A few weeks ago I was interviewed by Kelsey Haslam with Kaplan for their “Career Goals” show, facilitated by Lil Constantine and her team.

The episode has just been released – see below.

https://kaplan.co.uk/blog/careers/Career-Goals-Episode-Fifteen

If you are a salaried employee and you have expenses your employer has not reimbursed you for (e.g business mileage, uniforms, professional subscriptions etc) you can claim tax relief on these.

For example, if you are a higher rate taxpayer and had £1,000 of job expenses, you can claim back £400 from HMRC.

DO NOT use a tax refund firm. Their fees are extortionate. Do it yourself via HMRC’s portal. You can claim back for up to 4 tax years, and it’s quick and simple.

https://www.gov.uk/claim-tax-refund/y

An ICAEW registered employer in London is asking graduates to work for them for free for 3-6 months, to allow them to be ‘considered’ for a training contract.

I suspect this set up might be breaching National Minimum Wage requirements* (although I’m not an expert in this area).

I’ve redacted the name of the firm for this post to keep within the ICAEW’s social media guidelines, but the advert is still showing on the ICAEW jobs website.

** Edit – the ICAEW have now removed the post and are investigating.

Following on from my previous post about VAT on Jaffa Cakes, below are some more examples of taxpayers disagreeing with HMRC over the UK’s bizarre and arbitrary VAT rules.

𝗦𝗲𝗹𝗲𝗰𝘁𝗶𝘃𝗲 𝗙𝗲𝗿𝗿𝗲𝘁 (𝟮𝟬𝟭𝟭)

Food for animals which are either ‘working animals’ or can be ‘used for human food production’ are zero rated. Food for pets is standard rated**.

It’s why cat food is standard rated, whereas rabbit food is zero rated. Because you can eat a rabbit, but not a cat.

Supreme Petfood tried to argue that their ferret feed should be zero rated, as it was used to feed ‘working ferrets’ (apparently ferrets are commonly used for pest control, cable management and locating drain blockages). The Tribunal disagreed, saying that 80% of ferrets were kept for companionship, and therefore the ferret feed they sold was standard rated.

𝗣𝗿𝗶𝗻𝗴𝗹𝗲𝘀 (𝟮𝟬𝟬𝟵)

Are Pringles a crisp (thus standard rated), or a ‘non-potato savory snack’ (thus zero rated)? Proctor and Gamble argued that Pringles were only 42% potato, and made from a process that moulds and bakes a dough, unlike crisps. They also claimed that consumers don’t see Pringles as crisps due to their ‘unique shape, texture and packaging’. I think that’s a hard argument to make!

They further argued that Pringles lacked the necessary quality of ‘potatoness’ to be potato crisps (yes, that’s the word they actually used in their submission).

Whilst Proctor and Gamble initially won in the First Tier Tribunal, the Court of Appeal held 42% potato was sufficient to make them crisps, they were marketed like crisps, and that the legislation was intended to include food that was similar to crisps.

𝗜𝗻𝗻𝗼𝗰𝗲𝗻𝘁 𝗦𝗺𝗼𝗼𝘁𝗵𝗶𝗲𝘀 (𝟮𝟬𝟭𝟬)

Is an Innocent Smoothie a ‘beverage’ – which would make it subject to VAT – or a ‘food product’ – and therefore not subject to VAT?

A bowl of fruit would be zero rated. But if you liquify the fruit, is it still zero rated?

For VAT purposes, a beverage is a ‘liquid commonly consumed to increase bodily liquid levels, to slake thirst, to fortify or to give pleasure’. Innocent Smoothies argued that people drunk their products as a meal replacement/snack, and they had high nutritional value (unlike a fizzy drink or juice) so were not beverages.

The judge was unconvinced. In an 18,000 word judgement, he ultimately ruled that ‘fruit smoothies are not merely drinkable liquids. They are drinks.’ Therefore, they are standard rated.

Sunak has just proposed 0% capital gains tax if you sell to a tenant. If you don’t think that this will be abused I’ve got a bridge to sell you.

Transactions on properties pregnant with capital gains will be structured as a tenancy to the purchaser followed by a sale. I suspect they will also agree a lower price, sharing the capital gains tax saving whilst also saving Stamp Duty in the process.

These kind of tax measures create strange distortions in the market, that benefit no one. To give a current example, most commercial property transactions are sale of companies containing the property, not the property itself. That’s because a purchaser pays circa 5% stamp duty land tax on a property, but just 0.5% stamp duty on a purchase of shares.

We’ve had an R&D enquiry for around 18 months. HMRC owed the client just over £500k. The inspector managing the enquiry has been off for months at a time with no explanation, has provided responses clearly copied and pasted from other enquiries (e.g about the wrong subject), and has taken months to reply to correspondence. This has lead to big cash flow issues for the client. Last week, the enquiry was closed with no amendments.

What are HMRC’s obligations to taxpayers? On the government website, you can see HMRC’s Charter. It states “The HMRC Charter is a legal requirement under the Finance Act 2009″. The Charter includes things like ‘Being responsive’ and ‘Getting things right’.

Great. So HMRC need to ‘be responsive’ and are required to ‘get things right’, just like taxpayers are required to fulfil their filing and payment obligations? Well, no. The legislation (CRCA 2005, s16A) actually states (link in comments):

“The Charter must include standards of behaviour and values to which Her Majesty’s Revenue and Customs 𝐰𝐢𝐥𝐥 𝐚𝐬𝐩𝐢𝐫𝐞 when dealing with people in the exercise of their functions.” Aspire is doing some heavy lifting in this section. It is noteworthy that nowhere in TMA 1970 – which largely regulates taxpayer obligations – does the word ‘aspire’ appear. However ‘must’ can be found 85 times.

If HMRC doesn’t meet their obligations in the Charter, they can simply state they ‘aspired’ to do so. But unfortunately, next time you get a late filing penalty, you can’t lodge an appeal stating that you ‘aspired’ to file it on time.

Modern scholars are able to accurately translate ancient Egyptian hieroglyphics. The surprising reason? Tax.

The ability to understand ancient Egyptian hieroglyphics began to be lost around 313 AD, when the Roman Empire adopted Christianity. At this point hieroglyphics, which were generally tied to religion, were no longer used and pagan temples were shut down.

The ability to decipher hieroglyphics was then lost for around 1500 years until 1799, when the Rosetta Stone was discovered. It contained the same text in three languages – Ancient Greek, Egyptian and Demotic. Ancient Greek could be translated, and therefore Rosetta Stone could be used to translate the Egyptian hieroglyphics.

The Rosetta Stone itself? It was mostly a dull administrative document that praised King Ptolemy V in 196 BC, giving specific tax exemptions to priests and tax breaks to temples and their estates.

Last night I was on Times Radio with Rick Kelsey discussing VAT on Amazon sales and how their overzealous checks have caused hardship to genuine UK businesses (link below, on at 1hr 38m).

In brief, after 1 January 2021 Amazon (and other online marketplaces) are required to charge and remit VAT to HMRC for overseas traders on goods supplied to UK customers. This followed years of widespread non-compliance with VAT for overseas sellers as it was almost impossible for HMRC to pursue overseas sellers – often based in China – for uncollected VAT.

Amazon does not need to remit VAT to HMRC for goods sold to UK customers by UK sellers. The VAT (if due) would be paid by the UK sellers.

A number of foreign traders have registered UK companies (which is currently frightening easy to do) and fraudulently pretended they are UK businesses so that Amazon does not pay the VAT on their behalf.

To stop this, Amazon has requested huge amounts of documentation from sellers to prove they are UK businesses. And genuine UK businesses have been caught in the cross fire. Amazon are freezing sellers funds where this documentation is seen as insufficient and reports are that further documentation is not being processed in a timely manner.

This has meant for some Amazon sellers there has been massive cash flow issues, and indeed VAT has been due on sales where they have yet to receive the cash. Enterprise Minister Kevin Hollinrake has written to Amazon demanding swift action.

https://www.thetimes.co.uk/radio/show/20240226-26408/2024-02-26