Tax update September 2018

In this month’s update we report on HMRC’s updated position regarding payment of the April 2019 “loan charge”, HMRC’s updated guidance on the targeted anti-avoidance rule for close company distributions on a winding up and the CIOT’s comments on off-payroll working in the private sector. We also comment on recent decisions relating to, late filing penalties, an application by HMRC to amend its Statement of Case and tax geared penalties for failure to comply with information notices.

News items

HMRC publishes Spotlight 44 on the 2019 disguised remuneration loan charge

On 30 July 2018, HMRC published Spotlight 44 on the 2019 disguised remuneration loan charge. The Spotlight reminds taxpayers that if they wish to use the disguised remuneration settlement opportunity, they must provide all relevant information to HMRC before 30 September 2018. Read more.

HMRC updates its Company Taxation Manual in relation to the TAAR for close company distributions on a winding up

On 25 July 2018, HMRC updated its Company Taxation Manual in relation to the application of the “main purpose” test (Condition D) in the targeted anti-avoidance rule (TAAR) that taxes as income, rather than capital gain, distributions made to an individual in the course of a winding up of a close company if that individual continues, in one of three ways, to have involvement in the company’s trade (or a similar trade) after the winding up. Read more.

Off-payroll working in the private sector – CIOT comments

In its response to the Treasury and HMRC consultation proposing changes to the off-payroll working rules (IR35) for engagements in the private sector, the Chartered Institute of Taxation (CIOT) has suggested that there is a better option than simply extending the public-sector deduction at source rules to the private sector. Read more.

Case reports

Shaw – Tribunal cancels penalties … again!

In Shaw v HMRC [2018] UKFTT 0381 (TC), the First-tier Tribunal (FTT) has cancelled late filing penalties because HMRC had not satisfied the statutory requirements contained in section 8(1), Taxes Management Act 1970 (TMA) as a notice to file had not been validly served on the taxpayer. Read more.

Allpay – Tribunal refuses HMRC permission to amend its Statement of Case and awards costs to the taxpayer

In Allpay Ltd v HMRC [2018] UKFTT 0273 (TC), the First-tier Tribunal (FTT) has dismissed HMRC’s application to amend its Statement of Case to plead a new legal issue and awarded the taxpayer its costs. Read more.

Tager – Court of Appeal reduces penalties for failure to comply with information notices

In Tager & Ors v HMRC [2018] EWCA Civ 1727, in allowing the taxpayers’ appeals, the Court of Appeal has provided some general observations on the scope and purpose of HMRC’s power to impose tax-related penalties under paragraph 50, Schedule 36, Finance Act 2008, for failure to comply with information notices issued under paragraph 1, Schedule 36, Finance Act 2008. Read more.