Spiramus Press Sept 21

7 September 2021

Also in this edition

Working better together

6 September 2021

Richard McCall considers how Open Banking platforms are revolutionising the ways in which businesses access, manage and control finances, and what this means for taxation

In a world where time is precious, fast and secure, digital financial solutions are being welcomed with open arms. It is therefore unsurprising that Open Banking has quickly become an indispensable asset, shaping how consumers and businesses manage their finances.

Approximately 2.5 million businesses and consumers in the UK actively use Open Banking services, which is sharply growing by around one million every six months (see bit.ly/2U7EX4G). With more than 300 fintech companies assembling to form the Open Banking ecosystem, the programme has been commended for its encouragement of competition among financial corporations. With its expansion, the initiative has been endorsed by the banking industry and received support from government entities, such as HMRC.

6 September 2021

Keith Gordon reviews the Upper Tribunal’s decision in a case that considers the taxation of payments made to resolve an employment dispute

It is well known that the rules for obtaining a tax-allowable deduction from employment income are particularly restrictive. The underlying policy reason for this can be explained on the basis that employers can usually be expected to cover costs incurred by their staff.

Therefore, subject to the relatively common exceptions such as reimbursed travel expenditure and fees for professional memberships, it will usually be the case that what an employer pays will be taxed as a receipt of the employee. As with all ‘general rules’, however, this short cut cannot be relied upon as a hard and fast rule. A potential exception was the subject matter of the recent Upper Tribunal decision in Murphy v HMRC [2021] UKUT 152 (TCC).

The facts of the case

6 September 2021

Emma Chamberlain considers the common problems caused by reservation of benefit, and a change of approach by HMRC

Under Finance Act 1986 s 102, when there is a reservation of benefit in gifted property at the date of death, for inheritance tax purposes that property is treated by sub-section (3) as property to which the donor was beneficially entitled at his death. This means it is taxable under Inheritance Tax Act (IHTA) 1984 s 4. Where the reservation ceases at any time during the donor’s life, he is treated by sub-section 102(4) as making a potentially exempt transfer at that time. Like an ordinary potentially exempt transfer, the deemed one under sub-section (4) becomes chargeable only on the donor’s death within seven years of the reservation of benefit ceasing. Hence under both sections, it is not until the donor’s death that any tax can become payable under the gift of reservation rules.

6 September 2021

Making Tax Digital for VAT will be extended to voluntary registrations for VAT periods beginning on 1 April 2022 or later. Neil Warren considers whether it makes sense for a business to deregister before this date

Many UK businesses have either ceased to trade or suffered reduced turnover due to the Covid-19 pandemic. In some cases, this lost turnover will be permanent and therefore offer the opportunity for deregistration. Many other businesses are VAT registered on a voluntary basis anyway, having always traded below the compulsory registration threshold.

6 September 2021

Jon Claypole and Jonathan Levy consider the conclusion of a long running battle on the issue of follower notices, and what this could mean for their future

On 2 July 2021, the Supreme Court released its decision in the long running case of R (oao Haworth) v HMRC [2021] UKSC 25 (see bit.ly/3flKImV).

This is the first case taken all the way to the Supreme Court challenging the ability of HMRC to issue a follower notice. The judges unanimously concluded that HMRC had unlawfully issued a follower notice and consequently an accelerated payment notice to Mr Haworth.

The decision brings finality on what has been a long running battle with HMRC and demonstrates that judicial review remains an option open to challenge HMRC’s actions, albeit not one to be taken lightly as the taxpayer will need to be resolute to see it through.

The background

6 September 2021

Jack Hollyman considers how to manage the commercial and tax issues when transferring business assets and shares to a purchasing company

It always sounds so simple: ‘Hive down the trade and assets into a new company (‘Newco’) and dispose of Newco to a buyer, tax free’. But, of course, there are a host of commercial and tax issues to consider and navigate. The commercial aspects of a hive down, while burdensome, are generally well understood and managed upfront. For example, some of the key commercial areas of focus are:

6 September 2021

Sam Dewes considers the tax complexities of demolishing a property in order to rebuild, rather than simply renovating

Watching your house fall to the ground may sound like a homeowner’s worst nightmare. And yet, many people are willing to pay for the service of having their property knocked down. What is behind this seeming act of recklessness? As it turns out, if you want to make major changes to your home it is often easier and more cost effective to start from scratch, rather than renovating the existing structure.

6 September 2021

Bill Dodwell considers how better use of third party data could benefit individuals, their agents and HMRC, transforming the UK tax system

On 2 July, the Office of Tax Simplification published its report on ‘Making better use of third party data: a vision for the future’ (see bit.ly/3D2uCJ5).

6 September 2021

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Spiramus Press Sept 21

Working better together