Month: May 2021

Tax Diary June/July 2021

Posted on by Rana Zubair

1 June 2021 – Due date for Corporation Tax due for the year ended 31 August 2020.

19 June 2021 – PAYE and NIC deductions due for month ended 5 June 2021. (If you pay your tax electronically the due date is 22 June 2021)

19 June 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2021.

19 June 2021 – CIS tax deducted for the month ended 5 June 2021 is payable by today.

1 July 2021 – Due date for Corporation Tax due for the year ended 30 September 2020.

6 July 2021 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2021 – Pay Class 1A NICs (by the 22 July 2021 if paid electronically).

19 July 2021 – PAYE and NIC deductions due for month ended 5 July 2021. (If you pay your tax electronically the due date is 22 July 2021)

19 July 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2021.

19 July 2021 – CIS tax deducted for the month ended 5 July 2021 is payable by today.

Source: HM Revenue & Customs Tue, 18 May 2021 00:00:00 +0100

One month left to join VAT Deferral Payment Scheme

Posted on by Rana Zubair

Businesses that deferred VAT payments last year have until 21 June 2021 to join the new online payment scheme. This would allow them to spread the cost of repayment over a number of months. The VAT deferral scheme is open to businesses that took the option to defer the payment of their VAT liabilities between 20 March 2020 and 30 June 2020. 

Under the scheme, businesses have the option to pay their deferred VAT in smaller payments over a longer period and interest free. Instead of having to repay the full amount by 31 March 2021, businesses can make smaller interest-free payments during the 2021-22 financial year and complete payment of any arrears by 31 March 2022. 

The maximum number of instalments allowed under the scheme is based on the date businesses sign up for the scheme. The first instalment must be paid on joining the scheme. The March, April and May joining dates have passed but businesses that join by 21 June 2021 (the last available date) can pay in eight instalments.

Businesses must also meet certain conditions to use the scheme including being up to date with their VAT returns. HMRC has confirmed that businesses may be charged a 5% penalty or interest if they do not pay the VAT in full, sign up to the scheme or arrange to pay by 30 June 2021.

Source: HM Revenue & Customs Mon, 24 May 2021 00:00:00 +0100

Employment Status Tool

Posted on by Rana Zubair

HMRC’s employment status service can be used to help ascertain if a worker should be classified as employed or self-employed for tax purposes in both the private and public sector. The service has recently been updated to reflect off-payroll working changes that came into effect on 6 April 2021.

The service provides HMRC’s view as to whether IR35 legislation applies to a particular engagement and whether a worker should pay tax through PAYE as well as helping to determine if the off-payroll working in the public sector rules apply to a public sector engagement.

The software can be used to check the employment status of:

  • a worker providing services;
  • a person or organisation hiring a worker; or
  • an agency placing a worker.

HMRC has said that it will stand by the result given unless a compliance check finds the information provided was not accurate. HMRC will not stand by the results of contrived arrangements designed to achieve a particular outcome. HMRC are clear that this would be treated as evidence of deliberate non-compliance and could result in higher penalties.

The service is anonymous, and the results are not stored online. However, the results can be printed and held for your own records. If any changes take place to the workers role their status should be reassessed.

Source: HM Revenue & Customs Mon, 24 May 2021 00:00:00 +0100

Tax on sale of cryptoassets

Posted on by Rana Zubair

Most individuals hold cryptoassets (such as Bitcoin) as a personal investment, usually for capital appreciation in its value or to make purchases. 

HMRC is clear that these holdings will usually be subject to Capital Gains Tax (CGT) when: 

  • selling tokens
  • exchanging tokens for a different type of cryptoasset
  • using tokens to pay for goods or services
  • giving away tokens to another person (unless it is a gift to your spouse or civil partner)
  • donating coins to charity 

To check if you need to pay CGT, you will need to work out your gain for each transaction. The way a gain is calculated is different if you sell tokens within 30 days of buying them. If the asset was acquired free of charge, then the market value at the time should be used to calculate the gain. 

Taxpayers can deduct certain allowable costs when working out their gain, including the cost of:

  • transaction fees paid before the transaction is added to a blockchain
  • advertising for a buyer or seller
  • drawing up a contract for the transaction
  • making a valuation so they can work out the gain for that transaction

If the taxpayer’s activity is trading, then Income Tax will take priority over CGT and will apply to profits (or losses). 

Source: HM Revenue & Customs Mon, 24 May 2021 00:00:00 +0100

Tariff suspension on certain imports

Posted on by Rana Zubair

The UK government has announced plans to introduce a new tariff suspension scheme. This new scheme will help UK firms become globally competitive.

This will be done by allowing companies to request that duties be partially or wholly reduced for a set period. This in turn will result in lowering the cost of importing raw materials and decreasing production costs. Once a suspension has been introduced, all UK importers will be able to benefit from the reduced rate.

The new scheme will be launched from 1 June 2021 and will allocate suspensions based on the needs of firms in the UK and the wider economy. Prior to Brexit, firms had to submit applications to the EU bloc to request suspensions, which then had to be assessed by all member states.

The government has also confirmed that existing duty suspensions that the government has rolled over from the EU will be extended beyond 31 December 2021.

Source: HM Revenue & Customs Mon, 24 May 2021 00:00:00 +0100

It’s planning time!

Posted on by Rana Zubair

The businesses will have hard choices to make in few months to come specially those that are still claiming the Coronavirus Job Retention Scheme grants, now known as the furlough scheme.

Unless business activity picks up between now and September a significant number of those on furlough may find themselves unemployed.

Reaching a decision on who to retain or who to let go will be a difficult process for many employers. They will face breaking up teams that have worked tirelessly for employers for many years. And yet these hard choices need to be made.

What are the options available?

Affected business owners should sharpen their pencils, open Excel and start planning. They need to produce a forecast until, at minimum, the end of 2022, that sets out:

  • Sales
  • Direct costs
  • Other overheads including owners drawings
  • Repayments of loans
  • Any capital acquisitions that cannot be deferred, new plant or computer equipment for example.

We could help you in the process, see our services page.

These forecasts can be arranged to display profitability, solvency and cash-flow and are the only reliable way to measure and decide on actions – like laying off staff – that will need to be made.

If you are concerned that staff retention may become an issue for your business, pick up the phone. We can help you crunch the numbers and consider your options. Now is not the time to bury your head in the sand.

The clock is ticking.

If you are looking to discuss in detail, feel free to contact us.

Record keeping for limited companies

Posted on by Rana Zubair

Limited companies are required to hold a wide range of company and accounting records. This includes details of directors, shareholders, company secretaries and the results of any shareholder votes and resolutions.

The company must also keep a register of people with significant control (PSC register). The PSC register is used to identify and record the people who exert significant control over UK companies often known as beneficial owners. Companies must keep a record even if there are no people with significant control.

There is also a requirement to keep full accounting records including:

  • all money received and spent by the company, including grants and payments from coronavirus support schemes
  • details of assets owned by the company
  • debts the company owes or is owed
  • stock the company owns at the end of the financial year
  • the records you used to work out the stock figure
  • all goods bought and sold
  • who you bought and sold them to and from (unless you run a retail business)

The records must be held for 6 years from the end of the last company financial year they relate to, or longer if:

  • they show a transaction that covers more than one of the company’s accounting periods
  • the company has bought something that it expects to last more than 6 years, like equipment or machinery
  • you sent your Company Tax Return late
  • HMRC has started a compliance check into your Company Tax Return.
Source: HM Revenue & Customs Wed, 19 May 2021 00:00:00 +0100

When not to charge VAT

Posted on by Rana Zubair

When a VAT registered business issues an invoice to their customer, they must ensure that they charge the correct rate of VAT. Whilst most businesses in the UK charge VAT at the standard rate of 20% there are a number of different VAT rates and exemptions to be aware of; this includes the reduced VAT rate of 5% and the positive zero rate (0%).

There are two other categories that the supplies of goods and services can fall under:

  • Exempt – where no VAT is charged on the supply. Examples of exempt items include the provision of insurance, postage stamps and health services provided by doctors. If a business only sells VAT-exempt goods and services, they cannot register for VAT.
  • Supplies that are 'outside the scope' of the UK VAT system altogether. These supplies are beyond the realm of the UK VAT system and you cannot charge or reclaim VAT on these supplies. Examples include goods or services you buy and use outside the EU, statutory fees – like the London congestion charge and goods you sell as part of a hobby.

If a business has made an error in charging VAT, then this needs to be corrected. The timing of finding an error can impact on how the issue is resolved.

There are also penalties if you charge VAT to your customers before you are officially registered. VAT registration is only required for eligible businesses earning more than £85,000 per year although businesses under the threshold can voluntarily apply for a VAT registration.

Source: HM Revenue & Customs Wed, 19 May 2021 00:00:00 +0100

Business Asset Disposal Relief on UK Company Shares

Posted on by Rana Zubair

The UK Government has helped entrepreneurs flourish by offering Capital Gains Tax (CGT) reduction through Entrepreneurs Relief (ER). The same relief named as Business Asset Disposal Relief (BADR) after 6 April 2020.

However, the change in name does not affect the operation of the relief in itself. BADR applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership.

Capital gains tax is due on the sale of assets (business, property etc.). With Entrepreneurs Relief (ER), disposal of assets up to the value of £10 million was taxed at 10%. Since April  2020, the asset sale ceiling has been reduced to £1 million and all sale proceeds over this figure are taxed at 20% or higher.

Where this relief is available CGT of 10% is payable in place of the standard rate. There are a number of qualifying conditions that must be met to qualify for the relief.

https://www.gov.uk/business-asset-disposal-relief

There are certain conditions which must be met for the disposal of shares in a company to be eligible for business asset disposal relief.

Have a look at our Capital Ganis Tax Services.

Throughout the period of two years ending with the date of disposal of the shares:

  • the individual must have been an employee or officeholder in the company or any company within the group;
  • the individual must own at least 5% of the company’s share capital; and
  • the company must have been a trading company, or the holding company of a trading group. This means that any activities of a non-trading nature, such as holding investments, must not be substantial – understood to mean 20% of the company’s whole activities.

For an individual to satisfy the 5% shareholding condition they must own at least 5% of the ordinary share capital and by virtue of that holding the individual must be able to exercise at least 5% of the company’s voting rights.

In addition either:

  • the individual must be beneficially entitled to at least 5% of the profits available for distribution to equity holders and to at least 5% of assets available for distribution to equity holders on a winding up; and/or
  • in the event of a disposal of the whole of the ordinary share capital of the company, the individual would be beneficially entitled to at least 5% of the proceeds.

 

You can currently claim a total of £1 million in BADR over your lifetime. The £1m lifetime limit means you can qualify for the relief more than once. The lifetime limit may be higher if you sold assets before 11 March 2020.

Claims for BADR are made either through your Self-Assessment tax return or by filling in Section A of the Business Asset Disposal Relief help sheet. The deadline for claiming relief for the 2019-20 tax year is 31 January 2022.

 

If you are looking to know more about this relief, feel fee to book an appointment.

Scam calls – HMRC

Posted on by Rana Zubair

There has been sharp rise in the scam calls pretending from HMRC. In most of the cases the caller asks to disclose information about yourself or your finances.

Criminals now use every means at their disposal to obtain details that will enable them, ultimately, to cause you financial harm. For example, they might:

Pretend they are the tax office and offer you a tax refund or threaten you with legal action if you do not pay tax, you apparently owe.

Pretend you have inherited from a distant relative and all you need to do is send them certain personal details.

https://www.gov.uk/government/publications/phishing-and-bogus-emails-hm-revenue-and-customs-examples/phishing-emails-and-bogus-contact-hm-revenue-and-customs-examples

Call your mobile or landline using automated software and offer you some form of reward, financial penalty, or legal action unless you immediately select a number on your keypad.

With your personal details, name, address, etc., they can pretend they are you and borrow money in your name. With your bank details they can transfer money from your bank account.

Criminals can do this from the comfort of their homes, all they need is a computer. And so, be cautious when responding to any request for personal information or bank details. If in doubt, do not respond. Instead, contact a trusted adviser, call the tax office or your bank using contact details published on official websites.

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

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