As we roll towards the end of June, don't overlook the next major employer reporting obligations: form P11D (returns of benefits and expenses) and the employer's declaration P11D(b). Employment Related Securities (ERS) returns are due by 6 July. 

SME tax news 4

We are often asked about shareholder plans to gift their own shares personally to employees. It's important to note that such shares are 'Employment Related' and that the limited range of exemptions from the ERS regime, the so-called 'friends and family exemptions' are applied narrowly. We have just one tribunal decision on this covering the friend's exemption and the circumstances of that case were pretty extreme. If you are stuck on this (or any other tax matter) then don't forget that you can always 'phone a friend' by posting a question to our Virtual Tax Partner helpline. 

Our pick of tax cases features a cautionary tale on the dangers of neglecting to notify chargeability to tax: HMRC's time limit for assessment may then be extended to 20 years and, of course, tax-geared penalties apply. Truly onerous penalties may also potentially be applied when a taxpayer refuses to comply with an Information Notice. There is a safeguard in that only the Upper Tribunal (UT) can approve them. We review a decision on this topic and note that the problem is that the legislation requires substantial interpretation and this seems to be more difficult for HMRC than the taxpayer. We also have a VAT case which considers whether a dipping sauce is a mixed supply. 

Our next Virtual Tax Partner Workout is running next week and it covers a Company Purchase of Own Shares. This is one of the many topics covered in some depth in our 'Reorganisations Zone', and we field a lot of queries on this topic. The tax rules are pretty prescriptive but as we know companies and their owners are many and varied and there is never a dull moment when we advise on this kind of transaction. Do sign up now and expect some useful case studies and practical tips.

We covered 'How to run the most tax-efficient business 2024/25' in one of our sessions this week. The focus was very much on business vehicles, setting up an optimal structure and we took quite a good look at Limited Liability Partnerships (LLPs) and partnerships, the complicated anti-avoidance rules for Mixed Member partnerships and Salaried Members, and we also considered tax structures that we don't like as they are way too complex and don't achieve a lot! Recordings of this will be available at the start of next week for those who could not attend on the day.

The seven tax and accountancy bodies that comprise the Professional Conduct in Relation to Taxation (PCRT) group have responded to the latest consultation from HMRC on raising standards in the tax advice market. The group confirms that it supports the mandatory registration of tax practitioners. Currently, a wide range of persons can register with HMRC to act as a tax agent, for example, accountants and advisers who are unaffiliated with a professional body, members of the legal profession and property letting agents. There is clearly some work to be done and we await to hear more on this in the Autumn.

We have renamed the newswire this week: it's a Team effort!

Back soon

Nichola & the Team


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

Quick News (freeview)  

VtaxP CPD: Corporation Tax: Purchase of Own Shares
BOOK NOW: Our new online CPD will review a company's purchase of own shares with step-by-step with examples and case studies. Our Virtual Tax Partner ® Tax (VtaxP ®) Workouts aim to keep you up to date with your tax know-how but also to inspire you by introducing some new topics. 

More time needed to implement Carbon Border Adjustment Mechanism
The ICAEW has asked for more time and comprehensive guidance for businesses to implement an effective UK Carbon Border Adjustment Mechanism (CBAM).

Joint statement supports mandatory registration of tax agents
The UK's seven main professional tax and accountancy bodies have made a joint statement in support of mandatory registration of tax agents. 

Notification of EMI options by 7 July warning
The HMRC notification deadline for the grant of EMI share options has changed, but some plans still require earlier reporting. 

Tax Cases (freeview)

Complex penalty rules trip up HMRC
In Paul Baxendale-Walker v HMRC [2024] UK154, HMRC found its case struck out by the Upper Tribunal (UT) who decided they had 'no reasonable prospect of success' in imposing £14m of tax-geared penalties for failure to provide information because the conditions for a Paragraph 50 Schedule 36 Information Powers penalty could not be met.

Assessment 15 years after failure to notify was valid
In Kenneth Williams v HMRC [2024] TC09171, the failure of a property developer to notify chargeability to tax and the resultant loss of tax was attributed to his negligent conduct. This meant that HMRC were able to raise assessments into past profits some 15 years after the disposal of the properties. 

Editor's Choice  

Reorganisations and Reconstructions
What on earth is a company reorganisation or reconstruction? When would you use these really useful reliefs? What tax reliefs apply to a company reorganisation, a share for share exchange or a reconstruction?

AML Tools: Identify the Beneficial Owner for AML
As must complete Customer Due Diligence (CDD) on each client, and where you are dealing with an entity you must identify its Beneficial Owners. Use this tool to check who is treated as the Beneficial Owner according to the Money Laundering Regulations.

Virtual Tax Partner's Tax in June Workouts 
We ran two totally essential workouts for accountants and advisers last week. You can sign up to download the talks and notes for our Anti-Money Laundering 2024 Update and How to Run the Most Tax Efficient Business 2024/25...Ever!

Guides & Updates 

Finance Acts 2024: Tax Update and Rolling Tracker
This rolling planner tracks the key tax announcements that impact the 2024-25 tax year and beyond. This planner is updated on an ongoing basis. 

Schedule 36 Information Notices
What is a Schedule 36 Information Notice? When can HMRC issue one? What rights does the taxpayer have when an information notice is issued? What penalties apply for a failure to respond to an Information Notice?


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

Wages: Spouse or family
Can I employ family members? Can I employ my children? Will the costs be allowable? What needs to be considered?


Partnerships: Capital Gains Tax
How does Capital Gains Tax (CGT) work for partners and partnerships? What is HMRC’s Statement of Practice D12? How are transactions between partners treated? What if the partners are connected persons for CGT?

Partnerships: Losses
What loss reliefs are available to partners and what restrictions are there? How to calculate a partner's capital contribution? What are the anti-avoidance rules?

Directors & Companies  

Research & Development Tax Reliefs 
What is R&D Relief? How does it work? Why does the size of the company matter? What is sub-contracted R&D? How do I write an R&D Report?

Selling the business: Deferred consideration and earn-outs
When a company is sold via a share purchase the buyer may hold back or defer paying the whole of the purchase price until certain agreed conditions are satisfied or profit targets are met. What are the tax implications of this?


Employment tax: Reporting, dates & deadlines 2024-25
This guide summarises the key deadlines and additional considerations for employers for the end of the 2023-24 tax year.

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

Land & Property

Rent-a-room Relief
What is rent-a-room relief? When does it apply? What are the limits and restrictions?

Replacement of Domestic Items Relief
What is Replacement of Domestic Items Relief? When can it apply and what conditions must be met? 

Capital Allowances

What expenditure qualifies for plant & machinery allowances?
What is plant and machinery? What expenditure qualifies as plant and machinery? What is treated as part of a building?

Capital Allowances: What's new 2024-25
What's new in Capital Allowances for 2024-25? A summary of the different types of capital allowances currently available to UK businesses.

Penalties & Compliance

Professional Conduct in Relation to Taxation
The Professional Conduct in Relation to Taxation (PCRT), adopted by the main professional accounting and tax bodies, sets out the professional standards that are expected of a member when undertaking tax work.

Private Client & Estate Planning

IHT: Main Residence Nil-Rate Band (RNRB)
What is the Main Residence Nil-Rate band? When was it introduced? How does it work? Who can claim it? 

IHT Agricultural Property Relief
What is Agricultural Property Relief (APR)? When does it apply? What are the conditions and restrictions of the relief?

Divorce & Separation: Toolkit
A summary of the tax implications which can arise on divorce and separation.

VAT News & Cases

KFC dip pots formed part of VAT single supply 
In Queenscourt Limited v HMRC [2024] TC09184, the First Tier Tribunal (FTT) found that dip pots supplied as part of a KFC meal deal formed part of a single standard-rated supply of hot food.

Cars & Vans: VAT
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? 

VAT fraud: What is the Kittel principle?
What is the VAT Kittel principle? What happens when the Kittel principle applies? What tests do HMRC and the tribunals apply? How can I protect my business?


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 

More at CPD Index

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 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 13 June 2024

  • Is a fiscal till solution the way to prevent ESS?
  • Electronic Sales Suppression one-to-many letter
  • HMRC update List 3, approved organisations and societies 
  • Simpler reporting for medium-sized companies
  • VAT application response times extended
  • HMRC score against Nottingham Forest 
  • IR35 costs Childs £1.7m
  • HMRC’s fishing expedition shut down
  • FTT tests the Remittance Basis
  • Director's loan debits caused Remittance   ...More

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