Hello,

This week's Tax Administration and Management Day saw the publication by the government of many new 'Calls for evidence' (a bit like a consultation, but not quite) and some responses to past consultations and 'calls'. We have picked out some of these for review this week and will pick more over the coming weeks.

The thing that really turned our heads this week was a tax case that featured a combination of Transactions In Securities (TiS), Entrepreneurs' Relief (now Business Asset Disposal Relief) and Business Investment relief issues. It was the TiS part that really caught our attention. 

When you submit an advanced tax clearance under the TiS provisions, you must have considered firstly whether your transaction creates an Income Tax advantage, and secondly that you do not consider that tax avoidance is the 'main purpose, or one of the main purposes' of structuring the transaction that way. 

It is a truth universally acknowledged that there is a continuing problem, in that HMRC's manuals and its tax clearance team appear to exert a distinct bias in its view that, if your transaction can be structured in another way, which achieves no tax advantage, then the only way to show that tax avoidance is not a motive is for you to structure the transaction in that non-tax advantaged way. This creates something of a 'Catch-22' situation, whereby the Clearance team seeks to influence an actual transaction and, as a result, some taxpayers do not to bother with tax clearance.

In Assam v HMRC (see the link below), the taxpayer did just that. Dr Assam sold one of his companies to the other for cash. He maintained that he needed cash to invest abroad, and it was simpler to arrange a sale rather than having to do tax clearance and a share for share exchange then declare a dividend etc. He was rich enough to persuade the tribunal that he did not care about tax. HMRC failed to prove any tax avoidance motive which left the Upper Tribunal (UT) to confirm that the existence of an alternative transaction which has a different tax result does not necessarily mean that a transaction with a lesser tax result is undertaken for a main purpose of tax avoidance. 

Breaking news: the ICAEW report that HMRC has announced that its VAT and Corporation Tax helplines are closed on Fridays through-out December. Staff shortages are to blame.

More fascinating tax cases and updates for you, so do please read on.

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)

HMRC issues post-Brexit Christmas shopping warning
HMRC have issued a warning for Christmas shoppers to be aware of potential customs charges arising on certain goods purchased and imported from the EU due to changes that came into effect on 1 January 2021 when the Brexit transition period ended.

Tax Administration and Management Day publications

Chancellor responds to OTS’s reports on CGT and IHT 
The Financial Secretary to the Treasury has written to the Office of Tax Simplification (OTS), on behalf of the  Chancellor, to respond to the OTS's reports on Inheritance Tax (IHT) and Capital Gains Tax (CGT). Some of the OTS's recommendations will be implemented while others have been rejected.  

Call for Evidence: Umbrella Company Market
HM Treasury have opened a new Call for Evidence, ‘Umbrella Company Market’ inviting views on the role that umbrella companies play in the labour market, and how they interact with tax and employment rights.

Tax Agents: Raising Standards in the tax advice market
HMRC's Summary of responses, ‘Raising standards in the tax market: professional indemnity insurance and defining tax advice’ reveals no plans to introduce compulsory Professional Indemnity Insurance (PII) and a desire to create a legislative definition of 'tax advice'.

Unaffiliated tax agents: what type of agent are you?
Research, ‘Understanding the characteristics of unaffiliated tax agents’ explores the characteristics of tax agents who are not members of a professional body. It seems that these agents fall into 4 different typologies.

Editor's Pick 

Residential Property Developer tax
What is the Residential Property Developer Tax (RPDT)? What is residential property and who is a developer? Are there any allowances or exemptions?

Tax Penalties for accountants, advisers and tax agents
What tax related penalties can apply to accountants, advisers and agents?

Guides and Updates (subscribers)  

Self Assessment 

Working from home (self-employed)
What expenses can you claim for working from home, if you are self-employed? Are there special rules and precedents for certain types of trade or profession?

Land and Property  

Advisers' guide to Property Business profits
What is property income? How is it taxed? How are profits calculated? How are losses relieved? Is NI paid on property income? Is property income classed as a business activity?

Directors and Companies   

Transactions in Securities
UPDATE: This note examines the rules for an Income Tax advantage from the perspective of shareholders.

TAAR: Distributions on winding up (anti-phoenixing rules)
UPDATE: When does the TAAR apply? Who does it affect? Can you apply for tax clearance? What the rules affect striking off?

Employers

Working from home (employer/ee)
What expenses can employees claim for homeworking? Are the rules the same for the self-employed? How do you make a claim?

Mobile phones & devices
What is the taxable benefit of providing a mobile phone and data to an employee. How are mobile phones taxed? Can you provide a phone to your employee?

Private Client and Estate Planning 

IHT: Normal Expenditure Out of Income (gifts)
UPDATE: When is normal expenditure out of income exempt for Inheritance Tax (IHT)? How do you claim the exemption?

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?

Tax Cases

Too rich to TiS?
In Assem Allam v HMRC [2021] UKUT 0291, the Upper Tribunal (UT) has found that the Transactions in Securities (Tis) provisions did not apply when a wealthy entrepreneur sold his property company to his trading group for nearly £5m in cash, despite earlier clearance being denied, there was no evidence of any tax avoidance motive.

Non-UK resident not entitled to Child Benefit  
In Wendy Carrington v HMRC EWCA Civ 1724 the Court of Appeal (CoA) found EU law did not cause the entitlement to UK Child Benefit to remain after the taxpayer ceased to be UK resident.

VAT Cases and Guides 

Simplifying the VAT land exemption: Summary of responses
HMRC have published a summary of responses to their call for evidence ‘Simplifying the VAT Land Exemption’, which closed earlier this year.

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 25 November 2021

  • Agent update: November 2021
  • Advisory fuel rates from 1 December 2021 
  • HMRC analyse commercial impact of SDLT increase
  • National Minimum Wage: Driver can deduct car rental costs
  • Tax-free dividend scheme fails, income is taxable on company owner
  • Company’s supplies were not made outside of the EU 
  • Conservatory roof boards still not insulation for VAT
  • Energy Savings Materials
  • Plastic Packaging Tax: do I need to pay it?
  • Super-deduction & First Year Allowances
  • Woodlands: Overview
  • Starting Work 5. Agency or umbrella tax-avoidance risk
  • De-enveloping property
  • Management Buyout: What are your options?
  • Tips, gratuities and troncs
  • How to set up a UK trust ...More 

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