Tax Briefing September 2019

NEWS UPDATES

The IR35 saga continues. In the latest reported case (TC07377) , once again involving BBC presenters, the First-tier Tribunal has found in favour of HMRC, but only as a result of the lead judge exercising her casting vote.

Here is a selection of other tax news items from September …


Non-Residents and UK Property

 HMRC’s guidance for non-UK residents disposing of UK property has been updated to reflect the changes which took effect on 6 April 2019. The guidance note can be found here.

Loan Charges

The government has announced an independent review of the Disguised Remuneration Loan Charge. The Treasury has asked for the report by mid-November with the intention of giving taxpayers some certainty in advance of the 31 January 2020 self-assessment deadline.

The Chartered Institute of Taxation has produced a very helpful technical note which explains the history and background to the Loan Charges and some of the issues still to be addressed and resolved.

The technical note can be found here.

Stamp Duty Land Tax

HMRC have recently been looking very closely at claims that properties with extensive grounds and maybe disused farm outbuildings are ‘mixed use’ and taxable at the lower non-residential rates of SDLT.

The September 2019 issue of the Stamp Taxes Newsletter highlights the fact their views on the subject are set out in updated guidance in the Stamp Duty Land Tax Manual starting at SDLTM00440.

Negligible Value Claims

 HMRC guidance on negligible value claims and agreements has been updated and can be found here.

HMRC Help and Support

HMRC has issued updated guidance aimed at a number of different classes of taxpayer:

The guidance, referred to as help and support, consists of links to webinars and to other guidance notes and publications.

Business Investment Relief (‘BIR’)

The Chartered Institute of Taxation has written to HMRC highlighting concerns over the way HMRC is interpreting the BIR legislation. BIR gives income tax relief to non-domiciles who use their remittances to make certain investments in UK businesses. The issue here is that HMRC appear to be placing undue emphasis on how the profits of a trade are being applied rather than whether a trade is being undertaken on commercial terms with a view to profit. HMRC has been invited to comment and a copy of CIOT’s letter can be found here.

TAX CASE DECISIONS 

Roulette V2 Charters LLP [2019] UKFTT 0537 (TC) – Trading losses

 The issue here was whether trading losses incurred by a yacht chartering business qualified for relief. The relevant conditions for relief are that a trade must be carried on throughout the relevant basis period on a commercial basis with a view to the realisation of profits. HMRC argued that the ownership of the yacht was for mainly personal rather than business and the charter income was being generated merely to offset some of the costs but the Tribunal disagreed. On the other hand, the Tribunal did not believe the business had been run on a commercial basis. The decision was reached in part by reference to factors pointing towards uncommerciality, such as failing to properly insure the yacht and allowing some personal use during the peak time of the year for generating chartering income.

Roulette V2 Charters LLP

Potter & Anor [2019] UKFTT 0554 (TC) – definition of trading company

This was another case on the subject of trading but this time concerned with whether a company had met the conditions of being a trading company for capital gains tax entrepreneurs’ relief purposes. The main issue was the fact that following a downturn in business due to the recession, despite best efforts there was a long period of time elapsed during which the company issued no invoices before finally being wound up. The Tribunal found that despite there being no income, and despite the fact the company had money invested in bonds, the main activity being carried on was trading activity and so the company was a trading company.

Potter


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