The week we have a new guide to company sales, a handy freeview flowchart for Plastic Packaging tax, and a number of updates and topical case reports.
The Supreme Court has saved HMRC from a VAT refund bill of up to £1 billion. The long-running Zipvit case concerned a company's claim for input tax that the Post Office should have charged it, but did not. Customer and supplier mistakenly believed that the supply of postal services was a VAT-exempt supply, but it turned out to be standard rated. Lead case in a series of test cases, Zipvit claimed a deduction of input tax from HMRC for the VAT element of the original payment. This case was referred to the Court of Justice of the European Union (CJEU) along the way and as such was a very expensive, albeit necessary, way to obtain clarification of the VAT rules. Royal Mail has never paid the VAT to HMRC. I wonder if HMRC will now be pursuing them for the VAT that it should have charged.
The Queen's Speech, made during the State opening of Parliament this week, gave us little indication of any changes in tax policy to help combat the 'cost of living crisis'. We summarise the key announcements that may affect businesses.
The Statutory Residence Test (SRT) provides an exception to the day-counting rules where a taxpayer is forced to be present in the UK due to exceptional circumstances. According to the First Tier Tribunal (FTT), in the case of the anonymised A Taxpayer HMRC has been taking a very narrow view of the exceptional conditions and this may well lead them to deny taxpayers relief in certain cases. By coincidence, HMRC's views are echoed in a new entry in their Residence, Domicile and Remittance Basis Manual which also indicates that the same narrow view applies; see the SRT and Ukraine article for more details.
Lots more exciting content and updates below.
Nichola Ross Martin FCA CTA (Fellow)
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Quick News (Freeview)
Queen's Speech highlights
Prince Charles has delivered the Queen's Speech in Parliament, setting out the government's legislative agenda for the coming year.
SRT: exceptional circumstances Ukraine
HMRC has updated its Residence, Domicile and Remittance Basis Manual to confirm that acting on Foreign and Commonwealth (FCO) advice to avoid certain countries will qualify as exceptional circumstances for the purpose of the Statutory Residence Test (SRT). It's interpretation of the SRT conditions may be in doubt.
GAAR: Sale of pension obligation unreasonable
The General Anti-Abuse Rule (GAAR) Panel has issued its opinion on a pension rights planning scheme. The scheme, which purported to give a director a credit to reduce his loan account balance while achieving a Corporate Tax deduction and having no Income Tax consequences, was deemed abusive.
HM Treasury seeks views on reform of capital allowances regime
HM Treasury has published a policy paper 'Potential Reforms to UK’s Capital Allowance Regime – Inviting views'. Following the 2022 Spring Statement, which set out illustrations of the types of changes Government could make to the current capital allowances regime, this new publication invites interested parties to provide their views on such reform.
HMRC's late payment interest rate rises again
Following the most recent announcement by the Bank of England to raise the base rate from 0.75% to 1%, its highest level in 13 years, HMRC have also announced that the late payment interest rate will rise to 3.5% from 24 May 2022.
Editor's Pick (subscribers)
A company disposal? Start here...
NEW: The first of 4 planning aids for disposing of a business. If thinking of selling your company, what sort of things do you need to bear in mind? How do you know what the business is worth? What should you do with any built up cash? Are there any relief to mitigate the gains?
Salary 2022/23 (avoiding NICs)
NEW: What amount of salary can be paid by an employer to a director or shareholder and avoiding or reducing National Insurance Contributions (NICs)? Is it beneficial to pay a slightly higher salary to claim the Employer's NICs allowance and pay some NICs? With builti in calculator.
Guides & Updates (subscribers)
Calendar of tax deadlines and new tax measures
UPDATE: This is a freeview 'At a glance' rolling calendar of common recurring tax deadlines, new tax measures and other tax significant events.
Plastic Packaging Tax: at a glance (freeview)
An 'At a glance' guide to Plastic Packaging Tax. What is Plastic Packaging Tax? Who does it apply to? Are your products within the scope of Plastic Packaging Tax? When do you need to pay Plastic Packaging Tax? When do I register for Plastic Packaging Tax?
Sole trader v Limited company 2022-23
UPDATE: Is it better from both a tax and legal point of view to run your business as a sole trader or as a company? Are there tax advantages in running a business as a company? What legal protections apply?
Close companies: Definitions & control
UPDATE: This guide goes over basic definitions. When is a company deemed "close" and what constitutes control?
ABC or alphabet shares: directors & employees
Can you set up different classes of shares? How do you create Alphabet or ABC shares? What are the rules in giving different classes of shares to directors and employees?
Directors' loan accounts: Toolkit (subscribers)
UPDATE: HM Revenue & Customs (HMRC) have a director's loan accounts toolkit for advisers. This is our enhanced version with planning points.
How to gift your shares to the family
UPDATE: How can you gift your private company shares to members of your own family? What are the tax implications? What reliefs apply?
CIS: Contractors and Subcontractors
UPDATE: What is the Construction Industry Scheme? Who does it apply to? How does it work?
Tax-free benefits and perks
UPDATE: What are the key tax-free benefits or 'perks' that can be used to incentivise your staff? How should you structure them?
Private Client & Estate Planning
Dividend taxation for non-UK residents
UPDATE: How are non-UK residents taxed on dividend income?
Land & Property
Property & letting: CGT and IHT issues
UPDATE: What Capital Gains Tax (CGT) and Inheritance Tax (IHT) issues arise with property businesses? What about Furnished Holiday letting?This guide provides a brief outline of key CGT and IHT issues for landlords.
Welsh Land Transaction Tax
What is Land Transaction Tax? How does it operate? What reliefs are available?
Tax Cases (freeview)
SRT: caring for sister is an exceptional circumstance
In A Taxpayer v HMRC  TC08464 the First Tier Tribunal held that caring for an alcoholic sister and her minor children were exceptional circumstances for the statutory residence test. The taxpayer remained non-UK resident despite spending too many days in the UK.
TiS eliminates tax advantage of redemption of preference shares
In Ivan Wroe & Ors v HMRC  TC08474 the First Tier Tribunal (FTT) found that the Transactions in Securities (TiS) legislation applied to the redemption of preference shares issued on a reorganisation. Obtaining an Income Tax advantage was a main purpose of the reorganisation and repurchase.
Distribution of share premium subject to income tax
In Alexander Beard v HMRC  TC08460, the First Tier Tribunal (FTT) found that distributions of share premium by a listed PLC incorporated in Jersey were subject to UK income tax as dividends and not capital gains tax.
VAT Cases & Guides
Supreme Court ruling blocks £1 billion VAT claim
In Zipvit Limited v HMRC  UKSC12, the Supreme Court issued a second judgement dismissing the appellant's appeal to reclaim input VAT on services where the supplier, Royal Mail, had incorrectly not charged VAT. The judgement was made after the case had been referred to the CJEU.
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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?
- Trusts and Estates: What’s New May 2022
- Increase in tax receipts down to COVID VAT deferral scheme
- Changes to Remittance basis concession on overseas loans
- Tax Calcs
- Failing to file not deliberate for discovery purposes
- Late appeal allowed due to EIS fraud
- HMRC errors scupper discovery assessments
- Transfer of a going concern (TOGC)
- Opting to tax land and property
- Land & Property: an Adviser's Tax Update April 2022
- Accounts: Tax Checklist (self-employed)
- Partnership agreements: What should be considered?
- Losses: Trading and other losses
- Non-resident Tax Toolkit
- Termination, redundancy and leaving payments
- Trust Registration Service
- IHT: Estate planning checklist ...More
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