TAX INVESTIGATIONS

HMRC temporarily suspended tax investigations during lockdown.  However with public spending soaring due to Government schemes such as Furlough and SEISS, HMRC are expected to impose harsh penalties for underpayment of tax, as they did after the last financial crisis.

Tax collected and penalties imposed are an important source of revenue for HMRC and far outweigh any costs associated with investigations, so we should be prepared for activity in this area to ramp up.

50,567 penalties were levied last year on tax payers who failed to “take reasonable care”.  This includes accidental errors or not seeking the advice of a competent professional.  Penalties of up to 100% of the tax due can be issued against tax payers who HMRC believe to have deliberately given inaccurate information on their tax returns.

If you are unsure about what you can claim or anything else regarding tax, then always speak to your Accountant in the first instance.

We would also recommend taking out Tax Investigation Cover.  If one of our clients takes out this cover through us, we would then be able to support them, communicate with HMRC throughout and defend their position, without any invoice for our time, should they have a tax investigation or enquiry.

Call us on 0113 2864486 if we can help.

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Keeping business records digitally and submitting under Making Tax Digital (MTD) rules using MTD compliant software has been in place for VAT since April 2019.

The timescale for submitting self-assessment details using MTD compliant software and keeping all records digitally, has now been announced.

Under Making Tax Digital for Income Tax, updates need to be sent to HMRC using MTD compliant software each quarter.

It will affect all sole traders and landlords with total gross income above £10,000 per annum.

There is a voluntary trial taking place now, but you will be required to file under these new rules by 6^th April 2023.

We will be holding seminars and webinars on this subject, providing all the information required and giving an opportunity to ask questions on how this will affect you, nearer to the launch of this new legislation.

If you don’t already keep your records digitally, please speak to us about setting this up in advance, to ensure you are ready for this.  Call us on 0113 2864486 so we can help.

Further announcements in the Summer Budget 2020 was the reduction of VAT for certain sectors.

From 15 July until 12 January 2021, VAT is to be reduced from 20% to 5% on any eat-in or hot takeaway food and drinks from restaurants, cafes and pubs, excluding alcohol.

The reduction also applies to holiday accommodation in hotels, B&Bs, campsites and caravan sites as well as attractions e.g. cinemas, theme parks and zoos.

If we can help with this complex area of your business, then please contact us on 0113 2864486.

Source: GOV.UK

In the recent Summer Budget, the Chancellor announced the introduction of various measures aimed at helping businesses.

Job Retention Bonus

If you are an employer that has been claiming support under the Coronavirus Job Retention Scheme (CJRS) for any employees, then you may be able to claim a one-off payment of £1,000 per furloughed employee.

To be eligible, employees need to

• Earn at least £520 per month (above the Lower Earnings Limit) on average for November, December and January
• Been furloughed at any time since the scheme began and legitimately claimed for under the CJRS scheme.
• Been continuously employed until at least 31 January 2021

The bonus can be claimed from February 2021 once payroll information to 31 January has been provided to HMRC.

HMRC have stated that further information will be available on the scheme before the end of the month with full guidance available in the Autumn.

Traineeships

A new traineeship scheme was announced which will pay £1,000 cash bonus for every new work experience place a company provides, starting from September 2020.

Eligibility criteria:

• The scheme is for 16 to 24 year olds in England.
• The work experience must offer “a high-quality work placement of 60 to 90 hours.”
• To provide classroom-based lessons in Maths, English and CV writing, as well as up to 90 hours of unpaid work experience.
• The traineeships must last between 6 weeks up to 6 months.
• Employers are not required to pay trainees for a work placement.

Kickstart Jobs Scheme

A “kickstart jobs scheme” was also announced which will begin from August 2020 until December 2021, with an option for it to be extended

The eligibility is:

• The scheme is for 16 to 24 year olds on Universal Credit
• It will subsidise 6 month’s work placements
• For each “kickstarter job” the cost of 25 hours’ work per week will be covered at National Minimum Wage, though employers can make payments exceeding these if they wish. Current minimum wages are:
  • £4.55 for under 18s
  • £6.45 for 18 to 20 year olds
  • £8.20 for 21 to 24 year olds

Apprenticeships

Financial support for those companies in England that engage new apprentices from 1 August 2020 to 31 January 2021.  There are 2 levels:

• £2,000 for each new apprentice aged under 25
• £1,500 for those aged over 25

Employers in England are already receiving payments of £1,000 for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan, where it applies.

It is assumed that payments will be paid via normal Apprenticeship payments as at present but no precise details on this as yet.

If you should need assistance around this area, then please call us on 0113 2864486.

Source: BDO

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The Coronavirus Job Retention Scheme (CJRS) can become more flexible from 1 July meaning that employees can be brought back to work part time and furloughed for the remainder of the days they would work.  You can still keep employees on full furlough if needed.

The furlough scheme closed to new entrants from 30 June.  Going forward the employer can only furlough an employee (either fully or part time) if they have previously been furloughed for a complete 3 weeks’ period prior to 30 June.

For those employees that you wish to bring back under the new flexible furloughing employers will need to report and claim for a minimum period of a week.  During this time the Government will continue to contribute up to 80% of pay, subject to a cap of £2,500.

From August the scheme will slowly be reduced over a period of a few months.  The Government will continue to pay up to 80% of pay, subject to the £2,500 cap but the employer will need to begin paying the national insurance and pension contributions.

As of September the Government contribution will reduce to 70% with a cap of £2,187.50.  The employer will need to pay the additional 10% plus the national insurance and pension contributions.  The percentage the Government will pay from October will be 60%, subject to a cap of £1,875.  Again the employer will need to make up the additional 20% together with national insurance and pension contributions.

If you need any help and support with your pay roll then call us on 0113 2864486

Source : GOV.UK

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HMRC have announced that due to the impact of COVID-19, the introduction of the domestic reverse charge for the construction sector and the VAT change will not now be implemented until 1 March 2021.

The new rules were an overhaul of the way that VAT is payable on building and construction invoices, to reduce fraud around this area.  The new domestic reverse charge will see the customer who is receiving the service paying the VAT owed direct to HMRC as opposed to at present where the supplier was paid the VAT if they report under the Construction Industry Scheme (CIS).

The changes to the rules were originally to start in October 2019 but these were put back for a year due to concerns of the lack of preparation and impact of the changes on businesses.  With the present times it has been further put back to March 2021.

An amendment to the original legislation ensures that if a business is to be excluded from the reverse charge because they are end users or intermediary suppliers, they must ensure they notify the sub-contractors in writing of this position.  HMRC have said that this will ensure that both parties are clear whether the supply is excluded from the reverse charge.

However, with the date put back of these changes HMRC will still focus on identifying and tackling fraud in the construction supply chain.  In addition will closely work with the sector to raise awareness plus provide additional guidance and support to ensure all businesses implement the new changes next March.

If you should need assistance around this area, then please call us on 0113 2864486.

Source: Accountancy Daily

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The first furlough scheme comes to an end on 30th June 2020.  It will be followed by a second furlough scheme, with more details being announced soon,

As the first scheme comes to an end you must:

Make a claim – if you have employees who have been in furlough, but you have been waiting to make one claim for the whole period of furlough, to save time/admin, you must make a claim for the period to 30th June 2020. This should be as soon as possible after 30th June, and must be made by 31st July 2020, when applications for this first period will close.

If you have an employee who is not yet on furlough, but you anticipate that you will need to furlough them, they must be included in a furlough claim for the period to 30^th June 2020.  This means you must officially inform them, in writing, that they are to go into furlough by 10^th June at the latest.  They must not do any work whilst in furlough for this period of time.

GOV.UK has details of who can be furloughed, what you have to do, and how to make a claim.

We are still open and as we are cloud based, everyone can work from home.  So, we are continuing to provide the same fantastic support to our clients, just sometimes, in a slightly different way.

For help and advice call us on 01132864486 and ask for Jo.

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The scheme to support sole traders and sole trader partnerships has been extended.  There will be the opportunity to apply for a second grant under this scheme in August 2020.

The closing date for applications for the first grant under the scheme closes on 13^th July.  So, if you have not yet made a claim and your sole trader or sole trader partnership business has been adversely affected by coronavirus, then you should apply as soon as possible.

If you continue to be adversely affected by coronavirus in the period June to August 2020, you will be able to make a second claim in August 2020.  This second grant will be made at 70% of average earnings, rather than 80% as per the first claim.  It is anticipated that payments will be made in August.  Generally, this is 6 days after an application is received.

Don’t forget, these grants are taxable and will go into your 2020/21 tax return.

Please remember, HMRC require that you do your own claim for this grant.  It is not difficult to claim, but you will need your Gateway ID and password, so it will be good to check that you have these, in advance.

You can check out eligibility criteria and the way the grant is calculated by following GOV.UK

We are still open and as we are cloud based, everyone can work from home.  So, we are continuing to provide the same fantastic support to our clients, just sometimes, in a slightly different way.

For help and advice call us on 01132864486 and ask for Jo.

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With the current national situation fraudsters are unfortunately using this to their advantage and various scams are being circulated.

E-mails stating a tax refund from HMRC due to changes in the law because of COVID-19, texts stating they “Have been fined” for leaving their homes two/three/four times, fraudulent communication supposedly from the World Health Organisation, NHS and private health suppliers selling facemasks and other personal protection equipment…..the list is rather long.

Barracuda Networks, a cyber-security company, undertook some research and found that Coronavirus-related phishing e-mails have increased by 667% since the beginning of March.

With the Coronavirus Job Retention Scheme now up and running phishing e-mail scams are being sent by fraudsters supposedly from HMRC with the intention, like many of stealing personal information.

The e-mail is sophisticated using the HMRC branding and supposedly from Jim Harra, first permanent secretary and chief executive of HMRC.  On checking the address, it is from “no-reply@ncryptedprojects.com.”  The aim being for business owners to provide bank account information.  The website associated with this is in the process of being taken down.

HMRC have said “Fraudsters are taking advantage of the package of measures announced by the government to support people and businesses affected by coronavirus.  Scammers text, e-mail or phone taxpayers offering spurious financial support or tax refunds, sometimes threatening them with arrest if they don’t immediately pay fictitious tax owed.”

To date HMRC has detected over 54 Covid-related financial scams, most being sent by text message.  They have also asked internet service providers to take down more than 227 web addresses.  Many “mimic government messages such as “Stay at home” and “Stay home, stay safe,” as a way of appearing authentic and unthreatening.”

A HMRC spokesperson said “If someone texts, e-mails or calls claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it’s a scam.”

The National Cyber Security Centre has advice and guidance about on-line security and reporting phishing activity together with GOV.UK.

Source : FTAdviser & North Yorkshire Police

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The Coronavirus Statutory Sick Pay Rebate Scheme is for small and medium sized employers to recover the cost of Statutory Sick Pay (SSP) to their employees.  The claim portal opened on 25^th May.

The scheme has been set up to repay employers the current rate of SSP that they pay to current or former employees for sickness starting on or after 13^th March 2020.

If an employer pays more than the SSP rate, then they can only claim the current rate.  Repayment is from the first day of sickness up to 2 weeks, if any employees is unable to work due to,

• having the coronavirus
• self-isolating at home

Employees do not need to provide a doctor’s fit note to claim.

Employers can use the scheme if they

• are claiming for employees who are eligible for sick pay due to coronavirus
• have a PAYE scheme created and started on or before 28 February 2020
• have fewer than 250 employees on 28^th February 2020

The scheme covers all types of employment contracts,

• Full time
• Part time
• Employees on agency contracts
• Employees on flexible or zero-hour contracts

The Government will let you know when the scheme will end.

Connected companies and charities can also use the scheme if the relevant guidance above is true.

Records must be kept of all SSP claimed from HMRC including,

• the reason the employee cannot work
• details of each period when an employee could not work, including start and end dates
• details of the SSP qualifying days when an employee could not work
• National insurance number of all employees who you have paid SSP to

All records need to be kept for at least 3 years following the claim.

If you need help with payroll, then please call us on 0113 2864486

Source: GOV.UK

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