Tax Free Gifts For Staff On Christmas

Tax Free Gifts For Staff On Christmas. The employers who are looking to give their employees a small token of appreciation for Christmas, then their best option is probably to give them a gift tax free gifts. In order to ensure that this is not a taxable gift, it is important to that the trivial benefits in kind (BiK) rules apply.

If the gift doesn’t have a direct cash value then HMRC might accept it as a ‘trivial benefit’

The trivial benefits in kind (BiK) exemption applies to small non-cash benefits like a bottle of wine or a bouquet of flowers given to employees or any other benefit in kind classed as ‘trivial’ that falls within the exemption.

There is no tax to pay on trivial benefits in kind (BiK) provided to employees where all of the following apply:

https://www.gov.uk/expenses-and-benefits-trivial-benefits

  • the benefit is not cash or a cash-voucher; and
  • costs £50 or less; and
  • is not provided as part of a salary sacrifice or other contractual arrangement; and
  • is not provided in recognition of services performed by the employee as part of their employment, or in anticipation of such services.

So, for example a turkey that cost £45 would qualify as would a £15 bottle of wine. It is also possible to provide employees with a gift voucher (not a cash-voucher) where the value is £50 or less. It is important to remember that the gifts must not be provided in recognition of the employees’ services but merely as a gesture of goodwill at Christmas.

There is an annual cap for directors of a ‘close’ company of £300 per year. If the Christmas gifts have a value of over £50 or cannot be counted as a trivial benefit then the gift must be reported on form P11D and Class 1A NICs will be payable on the value of the gift.

If you are looking to know about it, feel free to contact us.

Crackdown On Tax Avoidance Scheme

HMRC has been very strict on tax avoidance scheme to loot innocent tax payers.

In a recent attempt, HMRC and the Advertising Standards Authority (ASA) have come together to jointly target misleading marketing by promoters of tax avoidance schemes.

HMRC and the ASA can jointly issue an Enforcement Notice to companies irresponsibly advertising tax arrangement schemes in a bid to clamp down on those breaking the rules.

https://www.gov.uk/government/news/hmrc-and-asa-launch-new-action-to-disrupt-promoters-of-tax-avoidance-schemes

The joint enforcement notice aims to disrupt the activity of promoters and protect people from being presented with misleading adverts which may tempt them into tax avoidance.

The ASA is clear that advertisers are required to ensure that their marketing communications are legal, comply with the law and do not incite anyone to break it.  As such, ads for any arrangements or schemes which are illegal will break the ad rules as well as the law.

HMRC has also launched a new campaign titled ‘Tax avoidance: don’t get caught out’ warning and educating contractors about how to identify if they are being offered a tax avoidance scheme, and the pitfalls of using these schemes. The campaign urges taxpayers to help avoid unwittingly entering into arrangements that HMRC are likely to be seen as tax avoidance.

The HMRC’s campaign is asking the public to:

  • Stop – don’t sign anything that you are uncomfortable with or don’t understand
  • Challenge – check for warning signs. If you’re unsure, seek independent professional advice
  • Protect – if you think you have been offered a tax avoidance scheme, report it to HMRC.

For example, a number of schemes have targeted workers returning to the National Health Service (NHS) to help respond to the coronavirus (COVID-19) outbreak.

If you need any further advice feel free to contact us to book a free consultation.

 

How To Correct Errors On VAT Returns

Businesses normally do care when filing their VAT returns but still there could be an error when filing a VAT return. Where an error on a past VAT return is uncovered, businesses have a duty to correct the error as soon as possible. As a general rule, any necessary adjustment can be made on a current VAT return. However, in order to be able to do so, there are three important conditions that must be met:

  • The error must be below the reporting threshold.
  • The error must not have been deliberate.
  • The error can only relate to an accounting period that ended less than 4 years ago.

https://www.gov.uk/vat-corrections

Under the reporting threshold rule, businesses can make an adjustment on their next VAT return if the net value of the errors is £10,000 or less. The threshold is further increased if the net value of errors found on previous returns is between £10,000 and £50,000 but does not exceed 1% of the box 6 (net outputs) VAT return declaration figure for the return period in which the errors are discovered.

Please have a look at our VAT Services page.

VAT errors of a net value that exceed the limits for correction on a current return or that were deliberate should be notified to HMRC using form VAT 652 (or providing the same information in letter format) and should be submitted to HMRC’s VAT Error Correction team.

Inaccuracy penalties:

  • The inaccuracy penalty, applies where there is an understatement of a VAT liability (or a false or inflated repayment claim), and
  • The inaccuracy must be careless, deliberate or deliberate and concealed
  • There is a further penalty if HMRC issues a VAT assessment which understates the tax due, and the taxpayer does not take reasonable steps to notify HMRC of the error within 30 days.

The penalty does not apply where the taxpayer has, in the view of HMRC, taken reasonable care in filing returns but makes an innocent mistake. Where it does apply, it is calculated as a percentage of ‘potential lost revenue’ as follows:

  • Lack of reasonable care errors – up to 30% of ‘potential lost revenue’
  • Deliberate errors – between 20% and 70% of ‘potential lost revenue’
  • Deliberate and concealed errors – between 30% and 100% of ‘potential lost revenue’

HMRC may also charge penalties and interest if an error is due to careless or dishonest behaviour.

 

If you need any further advice feel free to contact us to book a free consultation.

Stamp Duty Rate Change For Mixed Use Properties

HMRC’s published guidance on the application of the 3% higher rate of Stamp Duty and Land Tax (SDLT) has been updated for mixed use properties.

A ‘mixed’ property is one that has both residential and non-residential elements, for example a flat connected to a shop, doctor’s surgery or office.

The higher rates of SDLT were introduced on 1 April 2016 and apply to purchases of additional residential property such as buy to let and second homes.

https://www.gov.uk/stamp-duty-land-tax/nonresidential-and-mixed-rates

At the time the new higher rates were introduced, HMRC confirmed that where there was a purchase of mixed use buildings consisting of residential and non-residential properties that the 3% higher rate of SDLT applied to the dwelling element.

HMRC’s guidance on this issue was updated on 13 November 2020. The new guidance makes it clear that HMRC’s view has changed and that the 3% surcharge will not apply to the dwelling element. The guidance adds the caveat that the non-residential element of the transaction is neither negligible nor artificially contrived.

This change could allow affected purchasers to claim back any overpaid SDLT on mixed use, multiple dwelling transactions from HMRC within the legal time limits. HMRC’s guidance also suggests that purchasers can now make a non-statutory clearance application in the event of uncertainty over a transaction.

 

If you need any further advice feel free to contact us.

Be Cautious Before You Donate To A Charity

People donate huge amounts to charities, to ensure charity work continues in the country. It has been estimated that almost £350,000 of charitable donations last year ended up in the pockets of criminals.

Government recently issued advice to reduce this activity. They said:

The vast majority of fundraising appeals and collections are genuine, however criminals can set up fake charities, or even impersonate well-known charitable organisations, to deceive victims.

https://www.apexaccountants.tax/hmrc-investigation/

Action Fraud has teamed up with the Charity Commission, the regulator and registrars of charities, and the Fundraising Regulator, the independent regulator of charitable fundraising in England, Wales and Northern Ireland, to help the public make sure their donations go to the right place this Christmas.

Clearly, this bogus activity represents just a small proportion of overall donations made to reputable charities, but donors should be wary. Further advice to donors included in their press release says:

  • Make sure the charity is genuine before giving any financial information. Look for the registered charity number on their website. You can check the charity name and registration number at www.gov.uk/checkcharity;
  • You can also check if a charity is registered with the Fundraising Regulator. All charities registered here have made a commitment to good fundraising practice;
  • If you’re approached by a collector on the street or at your door, ask to see the collector’s ID badge. You can also check whether the collector has a licence to fundraise with the local authority, or has the consent of the private site owner;
  • Don’t click on the links or attachments in suspicious emails, and never respond to unsolicited messages and phone calls that ask for your personal or financial details – even if it’s in the name of a charity
  • To donate online, type in the address of the charity website yourself rather than clicking on a link. If in any doubt, contact the charity directly about donating;
  • Be cautious when donating to an online fundraising page. Fake fundraising pages will often be badly written or have spelling mistakes. When donating to an online fundraising page, only donate to fundraising pages created by someone you know and trust.

After making these checks, if you think that a fundraising appeal or collection is fake, report it to Action Fraud online or by calling 0300 123 2040.

 

If you need any further advice feel free to contact us.

Payment Of Deferred VAT

The coronavirus VAT payment holiday gave businesses the chance to defer the payment of any deferred VAT or VAT liabilities between 20 March 2020 and 30 June 2020. The option for businesses to defer their VAT payments ended on 30 June 2020.

https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

There are two options available for repaying this VAT.

The first option is to pay the deferred VAT in full on or before 31 March 2021. No interest or penalties will accrue on deferred payments that are paid by the new due date and there is no requirement to contact HMRC.

The second option, added by the Chancellor when delivering his Winter Economy Plan, is to further defer the amount of VAT due. The new VAT deferral payment scheme will allow businesses the option to pay the deferred VAT in smaller payments over a longer period. Instead of having to repay the full amount by 31 March 2021, businesses will now be able to make smaller interest-free payments during the 2021-22 financial year and pay the VAT due by 31 March 2022.

Businesses will need to opt-in to the new payment scheme. HMRC has published updated guidance confirming that the opt in process will be available in early 2021. Businesses will also need to opt in themselves and will not be able to use an agent to do this for you.

The new payment scheme will allow businesses to pay their deferred VAT in instalments without adding interest and select the number of instalments from 2 to 11 equal monthly payments. Businesses must meet certain conditions to use the scheme including being up to date with their VAT returns.

 

Please visit our VAT services page.

 

If you need any further information, feel free to contact us.

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