Hello,

With the Self Assessment filing deadline just a few days away, this week we feature our top tips for last-minute tax registration and tax returns. We also review HMRC’s new Agent Update, flag a potential tax issue for management buyouts (MBOs) and report on several cases, including the Upper Tribunal’s latest decision on the Tour Operators’ Margin Scheme (TOMS).

SME tax news 7

The tax tribunals remain busy, with decisions being published thick and fast. This week we examine the Sonder decision, and what this means for the scope of the Tour Operators’ Margin Scheme (TOMS) for VAT.

Continuing with a VAT theme, the First Tier Tribunal (FTT) recently considered the meaning of ‘sports drink’ for VAT liability in Global By Nature. Our summary of the decision is below. The tribunals heard several VAT disputes in the context of food and drink in 2024 and it is starting to look like that trend may continue into 2025.

With just over a week to go until the 2023-24 Self Assessment filing deadline, we share our guide of Top Tips for last-minute tax returns, which you can find in Editor’s Choice. We also have a mini-guide answering FAQs on how to make a last-minute tax registration. 

With late payment interest rates at particularly high levels, make sure that tax liabilities are settled on time, where possible. Don't forget to consider making a Time-to-pay arrangement with HMRC when difficulties in paying are encountered.

Digital Platform operators also have a 31 January 2025 reporting deadline. This is their first reporting cycle. Sellers on digital platforms should note that their details will be forwarded to HMRC under the new compliance system.

Recently, HMRC confirmed to the Chartered Institute of Taxation (CIOT) that the s.455 CTA 2010 Loans to Participators charge on indirect loans may well apply in a wider range of situations, including when a Management Buyout (MBO) is funded by borrowing. We are not convinced that Parliament has ever fully thought this through. It is certainly something that will cause firms to make case reviews if not already busy with Self Assessment tax returns.

For those preparing for their ATT and CTA exams in May 2025, Autumn Murphy from the rossmartin.co.uk team will present a free study skills session, including a live Q&A, on 19 February. Be sure to sign up and share details with anyone else who may find it useful.

More news, cases and updates below.

Nichola and the team

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


Quick News 

Agent Update: January 2025 
HMRC have published their Agent Update for January 2025. We have summarised the key content with links to our detailed guidance on the topics covered, including the classification of double cab pick-ups, a new R&D disclosure facility and the public service pensions remedy digital service. 

Indirect loans to participator shock
HMRC has confirmed the application of the rules governing indirect Loans to Participators in s.459 CTA 2010. This provides confirmation that a s,455 loan to participator tax charge may well apply in many more commercial situations including Management Buyouts (MBOs).

Digital Platforms: Report by 31 January 2025
Online sellers must gather and report information collected on their sellers between 1 January 2024 to 31 December 2024 by 31 January 2025.

Pensions over-taxation problem ends in April
HMRC have promised to apply the correct tax codes to pension pot withdrawals from April 2025. The change was announced in its 'Pensions schemes newsletter 166' following criticism of the current system that forces pensioners into reclaiming the tax.

Planning for Success: How to prepare for your May 2025 ATT/CTA Exams
Free Study Skills Session: Preparing for Your May 2025 ATT/CTA Exams on 19th February 2025 at 12 PM.


Tax Cases

HMRC’s tax calculation not appealable
In Sarah Yaxley v HMRC [2025] TC09405, the First Tier Tribunal (FTT) found that a taxpayer could not appeal against HMRC’s calculation of Top Slicing Relief. 

Taxpayer deliberately concealed trade receipts
In Haron Mayet v HMRC [2025] TC09406, the First Tier Tribunal (FTT) found that a taxpayer had deliberately submitted inaccurate self-assessment returns for a period of 20 years, by not declaring income receipts totalling £1.3 million.

'Reasonable care' taken by obtaining professional advice on agency rules
In Harbron Recruit Ltd v HMRC [2025] TC09395, the First Tier Tribunal (FTT) found ‘reasonable care’ had been taken by a taxpayer who took professional advice regarding CIS deductions and implementing agency worker rules.


Editor's Choice (subscribers)

Top tips for last-minute tax returns
This guide is a summary of top tips for dealing with last-minute tax returns; what not to forget and how to protect against enquiries.

Late tax return notification
A taxpayer who has never been in self-assessment before realises in late January that they need to file a tax return. What should they do?


What's in your 2025 training program?

20:20 Innovation Tax Product Review (CPD)
Join Sharon Cooke and Nichola Ross Martin for a webinar in which we look at ways in which accountants can obtain timely and relevant tax knowledge, resources and support from the 20:20 Innovation portfolio of products and services. When? February 27th 2025 ...More 


Guides & Updates 

Making Tax Digital 

Making Tax Digital for Income Tax: Data required by HMRC
UPDATE: What information do you need to submit under Making Tax Digital for Income Tax? What are the requirements for relevant persons under the VAT threshold? What are the categories of information required?

MTD: Toolkit for accountants
What is the current timetable for Making Tax Digital (MTD)? How will it work? Which clients will be excluded? What planning needs to be undertaken? 

Compare software for Making Tax Digital for Income Tax
What software is available for MTD for Income Tax? What's the cheapest software I can use for MTD for Income Tax? What is the best value software that I can use? What to consider before choosing software?

Self-employed 

Board and lodging adjustments
What private use adjustment should be made for board and lodging where a taxpayer lives at the business premises?

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

Directors & Companies

Employee Ownership Trusts: An exit route for owner-managers
UPDATE: What is an Employee Ownership Trust (EOT)? Are EOTs a good exit route for owner-managers? What are the tax benefits? What are the tax reliefs available? What clearances should be sought? What are the requirements for relief? 

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? 

Employers 

Company cars
Company car tax. How do you work out car benefit? How do you work out car fuel benefit? Are there savings for low-emissions vehicles? How do you reduce car benefit? Cars and the tax tribunals and Top Tax Tips.

Private Client & Estate Planning

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.  

National Insurance: What's the maximum payable?
How are National Insurance Contributions (NICs) limited? What is the maximum payable? What different rules apply to employment and self-employment income?  

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?  

ISA guide
UPDATE: What is an ISA? What are the limits? How are ISAs taxed?

Penalties & Compliance

Appeals: Grounds for Appeal Toolkit
What grounds are there to appeal a tax penalty? How should you word a tax appeal? Can you appeal HMRC errors? What is a reasonable excuse?

Named tax avoidance schemes, promoters, enablers
UPDATE: HMRC publishes a list of named tax avoidance schemes, promoters, enablers and suppliers. It is not recommended that taxpayers use any of these schemes. The most recent update was on 16  January 2025, when HMRC added five more companies

Directive on Administrative Cooperation (DAC8)
The Directive on Administrative Cooperation (DAC8) aims to enhance tax transparency and cooperation among OECD member states with the automatic exchange of information. How does it work and how should its requirements be fulfilled?

Cryptoasset Reporting Framework (CARF)
What is the Cryptoasset Reporting Framework (CARF)? When does reporting apply? What are the tax issues?

VAT News & Cases

Short-term apartment rental ineligible for TOMS 
In Sonder Europe Ltd v HMRC [2025] UT 00014, the Upper Tribunal (UT) found that the supply of holiday apartments to travellers was not eligible for the Tour Operators’ Margin Scheme (TOMS).

Powdered vegan food supplements were zero-rated
In Global By Nature Ltd v HMRC [2025] TC09396, the First Tier Tribunal (FTT) found that powdered vegan food supplements were zero-rated for VAT. 

Food, catering and takeaway
What is the VAT rate charged on food? How does this differ depending on hot or cold food and food consumed on or off the supplier's premises?

Reconcile your output VAT to your turnover
Why should you reconcile your output VAT to your VAT returns? How can you perform such a reconciliation? 


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 

CPD for lunch: Byte-sized chunks of lunchtime CPD (free for our Subscribers)

CPD: Pay as you go:

  • How to run the most tax-efficient business 2024/25.
  • Purchase of Own Shares: all the details.
  • Anti-money Laundering Update and Firm-Wide Risk Assessment ...More...

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 16 January 2025

  • Restriction to LTT Multiple Dwellings Relief
  • TaxGateway scam text warning 
  • HMRC tackle delivery drivers
  • Estate agents receive nudge to register for AML supervision
  • Quay wall eligible for Capital Allowances 
  • Living abroad? No excuse for late return
  • CJRS payments not valid 
  • Exempt supplies allowed for the 'Great Yorkshire Show' 
  • Private equity companies warned on VAT ...More

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