How to reduce the burden of tax returns upon millions of self-employed taxpayers

The time has surely come to reduce the burden of tax returns on millions of taxpayers.

One of the best series of events – at least in my view(!) – is the History of Tax events run by the Worshipful Company of Tax Advisers and often hosted by the CIOT (see bit.ly/3lCfLxn). It was here I learnt about the precedent value of the Magna Carta (Professor Jane Frecknall-Hughes) and in October 2011 about the invention of the PAYE system, from John Pearce.

25 May 2022

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Tax thresholds play a significant part in our financial system. But how do they impact our behaviour and what would happen if we increase them?

One of the traditional means of apparently simplifying the tax system has always been to lift thresholds. The personal allowance is perhaps the best example of this, as it has virtually doubled since 2010/11. The result has been that several hundred thousand people no longer pay income tax, since incomes generally have grown by less than the growth in the personal allowance.

24 June 2022

We must find some clear routes through the statutory maze governing employment status.

The key components of a tax system are law enacted by a democratic parliament; collection and enforcement by an independent tax authority; and adjudication of disputes by an independent judiciary.

22 April 2022

Against a background of challenging times and a rapidly rising cost of living, Rishi Sunak pushes to be known as a tax-cutting chancellor.

Chancellor Rishi Sunak delivered the Spring Statement on 23 March amidst a difficult UK and global context. The Statement (see bit.ly/37QT58V) set out some immediate measures to support people; a significant programme of national insurance and income tax cuts; and discussion around new measures to boost UK productivity, with decisions promised at the Autumn Budget.

28 March 2022

As the question of how government designs and implements its tax policy remains as complex as ever, the Office of Tax Simplification begins a new review to consider what tax simplification means.

The Office of Tax Simplification has just announced a new review to consider what tax simplification means. The report has been commissioned by the Chancellor and the Financial Secretary to the Treasury (see bit.ly/3LZu3UT) following the publication of the Treasury’s five year review into the effectiveness of the OTS. The FST wrote:

24 February 2022

Also in this edition

Legislation for the Register of Overseas Entities will require the registration of overseas legal entities that acquire UK land, as well as many existing holdings. Information will be due within six months of the Register coming into force.

The Economic Crime (Transparency and Enforcement) Act (‘the Act’) became law on 15 March 2022. Among other matters, the Act legislates for the introduction of a publicly accessible register of overseas legal entities that own UK land and their beneficial owners – the Register of Overseas Entities (‘the register’). This article provides a high-level overview of the register which will be maintained by Companies House.

25 May 2022

A series of legal judgments have questioned whether VAT relating to the disposal of shares really is irrecoverable, and whether the purpose of the sale could be the deciding factor.

In 1995, the European Court of Justice issued its judgment in BLP Group plc (Case C-4/94). In that case, the taxpayer had sold shares in a company to raise funds for the purpose of paying down debts incurred while making taxable transactions. The taxpayer then attempted to recover the input tax associated with the sale of shares on the grounds that the VAT was linked to its taxable transactions.

HMRC rejected the claim on the basis that the sale of shares was an exempt transaction and that this exempt transaction had consumed the disputed VAT: of course, Article 135(1)(f) of the Principal VAT Directive, as it now is, exempts ‘transactions … in shares’.

25 May 2022

As our working patterns shift and more of us move to hybrid working, what impact will this have on claiming tax relief for travel and subsistence expenses?

The coronavirus pandemic has significantly changed the way we work. Homeworking has become the norm for many more employees who previously spent all or almost all of their time in offices. Millions of us are now working from home for two or three days each week and spending the rest of the working week in the office. Homeworking and hybrid working appear to be here to stay.

That all sounds familiar and straightforward but the nub of the problem is that, for travel and subsistence expenses, even though more employees work remotely and/or are much more mobile than they used to be, the current tax rules covering employee travel and subsistence have not changed substantively since April 1998.

24 May 2022

Inheritance tax administration, time limits and penalties bring their own unique complexities when compared to other direct taxes, which can have real consequences to the taxpayer.

Recently, there has been much litigation about the procedural aspects of the tax code, including several decisions of the Supreme Court on the Taxes Management Act 1970 alone. The provisions governing the administration and collection of inheritance tax, by contrast, have in many cases been the subject of no judicial consideration at all. These provisions differ in important respects from those applicable to the main direct taxes and are frequently obscure in meaning.

23 May 2022

At a time of rising costs for business owners, here are some practical tips about how a small business could reduce its VAT bills or improve its cash flow.

VAT is often the forgotten tax. Charge VAT on your sales and claim it back on your expenses. Submit and pay a return once a quarter. End of story.

However, there are many concessions and opportunities in the legislation to reduce the VAT bill at the end of a period and also to improve the VAT cash flow for a business. An obvious example is the cash accounting scheme, available to a business with annual taxable sales of £1.35 million or less excluding VAT, where output tax is not declared on a return until customers have paid their dues. Input tax cannot be claimed until suppliers have been paid but it is a winner in most cases because debtors usually exceed creditors.

In this article, I’ll consider some potential VAT savers and cash flow opportunities.

23 May 2022

The repayment of student loans is becoming increasingly complex due to the growing number of repayment plans. We consider the different plan types, how and when student loans are collected through the tax system and how repayments work if the borrower has more than one type of loan.

From 1998 onwards, income-contingent student loans are usually collected by HMRC on behalf of the Student Loans Company either through a deduction via the PAYE system or through self-assessment tax returns. This article explains about the different plan types, how and when student loans are collected through the tax system and how repayments work if the borrower has more than one type of loan. It also discusses some quirks within the repayment process.

The Student Loans Company’s online repayment service is evolving with increasing options to make changes online. The ‘more frequent data sharing’ process between HMRC and the Student Loans Company should mean that loan balances are updated after every PAYE deduction.

23 May 2022

Decentralised finance (or DeFi) is growing rapidly. In the UK, we are seeing various government proposals towards creating the early stages of a framework, as well as HMRC guidance on the taxation aspects of DeFi.

HMRC introduced updated guidance on crypto assets on 2 February 2022, looking at the world of decentralised finance (DeFi) (see CRYPTO61214 at bit.ly/36LQPj8).

In my last Tax Adviser article on crypto assets, ‘The crypto revolution’ (December 2021), I referred to comments made by Sir Jon Cunliffe, Deputy Governor for Financial Stability at the Bank of England, who stated that between 2020 and 2021 DeFi had grown ten times in size to $100 billion and was continuing to grow quickly.

23 May 2022

In the case of Drake v HMRC, the First-tier Tribunal had to grapple with conflicting judicial precedents to decide a case concerning a lost deposit. We attempt to penetrate the obscuring mist.

In the December 2016 issue of Tax Adviser, my article ‘Return of the naïve’ looked at the Upper Tribunal case of Hardy v HMRC [2016] UKUT 332 (TCC). That case concerned Mr Hardy’s aborted purchase of a property, which led to him losing the £72,000 deposit he had paid on first entering into the contract. The Upper Tribunal concluded that the loss did not give rise to an allowable loss, essentially because Mr Hardy had not disposed of a chargeable asset in the process.

23 May 2022

The roadmap for implementing Making Tax Digital for Income Tax Self Assessment leaves little margin for error. What could we do to focus on the essentials and allow more time to get things right?

I have been following the progress of Making Tax Digital (MTD) with considerable interest, and have recently been involved with the CIOT’s development of a roadmap for MTD which is informing their discussions with HMRC.

I was slightly worried that, seven years after the end of the tax return was heralded, we don’t seem to have a workable model for MTD for Income Tax Self Assessment (ITSA), so I decided to amuse myself by expanding the roadmap to chart the MTD pilots in more detail. The result is more than slightly worrying.

23 May 2022

How to reduce the burden of tax returns upon millions of self-employed taxpayers

Bill Dodwell

How to use P11Ds: reporting obligations for benefits

Termination Packages – Is a complete tax and NI exemption due?

The temporary workplace: applying the intention or expectation test

The rules on travel and subsistence: a long and winding road

The capital gains tax treatment for lost deposits: three recent cases

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How to reduce the burden of tax returns upon millions of self-employed taxpayers

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Bill Dodwell

How to use P11Ds: reporting obligations for benefits

Termination Packages – Is a complete tax and NI exemption due?

The temporary workplace: applying the intention or expectation test

The rules on travel and subsistence: a long and winding road

The capital gains tax treatment for lost deposits: three recent cases