Weekly tax brief | 11 January 2022

Cost-of-living squeeze: what are the Chancellor’s options?
George Bull
 Tax has a big role to play when it’s necessary to change behaviours. But tax is notoriously inefficient at delivering benefits to specific groups. With an urgent need to head off the cost-of-living squeeze, increases to universal credit, the warm home discount scheme and pension credit are beginning to look like the simplest, quickest and best-focused solutions for the Chancellor.

Tax relief at risk for returns submitted in February
Chris Etherington
 Many taxpayers will be relieved by HMRC’s decision to waive penalties for tax returns submitted after 31 January this year, provided they are submitted by the end of February. However, this relaxation of the tax return penalty rule could result in taxpayers failing to realise that some claims for tax relief must still be made by the 31 January deadline.

Hotel granted the luxury of VAT recovery on a sale of shares to raise funds
Sarah Halsted
 The First-tier Tax Tribunal has decided that a hotel chain was entitled to recover VAT on the costs of selling shares in a subsidiary company to raise the funds needed to build a new hotel. While HMRC is likely to challenge this finding, a wide variety of VATable businesses could potentially benefit from increased VAT recovery.

New HMRC nudge letters bring tax return deadline headache
Jackie Hall
 Taxpayers who have received HMRC nudge letters must act now to amend 2019/20 tax returns where necessary.

HMRC data may be open to mis-matching risks
Kate Aitchison
HMRC is already under scrutiny for its maintenance and use of significant volumes of taxpayer data. A problem with the Trust Registration Service may link incorrect taxpayer data together, adding to the risks for taxpayers around data mismatching and enquiries.

Plastic packaging tax anomalies may cause problems for businesses
Grace King
The government’s new Plastic Packaging Tax, intended to encourage use of recycled plastics instead of single use plastics, will come into force on 1 April 2022. With several anomalies already exposed, this new tax may prove to be even more of a headache to implement for manufacturers and importers than was first thought.