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Hello

It’s been a quiet week in terms of tax news, which is only to be expected after the Jubilee weekend. Perhaps the lull before the storm for accountants as we approach 'P11D season'.

Taxpayers who pay all of their tax under Self Assessment, and who are mindful about potential cashflow may well benefit from agreeing a monthly or weekly advance payment plan with HMRC. We provide more detail, plus we have an updated list of software exclusions for 2021-22 Self Assessment returns for those already preparing and filing returns for that year.

We also have a new CPD, part two of our series about Basis Period Reform which looks at the transitional rules. The changes may seem far away but 2023-24 will be here before you can say ‘Overlap Relief'. In the meantime, many advisers will need to make a start on tracking down overlap profits for hundreds of clients.

This week's cases include a spurious claim for input VAT on luxury items and Pilates wear, and a detailed look at the tricky question of what is, and isn’t, a profit from a loan relationship. In this case, compensation that involved a debt write off was not.

What are the most tax-efficient ways to pass on your company to the next generation or employees, alongside cash extraction? Two starting points might be to look at our guides to Management Buyouts and Employee Ownership Trusts (EOTs) to see what your options are and how these work from a tax perspective. The EOT is a relatively new idea and has many tax advantages, but it is not something everyone will be familiar with so worth taking the time to understand the details.

Lots more exciting content and updates below. 

Back soon, 

The Team

www.rossmartin.co.uk

Your Virtual Tax Partner® online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.

Quick News (Freeview) 

Could a payment plan help your Self Assessment bill?
With the second payment on account for the 2021-22 tax year due by 31 July 2022, Self Assessment taxpayers may wish to set up a budget payment plan to help manage their tax payments.

Self Assessment 2021-22 returns: Online filing exclusions
Many taxpayers will be unable to file their Self Assessment returns online for the year ended 5 April 2022 due to software specification issues from HMRC. The list of filing exclusions as at 31 May 2022 has recently been published. 

Revenue & Customs Brief 10 (2022): VAT - business and non-business activities  
HMRC have published Revenue & Customs Brief 10 (2022) 'VAT - business and non-business activities' confirming the updated approach to establishing whether an activity is a business activity or not, following the Wakefield College v HMRC [2018] EWCA Civ 952 case.

Editor's Pick (Freeview)

An index to Capital Gains Tax reliefs
UPDATE: This is a freeview 'At a glance' guide to CGT reliefs: what are the key CGT reliefs, when do they apply and how to approach calculations.

Editor's Pick (Subscribers)

Employee Ownership Trusts: An exit route for owner-managers
UPDATE: What is an Employee Ownership Trust? When are they a good exit route for owner-managers? What are the tax benefits?

Guides & Updates (subscribers) 

Land and property 

SDLT: Residential property & dwellings
UPDATE: We have added a new case which considers an annexe used as an AirBnb.

Self-employed

Farming: Overview
UPDATE: What is farming? What are the tax consequences and tax considerations of farming?  What are the features of agricultural tenancies?

Wholly and exclusively…toolkit
UPDATE: What does 'wholly and exclusively' mean? How do you determine if a cost is wholly and exclusively incurred for the purpose of a trade? What cases are there? 

Companies 

Management Buyout: What are your options?
UPDATE: What are the simplest options for a management buyout? For example, what happens when two current director/shareholders wish to retire and sell to the manager? 

Super-deduction & First Year Allowances
UPDATE: What is the new Super-deduction allowance? When does it apply and what is the rate of allowance? What other First Year Allowances (FYAs) are available? What is the SR Allowance? What if I dispose of an asset on which the Super-deduction or SR allowance has been claimed? 

Employers 

Penalties: CIS (Construction Industry Scheme)
UPDATE: When are Construction Industry Scheme (CIS) penalties charged and how much are they?

Company cars
UPDATE: Company car tax. How do you work out car benefit? How do you work out car fuel benefit? Are there savings for low-emissions vehicles? How do you reduce car benefit? Cars and the tax tribunals and Top Tax Tips.

Overseas and Residence

Non-Resident Landlord Scheme
UPDATE: What is the Non-Resident Landlord scheme? How does it work? Who does it apply to? How can I apply to receive rent without a withholding tax deduction?

SRT: Statutory Residence Test
UPDATE: What is the statutory residency test? Why is it important and how does it work?

Penalties & Compliance 

Penalties: Accountants, Advisers & Agents
UPDATE: What tax-related penalties can apply to accountants, advisers and agents?

Client guide: Reasonable care and tax penalties
UPDATE: What triggers a tax penalty? What standard of care is expected from a taxpayer? What is reasonable care? When is an error careless?

Tax Cases (freeview)

Debt release not loan relationship profit   
In Hexagon Properties Ltd v HMRC [2022] TC08468, the First Tier Tribunal (FTT) found that the write off of a loan relationship debt was not subject to tax under the loan relationship code as the profit which arose related to a compensation claim brought by the taxpayer against their bank and not to the debt. 

VAT Cases & Guides 

No input VAT on luxury items 
In Maddison and Ben Firth T/A Church Farm v HMRC [2022] TC08496, the First Tier Tribunal (FTT) dismissed the appellants' claim for input VAT for two luxury cars, a private number plate and pilates clothing on the basis that they were not allowable business expenditure for VAT purposes.

Starting in business: VAT
UPDATE: One of the first decisions to make when starting in business is whether or not you should register for VAT. Am I running a business for VAT purposes and if yes, when do I register?

Tax Tools 

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 2 June 2022

 

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