Category: HMRC

HMRC Manual RDRM11570 states –

“The individual will have a 90-day tie for the tax year if they have spent more than 90 days in the UK in either or both of the previous 2 tax years immediately before the year under consideration.”

I was confused with the words “or both”. In my opinion purpose would have been solved without these two words. I looked at the legislation, see below.

Legislation FA2013 Sch 45 Para 37 states –

“P has a 90-day tie for year X if P has spent more than 90 days in the UK in—

(a) the tax year preceding year X,

(b) the tax year preceding that tax year, or

(c) each of those tax years separately.”

This increased my confusion, as what is the use of point c.

Then, I had the light bulb moment. Guidance and legislation are trying to be too perfect.

I have tried to illustrate this with a few examples below. Say we are doing SRT for taxpayer A for the year ended April 2023.

Example 1: If A was in the UK for 90 days in tax year ending April 2022.
This, satisfies point a of the legislation.

Example 2: If A was in the UK for 90 days in tax year ending April 2021.
This, satisfies point b of the legislation.

Example 3: Suppose we did not have point c of the legislation – “each of those tax years separately”. If A was in the UK for more than 90 days in both tax year ending April 2022 and April 2021, he would have satisfied both point a and point b but these are OR conditions. In our case as both are satisfied it can be construed that he would not have 90-day tie. To avoid this situation, point c was inserted.

For all practical purposes, A will satisfy the 90-day tie rule if he has been in the UK in ANY tax year ending April 2022 or April 2021.

This is a complex area; this article deals with the basics of RSUs.

RSUs are used by many US companies as long-term rewards linked to the share price of the company for employees.

There are two stages:

• Grant of Option: Usually, no income tax liability arises at this stage.

• Vesting of option: at this stage as employee actually receives shares at below market price, it is taxed as earnings* [Chargeable amount = MV of shares – consideration given, if any].
  
  *taxes payable income tax and national insurance both employee and employer.
  
  Usually, payroll department of the employer deals with the income tax via payroll. So, no further action required in SA return.

Capital Gains Tax

When shares acquired under RSU scheme are sold. Gains need to be computed and disclosed in SA return. Acquisition cost will be the MV of shares when RSU vested.

Further readings:
1. HMRC Manual ERSM20192 – 20194
2. Tolley Annual Income tax also has a good example in 70.17

Bonus
1. Some companies give cash bonus based on the share price, these are not RSUs they will be dealt via PAYE as normal bonus.

2. There are tax-advantaged employee share options as well like EMI, SAYE and CSOP we will cover them some other time.

Glossary

Grant Date – The date of agreement when employer promises to give shares in the future.

Vesting Date – The date on which employee becomes entitled to acquire shares after the fulfilment of pre-decided terms and conditions.

Exercise Date – The date on which the employee buys shares using the options.

Exercise Price – The price at which the employee gets the shares, usually lower than market value.

Started 1 Jan 2021

Account for VAT on the VAT return rather than pay at Port.

No approval needed to start using it.

When making import declaration, select duty deferment account instead of immediate payment. Usually, businesses use freight forwarders to complete import paperwork, so just need to instruct the freight forwarding company via a simple email to start using VAT postponement.

All VAT deferred will be captured in Monthly postponed import VAT statement (MPIVS).

Businesses typically will have both C79s (from courier companies like UPS etc.) and MPIVS.

To get your C79s and MPIVS use link below:
Get your postponed import VAT statement – GOV.UK (www.gov.uk)

VAT Return

Box 1                    include VAT due on imports as shown on MPIVS

Box 4                    include VAT reclaimed, same figure as Box 1*

So net effect – NIL

Box 7                    include total value of all imports

*Input VAT will be restricted for exempt and partially exempt businesses.

Bonus

• Import VAT is calculated by adding supplier invoice, freight and custom duty.

• In Sage use T18 code when positing invoices where postponement used.

• Chitragupta – According to Hindu mythology he keeps a record of all deeds – good and bad and their balance decides whether we go to heaven or hell.

• Sir Isaac Newton – In later life, he was master of Royal Mint for 30 years. He oversaw the Great Coinage of 1696 when counterfeit currency was rife. It is said he was an honest man when corruption in public life was widespread. He lost a fortune in South Sea Company Bubble. He is also credited, perhaps mistakenly, for moving England from bimetallic system to Gold Standard. Seeing England prosper other countries adopted Gold Standard. There is a fascinating BBC radio play about his time in Royal Mint.
  

• Daniel Defoe writer, most famous for Robinson Crusoe. A trader, journalist and spy. And sometime resident of New Gate prison. I made some changes in my own business reading his book `The Complete English Tradesman. Another absorbing BBC Radio Play.

• John D. Rockefeller richest man in recent American history started out as bookkeeper. Unfortunately, his nemesis Ida Tarbell was not.

• Medici bank – were early adopters of double entry.

• East India Company was formed by Auditor Smythe [Smith]. Accountants Robert Clive and Warren Hastings, were the persons who laid the foundation of British Raj in the Indian subcontinent.

I will try and improve this list as I meet other characters on my accounting journey.

Bonus

• Jesus was born in Bethlehem when Mary and Joseph visited it for paying their taxes. Luke 2:1-8.