Nichola's SME Tax W-update 17 February 2022

Hello,

There has been plenty going on this week. We have a new HMRC Employer Bulletin, we take a closer look at the reinterpretation of the Business Asset Disposal Relief (BADR) 'substantial extent' requirement, there is a consultation on post-Brexit customs and we have made some more tax tools.

An announcement this week by HMRC's head Jim Harra needs repeating. We are informed that, 'Following the success of the December test and learn, the CT and VAT telephony lines will see a further telephony shuttering exercise on Fridays in February and March 2022.'

'Telephony shuttering', you could not make it up. The leading search engine has never heard of such a term, in fact it IS made up. What Mr Harra is trying not to say is that HMRC is closing the customer telephone helplines on a Friday, again, due to staff shortages. This time for two more months. 

Another industry packed full of jargon is the new 'ecosystem' of the cryptocurrency. Have you bothered to ask yourself recently 'what the quality of the spectrum of stable coins looks like?' Ah, I thought not. That sentence came from a radio interview this morning from a cryptobusiness CEO being interviewed because the Financial Stability Board has issued another warning that the rise of cryptocurrencies poses a risk to global financial stability. The new generation of so-called 'stable coins' claims to be backed up by hard cash reserves. The risk is that, like the banking crisis of 2008, if there is a run on whatever new crypto derivative has been dreamed up next that there will be no cash to support it. I hope someone really is in charge of banking algorithms...

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)

Meaning of substantial extent for BADR
Enthusiasts of Capital Gains Tax, Business Asset Property Relief (BADR) will be keen to hear about a recent development in the interpretation of the description 'substantial' when determining the scale of a company’s non-trading activities.

Employer Bulletin: February 2022 
HMRC have published their Employer Bulletin for February 2022. We have summarised the key content for you, with links to our detailed guidance on the topics covered. This bulletin covers essential information for 2021-22 payroll end of year, benefit in kind reporting and moving into the 2022-23 tax year.

Coronavirus reconciliation headaches for HMRC
Nudge letters are being issued by HMRC where they cannot reconcile Coronavirus Job Retention Scheme (CJRS) payments paid with those declared on the Corporate Tax returns.  Our guides can help you declare these grants correctly.

Research: Impact of Making Tax Digital for VAT 
HMRC have recently published research, undertaken on their behalf, exploring the impact of record-keeping behaviour change in response to Making Tax Digital for VAT. Experiences of the costs and benefits varied considerably.

Consultation: ‘Call for evidence: An Independent Customs Regime’ 
In February 2022 HMRC opened a new consultation ‘Call for evidence: An Independent Customs Regime’. It considers how HMRC can improve the UK’s customs system by simplifying processes for traders and embracing innovation.

Editor's Pick 

CGT Briefing: Meaning of ‘substantial’ for BADR and trading companies (subscriber guide)
NEW: An interesting recent development in the meaning of 'substantial' when determining whether a company is trading or not for the purposes of Business Asset Disposal Relief (BADR).

VAT Tool: when do points-based penalties apply?
NEW: use our tool to highlight the day on which you fall into the new VAT late submission and late payment regime.

Guides & Updates (subscribers)  

Self Assessment 

Starting in business: start here!
Starting in business? Our 'At a glance' guide takes you through the key steps in getting started for tax, with links helping you drill down for more detail.

Is it a trade, a business or an investment activity
Starting in business? Is your new or existing business a trade, a business or an investment activity? The distinction is very important for tax purposes. This guide summarises key issues for tax purposes.

Land & Property   

Freeports: Tax breaks
UPDATE: It has been announced that two Green Freeports will be established in Scotland. Bidding will open in Spring 2022 and bidders will have to pledge to reach net-zero by 2045.  

Stamp Duty Land Tax: rates and allowances
UPDATE: our comprehensive guide to the basics

A landlord? Start here
You are about to become a landlord. Where do you start and what do you need to do before you buy? What business structure should you use? 

Directors & Companies 

How to grant share options or set up a share scheme?
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?

How to gift your shares to the family
How can you gift your private company shares to members of your own family? What are the tax implications? What reliefs apply?

Employers

Employer NICs relief for veterans
UPDATE: Since April 2021, a relief from Class 1 National Insurance has been available for employers who hire veterans within their first 12 consecutive months of civilian employment. 

Cycles & cyclist's safety equipment
UPDATE: What tax breaks are available to you and your staff if you provide your workforce with eco-travel solutions?

Training and course fees
Can you receive tax relief on the cost of training? Can employees' obtain tax relief on training? 

Private Client & 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?

Tax Cases   

CIS gross payment status allowed despite shadow director  
In Bagri Services Ltd v HMRC [2021] TC08357, the First Tier Tribunal (FTT) adjudged HMRC could not revoke gross payment status under the Construction Industry Scheme on the basis of false information. There was no requirement to notify Companies House that there was a shadow director of the company and the information on which gross payment status was granted was not therefore false.

LBTT: couple tripped up by inflexible additional dwelling rule
In Dr C Ewan H Crawford v Revenue Scotland [2022] FTSTC3, the First Tier Tribunal for Scotland (FTT) found two people purchasing their first house together did not meet the conditions for a repayment of Additional Dwelling Supplement as they had neither previously cohabited nor sold one of the two prior residences at the right time.

CFD PAYE avoidance scheme fails
In Jones Bros Ruthin (Civil Engineering) Co Ltd and Britannia Hotels Ltd v HMRC [2022] TC08378, the First Tier Tribunal (FTT) ruled a remuneration arrangement that aimed to avoid PAYE and NIC did not work. The arrangements had no commercial purpose and the likely outcome was that the employees received a cash bonus.

Wind farm studies: Capital allowances allowed in part 
In Gunfleet Sands Limited & Ors v HMRC [2022] TC08387, the First Tier Tribunal (FTT) found that studies and project management costs relating to offshore windfarms partly qualified for capital allowances.

VAT Cases & Guides 

Unusual accounting system denies VAT bad debt claim
In Regency Factors PLC v HMRC EWCA Civ 103, the Court of Appeal (CoA) dismissed a claim for VAT bad debt relief as the UK legislation was in line with EU law.  The failure to comply with the conditions of the relief was fatal to a successful claim.

Partial exemption & input VAT
UPDATE: How do you calculate the amount of input tax you can recover under the VAT partial exemption rules? What are the de minimis rules?

VAT: Penalties
When do penalties apply for VAT? What penalties are charged and how can they be mitigated?

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 10 February 2022

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