Replying to Richard Thomas's post at 18.12 on 3 September:
Richard - you were known as the scourge of HMRC when you were an FTT judge. Do you fancy reprising that role by leading a People's (and Accountants) rebellion against MTD? You could be to the anti-MTD lobby what Boris was to the EU. Not talking about super-gluing ourselves to Somerset House or paint-bombing it. (Oh, I don't know, though!)
Seriously, why doesn't HMRC seek to engage with someone like yourself who both has the legislative grasp AND the practical experience of being a property owner? Or are they still not speaking to you after you called out their inadequacies in several FTT decisions?
I have numerous clients who own rental properties, invariably jointly-owned, some Uk-resident, some not. Property portfolios range from one to over twenty. One client in the latter category lets through FOUR different lettings agents with each of them presenting the figures in their own chosen style.
In previous years I have taken it upon myself to try to obtain copies of the quarterly or monthly rental statements (not all agents are willing to accommodate me!) and from these create my own Year-to-date spreadsheet.
This then turns into the "raw" yearly rental accounts at Month 12. Then I have to adjust for non-allowables and in most cases work out the interest "tax credit" and slot all the figures into the SA returns. But, if I have read the MTD guidance (such as it is) correctly, then none of this will be good enough for MTD for ITSA. I simply despair.
"This seems to be ruling out the fact that if the individual has multiple clients or other business opportunities; it should not distract the assessment of employment status for the engagement in question."
Justin has already homed in part on this comment. For myself, I would say that it does seem to be somewhat at odds with the judgement in Hall v Lorimer, also a Court of Appeal case. The key wording from the Judgement in that case was:
"The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance....." These words were actually the ones used by Mummery J in the High Court hearing but were affirmed by Lord Justice Nolan in the C of A lead judgement.
I appreciate that there were multiple short-term clients in the case of Mr Lorimer and the C of A in the Kaye Adams judgement may have decided that this was sufficient to distinguish her from Hall v Lorimer. Nevertheless, I remain uneasy with the view expressed that the existence of multiple clients should NOT impact upon the employment status decision for the hypothetical contract under scrutiny. The C of A are entitled to distinguish the two cases but they are not entitled to overrule Hall v Lorimer - only the Supreme Court can do that.
Oh for a Statutory definition of employment status! Will it ever happen? Probably not in my lifetime!
(Replying to DJKL) Me Too! (If one is allowed to use that phrase in this particular fashion!)
Posted a medium-length piece about three weeks ago. I had proof-read it before posting, as I usually do, but missed a duplicated word. Pressed "Edit", zapped the duplicated word and re-posted and it just vanished into the ether, never to surface again! I couldn't face re-doing it all again. (If I post anything lengthy now I place a copy into a Word document in case it disappears.)
NOTE TO EDITOR: There is definitely some sand in your machine!
Responding to Hugo, I have an even more apt quote, from the very same source (Lewis Carroll), from The Hunting of the Snark:
"What I Say Three Times is true!"
Clearly, HMT believe that if they simply say it often enough it MUST be true. A bit like Putin: "We have no plans to invade Ukraine". Or, for balance, Donald Trump - "I won that election; easily". You simply cannot argue with such individuals, just as you cannot get through to a conspiracy theorist. Their minds are made up and no amount of rational argument will change anything. Sad to say.
I note that this article was written by Rebecca "in association with TAXCALC". I also note that it says that agents can use spreadsheets "provided that they link it digitally with suitable bridging software."
Now call me a cynic (and I know I'm not the first to make this observation) but it has always seemed to me that the only "winners" from MTD for ITSA are the software houses. Other than HMRC themselves, there are very few other Cheerleaders for the concept.
I also believe that the whole MTD ITSA thing is merely a Trojan horse for the eventual imposition of a quarterly payments regime. I believe I am right in saying that enabling legislation to facilitate that very outcome has already been mooted in a Consultation document .
I have many landlord clients, some resident some not. The vast majority of them own properties jointly and so that doubles whatever the new compliance burdens will be. Several have multiple properties and some even have multiple agents. I have gotten most of them to agree to copy me in on the monthly rental statements but, nevertheless, collating the monthly rents and expenses is already quite a challenge.
At the year end I then do the rental accounts (income and expenditure only), weed out any capital expenditure and in some cases do a business/private split and then feed the figures into the SA returns. The actual tax payable will depend (for the UK residents) on what other income they have, which may include fluctuating dividends etc. (The non-resident ones usually have no tax to pay at all, as long as they aren't US-resident!) There is no way that HMRC can send an In-year tax forecast with the degree of accuracy required to make them meaningful. They can't even get the tax code right for those whose rental income is adjusted for via the PAYE system.
In short, I can see no conceivable advantage of MTD for my clients, but a lot of extra work for me which I will have to pass on to them in whole or in part.
I note that this article was written by Rebecca "in association with TAXCALC". I also note that it says that agents can use spreadsheets "provided that they link it digitally with suitable bridging software."
Now call me a cynic (and I know I'm not the first to make this observation) but it has always seemed to me that the only "winners" from MTD for ITSA are the software houses. Other than HMRC themselves, there are very few other Cheerleaders for the concept.
I also believe that the whole MTD ITSA thing is merely a Trojan horse for the eventual imposition of a quarterly payments regime. I believe I am right in saying that enabling legislation to facilitate that very outcome has already been mooted in a Consultation document .
I have many landlord clients, some resident some not. The vast majority of them own properties jointly and so that doubles whatever the new compliance burdens will be. Several have multiple properties and some even have multiple agents. I have gotten most of them to agree to copy me in on the monthly rental statements but, nevertheless, collating the monthly rents and expenses is already quite a challenge.
At the year end I then do the rental accounts (income and expenditure only), weed out any capital expenditure and in some cases do a business/private split and then feed the figures into the SA returns. The actual tax payable will depend (for the UK residents) on what other income they have, which may include fluctuating dividends etc. (The non-resident ones usually have no tax to pay at all, as long as they aren't US-resident!) There is no way that HMRC can send an In-year tax forecast with the degree of accuracy required to make them meaningful. They can't even get the tax code right for those whose rental income is adjusted for via the PAYE system.
In short, I can see no conceivable advantage of MTD for my clients, but a lot of extra work for me which I will have to pass on to them in whole or in part.
It seems to me that there is an element of Alice in Wonderland in this case. "No, no, no" said the Queen of Hearts, "Sentence first, verdict afterwards!"
What on earth would be the point of going to the trouble of putting together all the figures of Overseas income and gains and supplying these to HMRC, so that they could "determine" the tax, which is then appealed on the grounds of being non-domiciled and assessable on the remittance basis? On which grounds the taxpayer ultimately wins! That would be a total waste of time (for both sides) and would no doubt cause a huge amount of professional costs to be incurred by the taxpayer.
What is wrong with allowing the Courts to decide IN PRINCIPLE on the domicile point, in which case only if they found in HMRC's favour would all that additional work and cost be necessarily incurred? I don't have the consultation documents to hand, nor whatever might have been said when the legislation governing partial closure notices was debated in Parliament. However, I have a clear recollection that the noise around this at the time was that it was (at least in part) being introduced precisely to avoid this kind of "Angels dancing on the head of a pin" situation.
I sincerely hope that the matter is allowed to go to the Supreme Court for a final decision.
"I've got 3 clients currently still waiting for their UTR having registered online over a month ago."
Only a month, Norstar?? I've got a husband and wife who started an FHL business in April 2021. Both in employment and not in the SA system, so no UTRs. I submitted an online request for UTRs for them on 19 October - still no reply after three and half months. I need the UTRs before I can apply for online agent registration so can't do that either. Consequently I also can't ring up to chase.
I resorted to sending in paper 64-8s before Xmas and mentioned that I was still awaiting the UTRs applied for. I've recently received two letters from the Agent Maintainer Unit - TWO WEEKS APART, and one for each client - both asking me for proof of my AML registration. I sent them copies of same. My AML Supervisor is - yes, you've guessed it - HMRC!!
I have other cases where I have written to HMRC - in one case on 20 March last year - and despite reminders, have heard absolutely zippo! It saddens me to say so as in a former life I spent over 20 years with the then Inland Revenue, but HMRC nowadays is simply not fit for purpose. Speeding up SA registration, indeed!? Don't make me laugh. Pot, kettle, black!!
In response to Rebecca's post, I can see no problem in principle to introducing a compensatory credit to the DLAs. Even the most hard-hearted Inspector would surely not argue that the directors should pay for the entire leasing costs AND pay BIK tax on top.
In strictness I am of the view that the DLA adjustment should occur in the accounting period in which the FTT decision was reached, i.e back-dating to the years in question would not be appropriate. However, if there were any "unsubmitted" accounts at that point in time I think it would not be unreasonable to put the adjustment through in those accounts.
The whole area of Crypto "investment" is fraught with all sort of problems. There are those (like me) who believe that buying Bitcoin is no different from putting a grand on the nose on Fancy That in the 3.30 at Newmarket. But gambling has never been regarded as a taxable activity (except perhaps for so-called professional gamblers, who might be argued to be trading!)
And I shudder to think about the practical consequences when this South Sea Bubble eventually pops, as it is bound to do at some point, thus crystallising millions and millions in capital losses.
Interestingly on this last point, HMRC already regards CFDs (contracts for difference) as within the scope of CGT for "retail" investors, despite statistics from the CFD promoters themselves which show that between 70 and 80% of retail investors will lose money on CFDs. Is the game worth the candle, HMRC??
My answers
Replying to Richard Thomas's post at 18.12 on 3 September:
Richard - you were known as the scourge of HMRC when you were an FTT judge. Do you fancy reprising that role by leading a People's (and Accountants) rebellion against MTD? You could be to the anti-MTD lobby what Boris was to the EU. Not talking about super-gluing ourselves to Somerset House or paint-bombing it. (Oh, I don't know, though!)
Seriously, why doesn't HMRC seek to engage with someone like yourself who both has the legislative grasp AND the practical experience of being a property owner? Or are they still not speaking to you after you called out their inadequacies in several FTT decisions?
I have numerous clients who own rental properties, invariably jointly-owned, some Uk-resident, some not. Property portfolios range from one to over twenty. One client in the latter category lets through FOUR different lettings agents with each of them presenting the figures in their own chosen style.
In previous years I have taken it upon myself to try to obtain copies of the quarterly or monthly rental statements (not all agents are willing to accommodate me!) and from these create my own Year-to-date spreadsheet.
This then turns into the "raw" yearly rental accounts at Month 12. Then I have to adjust for non-allowables and in most cases work out the interest "tax credit" and slot all the figures into the SA returns. But, if I have read the MTD guidance (such as it is) correctly, then none of this will be good enough for MTD for ITSA. I simply despair.
"This seems to be ruling out the fact that if the individual has multiple clients or other business opportunities; it should not distract the assessment of employment status for the engagement in question."
Justin has already homed in part on this comment. For myself, I would say that it does seem to be somewhat at odds with the judgement in Hall v Lorimer, also a Court of Appeal case. The key wording from the Judgement in that case was:
"The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance....." These words were actually the ones used by Mummery J in the High Court hearing but were affirmed by Lord Justice Nolan in the C of A lead judgement.
I appreciate that there were multiple short-term clients in the case of Mr Lorimer and the C of A in the Kaye Adams judgement may have decided that this was sufficient to distinguish her from Hall v Lorimer. Nevertheless, I remain uneasy with the view expressed that the existence of multiple clients should NOT impact upon the employment status decision for the hypothetical contract under scrutiny. The C of A are entitled to distinguish the two cases but they are not entitled to overrule Hall v Lorimer - only the Supreme Court can do that.
Oh for a Statutory definition of employment status! Will it ever happen? Probably not in my lifetime!
(Replying to DJKL) Me Too! (If one is allowed to use that phrase in this particular fashion!)
Posted a medium-length piece about three weeks ago. I had proof-read it before posting, as I usually do, but missed a duplicated word. Pressed "Edit", zapped the duplicated word and re-posted and it just vanished into the ether, never to surface again! I couldn't face re-doing it all again. (If I post anything lengthy now I place a copy into a Word document in case it disappears.)
NOTE TO EDITOR: There is definitely some sand in your machine!
Responding to Hugo, I have an even more apt quote, from the very same source (Lewis Carroll), from The Hunting of the Snark:
"What I Say Three Times is true!"
Clearly, HMT believe that if they simply say it often enough it MUST be true. A bit like Putin: "We have no plans to invade Ukraine". Or, for balance, Donald Trump - "I won that election; easily". You simply cannot argue with such individuals, just as you cannot get through to a conspiracy theorist. Their minds are made up and no amount of rational argument will change anything. Sad to say.
I note that this article was written by Rebecca "in association with TAXCALC". I also note that it says that agents can use spreadsheets "provided that they link it digitally with suitable bridging software."
Now call me a cynic (and I know I'm not the first to make this observation) but it has always seemed to me that the only "winners" from MTD for ITSA are the software houses. Other than HMRC themselves, there are very few other Cheerleaders for the concept.
I also believe that the whole MTD ITSA thing is merely a Trojan horse for the eventual imposition of a quarterly payments regime. I believe I am right in saying that enabling legislation to facilitate that very outcome has already been mooted in a Consultation document .
I have many landlord clients, some resident some not. The vast majority of them own properties jointly and so that doubles whatever the new compliance burdens will be. Several have multiple properties and some even have multiple agents. I have gotten most of them to agree to copy me in on the monthly rental statements but, nevertheless, collating the monthly rents and expenses is already quite a challenge.
At the year end I then do the rental accounts (income and expenditure only), weed out any capital expenditure and in some cases do a business/private split and then feed the figures into the SA returns. The actual tax payable will depend (for the UK residents) on what other income they have, which may include fluctuating dividends etc. (The non-resident ones usually have no tax to pay at all, as long as they aren't US-resident!) There is no way that HMRC can send an In-year tax forecast with the degree of accuracy required to make them meaningful. They can't even get the tax code right for those whose rental income is adjusted for via the PAYE system.
In short, I can see no conceivable advantage of MTD for my clients, but a lot of extra work for me which I will have to pass on to them in whole or in part.
I note that this article was written by Rebecca "in association with TAXCALC". I also note that it says that agents can use spreadsheets "provided that they link it digitally with suitable bridging software."
Now call me a cynic (and I know I'm not the first to make this observation) but it has always seemed to me that the only "winners" from MTD for ITSA are the software houses. Other than HMRC themselves, there are very few other Cheerleaders for the concept.
I also believe that the whole MTD ITSA thing is merely a Trojan horse for the eventual imposition of a quarterly payments regime. I believe I am right in saying that enabling legislation to facilitate that very outcome has already been mooted in a Consultation document .
I have many landlord clients, some resident some not. The vast majority of them own properties jointly and so that doubles whatever the new compliance burdens will be. Several have multiple properties and some even have multiple agents. I have gotten most of them to agree to copy me in on the monthly rental statements but, nevertheless, collating the monthly rents and expenses is already quite a challenge.
At the year end I then do the rental accounts (income and expenditure only), weed out any capital expenditure and in some cases do a business/private split and then feed the figures into the SA returns. The actual tax payable will depend (for the UK residents) on what other income they have, which may include fluctuating dividends etc. (The non-resident ones usually have no tax to pay at all, as long as they aren't US-resident!) There is no way that HMRC can send an In-year tax forecast with the degree of accuracy required to make them meaningful. They can't even get the tax code right for those whose rental income is adjusted for via the PAYE system.
In short, I can see no conceivable advantage of MTD for my clients, but a lot of extra work for me which I will have to pass on to them in whole or in part.
It seems to me that there is an element of Alice in Wonderland in this case. "No, no, no" said the Queen of Hearts, "Sentence first, verdict afterwards!"
What on earth would be the point of going to the trouble of putting together all the figures of Overseas income and gains and supplying these to HMRC, so that they could "determine" the tax, which is then appealed on the grounds of being non-domiciled and assessable on the remittance basis? On which grounds the taxpayer ultimately wins! That would be a total waste of time (for both sides) and would no doubt cause a huge amount of professional costs to be incurred by the taxpayer.
What is wrong with allowing the Courts to decide IN PRINCIPLE on the domicile point, in which case only if they found in HMRC's favour would all that additional work and cost be necessarily incurred? I don't have the consultation documents to hand, nor whatever might have been said when the legislation governing partial closure notices was debated in Parliament. However, I have a clear recollection that the noise around this at the time was that it was (at least in part) being introduced precisely to avoid this kind of "Angels dancing on the head of a pin" situation.
I sincerely hope that the matter is allowed to go to the Supreme Court for a final decision.
(Replying to Norstar)
"I've got 3 clients currently still waiting for their UTR having registered online over a month ago."
Only a month, Norstar?? I've got a husband and wife who started an FHL business in April 2021. Both in employment and not in the SA system, so no UTRs. I submitted an online request for UTRs for them on 19 October - still no reply after three and half months. I need the UTRs before I can apply for online agent registration so can't do that either. Consequently I also can't ring up to chase.
I resorted to sending in paper 64-8s before Xmas and mentioned that I was still awaiting the UTRs applied for. I've recently received two letters from the Agent Maintainer Unit - TWO WEEKS APART, and one for each client - both asking me for proof of my AML registration. I sent them copies of same. My AML Supervisor is - yes, you've guessed it - HMRC!!
I have other cases where I have written to HMRC - in one case on 20 March last year - and despite reminders, have heard absolutely zippo! It saddens me to say so as in a former life I spent over 20 years with the then Inland Revenue, but HMRC nowadays is simply not fit for purpose. Speeding up SA registration, indeed!? Don't make me laugh. Pot, kettle, black!!
In response to Rebecca's post, I can see no problem in principle to introducing a compensatory credit to the DLAs. Even the most hard-hearted Inspector would surely not argue that the directors should pay for the entire leasing costs AND pay BIK tax on top.
In strictness I am of the view that the DLA adjustment should occur in the accounting period in which the FTT decision was reached, i.e back-dating to the years in question would not be appropriate. However, if there were any "unsubmitted" accounts at that point in time I think it would not be unreasonable to put the adjustment through in those accounts.
The whole area of Crypto "investment" is fraught with all sort of problems. There are those (like me) who believe that buying Bitcoin is no different from putting a grand on the nose on Fancy That in the 3.30 at Newmarket. But gambling has never been regarded as a taxable activity (except perhaps for so-called professional gamblers, who might be argued to be trading!)
And I shudder to think about the practical consequences when this South Sea Bubble eventually pops, as it is bound to do at some point, thus crystallising millions and millions in capital losses.
Interestingly on this last point, HMRC already regards CFDs (contracts for difference) as within the scope of CGT for "retail" investors, despite statistics from the CFD promoters themselves which show that between 70 and 80% of retail investors will lose money on CFDs. Is the game worth the candle, HMRC??