Nichola's SME Tax W-update 18 August 2022

Hello

There is news that yet another public sector body, this time it's HS2, has managed to get the IR35 and Off-Payroll Working rules wrong. HS2's estimated £9.5 million liability, set aside in its accounts, now means that public sector organisations have nearly amassed £275 million in payrolling errors.

This is all pretty meaningless in terms of cash inflow for the unfortunate taxpayer, although without any doubt many sub-contractors will have reaped some sizeable financial benefits from HS2's lack of controls.

On a brighter note, many people have been spending this sunny summer at home, resulting in a large rise in pop-up campsites. We have created a new tax guide for these new entrepreneurs. This joins our widening selection of guides that focus on many different business activities.

We have a really fascinating selection of cases this week. Do take the time to have a quick a read as they are really valuable as CPD. I have learned so much about tax over the years from writing up and reviewing tax cases.

Our favourite case this week involves Theatre Tax Relief (TTR). Thursford is quite an unusual village in Norfolk, not only does it boast a charity that runs a large collection of steam engines, but it also takes Christmas to new touristic extremes with crowd-pulling activities. These include an annual ‘Christmas Spectacular’ show, an ‘Enchanted Journey of Light’ and a visit to ‘Santa’s Magical Journey’. Thursford Enterprises Ltd, the trading arm of the charity, made a claim for TTR on the costs of the show. HMRC denied tax relief on the basis that a Christmas spectacular is not dramatic enough to qualify for the relief. During the company's appeal, judges from the First Tier Tribunal (FTT) found themselves in new roles as theatre critics, watching the director’s home video of the 2017 production in order to decide whether the relief applied to this seasonal production.

It transpires that HMRC has deep worries that if this type of performance/show is considered eligible for TTR “the floodgates would be opened and that the Royal Variety Performance, pop concerts and karaoke productions would similarly be entitled”. We will have to wait and see if the new chancellor will likewise be as worried about this ruling and amend future TTR rules.

The Euromoney case, below, is also one to read if you are advising on take-overs. Don't miss out on this week's new CPD webcast, which covers Top Slicing Relief. The webcasts are free with a subscription to our site, and there are many more on the way.

News, cases 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.

Tax Cases (Freeview)

Oh yes it is! Christmas Spectacular qualifies as dramatic production
In Thursford Enterprises Limited v HMRC [2022] TC08560, the First Tier Tribunal (FTT) found that a 'Christmas Spectacular' performance did have sufficient dramatic production value in order to qualify for Theatre Tax Relief.

COVID denies stamp duty relief claim
In Iain Robertson v Revenue Scotland [2022] FTSCT 6, a taxpayer fell foul of the Land and Buildings Transaction Tax (LBTT) rules after COVID lockdown prevented him from occupying a new property as his main residence. The legislation provided no leniency under the circumstances and he was unable to claim relief from the Additional Dwelling Supplement (ADS)

Euromoney deal was bona fide, not avoidance 
In HMRC v Euromoney Institutional Investor PLC [2022] UKUT00205, the Upper Tribunal (UT) confirmed that an ordinary share for redeemable preference share exchange, in amending a prior agreement from a direct share for cash exchange in a takeover, was undertaken for bona fide commercial reasons, without the main purpose of tax avoidance. Relief under the Reorganisation provisions was available.

Deliberate suppression of purchases allows Presumption of Continuity 
In Bobby Khan Enterprises Limited & Ors v HMRC [2022] TC08556, the First Tier Tribunal (FTT) found that storekeepers consistently and deliberately suppressed purchases and corresponding turnover. This triggered Corporation Tax (CT), VAT and s.455 Directors' loan account charges for the missing income over a number of years.

Editor's Pick (Freeview) 

An Index to Reorganisations, Demergers & Share transactions
Got a tax query involving a company and its shares? Start here with this fabulous guide.

Guides & Updates (Subscribers) 

Self-employed

Campsites: what expenses can I claim?
NEW: What expenses can campsite owners claim for tax purposes? Are there special tax and accounting rules when land is used for camping on a seasonal basis? What are the VAT rules? 

Sponsorship
Is sponsorship an allowable expense for tax purposes? When is it disallowed? What is the case law?

Land & property  

SDLT: Residential property higher rates
UPDATE: What Stamp Duty Land Tax (SDLT) rate applies for the purchase of a second home? What is the SDLT higher rate? Are there any reliefs from the SDLT higher rate?

SDLT: Residential property & dwellings
UPDATE: What is residential property for Stamp Duty Land Tax (SDLT)? What tax rate applies?  What garden and grounds are subject to higher rates of SDLT?

Companies & Shareholders

Demergers: What are your options?
What are the different types of demergers that are available when you want to reorganise your business? What are the situations where they are typically used? For detailed steps and tax analysis see our Case Study guides. 

Mutual trading, members clubs and community trades
UPDATE: How are mutual traders, members clubs, associations and community trades treated for tax purposes?

Liquidation/strike off: Tax returns
UPDATE: What are the Corporation Tax filing requirements when a company is in liquidation or about to be struck off?

Employers 

Eye tests and glasses
UPDATE: Can you provide staff with eye tests? Is there a taxable benefit if you provide employees with eye tests or glasses?

PAYE Settlement Agreements
UPDATE: What are PAYE Settlement Agreements? How do they work? What can be included? 

Private Client & Estate Planning 

IHT: Estate planning checklist
UPDATED: This checklist covers some of the essential planning points that taxpayers should know when planning for their estate and Inheritance Tax (IHT).

CGT: Deductible expenditure
UPDATE: What expenditure is allowable for Capital Gains Tax (CGT)? What about loan interest, early redemption fees etc?

Trust Registration Service
UPDATE: What is the Trust Registration Service? What trusts does it apply to? What are the requirements and deadlines?

VAT Cases & Guides 

VAT repayment had no legal basis 
In London School of Accountancy and Management Limited v HMRC [2022] TC08559, the First Tier Tribunal (FTT) found that a VAT repayment claimed by a company in liquidation had no legal basis and was not supported by reliable evidence.

Place of supply: Services
UPDATE: The place of supply (POS) of a service determines whether the supply is within the scope of UK VAT and whether VAT is payable on that supply.

Registering for VAT
UPDATE: When should a business register for and charge VAT? What are the VAT registration thresholds? What penalties might HMRC issue for late notification of registration? When do you need to file a VAT return?

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: Top Slicing Relief
• NEW: CPD: How to avoid the High-Income Child Benefit Charge (HICBC)
• NEW: CPD: MBOs: How should they be structured?

More at CPD Index

Missed last time's Web-update?

Nichola's SME Tax W-update 11 August 2022

• Trusts and Estates: What’s New 2022/23 
• Employer Bulletin: August 2022 
• Another HMRC late payment interest rate increase 
• Self Assessment 2021-22 returns: Updated online filing exclusions 
• Compare software for Making Tax Digital for Income Tax
• HMRC Statistics: CGT and Tax Relief costings 
• Electric Vehicles: Update 2022
• COVID-19: Taxation of coronavirus support payments
• No tax relief for lawyers' success fee in case against the Met
• Input VAT: What constitutes a valid claim (& VAT invoice)?
• Registering for VAT
• Correcting VAT errors
• Trust Registration Service
• AML: Money Laundering Regulations: Accountants' Registration
• Allowances: Trading and Property
• Restricting mortgage interest relief (subscriber guide)
• SDLT: Stamp Duty Land Tax, start here
• LBTT: Additional Dwelling Supplement
• R&D Tax Relief: Overview
• National Insurance: What's the maximum payable?
• CGT: Chattels
• NEW: CPD: How to avoid the High-Income Child Benefit Charge (HICBC) ...More 

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