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In brief: partnership manual; gilt-edged securities; compound interest; refunds scheme; drugs and medicines; SDRT assessment; recovery of debts; agent strategy; guidance

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Draft new partnership manual

HMRC has published a draft Partnership tax manual, on which comments are invited. This follows the recommendations of the Office of Tax Simplification for a consolidated version of the guidance on partnerships. The manual highlights some of the main issues and areas of complexity that are specific to partnerships and signposts where more detailed guidance can be found. It is mainly focused on direct tax, particularly income and corporation tax, but it also refers to other taxes that may affect partnerships.

Gilt-edged securities

The Taxation of Chargeable Gains (Gilt-edged Securities) Order, SI 2014/1120, specifies two Treasury gilt-edged securities – 1¾% Treasury gilt 2019 and 2¾% Treasury gilt 2024 – disposals of which are exempt from tax on chargeable gains.

Compound interest

Revenue & Customs Brief 20/2014 explains that HMRC has received permission to appeal the taxpayer victory in the High Court decision of Littlewoods Retail Ltd and others v HMRC [2014] EWHC 868 (Ch) on a claim for compound interest on overpaid VAT to the Court of Appeal. Pending the outcome of this appeal, HMRC will apply for a stay on any compound interest claims already lodged with the High Court or County Court and will refuse any new requests for compound interest.

Refunds scheme: eligible bodies

The Value Added Tax (Refund of Tax) Order, SI 2014/1112, which comes into force on 20 May 2014, adds five new combined authorities to the existing VAT refunds scheme for eligible bodies in VATA 1994 s 33. The listed bodies are entitled to claim refunds of VAT charged in relation to their supplies, acquisitions or importations, provided that those supplies, acquisitions or importations are not for the purpose of a business carried on by them.

Supplies of drugs and medicines

The Value Added Tax (Drugs and Medicines) Order, SI 2014/1111, which comes into force on 21 May 2014, adds physiotherapists and podiatrists to the list of practitioners entitled to treat supplies of drugs and medicines they prescribe as zero-rated for VAT purposes.

Enhanced SDRT assessment service

HMRC is seeking to launch a new enhanced SDRT assessment service in June 2014. The enhancements aim to rebalance market practice by facilitating gross reporting of transactions in securities (stocks and shares), which have been netted outside of CREST, to a centralised point for reporting and assessment of SDRT. Comments are invited by 16 May 2014..

Consultation on direct recovery of debts

HMRC is consulting on proposed new powers allowing it to recover a range of assessed tax debts directly from the bank accounts of businesses and individuals who have ignored repeated requests for payment. This action would only apply to debts over £1,000 and would include such safeguards as leaving a minimum of £5,000 in the debtor's account. The proposal was announced at Budget 2014 and the consultation will run until 29 July 2014.

HMRC’s agent strategy

HMRC has published an update on its agents’ strategy. The review states that: HMRC should design all future digital services with agents in mind (agent online self serve will lay the foundations for this); HMRC should work with agents to promote voluntary compliance; and HMRC should work with software developers and service providers to determine the role it should play in supporting compliance.

HMRC guidance

New HMRC guidance is available from HMRC’s website, including:

  • a new Specialist investigations operational guidance manual, covering investigations across the range of taxes and duties. This replaces the Special civil investigations guidance manual, which was withdrawn from April 2014;
  • an update to the toolkits to minimise common errors;
  • an update to the list of qualifying recognised overseas pension schemes;
  • indexation allowance tables for corporation tax on chargeable gains;
  • revised notices: Notice 236: Customs: Importing returned goods free of duty and tax; Notice 163: Wine production; Notice 221: Inward processing relief; and Notice 175: Motor & heating fuels;
  • Customs information paper on the import control system; and
  • Tariff stop press notices 23/14, 25/14, 26/14 and 27/14.