Latest news round up

Newsletter issue - June 2021

Finance Bill amendments

Following the Budget in early March, the current Finance Bill was published on 11 March 2021. Since that date, a number of amendments have been made. Of the most significant, the following stand out in particular.

A clause in Schedule 2 that explicitly included FHLs in the provisions for the temporary extension to loss relief has been deleted. When the bill was first published, some commentators pointed out that further changes to the law would be required because FHL businesses are not eligible to use s. 64 ITA 2007, which is one of the conditions to use the extension.

The section on the new super deduction has also been amended to ensure that the 130% deduction and 50% deduction can apply to "background" plant and machinery in leased buildings. The ICAEW had raised concerns that the rules as originally drafted would cause issues where buildings are purchased or constructed and parts of them are fitted and leased out, for example office blocks. The amendment ensures that fixtures and other assets in all parts of such buildings will be able to enjoy the new temporary enhanced deductions.

Full details are available at GOV.UK.

Litigation

The long-running stand-off between Mr Raymond Tooth and HMRC came to a conclusion last month after it was considered in the Supreme Court. The case concerned the question of whether HMRC were out of time to raise a discovery assessment in respect of tax due in relation to a failed avoidance scheme. Mr Tooth has used an avoidance scheme that involved an employment loss. However, the tax software his advisers use did not have the facility to include such losses. Instead, the loss was entered on the partnership pages using a dummy partnership UTR with a full explanation in the additional information pages.

The case came down to which deadline was the appropriate one. For a discovery assessment to be valid it must be raised within four years of the end of the relevant tax year. This is extended to six years where there is careless behaviour. Where the loss of tax is brought about deliberately, the time limit is 20 years.

Part of HMRC's argument was that, in their opinion, the inclusion of the employment loss on the partnership pages constituted a deliberate error, meaning the 20-year time limit was the appropriate one. This was crucial because the assessment had been raised after the expiration of the six-year anniversary of the relevant tax year. The Court of Appeal had previously agreed with HMRC on this but had dismissed the department's appeal on the grounds that there had been no valid discovery. The Supreme Court found that, in fact, the discovery had been valid, but the way the loss had been reported did not constitute a deliberate mistake. The six-year time limit applied, and therefore HMRC's appeal was dismissed.

In other litigation news, it appears Gary Lineker is the latest presenter on HMRC's employment status review list, following high-profile cases involving Eamon Holmes, Lorraine Kelly, and Kaye Adams. The disputed amount of tax and NI is reportedly in the region of £5 million. For his part, Mr Lineker strongly refutes the suggestion that he was an employee in all but name.

Covid-19

There is a little-known deadline approaching in relation to the VAT deferral scheme. Any business that took advantage of the scheme in 2020 that has not repaid the deferred amount will need to indicate to HMRC how they are planning to make repayment or risk receiving a penalty of 5% of the outstanding amount on 30 June. Businesses may seek to take advantage of the new repayment scheme. If they wish to do this, they will need to register for the scheme by 21 June. This will allow them to make repayment in eight equal instalments.

Information regarding eligibility is available here.

The government has also grown concerned that some companies are being dissolved with a view to avoiding repayment of government-backed loans that were made available to support businesses affected by Covid-19.

In response, the government has published a Bill that aims to prevent this by preventing directors of dissolved companies from setting up a highly similar business following the dissolution. The Bill also contains significant sanctioning powers. Read more here.

Umbrella companies

Umbrella companies are currently high on HMRC's fraud investigation radar. In particular, the department's specialist unit is taking aim at mini umbrella companies, and new guidance has been published to help engagers spot potential criminal activity.

What our clients say about us...

  • "Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."

    ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT

  • "I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."

    Neil Price - Managing Director at Work Relief Charity Recruitment

  • "Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"

    Lee Westrap MBCS - Director - Bulldog IT Services

Request a Callback
Please complete our form
to request a callback
Get a Fixed Quote

Competitive fixed quotes
for agreed services

Find out how to Make more, Keep more and Work less

Increase your profit and
reduce tax liabilities

Your Business Size?

Expert advice for your
business size

 

Marker

Booth & Co  |   The Hermitage  |   15a Shenfield Road  |   Brentwood  |   Essex  |   CM15 8AG        Telephone: 01277 224666    |   Email: info@boothandco.co.uk