Following yesterday’s cancellation of the proposed autumn budget, the Chancellor of the Exchequer Rishi Sunak spoke in Parliament today (24.09.20) to address the next phase of the Government’s economic support during this crisis, dubbed their ‘Winter Economy Plan.’ The chancellor began his speech on a positive note, stressing that the UK is in a better economic position than in March, however he emphasised the need for more financial provisions to accompany the realisation that the virus will remain prevalent for months to come. The measures outlined today can be summarised as follows: 1. Jobs Support Scheme (JSS) The JSS will replace the furlough scheme (officially known as the Coronavirus Job Retention Scheme) ...

The recent First Tier Tribunal (“FTT”) case of Szymusik v HMRC [2020] raised some interesting questions about the eligibility criteria for claiming Seafarers’ Earnings Deduction (“SED”) – But what is SED? And who can claim it? This article will answer these questions, whilst also discussing what we can learn from Szymusik’s case. What is Seafarer’s Earnings Deduction?  The SED is an amount which employed seafarers can deduct from their employment earnings when calculating their UK tax liability - it is not available to seafarers who are self-employed. Who can claim it? In relation to the SED, a seafarer is someone whose employment consists of the performance of duties on a ship, including tasks which are incid...

The Coronavirus pandemic has not only endangered the health of the UK, but it has also had a huge impact on the economy. This financial strain has led to many people choosing to give up/use some of their income to support: 1) Businesses or employers; or 2) Charities. But what are the tax implications of these acts of generosity? Supporting a business or an employer People are showing support for a business or an employer in several ways such as: 1) waiving salary or bonuses before they are paid; 2) waiving dividends; or 3) giving salary or bonuses back to a business or employer after they have been paid. The tax treatment of this support depends on which route is taken (i.e. 1, 2 or 3). 1. Waiving salary or bonuses before they are...

Making Tax Digital (MTD) represents a series of efforts by the government to make it easier for individuals and businesses to keep on top of their tax affairs and get their tax right. The rules will mean that individuals and businesses will need to keep digital records, and send regular updates to HMRC. Certain announced changes have been postponed by the government in the past. This article provides an update of the latest position for businesses and individuals. VAT Since 1 April 2019 (1 October 2019 for some more complex businesses), MTD for VAT has required that businesses with turnover over the VAT threshold (£85,000 in 2020/21) keep their records in a digital format, and submit their VAT returns using software. In practice t...

It is common for business/financial decisions to be guided by the tax treatment of the transaction. However, in light of the tax legislation's complexity taxpayers may seek advance assurance before the event takes place to guarantee that the expected tax implications will indeed apply. In light of this, it is possible to write to HMRC to request advance clearance of the tax treatment of certain transactions. The tax legislation provides for clearances for certain arrangements (i.e. statutory clearances), and HMRC also provides a non-statutory clearance service for areas where the rules do not otherwise provide for it. The most common transactions that we as a firm seek clearance from HMRC include: Share-for-share exchanges Pu...

Many businesses have carried out new activities during the ongoing Coronavirus pandemic or alternatively were forced to temporarily suspend all trading activities. In light of the above, HMRC have recently updated the section in their Business Income Manual which relates to ‘Crisis-driven changes to trading activity’ to now cover the potential specific impacts of the Coronavirus pandemic on trading activities. This blog will cover the main changes: 1. New Trading Activities During COVID-19 & Lockdown When a business carries out an entirely new activity which is completely unrelated to its previous activities, then this will usually be treated as the commencement of a separate trade. However, if a business starts carry...

When looking at the capital gains tax (CGT) position following a disposal of an asset, it is important to understand that CGT follows the beneficial interest in the property (as opposed to the legal title). Establishing the owner(s) of the beneficial interest should be considered on a case-by-case basis. The case of Asif Bhikhi v HMRC (2020) demonstrates the importance of properly documenting transfers of property which can often be overlooked in transactions between family members. In this case, the First-Tier Tribunal (FTT) held that there was insufficient evidence to demonstrate that the appellant retained their beneficial ownership of a property on a transfer. In any case, even if there had been an implied trust in place, the transfe...

Private residence relief (PRR) provides relief from capital gains tax (CGT) on the disposal of a property that has been used as your main home during the period of  ownership. In the recent First Tier Tribunal (FTT) case of Hashmi v HMRC, the tribunal found that Mrs Hashmi (the taxpayer) had failed to satisfy the burden of proof required to show that the properties that she lived in were her private residences, and therefore eligible for private residence relief. The case provides insight into the level of proof that is required to support a claim for private residence relief for a property. Background Between 2013 and 2015, the taxpayer lived in the following properties, for the following periods:  132 Shaggy Calf Lane unt...

If you build yourself a new home or if you convert a non-residential building into a home for you or your relative to live in as a main residence, you may be able to claim a VAT refund on building materials and services. In order to be eligible for a refund, you must make a claim with HM Revenue & Customs (HMRC) no later than 3 months after the "completion" of the building. P Wedgbury & S Wedgbury v HMRC - The Definition of "Completion" The term "completion" is unfortunately not clearly defined in the legislation. However, in the recent case of P Wedgbury & S Wedgbury v HMRC (2020) the First-Tier Tribunal (FTT) considered the meaning of "completion" and therefore provides a useful guide for taxpayers who are looking to...

This article will cover the Stamp Duty Land Tax “SDLT” relief that may be available to you if you purchase a subsidiary dwelling alongside a principal dwelling. Normally if you purchase an additional residential property which will not be used as your main residence, an SDLT surcharge may be applicable. The surcharge increases the basic rates of SDLT by 3%, meaning that more SDLT will be payable. However, a purchase of more than one dwelling may be treated as the purchase of a single dwelling for SDLT purposes if one or more of the dwellings is subsidiary to the principal dwelling. This is applicable if: The subsidiary dwelling is within the same building as, or in the grounds of, another dwelling purchased in the same transa...