Insights

Weekly Tax Update 10 November 2021

  • Written By: Ami Jack
  • Published: Wed, 10 Nov 2021 12:00 GMT

Tax Update provides you with a round-up of the latest tax developments. Covering matters relevant to individuals, trusts, estates and businesses, it keeps you up-to-date with tax issues that may impact you or your business. If you would like to discuss any aspect in more detail, please speak to your usual Smith & Williamson contact. Alternatively, Ami Jack can introduce you to relevant specialist tax advisors within our firm.

1. General

1.1 Finance Bill 2021-22 published

The second Finance Bill of the year has been published. This contains the legislation for measures announced at Autumn Budget 2021.

The measures legislated for in this Finance (No.2) Bill include the new residential property developer tax, the economic crime (anti-money laundering) levy, and the health and social care levy on dividends.

2. Private client

2.1 Self-employment income support scheme: HMRC compliance activity

HMRC is writing to taxpayers who claimed grants under the self-employment income support scheme (SEISS) but have either not yet filed a 2019-20 tax return, or have filed one without self-employment or partnership pages.

To be eligible for SEISS grants in 2019-20, taxpayers had to be trading in that tax year. From November, HMRC will send letters to those claimants who have not yet submitted a tax return demonstrating trade in 2019-20.

The letters will ask them to file their return showing their trading income in 2019-20, or if they have already filed one, to amend it to add the partnership or self-employment pages. If they were not trading in that tax year they are asked to pay back the relevant SEISS grants (the first, second, and third). Links to additional guidance are included.

3. Trusts, estates and IHT

3.1 Information notice about trust distributions upheld

The FTT has upheld an information notice, finding that HMRC reasonably required documentary evidence to prove that payments to the taxpayer were indeed capital distributions from an offshore trust, rather than a form of income. HMRC should not be expected to take the word of the trust company alone.

HMRC opened an enquiry into the taxpayer’s return, as it held information showing that a number of UK resident companies had made payments to him, but there was no mention of these payments on his return, including in the white space notes. The taxpayer told HMRC that the payments were capital distributions from a non-UK resident trust, but that he did not hold any documents nor have the name of the trust. HMRC issued an information notice, after which an employee of an offshore trust company wrote to HMRC to confirm the name of the trust and that the distributions were of capital.

The taxpayer appealed the information notice to the FTT, arguing that HMRC did not need further information. The FTT rejected this, and upheld the notice, finding that HMRC reasonably required more information to check the tax position, and has good reason to suspect an underpayment of tax.

Lawson v HMRC [2021] UKFTT 367 (TC)

www.bailii.org/uk/cases/UKFTT/TC/2021/TC08298.html

4. PAYE and employment

4.1 IR35 appeal for TV presenter dismissed

The FTT has agreed with HMRC that IR35 applied to a TV presenter who had worked through a personal service company (PSC), as there was mutuality of obligation, and the TV station exercised control over his work. The presenter should have been taxed as an employee. PAYE and NIC were due.

A TV presenter set up a PSC that entered into contracts with Sky TV for the presenter’s services. Prior to this, he had been a sole trader and presented invoices to Sky, but switched to a PSC at Sky’s request. HMRC issued determinations for five years, on the basis that the intermediaries legislation applied to this arrangement, so the presenter should have been taxed as an employee.

The FTT considered the terms of the contract, and the work arrangements in practice. It considered what the terms of a hypothetical contract would be if describing the actual arrangement. It found that there was mutuality of obligation between Sky and the presenter as, although he was on fixed term contracts, and there was no intention to create an employment relationship, the presenter was paid the same amount each month, not reduced for no-shows nor increased for working overtime. Sky also exercised control over the presenter’s work, as it chose what sporting events he covered and when, so selected the dates and times that he worked. It also exercised control on how he worked as, although he had a degree of independence, it controlled the production process. The FTT also noted that over 50% of the presenter’s working time was devoted to Sky, taking into account preparation time, and that he was restricted such that he could not work for another broadcaster.

The PSC’s appeal was dismissed. The IR35 legislation was found to apply.

Little Piece Of Paradise Ltd v HMRC [2021] UKFTT 369 (TC)

5. Tax publications and webinars

5.1 Tax publications 

The following Tax publications have been published.

5.2 Webinars

The following client webinars are coming up over the next week.

  • 10 November 2021: S&W Sessions: Autumn Budget 2021
  • 11 November 2021: Investment and Tax Planning for multi-jurisdictional clients

https://smithandwilliamson.com/en/events/

6. And finally

6.1 A tax every year keeps the legislation – clear?

Our thanks to the CIOT for pointing out a milestone marked by this Finance (No.2) Bill: 20 new taxes since the millennium, not including devolved taxes. Accept no criticism: this is marvellous. Who cares that they barely nudge the ‘miscellaneous’ column in the tax receipt statistics? Every new tax is some bright-eyed policy maker’s baby, and the birth should be heralded with rejoicing.

Forget whispers about whether or not the Government really thinks this is simplification: as lovers of all things couple-colour and complicated we are delighted. Bring on 2100, and let’s see if the policy makers can score a century.

https://www.tax.org.uk/new-finance-bill-means-20-new-taxes-since-2000

https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk

View previous tax update

Ref: NTAJ141121106

Glossary

Organisations   Courts Taxes etc  
ATT – Association of Tax Technicians ICAEW - The Institute of Chartered Accountants in England and Wales CA – Court of Appeal ATED – Annual Tax on Enveloped Dwellings NIC – National Insurance Contribution
CIOT – Chartered Institute of Taxation ICAS - The Institute of Chartered Accountants of Scotland CJEU - Court of Justice of the European Union CGT – Capital Gains Tax PAYE – Pay As You Earn
EU – European Union OECD - Organisation for Economic Co-operation and Development FTT – First-tier Tribunal CT – Corporation Tax R&D – Research & Development
EC – European Commission OTS – Office of Tax Simplification HC – High Court IHT – Inheritance Tax SDLT – Stamp Duty Land Tax
HMRC – HM Revenue & Customs RS – Revenue Scotland SC – Supreme Court IT – Income Tax VAT – Value Added Tax
HMT – HM Treasury   UT – Upper Tribunal    

 

DISCLAIMER
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

 

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