Nichola's SME Tax W-update 20 January 2022

Hello,

Many VAT registered businesses will be very pleased to note that the introduction the new (and horribly complex) VAT points-based, late-penalty regime is being deferred until next January. The delay is being blamed on IT development at HMRC's end. I just hope that the new system carries with it some adequate safeguards to allow taxpayers to check that penalties are applied accurately, to report errors and even to appeal. 

HMRC has just produced a new Agent Update, we have summarised it for you. It is definitely worth giving it a quick scan. Highlights of the Update are the waiver of late-filing and payment penalties for Self Assessment, and there are some useful tips for companies claiming Construction Industry Scheme (CIS) deductions. There are also changes afoot to P11D (employee benefits and expenses) reporting.

Anyone who is renting out holiday accommodation will be used to 'day-counting'; it is a requirement if you wish to claim Furnished Holiday Letting (FHL) status. Forthcoming changes to business rates will place day-counting compliance on owners. More detail on reporting is expected from the government this year for the measure, which will commence in April 2023.

It was notable that the Chancellor failed to announce any new measures in an effort to combat climate change in his last budget in 2021. With COVID-19 allegedly moving to an 'endemic' stage, now might be the time to devise new taxes; a Westminster think-tank has put forward some suggestions for a carbon border tax.

Finally, we have been busy this week in developing a new Virtual Tax Partner Tax tool, our latest one calculates the outcome for the Purchase of Own Shares 'substantial reduction' and 'connection' tests. This makes life a bit easier to calculate a purchase of own shares in tranches. We also have some fabulous tools for calculating Business Asset Disposal Relief (BADR). All these tools save everyone hours of time and its a win-win for me, as they are quite fun to develop too. We are going to announce dates for a new series of Virtual Tax Partner practical tax workshops next time, these will also give you a chance to explore and play with our new range of tax tools.

Hope that Self Assessment is going well, it is substantially more pleasant working in the knowledge that late filing and payment tax penalties are being waived. 

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)

Agent update: January 2022 
HMRC have issued their Agent Update for January 2022. We have summarised the key content for you with links to our detailed guidance on the topics covered.

Deferral of new VAT penalty and interest rules to 2023
HMRC have announced that changes to the VAT penalty and interest rules due to come into force from April 2022 are to be delayed to 1 January 2023.

Consultation response: Business rates treatment of self-catering accommodation 
The government has published its response to the 2018 consultation ‘Business rates treatment of self-catering accommodation’ which considered options to strengthen the criteria for holiday lets to be liable for Business Rates. 

Think tank calls for carbon border tax 
A new report, 'Levelling Up and Zeroing In', by the Centre for Policy Studies says the Government can level up and decarbonise the economy simultaneously by introducing a carbon border tax, alongside a selection of other policies.

PAC seeks views on implementing IR35 reforms
The Public Accounts Committee (PAC) has issued a Call for Evidence on 'Lessons from implementing IR35 reforms'. With the reforms now taking effect in more sectors, the Committee will question senior officials at HMRC on what lessons have been learned from the public sector implementation of the IR35 reforms and seek views from those affected.

Technical consultation: Uncertain tax treatment 
The government have published a consultation 'Technical consultation: Uncertain tax treatment', which invites responses in relation to newly drafted HMRC guidance for the Uncertain Tax Treatment legislation which will come into effect on 1 April 2022.

Editor's Pick 

Sole trader?  Start here...   
NEW: This FREEVIEW ‘At a glance’ guide is essential reading for anyone who is, or is contemplating becoming, a sole trader.

 A new director? Start here...
NEW: This FREEVIEW 'At a glance' guide is essential reading for anyone thinking about becoming a company director.

Guides and Updates (subscribers)  

Self Assessment 

2020/21 Self Assessment Tax Return toolkit
UPDATE: top tips on completing this year's return, details as to what has changed, and lists of filing exclusions. Note that the normal due date of 31 January is unchanged this year however penalties are being waived.

Wider impacts: the 2020-21 tax return penalty waiver 
What are the wider impacts of HMRC's late filing and late payment penalty waiver for 2020-21 Self Assessment returns? Are they a cause for concern?

Land & Property   

Annual Tax on Enveloped Dwellings (ATED)
UPDATE: The next ATED return is due by 30 April 2022. The next revaluation date for the charge is 1 April 2022.

LBTT: Land and Buildings Transaction Tax (LBTT)
Land and Buildings Transaction Tax (LBTT) is a tax on transactions in land and property situated in Scotland. It replaced Stamp Duty Land Tax (SDLT) on 1 April 2015.

Directors & Companies   

Purchase of Own Shares
UPDATE: How can a company repurchase its share capital? What are the Companies Act requirements? What are the tax consequences for company and shareholder? Featuring our NEW Virtual Tax Partner tool.

Insolvency FAQs for directors
UPDATE: The new Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act aims to tackle directors dissolving companies to avoid repaying Government-backed loans, this guide also considers other issues.

Employers

Employer's What's On: 2021-22
UPDATE: A Finance Act 2021 employer update for advisers and their clients. 

Private Client & Estate Planning 

Private client: What’s on? 2021-22
UPDATE: A Private Client update for advisers and their clients.

Estates: Income Tax and Capital Gains Tax
How do executors deal with income and capital gains arising on the deceased’s estate? What allowances and reliefs are available? 

Tax Cases   

Four-year time limit for MGD repayments 
In Coyles Millar v HMRC [2021] TC08355, the First Tier Tribunal (FTT) found that a four-year limit applies to repayments of overpaid Machine Games Duty (MGD).

Court of Appeal upholds denial of farming loss relief claims 
In Ardeshir Naghshineh v HMRC [2022] EWCA Civ 19, the Court of Appeal dismissed a farmer’s sideways loss relief claims. The case should have failed for lack of evidence but in any event, based on the evidence which was available, the reasonable expectation of profit test was not met.

Employer payments whilst training remained taxable earnings 
In Dorothy Johnson v HMRC [2021] TC08346, the First Tier Tribunal (FTT) dismissed a claim that a nurse’s salary paid during a university training period was non-taxable scholarship income. The individual had remained employed throughout and the payments were taxable earnings.

Revenue Scotland had no right to unilaterally withdraw Closure Notice 
In Wind Energy Renewables LLP v Revenue Scotland [2022] FTSTC 1,  the First Tier Tribunal for Scotland (Scottish FTT) held that Closure Notices cannot be unilaterally withdrawn by the tax authorities and, consequently, the subsequent assessment was invalid.

VAT Cases & Guides 

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

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

• CPD: Business Asset Disposal Relief
• CPD: Appeals: How to Appeal a Tax Penalty
• CPD: VAT: Land and Property

More at CPD Index

Missed last time's Web-update?

Nichola's SME Tax W-update 13 January 2022

• New COVID-19 support package for businesses affected by Omicron
• Changes to IHT reporting & increases to probate fees
• Post-Brexit farming subsidy plan 'blindly optimistic'  
• Government IT: dysfunctional, damaging & sometimes dangerous
• HMRC updates guidance on reasonable excuse
• Budget & Spring Statement 2022
• Recovery Loan Scheme
• A new business? Start here...
• A new partnership? Start here...
• Pensions: What happens when you die?
• Electric Vehicles
• Goodwill: trade-related properties
• Directors: Tax planning toolkit for 2021/22
• Salary sacrifice & optional remuneration schemes (OPRA)
• Enhanced Capital Allowances: Energy saving plant (inc. vehicles)
• Cars & Vans: VAT 
• Agents and principal ...More 

Come and join our Cloud

Subscribe (and UNLOCK the whole site) A single user annual subscription is £425 (+ VAT).

What do you get?

• We keep YOU up to date in SME tax.
• FULL access to www.rossmartin.co.uk: your firm's favourite TAX INTRANET containing over 3,500 actively maintained tax guides, briefings, toolkits and checklists.
• Want to know more? Commission your own articles and checklists.
• Structured CPD our detailed SME tax updates "for Advisers Only" provide topical summaries and planning notes our webcasts provide you with structured CPD at your desk.
• Regular client tax briefings: these cover the latest business and employment tax issues and are designed to assist you plan meetings and improve your client services.