Nichola's SME Tax W-update 14 July 2022

Hello

This week questions have been asked as to whether some of the Conservative leadership candidates' plans for tax cuts are viable. Others are asking how can tax help us reach Net Zero? What do you think about crypto-assets: uncanny investment opportunities or no better than a Ponzi Scheme?

There seems to be very little mention about Net Zero in the submissions of the various Conservative MPs vying for the post of Prime Minister. Labour’s leader Kier Starmer noted that the candidates are engaging “in an arms race of fantasy economics”, a point also picked up on by the Confederation of British Industry (CBI) who warns “Tax changes must trigger business investment, not fuel inflation”. We consider their comments and those of the Climate Change Committee below.

With news today that the passage of the Online Safety Bill through parliament will be delayed over the summer, or maybe indefinitely, we are speculating as to how long before plans for Net Zero are set back too.

Crypto-assets: there are two calls for evidence out this week. One looks at regulation from the Treasury's perspective and the other considers tax treatment of lending and staking transactions. 

Some essentials for you this time:

Reporting IHT: we note that some executors are getting muddled in their claims for transferable residence nil rate band.

Reporting CGT: as our flowchart informs: even if your gain is covered by the CGT Annual Exemption, you need to report gains if your sales' proceeds exceed four times the Annual Exemption.

Tax Credits: don't delay over renewals, which are due by 31 July 2022. There are signs that the system at HMRC is creaking, best to get those forms in early.

Tax payments under Self Assessment are also due on 31 July 2022: now that the official rate of interest has increased it's advised to pay on time.

Lots more exciting content and updates below, including some cautionary tales for directors and LLP partners.

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) 

Executors: have you claimed the correct transferable IHT RNRB?
There is evidence that wording on Inheritance Tax (IHT) claim form IHT436 has led to some executors underclaiming relief for the transfer of any unused residence nil rate band (RNRB) on IHT returns and HMRC is not picking up the error.

Committee inquiry into crypto-asset industry    
The Treasury Select Committee has launched an inquiry into the Crypto-Asset industry to explore the role, opportunities and risks that crypto-assets offer consumers and businesses.

Crypto & Decentralised Finance Consultation    
HMRC's consultation, 'The taxation of Decentralised Finance involving the lending and staking of cryptoassets – call for evidence', asks for views on the consistency between the economic and tax treatment of lending and staking transactions and puts forward three different options for tax treatment. 

Sanctions against Russia: update for accountants & advisers
On 12 July 2022, the UK extended 'The Russia (Sanctions) (EU Exit) Regulations 2019' ‘the Regulations’. Professional firms need to ensure that they are familiar with the new measures.

Climate Change Committee urges Treasury to use tax to achieve Net Zero
The Climate Change Committee (CCC) has published ‘Progress in reducing emissions 2022, Report to Parliament’. In part, it calls on HM Treasury to review the tax system as to how it can best support the transition to Net Zero.

CBI pleads for serious and credible tax plans from Tory candidates 
The Confederation of British Industry (CBI) has warned candidates for the Conservative leadership to develop serious, credible and bold plans for growth and that,“Tax changes must trigger business investment, not fuel inflation”.

Editor's Pick (Freeview) 

CGT: Reporting Obligations
Did you know that you must report if total sale proceeds on capital disposals exceed four times the Annual Exemption? This means that you may sometimes need to report gains that are covered by the Exemption.

Personal Liability Notices
A Personal Liability Notice (PLN) may be issued by HMRC in the event of a company's or a Limited Liability Partnership's (LLP's) failure to pay its tax debts or tax penalties to HMRC. A PLN will transfer the liability to pay the debt to one of its officers.

Penalties: PAYE and late payment
What should an employer consider when handling late payment issues under PAYE? How are penalties calculated and how can you appeal?

Guides & Updates (Subscribers) 

Land & property  

Joint property elections
UPDATE: When property is held in joint names it is taxed according to beneficial ownership. There is an exception where married couples and civil partnerships hold joint property.

Gardens: selling or developing
What are the tax consequences of selling a garden for development purposes? What if the owner develops the garden? 

Self-employed

A new 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.

Extracting profits
What tax planning tips will help you to run a tax-efficient business? We review your different options.

Companies & Shareholders

Close company loans toolkit (loans to participators)
This guide takes a detailed look at the Corporation Tax treatment when a close company makes a loan to a participator (director-shareholder). It also provides links to our guides for individuals on the making of loans to companies.

Issuing new shares (planning and pitfalls):
UPDATE: A practical guide on how to issue new shares in a company together with a summary of some of the pitfalls if an issue fails to qualify for tax purposes.

Employers 

Travel (employer's guide)
UPDATE: How do employers apply the tax rules to travel costs? What is available for subsistence costs? What are the rules on home-to-work travel?

Employee liabilities and indemnity insurance
What are allowable deductions for employee insurance? What can ex-employees claim? How should policies be structured for full tax relief?

Private Client & Estate Planning 

How to set up a UK trust
What are the tax implications of setting up a trust? What do I need to do as a settlor? What do the trustees need to do? 

Non-domicile status, deemed domicile & tax
Who is non-UK domiciled? What does this mean for UK Income Tax, Capital Gains Tax and Inheritance Tax? What reliefs are available to non-doms?

How to calculate a capital gain or loss
UPDATE: How do you calculate a capital gain or loss? What costs are deductible? How can losses be utilised against capital gains?

Penalties & Compliance 

Grounds for Appeal: Legitimate Expectation
UPDATE: What is a legitimate expectation and when is it a ground for appealing a tax penalty or HMRC decision?

Grounds for Appeal: Reasonable excuse
UPDATE: What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?

Tax Cases (Freeview)

Neglect by director leads to £63k NICs bill
In David Howick v HMRC [2022] TC8531, a director who neglected to ensure that a company paid its PAYE and NICs when he took over as its sole director was found not to have acted as a reasonable and prudent man would in the circumstances. His failure meant that HMRC was able to assess him personally for the company's NICs company's debts.

Salaried members' rules hit hedge fund bonuses 
In Bluecrest Capital Management (UK) LLP v HMRC [2022] TC8529, the First Tier Tribunal (FTT) held that the salaried members' rules applied to payments made to members of an LLP as disguised salary. Some payments escaped the rules as the members had significant influence over the LLP.

VAT Cases & Guides 

UT confirms football pitch hire was an exempt composite supply 
In HMRC v Netbusters (UK) Limited [2022] UKUT 00175, the Upper Tribunal (UT) upheld the decision of the First Tier Tribunal (FTT) in finding that Netbusters' provision of football pitches and league management services were one single composite supply and so exempt from VAT. 

Flat rate scheme
UPDATE: What is the VAT Flat Rate Scheme (FRS)? Who can apply? How do you apply? What are the rules? What are the rules for capital expenditure and pre-registration VAT? 

Goods or services for VAT?
UPDATE: What are goods and what are services for VAT? The answer may have an impact on the time of supply, the place of supply and in some cases the rate of the supply. The answer is not always as straightforward as it may seem.

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: Setting up a corporate group
• NEW: CPD: VAT update 2022
• CPD: Change of Basis Periods Part 2. Transitional rules

More at CPD Index

Missed last time's Web-update?

Nichola's SME Tax W-update 7 July 2022

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