.

Tax Chat

Get tax-fit with our Virtual Tax Partner pre-conference tax workouts!
Our first ever Virtual Tax Partner 'VtaxP' practical tax conference takes place over two half-days on 12-13 October 2021. Buy your early bird tickets now to gain access to our pre-conference tax workouts.

Tax Poll: Should the chancellor increase the £150 annual staff parties (or functions) limit?
The current annual limit on the provision of Tax-free staff parties and events by an employer last increased from £75 to £150 in 2003. 

An Inspector calls

Offshore Disclosures: Penalties are coming 
HMRC are now starting the process for issuing penalty notices for disclosures made under the Worldwide Disclosure Facility (WDF) where HMRC issued protective assessments prior to 5 April 2021.

Uncertain Tax Treatment guidance released
HMRC have released guidance to accompany the draft legislation that they released which covers Uncertain Tax Treatment (UTT) for large businesses.

Editor's Pick  

Stamp Taxes Update August 2021
NEW: This is our enhanced version of HMRC's Stamp Taxes News with links to our guides and SDLT tools. 

Lorry Drivers: What expenses can I claim?
NEW: A guide outlining what expenses self-employed Lorry Drivers can claim for tax purposes as well as details about what expenses and allowances employed lorry drivers can claim.

Guides and Updates (subscribers) 

Self Assessment

Sales/turnover: Tax compliance
UPDATE: All accounts, whatever the size of the business, must be prepared according to Generally Accepted Accounting Principles (GAAP) unless the business chooses to use cash accounting. This requirement means that you may need to include some sales income in your accounts earlier than you might think.

Directors & Companies

EIS: Enterprise Investment Scheme
UPDATE: What are the requirements for claiming tax relief as an investor?

Close company loan 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. 

Capital allowances

Vehicles (4 wheels): Allowances
What capital allowances are available for vehicles? How does HMRC classify what is a car or what is a van? 

Employers

Pool cars
UPDATE: Is it still worth trying to adhere to absurdly strict pool car PAYE rules when you could just provide an ultra-low emission vehicle to named staff members?

Scale rates, bespoke rates and fixed-rate expenses
UPDATE: What expense allowances can be paid to employees? What are HMRC's scale rate or bespoke scale rates?

Employment-Related Securities & Share Schemes 
UPDATE: What are the tax consequences when a company gives shares to an employee or director? What are employment-related securities? What is best: shares or share options? How do you set up a share scheme?

Private Client & Estate Planning

Client Briefing: Making gifts & IHT
UPDATE: What gifts can you make without triggering Inheritance Tax (IHT)? What are the rules on making tax-effective gifts for IHT purposes?

Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of shares or securities in a company
UPDATE: When can you claim Business Asset Disposal Relief (BADR) on a share sale? What is the rate of Business Asset Disposal Relief (Entrepreneurs' Relief)? How to claim BADR. What case law is there on BADR?

Land & Property

Welsh LTT v SDLT: Comparing the rates and additional dwellings charge
Wales has introduced the Land Transaction Tax (LTT), its own version of Stamp Duty Land Tax (SDLT), effective since 1 April 2018. Whilst the rules are similar, there are some key differences. Since 1 April 2016, the cost of acquiring additional dwellings and the cost for a company in acquiring a dwelling have increased by an enhanced land tax charge.

Buying a property with an annexe? Use our Stamp Duty Land Tax tool
When you acquire two or more dwellings as part of the same transaction or as linked transactions a claim for Stamp Duty Land Tax (SDLT) Multiple Dwellings Relief (MDR) may well be possible.

Tax Cases 

No SDLT Multiple Dwelling Relief for annexe 
In John Mason v HMRC [2021] TC08216, the First Tier Tribunal (FTT) concluded that a main house and annexe represented a single dwelling, dismissing the appellants claim for Multiple Dwellings Relief (MDR) as the annexe did not have kitchen facilities and was only accessible with close proximity to the main house.

Interpretation of Nil Rate Band clause reduces legacy to nil 
In Royal Commonwealth Society for the Blind v John Wayland Beasant and Benjamin How Davies (as personal representative of the Estate of Audrey Arkell deceased) [2021] EWHC 2315, the High Court interpreted a nil rate band clause in a will so as to cancel a gift to an individual and increase the amount left to charity.

SDLT on residential property despite woodland and 15 acres  
In The How Development 1 Ltd v HMRC [2021] TC8194, the First Tier Tribunal (FTT) determined that the purchase of a substantial property and grounds consisted entirely of residential property and was subject to higher residential rates of Stamp Duty Land Tax (SDLT).

Revenue Scotland asks Tribunal to award expenses to taxpayer                    
In Wind Energy Renewables LLP v Revenue Scotland [2021] FTSTC 2, Revenue Scotland's seemingly altruistic application to have the appellant awarded expenses was really an attempt to pay only a nominal sum. The Tribunal agreed with the appellant's opposition and decided in their favour.

Director’s share options were not Employment Related Securities 
In Vermilion Holdings Limited v HMRC [2021] CSIH 45, the Inner House of the Court of Session found that replacement share options issued to a director were not made available by reason of his employment.  

VAT News, Cases & Guides

Just 43 items required to make a PESM proposal 
HMRC have launched a new online service for VAT registered businesses to apply for a Partial Exemption Special Method (PESM). This is accompanied by an updated checklist of information that should be provided with applications.

R & C Brief 11 (2021): VAT liability of Coronavirus (COVID-19) testing services 
HMRC have published Revenue & Customs Brief 11 (2021): ‘VAT liability of Coronavirus (COVID-19) testing services, which explains the VAT treatment of COVID-19 tests.

Goods or services for VAT?
UPDATE: 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.

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 19 August 2021 

 

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