Hello,
HMRC's latest campaign aims to identify undeclared dividend income. As you all know, most small companies' accounts do not show the amount of dividends that have been paid to their owners. HMRC can calculate the level of distributions made by making a comparison of a company's reserves from one year to the next from its accounts submitted for Corporation Tax.
It's a bit of a long-winded processes, but no doubt something that can be automated by the use of a suitable macro. Close company shareholders will, from 2025, be required to detail the amount of dividend income they receive from their companies separately from other dividend income in their tax return, if they do not already do that.
Reading over tax tribunals this week we noted that there is a major test case on the Managed Service Company (MSC) legislation gathering steam. Over 1,000 clients of the App Accounting Group Limited (TAAG), previously trading as Boox and Square Accounting, have been issued with Regulation 80 PAYE determinations. The allegation is that the clients, who are all personal service companies are MSCs because they are all linked to TAAG. HMRC says that TAAG cannot claim exemption as an accountancy firm because it was actually a 'MSC provider'. It is a sensible precaution to review the rules to ensure that your practice is not accidentally capable of being described as such.
Taxi-tax? That was a new one for us too. We became curious about this when read that several news outlets were insisting that there is a new taxi-tax. We investigated the issue. Naturally there is no new tax as such it's just that the advent of the ride hailing app tests the bounds of VAT. We have a couple of interesting VAT cases also to report this week. What happens when you convert a commercial vehicle to a car? That is a novel one!
More news, updates and cases below so do have a good old read through.
Back soon
Nichola & the Team
Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.
Quick News
HMRC targets undeclared dividends
In their latest one-to-many letter, HMRC turn their attention to company owners who may have underdeclared dividend income.
Tax and taxis: Is there a new 'taxi tax'?
The VAT treatment of taxis fares continues to be in the news. What is the current VAT position for private hire operators and what does the future hold?
Tax Data Card 2024-25
A summary of key tax rates and allowances for 2024-25 and 2023-24.
Tax Cases
Military service tax defence
A former soldier persuaded the First Tier Tribunal (FTT) to restrict the scope of HMRC's assessment for a High-Income Child Benefit Charge (HICBC). He claimed that he was unaware of the charge due to being absent from the country on military operations. HMRC's discovery was permitted due to a retrospective change in the tax law and the taxpayer missed the cut-off by a matter of days.
Rooms over garage were not a dwelling
Not quite there! A house buyer failed in a claim that he had purchased two dwellings for SDTL, the tax tribunal was not convinced that that 'Rooms over garage' had sufficient refinements to be either suitable for use as a dwelling nor were they in the process of being adapted for such use.
Editor's Choice (subscribers)
Private Clients' Tax Planning for the 2023-24 Year-end
NEW: our tax year checklist and toolkit for private clients. It can be used in conjunction with our checklists for directors, employers and self-employed individuals.
Managed Service Companies (MSCs): are you a MSC provider?
UPDATE: its confirmed that over 1,000 clients of the App Accounting Group Limited previously trading as Boox and Square Accounting have been issued with Regulation 80 PAYE determinations. Are you a MSC provider?
Dividends (how to pay & process): Step-by-step guide
A step-by-step guide to paying and processing legal dividends for companies and their owners.
Tax Tools
Tax calculators
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Tax Tools
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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
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?
Partnerships
Partnership agreements: What should be considered?
Partnership agreements can be invaluable to clarify everyday matters and settle disputes within a partnership. What sort of things should be discussed for inclusion in a partnership agreement? Why are they important?
Directors & Companies
Employment Related Securities: share schemes for smaller companies
What are the tax consequences when a company gives shares to an employee or director? What are employment-related securities? What is best: shares or share options? How do you set up a share scheme?
Employers
PAYE Settlement Agreements
What are PAYE Settlement Agreements? How do they work? What can be included?
Payrolling Benefits in Kind
UPDATE: this will be mandatory by 2026. Is it time to pilot the change with some of your clients?
Private Client & Estate Planning
Pensions: Tax rules and planning
UPDATE: What tax rules apply to pensions? What tax relief is available? What tax charges can arise? What planning opportunities are there?
IHT: Loans and restrictions on liabilities against the estate
When are loans deductible from the estate on death? What restrictions are there? What anti-avoidance rules do I need to consider?
Land & Property
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?
SDLT: Multiple Dwellings Relief for Annexes Tool (Buy here)
When can you claim Multiple Dwellings Relief? Will a purchase of two such dwellings also result in a higher rate charge? Our SDLT MDR & Annexes Tool is based on the legislation and current case law: this will take you over the key conditions that you will need to meet to enable you to decide which rate of SDLT applies to your transaction.
Capital Allowances
Capital Allowances: What's new 2023-24
NEW: What's new in Capital Allowances for 2023 and 2024? A summary of the different types of capital allowances currently available to UK businesses.
More Tax Guides
Childcare: Free and Tax-free Childcare
What childcare support is available? Can my child get 15 or 30 free hours of childcare? Am I eligible for the 25% government contribution towards childcare costs through the Tax-Free Childcare scheme?
Pensions: What happens when you die?
What happens to your pension when you die? What tax is due by your estate? Will your family have to pay Income Tax if they receive your pension going forward? What can you do to mitigate any tax charges?
VAT News & Cases
Cosmetic treatments were not medical care
In Aesthetic-doctor.com Ltd v HMRC [2024] TC09030, the First Tier Tribunal (FTT) found that a private medical clinic offering cosmetic treatments was not providing medical care. Its supplies were not exempt from VAT.
VAT recoverable on Land Rovers
In Three Shires Trailers Limited v HMRC [2024] TC09044, the First Tier Tribunal (FTT) found that input VAT was recoverable on the purchase of two Land Rover Discovery vehicles used solely for business purposes. The subsequent conversion of the vehicles into cars, by adding rear seats, did not prevent VAT recovery, or result in an output VAT charge.
Cars & Vans: VAT
UPDATE: What is a car for VAT? What is a van for VAT? What VAT can be recovered on a car that is bought? Leased? What about fuel? Or mileage reimbursements?
Penalties (VAT)
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: CGT Reporting and payment deadlines
- CPD: Corporation Tax Part 1: Rates and Challenges
More at CPD Index
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- VtaxP Tax Workouts 2023: AML Essentials update & IHT and Family Investment Company case studies
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Missed Last Time's Web-update?
Nichola's SME Tax W-update 1 February 2023
- Tax Clearance: Why bother?
- Hot briefs, January's case round-up
- PRR: No evidence, no relief
- What is the 2024/25 PAYE Code?
- Sale to an Employee Ownership Trust (EOT)
- An Index to Share Transactions incl. Reorganisations, Demergers & Share Exchanges
- Do I pay a salary or dividend? 2023/24
- Accountancy & tax fees
- Investment bonds & tax
- Off-Payroll Working UPDATE
- Travel (employer's guide) UPDATE
- Rent-a-room Relief UPDATE
- Transfer of Assets Abroad UPDATE
- Groups (VAT) UPDATE ...More
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