Nichola's SME Tax W-update 9 November 2023

Hello,

It has been another quiet week from a tax perspective. Tuesday saw the State Opening of Parliament in which the King’s Speech outlined the government’s intent to reduce inflation, ease the cost of living, and assist businesses to fund new jobs and investments. There was little mention of tax measures.

The Speech briefing notes highlight that a potential new duty on vapes is being considered. This is being explored as part of a wider ongoing consultation which seeks to tackle youth vaping. According to this consultation, some fifteen European countries have already introduced a national tax on vapes. Might the UK be the next?

A much greater number of tax announcements are expected in the upcoming Autumn Statement, which is now a little under a fortnight away. This week, the Chancellor wrote that his upcoming statement would lay down the next steps in his plan to boost economic growth by unlocking private investment and getting more people back to work. As for what this means in terms of specific measures, we will have to wait and see!

Once the dust from the Autumn Statement has settled, attention will turn to the Scottish Budget, which we now know will be held on 19 December.

Moving back to this week, we have a selection of interesting cases. Two decisions are concerned with Capital Gains Tax (CGT): Bottomer explores allowable deductions while Wilmore looks at divorce and the creation of a constructive trust. Being common issues seen in practice, these decisions are well worth a read.

Finally, we noted a subtle change to HMRC’s guidance on submitting the additional information form for R&D claims. We have seen R&D claims denied by HMRC on the basis of the previous guidance and wonder if this modified guidance, which seems to agree with the underlying legislation, signals a welcome change in approach by HMRC.

More news, cases and updates below. Do check out Editor's Choice.

Back soon

The Team

www.rossmartin.co.uk

Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.

Quick News (Freeview)  

Scottish budget date set for 19 December 2023 
The Scottish Parliament has announced that its 2023 Budget will be held on Tuesday 19 December 2023. This will set the tax and spending plans for Scotland for 2024-25.

Change in guidance highlights HMRC R&D error 
HMRC published amended notes on 7 November 2023 in relation to the completion of the CT600 to include an R&D claim. The new guidance confirms that the Additional Information Form (AIF) can be submitted at the same time as the CT600, contrary to HMRC's current specific R&D practice.

Tax Cases

Constructive trust prevented CGT liability 
In Abigail Wilmore v HMRC [2023] TC08959, the First Tier Tribunal (FTT) found that a divorcing couple’s agreement over the division of properties had created a constructive trust. This amounted to a disposal for CGT purposes, allowing no gain/no loss treatment to apply.

No CGT deduction for referral & project management fees
In Wayne & Beverley Bottomer v HMRC [2023] TC8968, the First Tier Tribunal (FTT) held that fees paid to an individual who provided a lead to a property and then helped manage its renovation were not deductible against the capital gain realised when the property was sold. The payments did not meet the requirements of s.38 TCGA 1992.

Tax Avoidance not main purpose of restructuring 
In Delinian Limited (formerly Euromoney Institutional Investor PLC) v HMRC [2023] EWCA Civ 1281, the Court of Appeal (CoA) held that although structuring a deal to allow non-payment of tax through the Substantial Shareholdings Exemption (SSE) rules was tax avoidance, it was not one of the main purposes and so the deferred gain was allowed.

Windfarm study costs not incurred on the provision of plant 
In Gunfleet Sands Limited & Ors v HMRC [2023] UKUT 260, the Upper Tribunal (UT) held that preliminary studies performed prior to the installation of the wind turbines were not incurred on the provision of plant and so did not qualify for capital allowances 

Editor's Choice (subscribers)

Private Client CPD: What’s on? November 2023 
NEW: A Private Client update for advisers and their clients.

Directors: Tax planning toolkit for 2023/24
What tax planning opportunities and strategies are available to directors? What's the optimum way to extract profits in 2023/24? What tax reliefs and tax deductions are handy to consider? This planner looks at a range of director tax issues. 

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  

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

Repairs and renewals
What expenses can you claim for tax? In what situations are repairs disallowed and treated as capital expenditure?  

Employers

Employers' NICs allowance
The Employers' National Insurance Contributions (NICs) allowance is an allowance given to small and medium-sized employers (SMEs) to offset against their annual Employers' National Insurance liabilities.

IR35: Off-Payroll Working
What is IR35? How does it work? How is the deemed payment calculated? What expenses are deductible?

Directors & Companies 

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

Gift Aid
UPDATE: How is tax relief for Gift Aid donations received by individuals? How do donations impact the personal allowance? When can Gift Aid donations be carried back to an earlier tax year? 

Dividend tax
UPDATE: This practical tax guide explains how dividends are taxed. It includes HMRC's own examples, more detailed examples, including an Owner Managed Business (OMB) section together with tax planning tips.

Land & Property

SDLT: Non-residents' surcharge
Non-UK residents have been subject to a 2% Stamp Duty Land Tax (SDLT) surcharge on the acquisition of residential property in England and Northern Ireland since 1 April 2021.

Property profits & losses: Toolkit (2023-24)
Our Property Profits & Losses toolkit takes HMRC's version and adds a great deal more information about what you can claim as an individual.

Overseas & Residence

Offshore Income Tax Toolkit
This toolkit provides an outline of the tax issues for UK resident individuals with offshore income and investments.

Disguised Remuneration

Disguised remuneration loan charge
What is disguised remuneration? What is the loan charge? When does the loan charge apply? Will the loan charge affect me? 

VAT News & Cases

Flat rate scheme
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?

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? 

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 2 November 2023

• HMRC stresses the need to check agent-prepared tax returns
• New Act strengthens Companies House anti-fraud powers 
• Estonia tops tax Competitiveness Index, UK bottoms out
• Women in Finance Charter survey results cautiously optimistic 
• FRS 105 does not allow cash basis accounting 
• Debt repayment did not reduce £8m sales proceeds 
• VAT group membership could not be backdated 
• No VAT exemption for indivisible intra-group supplies
• Input VAT claims: Pre-registration UPDATE:
• VAT representatives UPDATE
• Pre-trading expenses (companies) NEW
• Annual Tax on Enveloped Dwellings (ATED) UPDATE
• Remittance basis (overseas income) UPDATE
• Partnerships: Capital Gains Tax
• Employer pension contributions
• Loss relief (Income Tax) disposal of shares
• ISA guide
• Scottish Income Tax: Am I a Scottish taxpayer?  ...More

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