Month: October 2020

VAT Changes For Subcontractors In Construction Industry

Posted on by Rana Zubair

From 1 March 2020, contractors who employ subcontractors, will need to assume responsibility for declaring and paying the VAT that was previously settled by their VAT registered subcontractors.

https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services

The new rules will make the supply of construction services between construction or building businesses subject to the domestic reverse charge. The reverse charge will only apply to supplies of specified construction services to other businesses in the construction sector.

Guidance on the workings of the domestic reverse charge (referred to as the reverse charge) has been published by HMRC. The reverse charge will affect certain specified supplies of building and construction services supplied at the standard or reduced rates that are reported under the Construction Industry Scheme (CIS). This will place the onus for dealing with the VAT charge due on subcontractors’ bills, on the main contractor.

There are now less than 5 months until the new rules come into effect and you should ensure that your construction clients are making the necessary preparations.

Affected construction clients should:

  • make sure their accounting systems and software can deal with the reverse charge
  • consider whether the change will impact their cash flow
  • make sure all their staff who are responsible for VAT accounting are familiar with the reverse charge and how it will work

You must use the reverse charge for the following services:

  • constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services
  • constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence
  • installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure
  • internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration
  • painting or decorating the inside or the external surfaces of any building or structure
  • services which form an integral part of, or are part of the preparation or completion of the services described above – including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works

  

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Introduction Of Freeports In UK

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In an effort to moderate the vagueness in imports and exports from the UK after Brexit, the government is going ahead with the plans of free trade zones – known as Freeports. Freeports are a special kind of ports where normal tax and custom duty rules do not apply. These rules are simplified within Freeports.

https://www.city.ac.uk/news/2020/september/free-ports-could-help-britain-take-back-control-and-keep-trade-flowing-with-the-eu

 

Free ports often offer a wide range of incentives for businesses to operate here. These include lower corporate taxes, providing basic utilities at below-market prices and laxer regulations and employment rules.

The initiative would allow firms to import components and other pre-manufactured goods into a Freeport without paying taxes. The goods would then be processed into a finished product to be built in the UK. In these new Freeport areas, no duties would be charged on goods or materials until they leave the zone as a finished product for the UK domestic market. There should be no UK tariffs payable when the finished product is re-exported directly from the Freeport.

The Freeport bidding process in England is expected to open before the end of the year and the first Freeports on track to be open by the end of 2021. In this opening series of applications, sea, air and rail ports in England will be invited to bid for Freeport status.

The Chancellor of the Exchequer, Rishi Sunak, said: “Our new freeports will create national hubs for trade, innovation and commerce, regenerating communities across the UK and supporting jobs.

The government is also working with the devolved administrations to establish at least one Freeport in each nation of the UK and will introduce a package of tax reliefs for business investment in the Freeports. This will include speeding up the planning process to accelerate development. We are also told there will be new initiatives to encourage innovators to generate new ideas to create additional economic growth and jobs.

 

 

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Tax Scams Targeting Students

Posted on by Rana Zubair

University students have been warned by HM Revenue & Customs (HMRC) that fraudsters are targeting them with a wave of fake tax scams.

HMRC is warning new students starting university that they could be targeted by scammers trying to steal their money and personal details.

https://www.gov.uk/government/news/hmrc-urges-universities-to-warn-new-students-of-tax-scams-danger

As new students start the academic year they can be particularly vulnerable to tax scams. Coupled with an increase in remote working due to the pandemic can leave students particularly exposed to the work of fraudsters. Fake emails, which use university addresses in a bid to appear legitimate, may tell people that they are owed money and encourage them to send their personal details.

Many tax scams are directly targeting university students. Fraudulent emails and texts will regularly include links which take students to websites where their information can be stolen.

HMRC has written to universities, via Universities UK, asking them to help ensure their students know how to spot a scam and to raise awareness of this issue. These scams can offer fake tax refunds or help with claiming Covid-related financial support. HMRC has also seen frauds offering spurious support with reclaiming council tax, purporting to be from TV Licensing, the DVLA or ‘GovUK’.

Students can also be approached to act as ‘money mules’, with offers of reward to transfer funds through their own, genuine financial accounts, inadvertently laundering criminal funds.

Commenting on the warning, the Chief Executive of Universities UK, said:

‘The security and welfare of students is always a priority for universities. The message to students, at what is a particularly stressful time, is to remain vigilant and question anything that seems unusual. Any student who fears their account may have been misused is encouraged to speak to either university support services, their bank, or to the police via Action Fraud.’

If you are looking for more information; please book a call with us.

 

How To Apply For Green Homes Grant

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Home owners and landlords in England can apply for a grant to make their home more energy efficient. The Green Homes Grant will cover at least two-thirds of the cost up to £5,000 per household. For low income households these grants will cover all costs up to £10,000. The scheme runs until 31 March 2021.

The Green Homes Grant provides homeowners, including the owner occupiers and social/private landlords, vouchers to install one or more of the following primary measures:

  • solid wall, under-floor, cavity wall or roof insulation
  • air source or ground source heat pump
  • solar thermal

Homeowners and the landlords will need to apply for a voucher online. Once the works are agreed, vouchers will start to be issued. HMRC has updated their guidance to confirm that they will start to issue vouchers from early November 2020.

In addition, households can apply for a further voucher to install secondary measures for additional energy saving. Households will need to install at least one of the primary measures above to qualify for further funding for secondary measures. These secondary measures include the following:

  • double or triple glazing/secondary glazing, when replacing single glazing
  • upgrading to energy efficient doors
  • hot water tank/appliance tank thermostats/heating controls

Secondary measures can only be subsidised up to the amount of subsidy provided for primary measures. (e.g. if a household receives £1,000 for primary measures, they can only receive a maximum of £1,000 towards secondary measures).

If you are looking for more information; please book a call with us.

Job Support Scheme Expansion

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On Friday 9 October, the Chancellor, Rishi Sunak announced an extension to the Job Support Scheme (JSS) Expansion. The expanded scheme will include additional support for employees of businesses that are forced to close because of local or national lockdown measures. The extended scheme will run in parallel with the main JSS for 6 months from 1 November 2020. The scheme rules are due to be reviewed in January 2021.

Under the specific terms of the expanded scheme, the government will pay two-thirds (67%) of employees’ salaries, up to a maximum of £2,100 a month. Employees must be off work for at least 7 consecutive days to benefit from the expanded scheme. When premises re-open the regular JSS rules will apply, whereby employees must work at least one-third of their hours, paid as normal. The government and employer will then each cover one-third of any remaining hours the employee is not working.

Businesses will only be able to claim the extended grant whilst they are subject to specific lockdown measures that require the closure of their business premises. The expanded scheme will also be available to businesses restricted to delivery or collection services from their premises. However, businesses required to close as a result of specific workplace outbreaks are not eligible for this scheme.

In line with the main JSS, the grant will be paid in arrears, reimbursing the employer for the government’s contribution. The claim portal will be launched from December 2020 and claims will be paid on a monthly basis. This means that employers will have to use cash reserves or borrow money in order to pay their employees’ wages in advance of receiving the monthly grant.

Employees of firms that are legally closed in the period before 1 November are eligible for the Coronavirus Job Retention Scheme (CJRS). Interestingly, the new JSS expansion is more generous than the current CJRS, which pays 60% of an employee’s salary up to £1,875 a month.

The JSS grant does not cover Class 1 National Insurance Contributions or pension contributions and employers will have to continue making these contributions. Employers will not be required to contribute towards wages whilst under lockdown measures but can make top up payments if they wish.

To be eligible for the JSS or JSS expansion, employees must have been registered on their employers PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment in respect of that employee must have been made to HMRC on or before 23 September 2020.

The JSS scheme (including the expansion scheme) is available to businesses that meet the necessary criteria even if they had not previously participated in the CJRS.

New cash grants

The Chancellor also announced that businesses in England that are forced to shut as a result of lockdown measures will be eligible for grants of up to £3,000 per month, payable every two weeks. Businesses will be eligible to claim after two weeks of closure.

The amount businesses will be able to claim from their local authority depends on their rateable value:

  • Small businesses with a rateable value of or below £15,000 will be able to claim £1,300 per month.
  • Medium-sized businesses with a rateable value between £15,000 and £51,000 will be able to claim £2,000 per month.
  • Larger businesses will be able to claim £3,000 per month.

The government is also extending the scheme to include businesses that have been forced to close on a national rather than a local basis.

The devolved administrations in Scotland, Wales and Northern Ireland will receive an additional £1.3 billion in guaranteed funding in order to offer similar measures to affected businesses. This takes the additional funding to the devolved administrations this year to at least £14 billion.

Job Support Scheme Expansion

If you are looking to know more; feel free to book a no obligation consultation with us.

Source: HM Treasury Sun, 11 Oct 2020 00:00:00 +0100

Job Retention Bonus Scheme

Posted on by Rana Zubair

New guidance has been published on claiming the Job Retention Bonus. The Job Retention Bonus provides for a £1,000 bonus payment to employers that bring back an employee that was furloughed under the Coronavirus Job Retention Scheme, and continuously employs them for at least 3 months after the furlough scheme ends.

https://www.gov.uk/guidance/check-if-you-can-claim-the-

The £1,000 Government bonus will be payable for every employee retained under the stated terms. The bonus must be claimed between 15 February 2021 and 31 March 2021. No further claims will be accepted by HMRC after 31 March 2021.

Employers will still be able to claim the Job Retention Bonus even if they are receiving support from the recently announced Job Support Scheme.

In order to make a claim the employer must have:

  • made an eligible claim for the employee under the Coronavirus Job Retention Scheme
  • kept the employee continuously employed from the end of the claim period of their last Coronavirus Job Retention Scheme claim for them, until 31 January 2021
  • ensured their employee is not serving a contractual or statutory notice period on 31 January 2021 (this includes people serving notice of retirement)
  • paid the employee an amount in each relevant tax month and enough to meet the Job Retention Bonus minimum income threshold. To meet the minimum income threshold the employer must have paid the employee a total of at least £1,560 (gross) between 6 November 2020 and 5 February 2021.

Employers may be able to claim for employees who have transferred to them under TUPE or due to a change of ownership.  To claim the bonus for these employees the employer must have furloughed and successfully claimed for them under the CJRS, as their new employer.

Employers will not be able to claim for employees who transferred after the CJRS closes on 31 October 2020. HMRC’s guidance is due to be updated by the end of January 2021 with details of how to access the online claim service.

If you are looking to know more; feel free to book a no obligation call with us.

Source: HM Revenue & Customs Wed, 07 Oct 2020 00:00:00 +0100

Travelling Costs From Work To Home

Posted on by Rana Zubair

To ease the financial burden on their employees, some employers may look at paying or refunding travelling costs from work to home for their employees when they return to work. There are tax implications that should be examined. As a general rule, where an employer pays or refunds an employee the cost of transport from work to home, this is considered to be a benefit as it is classified as a private journey.

In some circumstances, there is an exemption from paying tax on this benefit. For this to happen, all of the following 4 conditions must be met:

  • the employee has to work later than usual and until at least 9 pm
  • this happens irregularly
  • by the time the employee finishes work, either: public transport has stopped, or it would not be reasonable to expect them to use public transport
  • the transport is by taxi or similar road transport

Travelling Costs employees may also regularly travel to work in a car with one or more other employees using a car-sharing arrangement. If this arrangement stopped because of unforeseen and exceptional circumstances, which are coronavirus related, and the employer provides transport or reimbursement of the expense of transport from their employee’s home to workplace, this may also be exempt.

HMRC’s guidance is clear that if these requirements are not met, free or subsidised transport is taxable and should be reported through a PAYE Settlement Agreement as a coronavirus related benefit.

If you are looking to know more; feel free to book a no-obligation consultation with us.

Source: HM Revenue & Customs Wed, 07 Oct 2020 00:00:00 +0100

Tax Implications Of COVID Related Employee Benefits

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Tax Implications Of COVID Related Employee Benefits

HMRC has provided detailed guidance on tax implications of COVID-related employee benefits. The major of these are coronavirus tests and the provision of Personal Protective Equipment (PPE) to employees.

The guidance explains how employers should proceed where they are providing coronavirus testing kits or Personal Protective Equipment (PPE) to their employees.

https://www.gov.uk/guidance/how-to-treat-certain-expenses-and-benefits-provided-to-employees-during-coronavirus-covid-19

Coronavirus testing kits

HMRC confirms that coronavirus tests provided by the government to healthcare workers and other eligible front-line as part of its national testing scheme are not treated as a benefit in kind for tax purposes. There is no tax due and you do not need to report a benefit to HMRC.

Further, where an employer separately provides antigen testing kits to their employees or provides tests completed by a third party then no Income Tax or Class 1A National Insurance contributions will be due.

Personal Protective Equipment 

Where employees are working in scenarios where the likelihood of the transmission of coronavirus is very high and a risk assessment determines that PPE is required, then the necessary equipment must be provided to employees free of charge. The PPE must fit correctly. The provision of this PPE to employees is non-taxable.

If an employee requires PPE to complete their job and the employer is unable to provide this, then employers must reimburse the actual expenses of employees purchasing PPE themselves. This is non-taxable and employees cannot claim tax relief on these expenses from HMRC.

If you are looking to know more; feel free to book a no obligation contact with us.

Source: HM Revenue & Customs Wed, 07 Oct 2020 00:00:00 +0100

Repaying Overclaimed Job Retention Scheme Claim

Posted on by Rana Zubair

HMRC has announced that they are going to take strict action against those who have overclaimed and the businesses must repay the overclaimed Coronavirus Job Retention Scheme (CJRS) claim. The rules outlined below for paying HMRC back an overclaim also apply to businesses that would like to make a voluntary repayment because they do not want or need the grant.

https://www.gov.uk/guidance/pay-coronavirus-job-retention-scheme-grants-back

Any overpayments can be corrected in your next claim. If you confirm that your business has been overpaid, the new claim amount will be reduced to reflect this overpayment. You will need to keep a record of this adjustment for six years.

Alternatively, if you are not making another claim under the CJRS then you can request a payment reference number and pay HMRC back within 30 days. This request needs to be made online.

HMRC’s guidance states that if you have overclaimed a grant and have not repaid it, you must notify HMRC by the latest of either:

  • 90 days after the date you received the grant you were not entitled to
  • 90 days after the date you received the grant that you were no longer entitled to keep because your circumstances changed
  • 20 October 2020

Note that the deadline of 20 October 2020 is fast approaching. Late notifications of overclaimed grants could trigger the imposition of penalties. Any claims based on inaccurate information can be recovered by HMRC. However, HMRC has stated that they will not be actively looking for innocent errors in their compliance approach.

Having to repay HMRC is unlikely to be a cost that employers will have thought about, so it is important to ensure that all claims made for furloughed employees are accurate. Employers are required to keep full records relating to any CJRS claims (including adjustments) for a period of six years.

Source: HM Revenue & Customs Wed, 07 Oct 2020 00:00:00 +0100
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