Archive for the ‘accountancy’ Category

Its tax payment time again

Friday, July 10th, 2020

If you submit a self-assessment tax return you may need to consider your options as any second payments on account for 2019-20, are coming due for payment 31 July 2020. In a nut-shell you have three options:

 

Defer payment until 31 January 2021

As part of his support for taxpayers during the present disruption, Rishi Sunak has given you the opportunity to defer payment of the July instalment until 31 January 2021.

This is generous, but readers should be cautious as this is not a cancellation of amounts due. If you do defer your July payment you will need to plan your cash flow carefully, as the total self-assessment tax (and possibly NIC) due 31 January 2021 will include:

  • The deferred July 2020 payment
  • Any balance of tax due for 2019-20, and
  • The first payment on account for 2020-21.

If you do defer, HMRC have confirmed that they will not charge interest or penalties as long as amounts due are paid on or before 31 January 2021.

 

Make the July 2020 payment

The deferment is an option. If you have already reserved funds you may prefer to pay the tax and reduce amounts due January 2021.

Reduce tax due 31 July 2020

A third option you could consider is applying to reduce payments on account for 2019-20 and therefore reduce the amount payable 31 July 2020? You can do this if the following applies.

The payments on account – due 31 January and 31 July 2020 – are for the tax year 2019-20. Until your tax return is filed for 2019-20, these payments on accounts will be based on figures for the previous tax year, 2018-29.

If your profits for 2019-20 are lower than those for 2018-29, then you can elect to reduce payments on account for 2019-20.

Accordingly, if you feel that your business profits or other income assessable during 2019-20 were lower than those for 2018-19, then we should consider this option.

Summer Statement 8 July 2020

Thursday, July 9th, 2020

The Chancellor, Rishi Sunak continued with his campaign to support the business and jobs community today, 8 July 2020, as firms engage with the disruption caused by the coronavirus outbreak and the measures taken to control infection.

The main thrust of his announcements during his Summer Economic update concerned his nominated Plan for Jobs 2020, details are listed below.

He also announced measures to support the hospitality and tourism industry including a novel voucher scheme and a temporary reduction in VAT. Again, details are provided in the following update.

In an attempt to boost the flagging property market Stamp Duty is being temporarily reduced in England and Northern Ireland. Separate announcements on this topic are awaited for Scotland and Wales who have their own Stamp Duty regimes.
Details of these announcements follow:

1. Job Retention Bonus: employers that bring back an employee that was furloughed, and continuously employ them through to January 2021, will be paid a £1,000 government bonus per employee retained. Employees must be seen to be gainfully employed during this period and be paid at least £520 a month, on average, from November 2020 to January 2021. All furloughed employees returned to employment in this way will be available for the £1,000 bonus.

2. Kickstart scheme: this new scheme will cover the wages (plus associated costs) of new jobs created for any 16 to 24-year-old – at risk of long-term unemployment – for six months. These will have to be new jobs, of at least 25 hours a week and paid the National Minimum Wage. Employers will need to offer kickstarters training and support to find a permanent job. Employers can apply to be part of this new scheme from next month – August 2020 with first jobs starting in the autumn. Government has made an initial £2bn available for this scheme, but there is no cap on the number of places made available.

3. Apprenticeships: for the next six months government will pay employers to create new apprenticeships. The amount payable will be £2,000 for each apprentice. A new bonus to take on apprentices aged over 25 has also been announced. This will amount to £1,500 per appointment.

4. Green jobs initiatives: as an incentive to create jobs in the green jobs’ market a number of new grants have been announced. From September 2020, homeowners and landlords in England will be able to apply for a grant to make their home more energy efficient. The £2bn 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. There will also be a further £1bn allocated to make public buildings greener.

5. Boost for the housing market: Presently, in England and Northern Ireland (different amounts apply in the regions) no Stamp Duty Land Tax is payable on residential property purchases below £125,000. From today – for a temporary period to 31 March 2021 – this threshold is increased to £500,000. It is projected that this will reduce the average stamp duty bill by £4,500. Regional variations may apply. Purchasers buying a second residential property will still have to pay the 3% Stamp Duty Land Tax for property purchases up to £500,000.

6. VAT reduction for hospitality and tourism: for the next six months VAT charged on food, accommodation and attractions (such as eat-in or takeaway food in restaurants, cafes, pubs, cinemas, theme parks and zoos) will see VAT reduced from 20% to 5%. This will apply from 15th July 2020 until 12th January 2021.

7. Eat Out to Help Out discount: for the month of August 2020, meals eaten at any participating business Monday, Tuesday or Wednesday, will be 50% off up to a maximum discount of £10 per head including children. To access the discount businesses will need to register and can do so through a website to be opened next Monday, 13 July 2020. Businesses will be able to claim the money back weekly with the money in their bank accounts within 5 working days.

As we manage the cautious steps to emerge from lock-down, still wary of COVID-19, the new incentives announced by Rishi Sunak today should be welcomed.
As more details emerge on the various schemes announced today they will be published accordingly.

Which businesses can reopen 4th July 2020

Wednesday, July 8th, 2020

As the town of Leicester demonstrates, the recent announcement that many businesses would be able to reopen since 4 July 2020, depends on local conditions. Rates of infection in Leicester are causing concerns and consequently, local businesses were unable to reopen.

However, for the rest of England (regional variations may apply for Scotland, Wales and Northern Ireland) all businesses can reopen apart from those listed below:

Businesses that will remain closed

  • Nightclubs
  • Casinos
  • Bowling alleys and Indoor skating rinks
  • Indoor play areas including soft-play
  • Spas
  • Nail bars, beauty salons and tanning salons
  • Massage, tattoo and piercing parlours
  • Indoor fitness and dance studios, and indoor gyms and sports venues/facilities
  • Swimming pools including water parks
  • Exhibition or conference centres must remain closed for events such as exhibitions or conferences, other than for those who work for the business or organisation who run the venue.

It has also been announced that cafes, restaurants and shops that are self-contained and can be accessed from the outside, will still be permitted to open.

Track and Trace

As part of government initiatives to control the spread of the COVID virus, track and trace is an important element. Accordingly, businesses are requested to keep a record of customers and visitors for 21 days, in a way that is manageable for your business, and assist NHS Test and Trace with requests for that data if needed. This could help contain clusters or outbreaks. Many businesses that take bookings already have systems for recording their customers and visitors – including restaurants, hotels, and hair salons.

Government has requested that if you do not already do this, you should do so to help fight the virus. They will also work with industry and relevant bodies to design this recording system in line with data protection legislation. Details will be issued shortly.

 

 

What happens if VAT rates are changed

Monday, July 6th, 2020

A number of EU countries have reduced VAT rates in an attempt to stimulate the economy: if VAT rates fall, prices should fall encouraging consumers to spend more.

There has been much press commentary recently that Rishi Sunak will announce a similar reduction in the UK. Note, at present this is pure speculation.

If announced, any reduction will no doubt be for a limited period as the cost in lost tax revenue will be considerable.

However, if and when a reduction is announced what will VAT registered businesses need to do? We have listed below some of the issues that will need to be considered:

Accounts software

If you use bookkeeping software cloud versions may make changes to VAT rates for you. If not, they will presumably provide users with clear instructions. Essentially, from the announced date, the rate of VAT charged on sales will need to be adjusted.

Many businesses invoice for their services by using features in their accounting software. In these cases, the rate of VAT charged from the date any reduction is announced will automatically be applied. Businesses that use other processes to create sales invoices will need to use the amended VAT rate from the appointed day.

Retailers

Retailers, who normally show VAT inclusive prices on price tags, will have two choices:

  • to leave prices at the pre-VAT reduction levels – this will increase their profits on items sold or
  • reduce their prices – thereby passing on the VAT reduction to their customers.

The intention of any VAT reduction is to stimulate consumer expenditure and so the preferred option from the government’s point of view is that retailers will reduce their prices for goods subject to a VAT charge.

Subscriptions

If your business has subscribers, members or any other model that charges for services on a fixed monthly basis, presumably customers will expect any VAT reductions to be passed on their periodic payments reduced accordingly.

Aside from the changes to invoicing, affected businesses that have set up standing order arrangements may face a challenging conundrum. They will need to contact each customer and ask them to reduce their standing order payments.

An option that affected businesses could consider is switching from standing order payment to direct debit. There are a number of cloud based direct debit facilitators that could be considered.

We can help

If rates are reduced for a limited period we can help you devise a strategy to cope with any changes to your pricing or admin systems.

Unwinding furlough

Thursday, July 2nd, 2020

Last month we commented on the changes to the Coronavirus Job Retention Scheme (CJRS) that commenced at the beginning of this month (1 July 2020).

Now that we have the option to bring back employees on a part-time basis and still have a measure of support for their unpaid time, what considerations should we consider when planning the effects of the gradual unwinding of the CJRS?

Here are a few issues you may need to consider:

  • Based on your present circumstances, what turnover levels are you likely to achieve from the end of this month?
  • Apart from staff costs, what are your other fixed cost projections?
  • You will need to account for the gradual impact of presently furloughed payroll costs as the CJRS unwinds towards close-down 31 October 2020.
  • And last, but not least, have you created formal cash-flow and profit forecasts?

Armed with this information, you can then consider the combination of staffing levels that will allow you to at least breakeven from a profit perspective.

Planning is obviously paramount. If you have your account’s updated in real-time – using cloud based software – this will provide you with much needed data on which to base your decisions.

The UK economy seems set to break all records for reduction in output. As the 20% drop in May illustrates, we are descending into uncharted territory.

If you need help creating the necessary “what-if” planning reports, please call. There has never been more pressing need to make informed decisions. Delaying or ignoring this need is rather like driving blind-fold.

Parents returning from paternity or maternal leave

Thursday, July 2nd, 2020

One aspect of the 1 July changes to the CJRS was the closing date to new entrants was set as 30 June 2020. This disadvantaged parents who had been on extended parental or maternal leave in recent months and were intending to return to work after 30 June.

The government has now confirmed that parents on statutory maternity and paternity leave who return to work in the coming months, after a long period of absence, will be permitted to be furloughed.

This will only apply where they work for an employer who has previously furloughed employees.

Brexit – no extension to transition period

Thursday, July 2nd, 2020

It is now confirmed that the UK will neither accept nor seek any extension to the Transition Period.

From 1 January 2020, the UK will have the autonomy to introduce its own approach to goods imported to GB from the EU.

Recognising the impact of coronavirus on businesses’ ability to prepare, and following the announcement in February that the UK would implement full border controls on imports coming into GB from the EU, the UK has taken the decision to introduce the new border controls in three stages up until 1 July 2021. This flexible and pragmatic approach will give industry extra time to make necessary arrangements. The stages are:

  • From January 2021: Traders importing standard goods, covering everything from clothes to electronics, will need to prepare for basic customs requirements, such as keeping sufficient records of imported goods, and will have up to six months to complete customs declarations. While tariffs will need to be paid on all imports, payments can be deferred until the customs declaration has been made. There will be checks on controlled goods like alcohol and tobacco. Businesses will also need to consider how they account for VAT on imported goods. There will also be physical checks at the point of destination or other approved premises on all high risk live animals and plants.
  • From April 2021: All products of animal origin (POAO) – for example meat, pet food, honey, milk or egg products – and all regulated plants and plant products will also require pre-notification and the relevant health documentation.
  • From July 2021: Traders moving all goods will have to make declarations at the point of importation and pay relevant tariffs. Full Safety and Security declarations will be required, while for SPS commodities there will be an increase in physical checks and the taking of samples: checks for animals, plants and their products will now take place at GB Border Control Posts.

New support for High Street

Thursday, July 2nd, 2020

A package of support to help high streets to get back on their feet was launched 12 June 2020. This announcement was made just days before shops were allowed to reopen on 15 June.

The High Streets Task Force will provide access to cutting-edge tools, training, information and advice for high streets across England as part of the government’s efforts to get shops open and back in business.

This support is open to local councils and all organisations involved with high streets and will include free access to online training programmes, webinars, data and intelligence on topics including recovery planning and coordination, public space and place marketing.

The support will form one part of the Task Force’s 4-year programme which will focus on the long-term transformation of town and city centres and helping communities reimagine and revitalise their high streets.

Tax Diary July/August 2020

Thursday, July 2nd, 2020

1 July 2020 – Due date for corporation tax due for the year ended 30 September 2019.

6 July 2020 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2020 – Pay Class 1A NICs (by the 22 July 2020 if paid electronically).

19 July 2020 – PAYE and NIC deductions due for month ended 5 July 2020. (If you pay your tax electronically the due date is 22 July 2020)

19 July 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2020.

19 July 2020 – CIS tax deducted for the month ended 5 July 2020 is payable by today.

31 July 2020 – Self-assessment second payment on account for 2019-20 is due. The government has announced measures that will allow many tax payers to delay this payment until January 2021, if they wish

1 August 2020 – Due date for corporation tax due for the year ended 31 October 2019.

19 August 2020 – PAYE and NIC deductions due for month ended 5 August 2020. (If you pay your tax electronically the due date is 22 August 2020)

19 August 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2020.

19 August 2020 – CIS tax deducted for the month ended 5 August 2020 is payable by today.

Lock-down independence day 4th July 2020

Tuesday, June 30th, 2020

The changes to lock-down announced by the Prime Minister last week are summarised below. Most are effective from 4th July 2020.

Pubs, restaurants and hairdressers will be able to reopen, providing they adhere to COVID Secure guidelines.

From the same date, two households will be able to meet up in any setting with social distancing measures. This will open up the possibility that people can now enjoy staycations in England with the reopening of accommodation sites.

In order to begin restoring the arts and cultural sector, some leisure facilities and tourist attractions may also reopen, if they can do so safely – this includes outdoor gyms and playgrounds, cinemas, museums, galleries, theme parks and arcades, as well as libraries, social clubs, places of worship and community centres.

Following a review, the Prime Minister has also set out that where it is not possible to stay two metres apart, guidance will allow people to keep a social distance of ‘one metre plus’.

What is one metre plus?

This means staying one metre apart, plus mitigations which reduce the risk of transmission.

The Prime Minister underlined that as we begin to reopen the economy, it’s important that we do not increase the risk of transmission which is why “close proximity” venues such as nightclubs, soft-play areas, indoor gyms, swimming pools, water parks, bowling alleys and spas will need to remain closed for now. The Government is continuing to work with these sectors to establish taskforces to help them to become COVID Secure and reopen as soon as possible.

While the infection rate continues to fall, the Prime Minister has been clear that the public must continue to follow social distancing guidelines to keep coronavirus under control. The Government will keep all measures under constant review and will not hesitate to apply the handbrake, or reverse measures, should the virus begin to run out of control.

These changes apply in England only.