Nichola's SME Tax W-update 14 September 2023

Hello

The holidays are over and it's 'all systems go' at HMRC. The long-awaited Overlap Relief form is now working; if you scroll down to VAT news you will note that we have changes to VAT Agent authorisation.

Although we have all been doing a lot of writing and webinars on the topic of tax Basis Year Reform, we have had remarkably few queries on this topic. Is this topic a smoking gun? I guess we will know when we get into the 2024-25 'Tax return season'. 

This week we have a new guide to tax and online sellers, and if you missed last week, a new Corporation Tax guide and checklist. We have some useful guides for start-ups and in the Private Client section we are featuring guides on Business Asset Disposal Relief (BADR), a Capital Gains Tax relief, and Business Property Relief (BPR), an Inheritance Tax relief. Both are very handy reliefs if you can get yourself into a position to claim them.

I have also flagged up our favourite tax planning guide for Directors, the Directors Tax Planning toolkit for 2023-24. In our case updates, we feature a cautionary tale on how extracting cash from a company when there are no distributable profits can potentially result in a Loans to Participators tax liability.

Stamp Duty Land Tax (SDLT) is now a regular subject for tax appeal hearings. Two case reports this week feature unsuccessful claims which used the non-residential rate for purchases of interests involving residential property and its grounds. All worth a note or two!

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)  

HMRC's Overlap Relief form now available
The long-awaited HMRC form, which will allow businesses to check their Overlap Relief figure in preparation for filing tax returns under the new Basis Period transitional phase, has gone live.

Gift Relief one-to-many letters 
HMRC’s latest one-to-many letter campaign focuses on Gift Relief claims made in 2021-22 tax returns, for Capital Gains Tax (CGT) purposes.

You're Fired! Sugar's advisers miss vital residence rule
Lord Sugar has a massive Income Tax bill after he mistakenly claimed that he was a non-UK resident at the time that his company paid him a £390 million dividend. As a serving member of the House of Lords, he is automatically deemed to be resident and domiciled in the UK. It was reported that he is suing his advisers.

Government 'flying blind' on levels of fraud and corruption 
The Public Accounts Committee has published 'Tackling fraud and corruption against government', which finds that large gaps still remain in the government’s understanding of its exposure to fraud and corruption to the extent that it is unable to effectively measure or combat it.

Tax Cases

Apartment reservation agreements didn't reduce SDLT 
In Landmaster Investment Limited & Anor v HMRC [2023] TC08919, the First Tier Tribunal (FTT) found that reservation agreements, relating to the purchase of new-build apartments, were not options or rights of pre-emption. Residential rates of Stamp Duty Land Tax (SDLT) applied.

Garages and right to use a garden: residential for SDLT
In Espalier Ventures Property Ltd v HMRC [2023] TC8914, a claim that the purchase of three garages and a right of access to communal gardens were separate non-residential property for SDLT failed to impress the First Tier Tribunal (FTT). It was found that the interests were residential and the higher rate of SDLT applied.

Energy company denied deductions for £28 million
In Scottish Power & Ors v HMRC [2023] UKUT 218, the Upper Tribunal (UT) found that £28 million of consumer settlements paid by a power provider were in lieu of penalties and so were non-deductible for Corporation Tax purposes.

Taking company money is not deliberate behaviour for s.455
In Prutish Gopaul v HMRC [2023] TC8917, the First Tier Tribunal (FTT) found that a company's suppression of turnover meant that the sole shareholder/director was personally liable for penalties. However, having taken the missing funds from the company was not enough to prove a s.455 charge had been deliberately unaccounted for.

Editor's Choice (subscribers)

Online sellers: Tax Overview 
NEW: What are the tax implications of being an online seller? When does a hobby become a business? What expenses can online sellers claim for tax purposes?  Are there special rules for taxing income? What are the VAT rules for online sellers?

Calculating Corporation Tax & Checklist
How do you calculate Corporation Tax? What is the small profits rate? How do you calculate Marginal Tax relief? How do you adjust for Associated Companies? What is meant by Control? What are Augmented profits?

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.  

Guides & Updates (subscription content)

Start-ups

Accounting periods and tax basis periods
Which date do I choose? Does it matter? Can I change my accounting date?  What changes are made as the result of basis period reform?

Conditionality: taxi, private hire vehicles and scrap licenses
UPDATE: What is tax conditionality? Does this affect tax registration? The renewal of certain licences, to drive taxis and private hire vehicles or deal in scrap metal, is conditional on applicants confirming that they are appropriately registered for tax.

Self-Employed 

Basis Period reform
What is basis period reform? Who is affected? What is the new basis year for tax? What are the transitional rules?

Directors & Companies 

Directors Tax Planning Toolkit 2023-24
This planner looks at a range of director tax issues, including company profit extraction. 

Employee Ownership Trusts: An exit route for owner-managers
What is an Employee Ownership Trust (EOT)? Are these a good exit route for owner-managers? What are the tax benefits?

Private Client & Estate Planning

Business Asset Disposal Relief: CGT & Disposal of a business
UPDATE: When does Capital Gains Tax (CGT) BADR apply? What is the rate of BADR? How do you claim BADR? What BADR case law is there?  

Business Property Relief: IHT Estate planning
UPDATE: How can you use Business Property Relief (BPR) to its maximum advantage through the interaction with other Inheritance Tax (IHT) reliefs?

Land & Property 

Joint property: legal v beneficial ownership
UPDATE: What is the difference between legal and beneficial ownership? What are the tax consequences? Are the rules different for married couples and civil partners?

Residential Property & SDLT
UPDATE: What is residential property for Stamp Duty Land Tax (SDLT)? What tax rate applies? Are garden and grounds are residential? Can a garage or other outbuildings be non-residential?

Incorporation

Capital allowances: On incorporation
What is the capital allowance position when an existing business is incorporated? What elections need to be made? 

Goodwill & incorporation: Tax issues
What are the tax issues in respect of intangible property (IP) assets, such as goodwill, on incorporation? What tax reliefs apply if you buy and sell goodwill and IP? What are the valuation and clearance procedures?

VAT News & Cases

HMRC changes VAT agent authorisation rules
HMRC have announced that they will be changing the functionality for agent authorisation for VAT. The change will impact copying across authorisations and will have effect from October 2023.

Holiday cottage not eligible for VAT repayment 
In Philip Spani v HMRC [2023] TC08916, the First Tier Tribunal (FTT) found that a newly constructed cottage did not qualify for VAT recovery under the DIY Housebuilders scheme. Constraints imposed by the property’s planning permission meant it was built in furtherance of a business.

Vacancies

Tax writer and Tax adviser vacancies
Enjoy working from home? Looking for a flexible career change? We are looking to expand our team and we have a vacancy for a tax writer and a tax adviser. The two can be combined. We are looking for someone with broad practical experience in advising in OMB and SME tax, who enjoys writing and updating our tax resources at www.rossmartin.co.uk, making CPD webinars and (optional) can advise our Virtual Tax Partner clients. 

CPD for Lunch

Byte-sized chunks of lunchtime CPD for subscribers

• CPD: Landlords Update 2023
• CPD: VAT Penalties Update
• CPD: Maximising Expense Deductions for Businesses
• UPDATE: CPD: Non-Resident CGT: UK Property

More at CPD Index

CPD Workouts

Two hours of CPD: Unravelling the diverse tax rules over 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 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 7 September 2023 

• Autumn Statement 2023: dates
• Overseas owners of UK property: time to register for tax?
• Councils call for control of failing apprenticeship levy scheme
• Can't only rely on agent: taxpayer must check tax returns
• SSE: a single company can't be 'a group'
• Company Tax: What's New 2023-24 NEW
• Calculating Corporation Tax (from 1 April 2023) NEW
• Corporation Tax (from 1 April 2023) checklist NEW
• Rollover Relief: Exchanges of joint interests in land UPDATE
• Land & Property: Relevant residential & relevant charitable purpose UPDATE
• Restricting mortgage interest relief
• Capital Allowances: What's new 2023-24
• Share capital: What's an ordinary share?  ...More

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