Tax Bites – October 2024

Welcome to the latest edition of RPC's Tax Bites – providing monthly bite-sized updates from the tax world.

News

HMRC updates its Guidance on applying for a refund of the higher rates of SDLT

HMRC has published updated Guidance on applying for a refund of the higher rates of Stamp Duty Land Tax (SDLT).

If you already own a residential property and you purchase an additional residential property, you may have to pay a higher rate of SDLT. However, if the property you already own is your main home, and you sell it within three years of purchasing the additional property, you can apply for a refund of any higher rate SDLT paid.

There are different deadlines for applying for a refund based on when you sold your main home:

• If your main home was sold on or after 29 October 2018, then HMRC must receive the refund request by the later of 12 months after the date of sale, or 12 months after the filing date of the SDLT return for the new property.
•  If your main home was sold on or before 28 October 2018, then HMRC must receive the refund request by the later of 3 months after the date of sale, or 12 months after the filing date of the SDLT return for the new property.

HMRC updates its Guidance on off-payroll working

The off-payroll working rules ensure that a worker (sometimes known as a contractor) pays broadly the same amount of Income Tax and National Insurance as an employee.

HMRC's updated Guidance provides further information for businesses as to the tax treatment of a worker who provides services to them. This is important as businesses need to determine the employment status of their workers. The Guidance provides a link to a tool called: Check Employment Status for Tax, which provides HMRC's view of a worker's employment status based on the information provided.

If the business is deemed to be an employer, then it will be responsible for the worker's Income Tax, National Insurance and Apprenticeship Levy (if applicable).

HMRC updates its Guidance on disguised remuneration settlement terms 2020

HMRC has published updated Guidance for tax agents and advisers which can be used to help their clients understand how their disguised remuneration liabilities will be calculated under the 2020 settlement terms.

Noting that disguised remuneration arrangements are extremely fact specific, the Guide provides details of the general principles that HMRC will apply to disguised remuneration schemes.

HMRC publishes new guidelines on best practice for transfer pricing compliance

HMRC has published new guidelines which set out its compliance expectations of UK businesses in relation to managing transfer pricing risk.

The guidelines provide a helpful 'best practice' approach to compliance, analysis and the supporting information needed when preparing documents for HMRC.

Case reports

Tribunal awards costs against HMRC due to its unreasonable conduct

In Daniel Witton v HMRC [2024] UKFTT 489 (TC), the First-tier Tribunal (FTT) awarded costs against HMRC, despite its applications to amend its list of documents and to admit further evidence being successful.

In awarding the taxpayer his costs, the FTT noted that it is unusual to grant costs to an unsuccessful party, but in this case the FTT was satisfied that HMRC's conduct, in relation to the barring application and the application for permission to admit a second witness statement, was sufficiently unreasonable to justify a costs order being made against it.

You can read our commentary on the decision here.

Tribunal allows taxpayer's post-cessation trade relief claim as enquiry was out of time

In Anthony Dennison v HMRC [2024] TC09153, the FTT allowed the taxpayer's claim for post-cessation trade relief under section 96, Income Tax Act 2007, because HMRC's notice of enquiry was out of time and its closure notice was accordingly invalid.

This decision highlights the importance of carefully checking the date on any letters sent by HMRC as well as considering when any letters were actually received as statutory time limits cannot be ignored.

If HMRC had opened its enquiry a few days earlier, the outcome would have been a less happy one for Mr Dennison. It is also worth noting that HMRC claimed that notice had been given orally on the telephone to Mr Dennison's agent, notwithstanding that HMRC's own guidance states that any notice given must be in writing.

You can read our commentary on the decision here.

Tribunal allows taxpayer's appeal and confirms that non-residential SDLT rates applied

In Anne-Marie Hurst v HMRC [2024] UKFTT 00540 (TC), the FTT allowed the taxpayer's appeal and confirmed that non-residential stamp duty land tax rate applied because the sellers of the property had used it as a 'hotel, inn or similar establishment' (HISE).

This decision provides helpful clarification of the factors that the FTT will consider when determining whether a property is a HISE. The FTT's decision also confirms that mere occasional use as a bed and breakfast and features of passivity, are unlikely to be sufficient for a property to be considered a HISE. 

You can read our commentary on the decision here.

And finally...

In an article published in Private Client Magazine's 15th Issue, Michelle Sloane and Liam McKay consider HMRC's offshore information gathering powers and their application to High Net Worth individuals. 

You can read the article here.