Nichola's SME Tax W-update 23 September 2021

Hello,

The introduction of Making Tax Digital for Income Tax (MTD for ITSA) for individuals has been postponed yet again. It will now commence on 6 April 2024. General partnerships will not be mandated to join until 2025. The date at which all other types of partnerships will be required to join will be confirmed later. The Financial Secretary to the Treasury, Lucy Frazer, made the announcement to parliament this morning.

Looking at the announcement, it's not all good news because the new system of penalties for the late filing and late payment of tax is not going to be subject to any 'soft landing', and it too will begin in April 2024, and for all other ITSA customers in the tax year beginning in April 2025.

Making Tax Digital for VAT commenced back in 2019, and to be frank we still do not really know how that has gone, although we think that most accountants are now fully onboard with that system. It seems to me that introducing a new Income Tax tax filing and payment system on top of everything that has already happened in the last two years will be too much to bear. Businesses have been going through a lot: Brexit, COVID-19, the new gas crisis and tax rises and there is also evidence of epic levels of fraud across government initiatives such as the Coronavirus Job Retention Scheme (CJRS). It seems that that we are creating a perfect storm that could result in only one thing, a long economic recesssion.

On a different tack, employers might be extremely interested in a new consultation ‘Making Flexible Working the Default', which seeks views on government proposals to reform flexible working regulations as part of their ‘Build Back Better’ approach to dealing with the COVID-19 pandemic. 

Worth a mention is the now critical labour shortage across the food and drink and transport sectors detailed in a recent report by Grant Thornton. 'Establishing the Labour Availability Issues in the Food and Drink Sector' was commissioned by the National Farmers Union (NFU) together with 11 other organisations. It recommends that government create a 12-month COVID-19 Recovery Visa to attract foreign workers. As this is entirely contra the ideology of Brexit, it cunningly does not mention that in the title. The report is also well worth a read if you are advising in this sector.

A review of the work of the First Tier Tribunal (FTT) over 10 years, reveals that it too is losing its staff. This time they are going to other government departments. Will bringing in a right to homeworking help deal with this kind of issue and deal with the FTT's huge backlog of cases? 

Have you tried to register for VAT lately? I have always found this difficult, but HMRC is now advising that the lead time in dealing with VAT Flat Rate Scheme applications is 97 days. The reason given for the length of time is 'due to the pandemic',  presumably because people are working from home. I wonder whether we can just use the same blanket excuse ourselves come January 31 or any other deadline for that matter. Is anyone else experiencing the same awful service? 

Book now for our Virtual Tax Partner tax conference, if you are quick you can still qualify for our pre-conference tax workouts although places are limited for certain topics

Lots more news, updates, CPD and details of our forthcoming Virtual Tax Partner Practical Tax Conference follow.

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)

Call for evidence: Basis Period Reform and Uncertain Tax Treatment  
The Finance Bill Sub-Committee has issued a call for evidence seeking views on the draft legislation for the Reform of Basis Periods and the Uncertain Tax Treatment provisions.

Residential Property Developer Tax draft legislation
The government has published draft legislation for the Residential Property Developer Tax. The legislation will be open for technical consultation until 15 October 2021.

Improving tax tribunals for the next ten years
The Institute of Fiscal Studies (IFS) has published 'The tax tribunals: the next ten years'. A review the past ten years of operations of the First Tier Tribunal (FTT) reveals that there is still a backlog of cases which is caused by staff shortages and a lack of judges' time.

New Consultation on 'Making flexible working the default'
The government has opened a new consultation ‘Making flexible working the default unless employers have good reasons not to’ which seeks views on proposals to reform flexible working regulations as part of their ‘Build Back Better’ approach to dealing with the COVID-19 pandemic.

Editor's Pick (freeview)

Making Tax Digital Index & Timeline
UPDATE: all change yet again, as the government delays the start date for Income Tax.

Ouch! NICs &  Dividend Tax rises hit wider than first thought
A 1.25% rise in National Insurance Contributions (NICs) and dividend tax from 6 April 2022. As the dust on these announcements settles, it becomes clear they are wider-reaching measures than they first appeared. 

Virtual Tax Partner Practical Tax Conference
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.

Guides and Updates (subscribers)  

Self Assessment

Sch 36 Information Notices
What is a Schedule 36 Information Notice? When can HMRC issue one? What rights does the taxpayer have when an information notice is issued?

HMRC's Customer Charter
UPDATE: HMRC's Charter sets out what taxpayers can expect from HMRC and what HMRC expect from taxpayers. The latest version was issued in November 2020. 

Partnerships

Intangibles regime and partnership interests
An interest in a partnership has special treatment under paragraph 76 of Schedule 29 to the 2002 Finance Act, under the section covering the Intangibles regime. 

Directors & Companies   

Directors' loan accounts: Toolkit
UPDATE: HM Revenue & Customs (HMRC) do a toolkit for advisers. This is our enhanced version with planning points. 

Losses: Trading and other losses
UPDATE: When can a company offset its losses? What restrictions are there? How are loss claims made?

Employers

Company Cars
UPDATE: Low emissions & electric vehicles: what are the advantages? How do you reduce car benefit? Cars and the tax tribunals and Top Tax Tips.

Employment status & detailed checklist
UPDATE: Why is it important to check my employment status? What tests should I use? What is the recent case law? 

Private Client & Estate Planning

IHT: development land
When is the development of land a business for the purposes of Business Property Relief (BPR)?

Land & Property 

Interest on re-mortgaged buy-to-let property
This freeview note considers whether mortgage interest relief is available when remortgaging a rental business. Can I claim mortgage interest relief if I remortgage?

Tax Cases 

Lack of trust and loan documents lead to avoidable tax liability 
In Shinelock Ltd v HMRC [2021] TC08261, the First Tier Tribunal (FTT) dismissed the taxpayer’s appeal contending that a payment to a non-resident director shareholder was an allowable non-trading loan relationship deduction in computing the profits of a company. Properly documenting the loan relationship or a deed of trust that was intended to keep beneficial ownership with an individual could have avoided a tax liability.

Are football referees employees? Court of Appeal lets FTT decide 
In HMRC v Professional Game Match Officials [2021] EWCA Civ1370, the Court of Appeal concluded that the First Tier Tribunal (FTT) and Upper Tribunal (UT) had both erred in law when considering the control and mutuality tests in deciding whether football referees were employees.

Loss scheme is notifiable under DOTAS 
In HMRC v Redbox Tax Associates LLP [2021] TC8235, the First Tier Tribunal (FTT) held that a loss scheme should have been notified under the Disclosure of Tax Avoidance Scheme (DOTAS) rules. There were arrangements, premium fees were charged and it was a standardised tax product.

Failure to verify asset was deliberate inaccuracy 
In Grangewood Enterprises Limited/Anthony Marsden v HMRC [2021] TC08264, a director transferred an intangible asset to his company for £4m, to clear his outstanding director's loan account. Finding no evidence of such a valuable asset the First Tier Tribunal (FTT) confirmed HMRC assessment of a penalty and Personal Liability Notice (PLN) on the director, personally.  

VAT News & Guides

FTT did not consider whole picture in VAT strikeout
In G B Fleet Hire Limited v HMRC [2021] UKUT0225, the Upper Tribunal (UT) allowed an appeal against a First Tier Tribunal (FTT) decision to strike out the taxpayers claim. The FTT had wrongly concluded the taxpayer had dropped its case that supplies were zero-rated.

Opting to tax land and property
UPDATE: What is an option to tax? What do I need to do to opt to tax? What happens if I buy an opted property?

Deregistration
UPDATE: When do I have to deregister for VAT?  When can I voluntarily deregister?  What penalties might HMRC issue if I am late notifying them of a mandatory deregistration?

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

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Nichola's SME Tax W-update 16 September 2021

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