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We have a diverse collection of cases and guides this week. Some of the cases warrant a close read.
The Upper Tribunal has given its decision in the Gerald and Sarah Lee case. The scenario was a common one: Mr and Mrs Lee purchased a plot of land, demolished the existing property, built a new home and took up occupation as their main residence. They claimed full Private Residence Relief (PRR) on the gain when the property was sold. The Upper Tribunal agreed the claim for PRR; the relevant ‘period of ownership’ was that of the dwelling house, not that of the underlying land. This gave the taxpayers a very favourable outcome.
The importance of date-stamping inbound post is highlighted in the Langley case. The taxpayers could not support their claim that a Stamp Duty Land Tax enquiry opening letter was received outside of the enquiry window. This meant that the letter was deemed to be received by the taxpayers in the ordinary course of post. Unfortunately for them, this meant that the enquiry was valid as it was deemed to have been opened within the time limits.
It’s not all land and property this week. Employers who reimburse employees for charging electric company cars and vans at home will be pleased that HMRC have changed their policy and now accept that such reimbursements are exempt from a Benefit In Kind tax charge.
The Institute for Fiscal Studies (IFS) has been asking ‘Should full expensing capital allowances be made permanent?’. Their answer on balance is ‘Yes’. We wonder if this is something we will see in next month’s Autumn Statement.
More news, cases and updates below. Do check out Editor's Choice.
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The Team
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Quick News (Freeview)
SATR discrepancies One-to-Many letters
HMRC have issued the latest round of One-to-Many letters. It is aimed at tax agents submitting multiple P11D and P14 claims for clients where there may be a subsequent discrepancy on their 2021-22 Self Assessment Tax Return in relation to the High Income Child Benefit Charge (HICBC).
IFS says full expensing should be made permanent
The Institute for Fiscal Studies has published, 'Full expensing and the corporation tax base'. The report discusses the temporary full-expensing policy and whether it should be made a permanent part of the corporate tax base, concluding that if ends up being temporary it will have little or no long-run effect on the UK’s capital stock.
Public service pensions & the McCloud remedy
Following the 2015 changes to public sector pensions, from 1 October 2023, certain younger members of public service pension schemes can use the McCloud remedy to benefit from the same annual and lifetime allowance protections as older retiring scheme members.
HMRC's CEST moves to new platform
HMRC's Check Employment Status for Tax (CEST) tool has moved to a new platform. It improves the user experience of the tool, giving more flexibility and a better understanding of the outcome.
Electric car charging: HMRC BIK policy change
HMRC have updated their Employment Income Manual to reflect a change in policy. This impacts employers who reimburse employees for the cost of electricity used to charge company cars and vans at home. A Benefit In Kind no longer arises on reimbursement.
Tax Cases
SDLT enquiry deemed in time
In Melvyn and Carol Langley v HMRC [2023] TC08899, the First Tier Tribunal (FTT) found that an SDLT enquiry opening letter, sent by HMRC two days before the enquiry window closed, was deemed to be delivered to the taxpayers in time. The enquiry and subsequent closure notice were valid.
Late ATED return penalties cancelled
In Derrida Holdings Limited v HMRC [2023] TC08905, the First Tier Tribunal (FTT) found that a company that was charged ATED late filing penalties did not in fact need to submit an ATED return. As a return was not required, the penalties charged were cancelled.
PRR period of ownership relates to dwelling only
In HMRC v Gerald and Sarah Lee [2023] UKUT 242, the Upper Tribunal (UT) found that Private Residence Relief (PRR) applied to the entire gain on a main residence built on the site of a previously demolished property. The dwelling house existed for a quarter of the time that the land had been owned, but the period of ownership test related to the house only.
Editor's Choice (subscribers)
Rollover Relief: Exchanges of joint interests in land
This guide outlines the form of Capital Gains Tax (CGT) Rollover Relief available for exchanges of joint interests in land.
How to disclaim the Personal Allowance
Why would I want to disclaim the Personal Allowance (PA)? What are the advantages? How do I disclaim the PA?
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)
Self-Employed
Extracting profits (self-employed)
What tax planning tips will help you to run a tax-efficient business? We review your different options. The majority of businesses in the UK are run by sole traders. This guide looks at profit extraction from the perspective of the unincorporated business.
Farming: Tax Overview
UPDATE: What is farming? What are the tax consequences and tax considerations of farming? What are the features of agricultural tenancies? What expenses can farmers claim for tax purposes? Are there special tax and accounting rules for farmers? What are the VAT rules for farmers?
Employers
Employer’s What’s On: 2023/24
This is an employer update for advisers and their clients covering measures that are new in 2023-24.
Directors & Companies
Losses: Trading and other losses
When can a company offset its losses? What restrictions are there? How are loss claims made?
Private Client & Estate Planning
Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of shares or securities in a company
UPDATE: When can you claim Business Asset Disposal Relief (BADR) on a share sale? What is the rate of Business Asset Disposal Relief (Entrepreneurs' Relief)? How do you claim BADR? What case law is there on BADR?
Trust Registration Service
UPDATE: What is the Trust Registration Service? What trusts does it apply to? What are the requirements and deadlines?
Capital Allowances
Capital Allowances: What's new 2023-24
What's new in Capital Allowances for 2023 and 2024? A summary of the different types of capital allowances currently available to UK businesses.
Full expensing & First Year Allowances
What is full expensing? When does it apply and what is the rate of allowance? How are disposals of full expensing assets dealt with? What assets qualify for the 50% First Year Allowance (FYA)? How do I deal with disposals of 50% FYA assets? How do I make a claim?
Land & Property
Adviser's Guide: Property Business, profits and losses
What is property income? How is it taxed? How are profits calculated? How are losses relieved? Is National Insurance paid on property income? Is property income classed as a business activity?
Profits from dealing in or developing UK land
These rules apply UK Income tax or Corporation tax to all profits from trading in and developing UK land, regardless of your country of residence.
Penalties & Compliance
Client Briefing: How to avoid penalties for carelessness?
UPDATE: How do you avoid penalties for carelessness when preparing your tax return?
Economic Crime Levy
UPDATE: The Economic Crime Levy is a fixed fee paid by medium and large-sized entities that are subject to Money Laundering Regulations. This will include accountants, auditors and tax advisors. Registration, filing and payment are due by 30 September.
VAT News & Cases
Revenue & Customs Brief 7 (2023): Drugs & medicines under patient group directions
HMRC have published Revenue and Customs Brief 7 (2023) ‘change to the VAT treatment of drugs and medicines supplied under patient group directions’. This sets out a temporary zero rating for VAT.
Cash accounting
What is cash accounting for VAT? What are the benefits? What are the conditions?
Energy-Saving Materials
The supply and fitting of energy-saving materials in residential accommodation attracts the zero rate of VAT. What does it apply to? What are the qualifying conditions? What case law is there on this topic?
CPD for Lunch
Byte-sized chunks of lunchtime CPD for subscribers
- NEW: CPD: Corporation Tax Part 1: Rates and Challenges
- NEW: CPD: Corporation Tax Part 2 Associated Companies
- NEW: CPD: Corporation Tax Part 3 Augmented Profits & Marginal Relief
- CPD: Landlords Update 2023
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 5 October 2023
- Revenue Scotland releases Green Freeports guidance
- Tax exemption for war 'widow' recognition payments
- Spotlight 63: Property business arrangements involving hybrid partnerships
- Grazing land does not make equestrian property mixed use for SDLT
- F1 lawyer's appeal fails again, £40 million is taxable as income
- Repatriation of the dead predominantly a supply of transport
- Withdrawal of paper VAT registration form
- Investment bonds & tax UPDATE
- Badges of Trade: Are you trading or not? UPDATE
- Conditionality: taxi, private hire vehicles and scrap licenses UPDATE
- IHT Agricultural Property Relief UPDATE
- Economic Crime Levy UPDATE
- Reverse charge: Domestic UPDATE
- Post-deregistration VAT recovery UPDATE
- NEW: CPD: Corporation Tax Part 1: Rates and Challenges
- NEW:CPD: Corporation Tax Part 2 Associated Companies
- NEW:CPD: Corporation Tax Part 3 Augmented Profits & Marginal Relief ...More
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