HMRC have issued their Agent Update for August 2023. We have summarised the key content for you with links to our detailed guidance on the topics covered.
SME Tax News
In Stephen Lee v HMRC [2023] TC08872, the First Tier Tribunal (FTT) upheld two of the four assessments for the High-Income Child Benefit Charge (HICBC), as not being a parent of the child did not stop the charge applying. No knowledge of his partner's financial position was, however, a reasonable excuse for preventing penalties from arising.
In John and Janet Beesley v HMRC [2023] TC08871, the First Tier Tribunal (FTT) found that a tax agent had mistakenly claimed a deduction for Capital Gains Tax (CGT) in respect of payments made to redeem a mortgage and made under a personal guaranteed on the disposal of a property and that no Entrepreneurs’ Relief was due either.
In Purple Sunset Limited v HMRC [2023] TC08880, the First Tier Tribunal (FTT) found that payments made to a director should have been reported under Real-Time Information (RTI) as a director is included in the definition of an employee for RTI purposes.
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The dramatic rise in the price of land and property following the COVID-19 lockdowns have resulted in taxpayers reporting record levels of capital gains. HMRC's new report reveals that most gains are created on the disposal of properties in the South East by the over-fifties many of whom are downsizing as part of retirement plans to 'escape to the country'. We note that many private landlords have taken the opportunity to cash in.
In James George Gibson v HMRC [2023] TC8869, a claim that a property was in mixed-use when acquired and so attracted the non-residential rate of Stamp Duty Land Tax (SDLT) was unsuccessful on appeal. The evidence was indecisive: it was the kind of decision that could go either way.
In HMRC v A Taxpayer [2023] UKUT00182, the Upper Tribunal found that looking after an alcoholic sister and her family was not an exceptional circumstance for the Statutory Residence Test (SRT). The taxpayer exceeded her day limit by six days so was UK resident, resulting in tax on £8m of dividends.
HMRC has released the latest statistics about Capital Gains Tax (CGT) for the 2021-22 tax year which show record levels of gains and a significant increase in CGT being paid on the sale of residential property.
The Chartered Institute of Taxation (CIOT) and Association of Taxation Technicians (ATT) have published the results of their recent member survey about Making Tax Digital (MTD). It shows that members have continuing concerns about the costs and benefits of MTD for Income Tax despite the increased thresholds and delayed start announced by HMRC in December 2022.
Following the Bank of England’s announcement on 3 August 2023 that the base rate will rise to 5.25%, HMRC's interest rates are also increasing by 0.25%, to 7.75% for late payment interest and 4.25% for repayment interest, from 22 August 2023.