Nichola's SME Tax W-update 10 August 2023

Hello

The dramatic rise in the price of land and property following the COVID-19 lockdowns have resulted in taxpayers reporting record levels of capital gains. HMRC's new report reveals that most gains are created on the disposal of properties in the South East by the over-fifties many of whom are downsizing as part of retirement plans to 'escape to the country'. We note that many private landlords have taken the opportunity to cash in.

Stamp Duty Land Tax (SDLT) has taken yet another scalp. We feature a case where a taxpayer did not receive enough advice on the purchase of a property which included converted farm buildings and a field. The result was that he was timed out of a claim for Multiple Dwellings Relief (MDR). The tribunal also decided that his field was residential. In my humble opinion, it was a bit of a difficult case, but then again these are all difficult cases which is why they reach the tribunal. My thoughts are that if you have something that is clearly parkland to a stately home or horse paddock to a non-commercial equine property then fair enough it is residential but when you have land that was previously farmland and is now used for intermittent grazing then I can't quite see how that makes it become residential. Fair enough if you keep your sheep in the kitchen, but then if that's the case you probably have a farmhouse and you are looking at non-residential rates of SDLT anyway.

The results of a new survey on  Making Tax Digital (MTD) call into question the costs v benefits of MTD for Self Assessment. I guess that the jury is still out on this one. Given the recent reports about public sector data security breaches, I would imagine that there are more pressing concerns right now.

More news 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)  

Another HMRC late payment interest rate rise 
Following the Bank of England’s announcement on 3 August 2023 that the base rate will rise to 5.25%, HMRC's interest rates are also increasing by 0.25%, to 7.75% for late payment interest and 4.25% for repayment interest, from 22 August 2023. 

HMRC reports record levels of CGT 
HMRC has released the latest statistics about Capital Gains Tax (CGT) for the 2021-22 tax year which show record levels of gains and a significant increase in CGT being paid on the sale of residential property.

Agents concerned about MTD despite HMRC concessions 
The Chartered Institute of Taxation (CIOT) and Association of Taxation Technicians (ATT) have published the results of their recent member survey about Making Tax Digital (MTD). It shows that members have continuing concerns about the costs and benefits of MTD for Income Tax despite the increased thresholds and delayed start announced by HMRC in December 2022. 

Tax Cases

Field was residential, although it's hard to tell why
In James George Gibson v HMRC [2023] TC8869, a claim that a property was in mixed-use when acquired and so attracted the non-residential rate of Stamp Duty Land Tax (SDLT) was unsuccessful on appeal. The evidence was indecisive: it was the kind of decision that could go either way.

SRT: Looking after alcoholic twin is not an exceptional circumstance 
In HMRC v A Taxpayer [2023] UKUT00182 the Upper Tribunal found that looking after an alcoholic twin sister and her family was not an exceptional circumstance for the Statutory Residence Test (SRT). The taxpayer exceeded her day limit by 6 days and was UK resident, resulting in tax on £8m of dividends.

Editor's Choice

CGT reporting: when & how? (Freeview)
How do you report your capital gains? What return do you use? There are different ways for individuals to report capital gains depending on whether you are resident or non-resident, and whether you are in or out of Self Assessment. 

SDLT: Multiple Dwellings Relief (MDR)
What is Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax purposes? When does it apply and how is it claimed? Use our tool to calculate the rate of SDLT on the purchase of a larger property with an annexe, a granny flat, or some other kind of accommodation, such as a cottage within the grounds of the larger property.

Guides & Updates (subscription content)

Start-ups

Anti-Money Laundering: do you need to register? (Freeview)
Which businesses are required to register with a supervisor for Anti-Money Laundering (AML) purposes? Who is your supervisor for (AML) purposes?

Acting for a trust? Start here…
An essential guide for advisers and trustees on how to manage the tax affairs of a UK trust and how to avoid common pitfalls.

Partnerships

Partnerships: Capital Gains Tax
How does Capital Gains Tax (CGT) work for partners and partnerships? What is HMRC’s Statement of Practice D12? How are transactions between partners treated? What if the partners are connected persons for CGT?

Employers

Employer’s What’s On: 2023/24
UPDATE: This is an employer update for advisers and their clients covering measures that are new in 2023-24.

Travel (employer's guide)
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?

Directors & Companies 

Company tax rates and allowances
(Freeview) How do I calculate Corporation Tax? What is the current rate of Corporation Tax? How does marginal relief work? Which companies pay the main rate of Corporation Tax? Which companies pay the small profits rate of Corporation Tax? 

Private Client & Estate Planning

Probate: At a glance (Freeview)
NEW: When someone dies, it is often necessary to apply for probate. What is probate? When is probate needed? Who can apply for probate? What happens if there is no will?

Trust Registration: At a glance (Freeview)
NEW: What is the Trust Registration Service (TRS)? When do trusts need to register? How can you check if a trust has been registered? Do trustees need to also register for Self Assessment?

Capital Allowances

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

Land & Property

SDLT: Residential property & dwellings
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?

National Insurance for landlords
UPDATE: When are National Insurance Contributions (NICs) payable by landlords? Can landlords pay Class 2 NICs voluntarily?

Overseas & Residence

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

VAT Guides & Cases

Medical clinic supplies standard rated for VAT
In Epem Limited v HMRC [2023] TC08865, the First Tier Tribunal (FTT) found that supplies made by a medical clinic were standard-rated for VAT. There was insufficient evidence to conclude to what extent exempt supplies may have been made. 

Education & VAT
UPDATE: What rate of VAT applies to education? What sort of services are classed as education? What do you do if you have multiple supplies including education? What cases are there on VAT and education?

Penalties (VAT)
UPDATE: When do penalties apply for VAT? What penalties are charged and how can they be mitigated?

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

• CPD: VAT Penalties Update
• CPD: Maximising Expense Deductions for Businesses
• CPD: Purchase of Own Shares (POS)
• UPDATE: CPD: Non-Resident CGT: UK Property

More at CPD Index

CPD Workouts

Taking a deeper dive into a range of topical subjects

• VtaxP Tax Workouts 2023: AML Essentials update & IHT and Family Investment Company case studies
• VtaxP Tax Workouts 2023: Tax Update for OMBs & Taxing the Digital Nomad

Tax Tools 

Tax calculators
FREE for subscribers: We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes. 

Tax Tools
FREE add-on for subscribers, or available separately

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.  

Tax Queries?

UK Agent for registration of Overseas Entities
Do you require assistance in the registration and verification of an overseas entity that owns UK land or property?

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.  

Missed Last Time's Web-update?

Nichola's SME Tax W-update 3 August 2023

• Tax reliefs uncosted, complicated & abused
• Basis Period reform: At a glance 
• HMRC falsifies bankruptcy order 
• Named tax avoidance schemes, promoters, enablers
• VAT: land & property (signpost)
• Farming: Tax Overview
• Accounting periods and tax basis periods
• Partnerships: How to prepare partnership and partners tax returns
• Accommodation: With travel or temporary workplaces
• Directors: Tax planning toolkit for 2023/24
• Acting for a trust? Start here…
• SDLT: Linked transactions
• Named tax avoidance schemes, promoters, enablers
• CPD: VAT Penalties Update ...More

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