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Leaving the UK: a look at split-year treatment

According to reports, the number of people leaving the UK during 2020 was “unprecedented”. The Economic Statistics Centre of Excellence reported that as many as 700,000 left London alone in the 15-month period to September 2020. This brings the question of tax residence into sharp focus.

Residence

For any given tax year, an individual is either UK-resident or non-UK resident for tax purposes as determined by the statutory residence test (SRT) set out in Finance Act 2013, Sch. 45. However, if they move out of (or indeed into) the…

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Self-assessment – DIY time-to-pay options

The tax return filing deadline for 2019/20 has now passed. However, where taxpayers have struggled to pay any tax they owed by the 31 January deadline, it is still possible to set up an instalment plan – or “time-to-pay” – arrangement. In the right circumstances, this can be done online with no need to contact HMRC by phone.

An online plan can be set up if the taxpayer:

– owes £30,000 or less;
– does not have any other payment plans or debts with HMRC;
– does not…

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Deregistering from VAT

As a result of the Covid-19 crisis, many businesses are currently experiencing reduced turnover. In many cases, the business is VAT-registered, and some owners are asking whether they can now deregister. What are the rules here, and is it always advisable to do so?

There can be a number of motives for VAT deregistration. For example, if the majority of sales are B2C sales, i.e. not to other VAT-registered businesses, the VAT charge is a real cost to the customer. On the face of it, deregistering can possibly offer…

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Latest news round up

Covid-19 – business support

Unsurprisingly, Christmas 2020 was dampened by the ongoing Covid-19 measures. The Prime Minister revised his plans to permit “Christmas bubbles” to be formed between for up to five days between multiple households. In the end, such bubbles were only permitted on Christmas day, and then only for areas that weren’t in tier 4.

The New Year brought further bad news with the announcement of a third national lockdown for England starting on 6 January, lasting until at least mid-February before review. Scotland and Wales had announced…

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HMRC launches UK VAT number checking tool

Following the UK’s exit from the European Union, VAT registration details of UK companies will no longer be maintained on the VAT Information Exchange System (VIES). Being able to check the validity of a new supplier’s VAT number is an important step in combatting VAT fraud.

For example, a rogue supplier might provide what looks like a valid VAT invoice to another business. In reality, the supplier isn’t VAT registered and the VAT registration number on the invoice is fake. The supplier simply pockets the 20% “VAT” charged. The…

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First-year allowances for zero emission cars to continue

There was some confusion when Finance Act 2020 was published. The government had announced that it would be extending the current enhanced 100% first-year allowance (FYA) available for zero-emission vehicles. However, when the legislation was published there was no mention of any extension, leading to speculation that the FYA would be scrapped in April 2021.

The position has now been clarified, and the 100% FYA will be available for the purchase of zero-emission cars until April 2025. It will also be available for purchases of equipment for gas refuelling…

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Reverse charge for building services imminent

After two delays, the new rules for certain building services will finally take effect from 1 March 2021. Under the current rules, a business (for example a builder) will add VAT to their sales invoices passed to their customers, and then account for this to HMRC via the VAT return. The problem is that HMRC feels that there is a high amount of what is called “missing trader fraud” in the construction industry, i.e. where the trader charges and collects VAT, but then absconds with it without paying…

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Latest news round up

With much of the country entering Tier 3 restrictions around Christmas, and Wales being put back into a stay at home lockdown from 28 December, it is inevitable that there would be further announcements made with respect to business-related COVID-19 measures.

Extension of furlough scheme

The Coronavirus Job Retention Scheme (CJRS) was initially supposed to end on 31 October 2020. However, this was extended to 31 March. On 17 December, the Chancellor announced that the scheme would be further extended to the end of April 2021. The government will therefore…

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Gift Aid tax relief

This year, many charities have been heavily impacted by the coronavirus pandemic and have struggled to raise funds. Highlighting the prospects of tax reliefs on donations is one way to encourage gifts.

Broadly, the government’s Gift Aid scheme is designed to help maximise the value of a gift made to a charity by allowing most UK taxpayers to claim tax relief on the gift.

Under the Gift Aid scheme, individuals can claim tax relief on making one-off or regular gifts to charity. No lower or upper limit applies on donations…

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Directors’ loans – a reminder of the tax charge

Cash transactions between a director and a personal or family company are recorded through the director’s account. At the end of an accounting period, if the director owes the company money (ie the account is considered overdrawn), and the company is close (broadly, one that is controlled by five or fewer shareholders (participators)), there will be tax consequences to consider.

The s 455 charge

A tax charge will arise under the Corporation Tax Act 2009, s 455 where a director’s loan account is overdrawn at the end of the accounting…

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