Nichola's SME Tax W-update 16 June 2022

Hello

Clearly things are reaching some kind of breaking point at HMRC. It is not every day that four professional bodies write a joint letter to HMRC's Director General of Customer Services to complain about service levels, but they have done just that this week.

Commercial disputes: if you have been involved in any type of contract dispute, you will probably have learnt that it pays to work through what will happen in the event that the parties fall out before you sign on the dotted line. It follows that when you bring in new directors and shareholders that you should carefully review your various agreements, including the Articles of Association and amend them to suit your situation. A case before the High Court this week highlights a potential pitfall if you set the quorum for directors meeting at a minimum of two directors and consequently, that number then reduces to one. If you are not quorate you cannot validly make any decision. In this case, that decision was to sue the outgoing officer. the court thus found it 'ultra vires'.

This week we have a new VAT CPD, a new Employer Bulletin and our pick of tax cases are all cautionary tales of one kind or another. The pensions/discovery case is one in which HMRC used the wrong powers to make a 'discovery assessment', rendering it invalid. This shows how important it is to take professional advice in the event of an assessment.

Thinking of subscribing to our services but unsure? Our staff have been writing testimonials about what they like most about our web service and picking out some of their favourite content. See Editor's Pick.

Lots more exciting content and updates below. 

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) 

Joint letter to HMRC: What on earth is going on?
Four professional bodies have written to HMRC following record numbers of complaints from their members. It is clear that the joint professional bodies have become totally exasperated with HMRC's poor service levels and an ongoing lack of communication and engagement.

R&D Tax Credit payment delay update
The Chartered Institute of Taxation (CIOT) has been asked by HMRC to share the message below about the recent pausing of Research & Development Tax Credit (RDTC) payments with their members.

UK delays global minimum tax rate 
The government has provided an interim update further to the responses received as part of the 'OECD Pillar 2: Consultation on implementation'. Key concerns centred around early implementation, which has led to the Government provisionally stating that the global minimum tax rate will not be introduced until 31 December 2023.

Employer Bulletin: June 2022 
HMRC have published their Employer Bulletin for June 2022. We have summarised the key content for you, with links to our detailed guidance on the topics covered.

Editor's Pick (Freeview)

The benefits of www.rossmartin.co.uk : An inside view
The team at www.rossmartin.co.uk are no strangers to positive feedback from subscribers using the subscriber-exclusive content, but what are the benefits of subscribing from the perspective of one of the editors of the website? 

Company Articles disrupt shareholder dispute
In Idrees Hashmi v Paul Lorimer-Wing and Fore Fitness Investment Holdings Limited [2022] EWHC 191 (Ch) a dispute between a shareholder and company took an unexpected course: the company's articles prevented a sole director from passing decisions. The decision to commence legal action against the dissenting shareholder was thus ultra vires.

Tax Data Card 2022-23
UPDATE: A summary of key tax rates and allowances for 2022-23 and 2021-22.

Editor's Pick (Subscribers)

De-enveloping Property
UPDATE: you incorporated the property business but now you want to transfer the property to the shareholders. There is no specific tax relief for de-enveloping: the result is that it needs to be carefully planned in order to mitigate tax charges.

Incorporation of a property business
UPDATE: What relief can I claim if I incorporate my residential property business? What claims and elections do I need to make? What are the VAT and Stamp Duty Land Tax (SDLT) implications?

Guides & Updates (Subscribers) 

Land & property 

Freeports: Tax breaks
UPDATE: Regulations have been made designating areas as freeport tax sites in Plymouth and South Devon with effect from 4 July 2022. 

Self-employed

MTD: Data required by HMRC
Making Tax Digital: the schedule and likely categories of information. The categories of information listed are being reviewed by HMRC and have not yet been finalised. They have been included mainly for indicative purposes.

Companies & Shareholders

Which investment relief: IR, BADR, SEIS or EIS?
What is the difference between Business Asset Disposal Relief (BADR) and Investors' Relief? How do they compare to investments in the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS)? 

R&D Tax Relief: Overview
What is R&D Relief? How does it work? Why does the size of the company matter? What is sub-contracted R&D? How do I write an R&D Report?

Companies: Filing & payment deadlines
What are the filing and payment deadlines for companies? What penalties apply?

Employers 

RTI: Real-Time Information for PAYE
What is RTI: Real-Time Information (RTI) reporting for PAYE? How does it work?

Employment-Related Securities: Reporting issues
UPDATE: An online return is required by 6 July following the end of the tax year, including details of any reportable events in the tax year. 

Capital allowances

What expenditure qualifies for plant & machinery allowances?
UPDATE: What is plant and machinery? What expenditure qualifies as plant and machinery? What is treated as part of a building?

Structures & Buildings Allowance (SBA)
UPDATE: Who can claim the Structures and Buildings allowance? What expenditure is eligible? How to make a claim? 

Penalties & Compliance 

Penalties: Errors in Returns and Documents (subscriber version)
UPDATE: What penalties apply if you make an error or mistake? How are penalties calculated? How do you check penalties? What can you do if you receive a penalty?

Penalties: Failure to Notify
UPDATE: What tax penalties apply if you fail to notify HMRC that you are chargeable to tax? Can they be appealed or reduced?

Tax Cases (Freeview)

Pension tax charge discovery invalid    
In Elaine Curtis v HMRC [2022] TC 8499, the First Tier Tribunal (FTT) ruled that while a loan received was related to a pension transfer and represented an Unauthorised Member Payment, HMRC had not raised a valid discovery assessment to collect the resulting tax.

No CGT deduction for loan repayment 
In Ignatius Tedesco v HMRC [2022] TC8498, the First Tier Tribunal (FTT) found that the repayment of secured debt was not a deductible expense for CGT purposes despite it being a condition of sale.

One share short for £1m Entrepreneurs’ Relief 
In Seamus Kavanagh v HMRC [2022] TC08500, the First Tier Tribunal (FTT) found that an individual holding 4.997% of a company was unable to benefit from Entrepreneurs’ Relief on its sale. There was no evidence of other shareholders holding any shares on trust for the taxpayer.

VAT Cases & Guides 

Energy-Saving Materials
UPDATE: The supply and fitting of energy-saving materials in residential accommodation attract a reduced rate of VAT. What does it apply to? What are the qualifying conditions? What case law is there on this topic?

Is voluntary VAT registration worthwhile?
UPDATE: When can a business voluntarily register for VAT? When would it be beneficial to voluntarily register?

Agents and principals
UPDATE: What is an agent for VAT purposes? When do the agency rules apply? 

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

• NEW: CPD: VAT update 2022
• NEW: CPD: Change of Basis Periods Part 2. Transitional rules
• CPD: Change of Basis Periods Part 1. Planning for the change

More at CPD Index

Missed last time's Web-update?

Nichola's SME Tax W-update 09 June 2022

• Could a payment plan help your Self Assessment bill?
• Self Assessment 2021-22 returns: Online filing exclusions
• Revenue & Customs Brief 10 (2022): VAT - business and non-business activities
• An index to Capital Gains Tax reliefs
• Debt release not loan relationship profit 
• No input VAT on luxury items 
• Starting in business: VAT
• NEW: CPD: Change of Basis Periods Part 2. Transitional rules
• Employee Ownership Trusts: An exit route for owner-managers
• SDLT: Residential property & dwellings
• Farming: Overview
• Management Buyout: What are your options?
• Penalties: CIS (Construction Industry Scheme)
• Non-Resident Landlord Scheme
• Penalties: Accountants, Advisers & Agents
• Client guide: Reasonable care and tax penalties ...More 

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