Archive:February 2022

Please find below all the articles from February 2022.

Holdover relief tax trap

Tuesday, February 1, 2022

Some small company owners bring in adult children to take over the day to day running of the business as they approach retirement. There are many strategies used in practice. One may be to appoint the children as directors, while maintaining overall control of the share capital. However, some owners may wish to hand over full control and exit the company altogether and gift the shares to the children as well.

This involves a transfer of value, i.e. the value of the shares being gifted. However, thanks…

Does an employee loan always need reporting to HMRC?

Tuesday, February 1, 2022

Employee loans are an area where businesses often get confused. The first thing many owners will think of is the temporary corporation tax charge under s. 455. However, that only applies if the loanee is a participator of a close company. It doesn’t apply to regular employees – even directors – unless they also own/control at least 5% of the company’s share capital.

However, that isn’t the end of the tax issues. Employee loans can be a taxable benefit in kind (BIK) that need reporting on form…

VAT – charged too much?

Tuesday, February 1, 2022

Suppose that a business has been paying its suppliers’ invoices for many years without really giving too much thought to the VAT being applied. The business engages an accountant to assist with its VAT returns due to an increase in business activity. The accountant immediately spots that one supplier has been incorrectly charging standard rate VAT instead of the correct reduced rate of 5%. On inspection, this is a long-term issue going back many years.

The business has a problem, because the VAT legislation requires VAT to…

Latest news round up

Tuesday, February 1, 2022

On 7 January, HMRC announced that there would be no automatic late filing penalties provided that tax returns are filed by midnight on 28 February 2022. Anyone seeking to take advantage of the extra month should keep in mind that it is the penalty trigger, not the filing deadline itself, that has moved. This means that where a return is filed in February there will be no penalty, but the enquiry window will be extended to the relevant quarter day in 2023, i.e. 30 April.

There will…