Hello,
When does a pool car qualify as a pool car? When it meets the relevant qualifying conditions of course! Our tax case this week features an unfortunate situation where an HMRC inspector tried to help an employer set a carpool policy. Unfortunately, the employer misinterpreted the rules, the qualifying conditions for tax-free pooling were not met, and HMRC raised an assessment.
How do you know if the tax advice you receive is reliable, even when it comes from a specialist? That can be tricky, as the pool car case shows. I was reviewing HMRC's Standard for Agents, which has come a long way since it was introduced back in 2016, and it now contains some interesting advice. For example, agents are supposed to "take reasonable steps to make sure any third-party input used in the course of acting for a client (such as software or specialist advice) provides accurate results and complies with the client’s tax obligations".
In the context of future obligations for Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), the "reasonable steps" you could take are to use software which is on HMRC's list for MTD for ITSA. Being on HMRC's list is not an endorsement by any means, but who has the time to analyse whether the software follows the specifications given? HMRC's advice is to "always check with the software providers to make sure their software suits your needs." It also notes (somewhat alarmingly in my opinion) "You’ll also need to check with the software supplier if their software supports calendar quarters." I was thinking that if you were on HMRC's list surely quarterly filing must be 'a given'. It just shows it makes sense to try and sign up for the MTD for ITSA pilot ASAP and get testing!
A couple of interesting news items to point out: some non-resident companies have been slow to note that the rate of Corporation Tax changed back on 1 April 2023 and a reminder from HMRC on confirming provisional claims in returns.
Quick reminders this week: we are now in 'Employer year-end filing season', this means that if you run a payroll, P60s should be given to employees today. If you are providing fuel to employees (how many people still do that?) a new advisory fuel rate applies from 1 June. Further upcoming deadlines are included in our Tax Calendar and also our Employment Related Securities (ERS) what's new below.
Nichola & the Team
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Quick News (Freeview)
Employment-Related Securities: What's New? May 2024
The issuing of Employment-Related Securities Bulletin 55 (May 2024) is a useful reminder that the online filing season has begun for all employment-related securities (ERS) matters.
Advisory fuel rates from 1 June 2024
HMRC have published new advisory fuel rates for company car drivers which apply from 1 June 2024.
Statistics show decrease in take-up of share investor reliefs
HMRC have released statistics showing a general decrease in the number and amount of investments made under the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), Social Investment Tax Relief (SITR) scheme, and Venture Capital Trust (VCT) scheme.
Non-resident companies miss Corporation Tax rate changes
HMRC have updated their guidance to assist non-UK resident companies who have missed the 2023 changes to Corporation Tax and have been applying the wrong rate of tax to their profits.
Updating provisional claims in returns
HMRC are writing to taxpayers who included a provisional Rollover Relief claim in their 2020-2021 Self Assessment return where HMRC has no evidence of the provisional claim being updated with a valid claim. These claims expire on 31 January 2025.
HMRC Updated the Standard for Agents
The new version acknowledges that if a tax agent is a member of one of the professional bodies that have signed up to Professional Conduct in Relation to Taxation (PCRT) and adheres to its values, HMRC's Standard for Agents should not place further requirements on them
Tax Cases (Freeview)
HMRC reverses decision on pool cars
A tax inspector agreed to a company pool car policy with an employing company, subsequently, HMRC changed its view and raised a NICs assessment. Could the employer do anything to mitigate the ensuing NIC assessment?
Editor's Choice
VtaxP: Virtual Tax Partner Tax Workouts: June 2024
Our Virtual Tax Partner Workouts aim to keep you up to date with your tax know-how but also to inspire you by introducing some new topics: including:
- How to run the most tax-efficient business...ever 2024/25
- AML Update & making your firm-wide risk assessment
- Corporation Tax: Purchase of Own Shares: case study
Calculating Corporation Tax & Checklist
How do you calculate Corporation Tax? What is the small profit rate? How do you calculate Marginal Tax relief? How do you adjust for Associated Companies? What is meant by Control? What are Augmented profits?
Guides & Updates
Self-Employed
Herd basis: Farming
The 'herd basis' recognises, for tax purposes, the economic nature of animals held for production as capital assets, rather than as trading stock. This can be of benefit to some farmers and result in tax savings.
Losses, trade losses and sideways relief
How can trade losses be utilised? What are the restrictions?
Overseas & Residence
Companies: Permanent establishment & residence
What are the rules for determining a company's country of residence? What is central management and control? When does a company create a permanent establishment in another country?
Non-resident directors: earnings, expenses and reporting requirements
Do non-resident directors have to complete a UK Self Assessment return? When and how is their remuneration taxable in the UK? What expenses can they claim? Should they be paid via PAYE?
Directors & Companies
Loss relief (Income Tax) disposal of shares
Share Loss relief allows you to offset a loss made on the disposal of shares against income instead of following normal capital loss treatment.
Share capital: What's an ordinary share?
What is an ordinary share? Why is it important?
Companies: Trading, non-trading and accounting periods
When is a company classed as trading, non-trading or dormant for Corporation Tax? What are the tax filing obligations in each case?
Employers
Pool cars
What is a pool car? How is it taxed? When does it become a benefit? What are the rules? Is it still worth having them?
Recreational benefits
Employers can provide sporting or recreational benefits tax-free to employees. What is excluded? How should an employer structure benefits?
Land & Property
National Insurance for landlords
When are National Insurance Contributions (NICs) payable by landlords? Can landlords pay Class 2 NICs voluntarily?
Private Client & Estate Planning
IHT Business Property Relief
A guide explaining what Business Property Relief is, when it can apply and pitfalls and planning points.
Negligible value claims
What is a negligible value claim? When and how can a claim be made?
Divorce & Separation: Toolkit
A summary of the tax implications which can arise on divorce and separation.
Tax Return questionnaire
What information is needed to complete a Self Assessment Tax Return? This questionnaire will help you gather the documents and information required.
Capital Allowances
Plant & machinery: Allowances
What capital allowances are available on plant and machinery? How do you calculate them? What are qualifying activities?
Farming: Capital allowances
What types of expenditure may qualify for capital allowances in farming businesses? What farming-specific points need to be considered?
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?
Capital Goods Scheme
What is the VAT Capital Goods Scheme (CGS)? When do I use it? How does it work?
Business splitting and VAT (single business directions)
What measures can HMRC take when they identify that a business has been artificially split into two more entities in order to trade below the VAT registration threshold?
Tax Tools & Calculators
Tax tools & calculators
UPDATE: 2024/25 versions available now. We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes.
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.
CPD for Lunch
Byte-sized chunks of lunchtime CPD for subscribers
- NEW: CPD: Change of basis periods: Transitional rules 2023-24 Returns
- CPD: VAT Penalties Update
- CPD: CGT Reporting and payment deadlines
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 23 May 2024
- Agent Update: May 2024
- Early election pauses non-dom and other reforms
- FHL simplification test rejected
- Applications open for Welsh 'future-proofing' grants
- Football agents' fees and contracts
- TiS blocks EIS disposal
- Was the DLA written off? A cautionary tale
- High Court saved uncertain charitable gifts
- Gold bullion scheme escapes VAT fine
- Energy-Saving Materials UPDATE
- Non-Domiciled Individuals and Remittance Basis: Spring Budget 2024 proposals briefing
- Campsites & Caravans: Tax Overview UPDATE
- Advisers' Guide to Property Business' Profits and Losses UPDATE
- Furnished Holiday Letting UPDATE
- Trusts & Estates: what's new 2024/25 UPDATE
- Named tax avoidance schemes, promoters, enablers UPDATE
- Overpayment Relief ...More
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