Hello,
This week, we wonder whether HMRC are sending out too many 'One-to-many' letters, we muse on the fact that it has taken HMRC seven years to issue Simple Assessments and we consider tax on public sector pay. We have more news and case reports too.
One too many? Will taxpayers (and their agents) become desensitised when they keep receiving 'One-to-many' letters from HMRC? This is a form of 'nudge' targeted at taxpayers with certain assets and income streams. The new batch covers a diverse range of subjects from Cryptoassets to Investor's Relief to Construction Industry Scheme (CIS).
We have been thinking about how tax agents should respond. Included in Editor's choice (below) we have created a freeview step-by-step guide to handling HMRC's one-to-many agent letters.
Simple Assessment is back. It was originally due to be introduced back in 2017 but it appears to have been defeated by technology. We also feature a guide to that with details as to how to appeal if the information HMRC provides is incorrect.
The BMA reports that some NHS doctors are shocked to find that their new pay awards take them into marginal rates of tax. We wonder if the high level of the new pay award is calculated to take that into account: high earners who earn more than £100,000 face a clawback of the Personal Allowance, those earning more than £125,140 become Additional Rate payers, they also lose their Savings allowance. Our guide to Avoiding Marginal Tax rates provides more detail.
On cases, our top picks are HFFX LLP's tax appeal journey which has taken it up to the Court of Appeal who confirmed that what it treated as partnership capital contributions were not capital but miscellaneous income. This echoes the findings of the Upper Tribunal. There is also a case where executors tried unsuccessfully to amend IHT returns to maximise tax relief on charitable donations. Sadly, 'the horse had already bolted' and it was impossible to undo what had already been done. The moral of the story: take tax advice before reporting!
Back soon
Nichola & the Team
Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.
Quick News
Simple Assessments, seven years in the making
After a seven-year delay, HMRC will start issuing 'Simple Assessments' to 560,000 individuals with tax outstanding for 2023-24 in early Autumn. What are Simple Assessments and why did it take so long to make them?
HMRC's interest rates revised
Following the reduction in the Bank of England base rate by 0.25%, HMRC's interest rates for late payments and the repayment of tax will also be reduced.
One-to-many letter for Investors' Relief claimants
The HMRC Wealthy Unit is sending one-to-many letters to taxpayers who made an Investors' Relief claim in their 2022-23 tax return.
One-to-many letter on cryptoassets
HMRC's Wealthy Unit is sending one-to-many letters to those taxpayers HMRC believes have unreported chargeable gains or income from cryptoassets they have sold.
HMRC prompt correct deductions for CIS
HMRC have recently begun issuing one-to-many letters to contractors in the Construction Industry Scheme (CIS) to prompt them to ensure the status of subcontractors is correctly verified and the correct amount of tax deducted from payments made.
Tax avoidance litigation league table
HMRC have published their list of tax avoidance litigation decisions for 2023-24. This identifies the results in litigation decisions where HMRC considered that tax avoidance was involved. The summary indicates decreased litigation in 2023-24, but a continued high win rate for HMRC.
Tax Cases
Declared farming, forgot football
In Furlong Services Ltd v HMRC [2024] TC09252, the First Tier Tribunal (FTT) largely upheld an Information Notice requiring details of football consultancy income received by a company which had only declared income from farming in its tax computations.
Partnership allocations were miscellaneous income and not capital
In HMRC v HFFX LLP [2024] EWCA Civ 813, the Court of Appeal (CoA) affirmed the Upper Tribunal's (UT's) decision that allocations by a corporate member of a mixed member partnership to individual members constituted miscellaneous income.
No late appeal for failure to respond to Statutory Review
In Cranham Sports LLP v HMRC [2024] UKUT 209, the Upper Tribunal (UT) refused to allow a late appeal in an IR35 case when the taxpayer’s representative filed objections against HMRC's conduct but failed to object to the outcome of Statutory Review in time.
No rewrite of estate return to enhance charitable relief
In David Marks (Executor of Hilda Marks) v HMRC [2024] TC09253, executors failed in their efforts to reinterpret a will trust and thus rewrite an earlier estate return to improve tax relief for charitable donations.
Editor's Choice
HMRC one-to-many letters on Agents' responsibilities (FREEVIEW)
Our step-by-step guide to handling HMRC's one-to-many agent letters and understanding your responsibilities as an agent.
VAT: Agents and principals
UPDATE: A summary of recent legal disputes concerning whether Private Hire Vehicle (PHV) operators are legally required to act as principals and the implications for their VAT liability.
Guides & Updates
Tax planning for income at marginal tax rates
At what levels of income do higher marginal rates of Income Tax apply? What tax planning can be undertaken?
Self-employed
A sole trader? Start here...
Our 'At a glance’ guide is essential reading for anyone who is thinking of starting in business on their own, as a sole trader.
Partnerships
Partnerships with mixed membership
What is a mixed-member partnership? How are the profits of a mixed-member partnership taxed?
Directors & Companies
Associated companies & tests for control
What is an associated company? What are the tax effects of associated companies? How do the control tests work? Examples of associated companies. What are the rules for indirect control?
Employers
IR35
What is IR35? How does it work? How is the deemed payment calculated? What expenses are deductible?
Land & Property
Abolition of the FHL regime: Briefing
HMRC have published draft legislation and related notes detailing how the abolition of the Furnished Holiday Letting (FHL) rules in April 2025 will operate. We consider the practical impact of the loss of the FHL rules and provide some essential planning points
Penalties & Compliance
Appeals: Late
When can you make a late tax appeal? What conditions must be met?
Grounds for Appeal: Amount
This guide covers your grounds for appeal against a penalty on the basis that the penalty is too high, miscalculated or if there are other reasons to warrant or request a reduction.
DOTAS: Disclosure of Tax Avoidance Schemes
What are the Disclosure of Tax Avoidance Schemes (DOTAS) rules? When should you disclose your use of a tax avoidance scheme? What are the consequences of non-disclosure? How are penalties calculated?
Private Client & Estate Planning
Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of trust business assets
When can trustees claim Business Asset Disposal Relief (BADR)? Which types of trust is BADR available to? Who can claim BADR for a trust disposal of business assets?
CGT: Date of acquisition or disposal
When is the date of acquisition or disposal of an asset for Capital Gains Tax (CGT) purposes? When do special rules apply? Why does it matter?
Cryptoassets: How are Bitcoin, cryptocurrencies or cryptoassets taxed in the UK?
How do you tax Bitcoin? Are cryptocurrency or cryptoasset gains or profits, taxable? Can you obtain tax relief if you make losses on Bitcoin? Gains on transactions in cryptoassets are potentially taxable in the same way as other investments.
Capital Allowances
Cars, Vans & Other 4 wheel vehicles: Allowances
What capital allowances are available for vehicles? How does HMRC classify what is a car or what is a van?
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
Partial exemption & input VAT
How do you calculate the amount of input tax you can recover under the VAT partial exemption rules? What are the de minimis rules?
Registering for VAT
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?
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
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 the Last Tax Update?
Ross Martin Tax: SME Tax News 1 August 2024
- Autumn Budget 2024 announced with a raft of new measures
- Abolition of the FHL regime: At a glance
- Non-domiciled individuals: the new proposals
- Call for Evidence on carried interest
- New cross-border transitional tax rules for multinationals
- Grants open to Welsh school children
- VAT on private school fees and removal of business rates relief
- Client briefing on Reform to the Non-Domiciled Individuals' regime ...More
Subscribe for news, guides, tools & CPDs
Subscribe and UNLOCK the site. Annual subscriptions begin at £550 (+ VAT) or pay in 12 monthly instalments of £53 (+ VAT). All subscriptions are for a 12-month term.
What do you get?
- A comprehensive practical tax database of guides, checklists, briefings and practice notes, and access to all our time-saving calculators and tax tools.
- A regularly updated library of on-demand verified CPD.
- 25% discount on Virtual Tax Partner services.
- Read everything in our comprehensive weekly SME tax news summary. We do the reading then summarise legislation, HMRC guidance, analyse official reports and cherry-pick the best of the press and the rest.
- Commission guides and checklists for your own practice.
