Here is a summary of some tax and VAT related news items from April.
The 2018-19 self-assessment returns and helpsheets were published in early April and can be accessed here.
Here is a summary of some other news items from April.
Other Returns and Forms
Guidance Notes Updates
A number of HMRC guidance notes have been updated, including:
Disposals of UK Land
HMRC guidance on non-residents selling UK land and property can be found here. It has been updated to reflect the fact that ATED-related capital gains tax no longer applies, non-resident capital gains tax now also applies to UK non-residential land and property and non-resident companies are now charged corporation tax on UK land and property capital gains.
Non-resident companies which are not already chargeable to UK corporation tax will need to register within three months of the first UK property disposal. Details of how to register can be found here.
Following criticism that the guidance might be misleading, HMRC has clarified its position on tax deductions for expenses incurred personally by partners. The revised guidance in their Business Income Manual at BIM82080.
A number of HMRC toolkits have undergone their annual review and update and can be found here. The stated purpose of the toolkits is to help taxpayers and their agents ensure returns are completed correctly and with reasonable care.
TAX CASE DECISIONS
Gallaher Limited  UKFTT 0207 (TC) – Cross border intra-group transfers
The First-tier Tribunal has ruled that restricting the ‘no gain/no loss’ treatment of intra-group asset transfers to UK resident entities is a restriction of the freedom of establishment and so is in contravention of EU law and should be disapplied. The only surprising aspect of this decision is that it has taken so long for a case to be heard by the Tribunal.
Hull City AFC (Tigers) Ltd  UKFTT 0227 (TC) – Image rights
It is well known that HMRC have been taking a keen interest in image rights payments for many years and this case was found in their favour. Hull City Football Club entered into a contract with a BVI company which enabled the club to exploit the overseas image rights of the player Geovanni Gomez. The Tribunal decided that although the arrangement was not a sham, the Club had no clearly defined plan for exploiting the rights, it did not have the resources to exploit the rights nor had it shown any intention to do so, and the rights did not have any real commercial value to the Club. So, viewed realistically, the sums payable to the BVI company were actually a reward for the footballer providing his services as a footballer and formed part of his earnings.
Hunt  UKFTT 0210 (TC) – Entrepreneurs’ relief definition of personal company
This case simply confirms that ownership test of not less than 5% of a company’s ordinary share capital for entrepreneurs’ relief purposes is to be determined by reference to nominal share capital rather than the number of shares in issue.
Gray  UKFTT 0213 (TC) and Hargreaves  UKFTT 0244 (TC) – Discovery
One of the requirements of a discovery assessment is that it is raised as a result of a discovery. These two cases are the latest in a recent series of cases which examine whether sufficient time elapsed between HMRC making the discovery and then later raising the assessment to cause the assessment to become ‘stale’ and therefore invalid.
Silver  UKFTT 0263 (TC) – Top-slicing relief
The Tribunal decided that the availability of personal allowance when calculating income tax on the ‘slice’ is determined by the size of the slice and not by the total income (including the chargeable event gains) for the tax year in which the gains arose. Subject to HMRC appeal, many taxpayers may now find themselves in the position of being able to amend their self-assessments and/or submit overpayment relief claims.
Draft regulations to amend VAT adjustment rules following a change to consideration
HMRC published a draft statutory instrument VAT (Amendment Regulations 2019) This will change the rules regarding VAT adjustments which may be made due to changes in the price of goods and services.
VAT regulations will be changed so that an adjustment can only be made following an increase or decrease in the consideration, when a supplier provides the debit or credit note which includes information specified in regulation 15C.
This will be effective from 01 September 2019.
Planned changes regarding the VAT liability of energy saving materials
In 2015 the EU commissioned a report which suggested that the UK relief for energy saving materials was too wide and should be restricted in line with other member states. The new legislation will remove the 5% rate for the installation of wind and water turbines, but retains the current 5% relief for elderly people and vulnerable persons in residential accommodation.
The planned changes will be complicated as the 5% relief will be retained for energy saving materials but only when the costs of the energy saving materials does not exceed 60% of the cost of the installation. Therefore, the legislation provides that if the materials cost exceed 60% the installation of the energy-saving materials must be standard rated.
This seems complex and will be difficult to identify for HMRC VAT officers.
VAT CASE DECISIONS
Cube Construction Southern Limited v HMRC 2019 TC 07030
The company undertook works to the roof, doors and with re-wiring works of a listed building which had been damaged by fire.
The point at issue was whether the works were zero rated as charged to the customer by the company or standard rated as asserted by HMRC with a deliberate penalty charged although this was removed at the outset of the hearing. The relevant VAT periods checked by HMRC were prior to October 2012 when approved alterations to to a listed building were zero rated but not repair works.
The result was that the works to the roof and doors were found to be zero rated and thus an approved alteration and the re-wiring was standard rated and a fair and reasonable apportionment was used.
Snow Factor v HMRC UKUT0077
The tribunal found that that payment of tax would cause extreme financial hardship.
The company had claimed financial hardship before the first tier tribunal but lost at this stage and therefore following that decision the tax became payable under Section 85(3) VAT Act 1994, before the case could be heard at the Upper Tier.
The law allowed the company to appeal the required payment as it remained that paying the tax would cause financial hardship.
The tribunal could not find any other similar cases and allowed the appeal and the disputed tax did not have to be paid.
It is important to remember that when applying to tribunal for VAT cases, it is generally expected that the VAT assessments are paid to HMRC unless genuine financial hardship can be demonstrated. This aspect of HMRC VAT enquiries is frequently overlooked but does not apply to penalties. The types of evidence that will usually be accepted by the Financial Hardship section at HMRC are bank statements and accounts which show that the appellant does not have sufficient funds to pay the disputed tax. In some cases appellants have been expected to apply for loans to pay the disputed tax in advance of a tribunal hearing. The above case shows that there is recourse to appeal the denial of financial hardship.
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