Grants and Loans still being checked by HMRC

With over £129bn being paid to businesses and individuals through Covid grants and allowances through the pandemic, HMRC are estimating that £5.8bn was claimed in error or fraudulently.

Given this, HMRC has been and continues to scrutinise and investigate Covid support scheme pay-outs.

A taskforce was set up in March 2021 with the aim of recovering funds from claims made deceitfully or due to mistakes or misunderstandings.

£536m was recovered during the period 20-21 and a further £1bn is expected to be recovered through to 2023.

This is a complicated and often confusing area, but it helps to think about things using a few rules as detailed below, as this will cover most circumstances.

Wholly, exclusively, and necessarily

This phrase is at the centre of most of the rules around claiming tax deductible expenses.  If an expense was incurred wholly, exclusively, and necessarily in the performance of the duties of the business, then it will be claimable (with some exceptions).  All businesses are different, so what may be claimable by one, may not be claimable by another, depending on the nature of the business. It is important to keep a record of why you believe it complies with this rule and to keep receipts.

Client Entertaining

This is not a tax-deductible expense.  You can pay for it through the business but should code it to Client Entertaining so that it is taken account of in the tax calculation at the end of the year.

If you travel to see a client, and then take them out for lunch, you can still claim your travel costs.

Staff Entertaining, Christmas parties and other annual functions

Staff entertaining IS an allowable business expense, and VAT incurred is also allowable.

Whilst you are able to provide staff with meals and drinks etc, your employees may then have to include these on a P11D as they are taxed on “any benefit provided by reason of their employment” (with a number of exceptions)!  The goodwill gained by providing company events could quickly evaporate if your employees receive a tax bill relating to them!  However, there is the annual party exemption!

So, as long as the event complies with the 3 rules below, it will be exempt from the above:

• It must be annual (taking place every year – not a one-off event) – although there can be more than one in a year.
• Open to all employees
• And falls within the £150(including VAT) per head rule

This must be under £150 per annum per person attending (this includes VAT, regardless of whether you can recover it), and attendees can include spouses and other guests.  If you have multiple events that qualify, you would add the average cost per head together for each event in the year to check against the £150 test.

If the cost of an event goes above the £150 per head, then none of the costs associated with the event will be excluded under this exemption, and the value of the event must be declared either on each employees P11d, or the company can elect to do a voluntary settlement, whereby the company would pay the tax on behalf of its employees.

If these rules are adhered to, then the cost of the event, including incidental costs like transport, are all tax deductible.

Conferences, primarily for promotional and training purposes are not classed as staff entertaining.  They are fully allowable.  You should keep the agenda as proof that these events are for training and promotional purposes. You may need to prove that any entertainment or subsistence costs are incidental for the purpose of the meeting.

VAT – you can reclaim the VAT on staff entertaining in most circumstances.  Although this only includes current employees.  From a VAT perspective, expenses incurred on behalf of anyone other than a current employee, (sub-contractors are not included in the above), would not be allowable for a VAT reclaim.

Meals provided on site to staff

Providing employees with free tea, coffee and biscuits falls within this rule.  But meals provided on the company’s premises can also qualify, if they are provided at a “reasonable scale” and are available to all employees.

Expenses incurred whilst away from the office on business

If you are required to travel to a temporary place of work, or to a meeting etc, then any subsistence expenses you incur as a result of the business travel and tax deductible.

Did you know that Jo is one of only a dozen Certified Quickbooks Trainers in the UK, where she provides Quickbooks training under a certification programme to Accountants and Bookkeepers and also provides training to small to medium sized businesses?

Did you know she also does one to one training too, for clients and people looking for training on the Quickbooks software.

This training can be for current users of Quickbooks who are looking to improve their knowledge of the software and its capabilities, or for people who are new to Quickbooks and want to fast track their ability to use the system.

Why not give Jo a call on 0113 286 4486 and she can tailor a Quickbooks training program to suit your needs.

Here at Business Works we have recently taken on a new team member through the Government’s Kickstart Scheme.

The scheme funds the creation of new 6 month placement for 16 to 24 year olds who are on Universal Credit and at risk of long-term unemployment.  Any size of company is eligible to apply and you can have a number of young people on the scheme working within your business.  It runs until 31 December 2021 with funding therefore available until 30 June 2022.

The funding covers:

• 100% of the National Minimum Wage (or National Living Wage depending on the age of the participant) for 25 hours per week for 6 months. You can pay a higher wage and/or employ for more hours but this cost will be payable by the employer.
• Associated employer National Insurance Contributions
• Minimum automatic enrolment pension contributions
• A grant of £1,500 to cover setup costs and support the young person in developing their employability skills

Applying for the Kickstart grant is either on-line yourself or through a Kickstart gateway, an organisation e.g. local authority, charity or trade body working with the Kickstart scheme.

For additional information or to apply yourself then go to Kickstart scheme and/or www.gov.uk

If you can assist with this or your accounting needs, then please get in touch on 0113 286 448

In October 2017 Business Works decided to “Give A Duck” by supporting a local charity every time we sign up a new client.  But this isn’t just any duck.  This Duck supports children with cancer.  To date we are proud to say we have donated 129 Ducks.

It’s lovely to announce that Sindy Smetham and Kate Roberts, along with 2 friends, will once again be taking part in the Leeds 10K on 5^th September in support of Give a Duck.  If you would like to donate, then you can do so via their fundraising page Kate and Sindy’s Just Giving page

The Give A Duck Foundation was hatched in Leeds by Andrew and Karen Phillips when their son Harry was diagnosed with leukemia in November 2012. Chemo Ducks are given to families in hospital upon their child’s cancer diagnosis and used to support and educate children and their families during the diagnosis and treatment for cancer. Each Chemo Duck pack includes a ‘Meet Chemo Duck’ information book, ‘I’m Still Me’ activity book and a mini pencil case complete with colouring pencils and a pencil sharpener. Through the power of play, the Play Leaders and medical staff will first demonstrate on Chemo Duck the medical procedures the child will experience, helping to reduce the child’s fear and anxiety. Siblings are not forgotten and are offered a Huggable Hope duck to help support and comfort them too.

The Give A Duck Foundation now supply stock of Chemo Duck and Huggable Hope to over 30 hospitals throughout the UK. We are proud to be supporting such a wonderful charity, now more than ever charities need our support.

The aim of the Give A Duck Foundation is to ensure that every child diagnosed with cancer in the UK is given a Chemo Duck and Huggable Hope for their sibling/s. To find out and read more about this inspiring charity, please go to www.giveaduck.org.uk

Applications for the Self Employment Income Support Scheme (SEISS) 5 are open from the end of this month and will be calculated on how much your turnover has reduced in the tax year April 2020 to April 2021.  This is different to the previous SEISS grants where a reduction in profit has been the basis of the claim.

To be eligible to apply for SEISS 5;

• You must be a self-employed individual or in a partnership & having traded in 2019/20
• Have traded in 2020/21, subject to coronavirus restrictions and intend to continue trading to 2022.
• Believe that your trading profits will be significantly impacted by COVID-19 between 1 May and 20 September 2021.
• Submitted a tax return on or before 2^nd March 2021.
• Have trading profits not exceeding £50,000 per year
• At least half your trading profits must be equal to your non-trading income. The latter is income made outside of your business e.g. part time job, pension etc.

The grant will be payable for the 3 months to 31 July 2021 and you have until 30 September 2021 to apply.

A maximum of £7,500 can be claimed.  However, unlike previous SEISS’s where profit measures were used to calculate eligibility, HMRC have introduced a complex turnover test.  If the turnover of your business has fallen by at least 30% , when comparing 2019/20 and 2020/21, then a full grant is calculated at 80% of average trading profits.  If your business turnover is less than 30% then you receive a grant based on 30% of average profits which is capped at £2,850.

If you need help with this or any other accounting needs, then please get in touch on 0113 286 4486

Source: Accounting Web & HMRC

The Chancellor announced measures to help businesses through into 2021 with the “Winter Economy Plan.”  These are 3 of the 5 measures he has put in place.  Our further blog details the other areas.

SEISS grant

The second SEISS grant application closes on 19^th October with a third SEISS grant to be made available to cover 20% of the average monthly profits for three months.

Only those that were eligible for the first and second grants can apply, with it being capped at £1,875 per taxpayer.  This is not yet open for applications.

A fourth SEISS grant will be made available from February to April 2021.  This may be available for those self-employed taxpayers that were not able to claim under the first three.

Bounce Back Loan Scheme Upgraded to Pay as you Grow

All existing COVID-19 loan schemes have been extended; applications for the Coronavirus Business Interruption Loan Scheme (CBILS), the Bounce Back Loan Scheme (BBLS) and the Future Fund are open until 30 November.  31 December now the new deadline for approvals.

The CBILS and BBLS loans are extended to a 10 year repayment term.  The £50,000 BBLS has been rebranded as “Pay as you Grow.”  It offers borrowers a more flexible repayment schedule, starting with interest only repayments for up to six months.  Businesses who are struggling can also request a six month repayment holiday.

VAT changes

The VAT rate for the hospitality and tourism sector is to remain at 5% until 31 March 2021.

VAT payments due for the period 20 March to 30 June 2020 could be deferred until 31 March 2021.

Businesses that took advantage of this deferral will be able to spread the deferred VAT payment over 11 equal instalments between April 2021 and March 2022.

If you need help with this then please call us on 0113 2864486.

Source: Accounting Web

Photo by Kylie Haulk on Unsplash

The Chancellor announced measures to help businesses through into 2021 with the “Winter Economy Plan.”  These are 2 of the 5 measures he has put in place.  Our further blog details the other areas.

Job Support Scheme

The current furlough scheme ends on 31^st October and a new 6-month Job Support Scheme will begin on 1^st November.

The new scheme applies to any employees on your payroll on 23 September 2020 and is, therefore, not restricted to employees that had been on furlough between March and October.

To qualify employees must work for at least a third of their usual hours with the employer paying for all the hours.  It is assumed this will be at the employees’ usual hourly rate but it has not been confirmed.  Of the remaining “resting” hours, the Government and the employer will each pay a third at the employee’s usual wage rate.  The employer therefore pays 55% of the employee’s wages for a third of their normal working time.

The Government’s contribution is capped at 22% of usual wages and £697.22 per month.  The employer will need to pay the employer’s NI and pension contributions on all the employee’s pay.  There are no restrictions for SMEs using the new scheme.

Tax deferrals

The deferral of the payment on account (POA), was one of the first to be announced, and tax due on 31 July 2020 is now due on 31 January 2021.  No interest will be charged for late paid tax.

Individual taxpayers can have longer to pay all the taxes due by 31 January 2021.  These are made up of second POA 2019/20, balancing payments 2019/20, capital gains tax 2019/20 (if not paid under 30 day rule), first POA 2020/21.

The taxpayer will need to apply for time to pay to spread the tax due over 12 monthly instalments to January 2022.  If the total tax due does not exceed £30,000 the time to pay will be automatically agreed when completing the on-line form.

Where tax exceeds £30,000 or you need longer to pay, you will need to telephone HMRC to organise a bespoke payment plan.

Source: Accounting Web

Photo by Arlington Research on Unsplash

HMRC has increased the threshold for time to pay arrangements, for Self Assessment customers, to help ease the financial burden they may be experiencing due to the COVID-19 pandemic.

Previously the Time to Pay plan could be used to set up instalment arrangements for paying tax liabilities up to £10K. However, since 1 October it has been officially increased to £30K.

The increase aims to help individuals spread the cost of their tax bill into monthly payments. The deadline to complete Self-Assessment tax returns for 2019/20 is 31 January 2021.

The increased self-serve Time to Pay limit of £30k follows chancellor Rishi Sunak’s announcement on 24 September to increase support for businesses and individuals through the fallout from the pandemic.

If you need help with this then please call us on 0113 2864486.

Photo by Christina @ wocintechchat.com on Unsplash

A new fund for small and medium businesses (SMEs) has been announced by the Government.  It is to enable them to access specialist advice to further lessen the impact of COVID-19 or support potential new opportunities.

Grants of between £1000 – £3000 will be available for SMEs directly impacted by COVID-19 to access professional support e.g. digital, legal, HR, financial, health and safety or other consultancy advice,  and to purchase minor equipment to adapt or adopt new technology to enable businesses to continue or diversify.

The grants will cover 100% of the cost, excluding VAT.  SMEs will need their application approved before making a payment for the support or purchase.  They will then make a claim for the grant.

The funding is been allocated to Growth Hubs within each Local Enterprise Partnership (LEP) area.  The application process has not opened yet, but you can complete a “register your interest” form and further information will be forwarded in due course.

Source: LEP

Photo by S O C I A L . C U T on Unsplash