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Friday, 15 November 2019

Newsletter 141


CHRISTA ACKROYD LOSES IR35 APPEAL

Former BBC presenter Christa Ackroyd has lost her appeal against a ruling that she was an employee, not a freelance contractor, when she worked for the BBC via a personal service company.

The IR35 rules in broad terms mean that those working via a personal service company have to consider whether, if the services were provided by the individual contractor directly to the client, there would be a contract of employment.

Judges in the Upper Tier Tribunal upheld last year's First Tier Tribunal ruling that she was a BBC employee when she presented Look North in Yorkshire and was therefore liable to pay income tax and national insurance contributions.

The case related to the tax years 2006/07 to 2012/13, while she worked for the public broadcaster through her personal service company, Christa Ackroyd Media (CAM).

HMRC argued that she owed almost £420,000 in income tax and national insurance contributions, before corporation tax deductions. An HMRC spokesperson said they welcomed the judgment that the presenter was within the intermediary rules.

'Employment status is never a matter of choice; it is always dictated by the facts and when the wrong tax is being paid, we put things right.

It is right that an individual who works through a company, but would have been an employee if they were taken on directly, pays broadly the same amount of tax and national insurance contributions as employees.'

The IR35 rules were amended for Public Bodies (including the BBC) from April 2017 and the government will make similar changes for the private sector from April 2020.

Internet links: ICAEW news BAILII cases

CLAMP DOWN ON ENABLERS OF TAX AVOIDANCE SCHEMES
HMRC says it is clamping down on the promoters and enablers of tax avoidance schemes in the wake of the loan charge controversy.

Penny Ciniewicz, Director General of Customer Compliance at HMRC, told the Treasury Select Committee that HMRC is 'doubling the resources' to tackle those in the 'avoidance supply chain'.

In response to questions about the loan charge, Ms Ciniewicz said:

'We have more than 100 current investigations into promoters [and enablers], and we're keeping a very close eye on the market for avoidance. We are spotting schemes as they emerge and we're tackling them.'

The loan charge policy is currently subject to an independent review. It came into effect on 6 April this year, and applies to anyone who used 'disguised remuneration' schemes. The legislation added a 45% non-refundable charge on all loans advanced through the schemes, unless the individual had agreed with HMRC to settle their tax affairs.

Internet link: ICAEW news

INCREASE IN PROBATE FEES ABANDONED
The government has abandoned its planned increase in probate fees. The increase in fees was originally expected to take effect from 1 April 2019. However, in March 2019 HMRC postponed the introduction of the increase, attributing the delay to pressure on Parliamentary time.

As part of the government's plans, estates that are valued between £50,000 and £300,000 would have been subject to a probate fee of £250. Fees were to rise thereafter to reach £6,000 for estates with a value above £2 million.

Currently, for estates valued at over £5,000, a grant application made by a solicitor is subject to a flat fee of £155. A grant application made by an individual is subject to a fee of £215.

The increase was included in a statutory instrument (SI) however the SI fell away on the prorogation of Parliament in September, but was reinstated when the prorogation was declared illegal.

The government has now announced that the planned increase will not take place. Instead there will be a review of court costs and how they can be covered by the actual service required.

Probate fees apply in in England and Wales.

Internet link: ICAEW post

CHARITIES FRAUD PROTECTION FAILURES
According to a report published by the Charity Commision, the majority of UK charities admit fraud is a major risk, but are still failing to carry out basic tasks in order to protect themselves.

More than 3,300 charities took part in the Charity Commission's survey into fraud awareness, resilience and cyber security in the sector. Over two thirds of charities agree that fraud is a significant risk. Insider fraud is recognised as one of the biggest threats, the report stated.

The survey found that 85% of charities think they are doing everything they can to prevent fraud, but almost half do not have robust protections in place.

The Commission recommended some simple steps that charities could take to protect their funds, including introducing and enforcing basic financial controls. They should also make sure no single individual has oversight or control of financial arrangements, as effective segregation of duties is a crucial method of preventing and detecting fraud.

The Commission also recommends that employees, volunteers and trustees should be encouraged to speak out when they see something they feel uncomfortable about.

Internet link: GOV.UK news

GUIDANCE FOR EMPLOYERS
HMRC has published the October 2019 issue of the Employer Bulletin which contains guidance on a number of issues relevant for employers. Topics in this edition include:

         Changes for UK employers sending workers to the EU, the EEA or Switzerland
         PAYE Settlement Agreements and Welsh rate of Income Tax
         Guidance for employers on reporting PAYE information in real time when payments are made early at Christmas
         Disguised Remuneration
         Termination payments: Post Employment Notice Pay for employees paid by equal monthly instalments
         Do your employees have the right tax code?
         Employment Allowance reform – eligibility rules for the Employment Allowance are changing from April 2020
         Do you claim the Apprenticeship Levy Allowance or Employment Allowance?
         Changes to company car tax regime
         Student and Postgraduate Loans
         Childcare vouchers
         Trivial Benefits in kind
         Paying for fitness equipment

If you would like help with payroll matters please contact us.


HMRC COUNTDOWN: FILE YOUR TAX RETURN
With less than 100 days until the self assessment tax return deadline of 31 January 2020, HMRC is urging taxpayers to complete their tax returns early, in order to avoid the last minute rush.

HMRC report that last year more than 2,000 people submitted their tax returns on Christmas Day. Taxpayers should consider submitting their returns early to avoid the stress of a last minute rush.

Angela MacDonald, HMRC's Director General for Customer Services, said:

'The deadline for completing Self Assessment tax returns is only 100 days away, yet, so many of us wait until January to start the process. Avoid the last minute rush by completing your tax returns on time and then enjoy the upcoming festive period.

We want to help people get their tax returns right – starting the process early and giving yourself time to gather all the information you need will help avoid that stressful, late rush to file.'

Not all taxpayers need to complete a tax return as tax is automatically deducted from the majority of UK taxpayers' wages, pensions or savings. For people or businesses where tax is not automatically deducted, or when they may have earned additional untaxed income, they are required to complete a Self Assessment tax return each year.

HMRC is also reminding people who are liable for the High Income Child Benefit Charge that they may need to file a tax return before the deadline. Those with income over £50,000 who receive child benefit, or those whose partner gets it, are liable for the charge. Taxpayers can check their annual income via their P60 or Personal Tax Account, and use HMRC's child benefit tax calculator.
The deadline for filing paper tax returns was 31 October 2019 and the deadline for online tax returns and paying any tax owed is 31 January 2020. If taxpayers miss the deadline, they face a minimum £100 penalty for late submission.

Contact us for help with your self assessment tax return.

Internet link: GOV.UK news

GENUINE HMRC CONTACT AND RECOGNISING PHISHING EMAILS AND TEXTS
HMRC has updated their guidance on how to recognise when contact from HMRC is genuine and how to recognise phishing or bogus emails and text messages.


Monday, 14 October 2019

High Income Child Benefit


There are still a significant number of people receiving Child Benefit where one or other parent is earning over £50,000.

In the case of James Robertson, HMRC issued a penalty for not disclosing the full facts on his Tax Return. The lower Tribunal ruled against HMRC.

A similar case relating to David Lau also went to tribunal where the Judge found in favour of HMRC. The matter went to the Upper Tribunal which found in favour of HMRC.

The penalties levied in both cases were therefore adjudged to be correct and payable. Our advice therefore is for taxpayers always to disclose if they or their partner is receiving Child Benefit to disclose the fact on a tax return.

Tuesday, 8 October 2019

Newsletter 140


SIMPLIFY APPRENTICESHIP FUNDING
The Institute of Chartered Accountants in England and Wales (ICAEW) has urged the government to simplify the complexities of accessing apprenticeship funding.
The Apprenticeship Levy took effect from 6 April 2017 and changed the way in which apprenticeships are funded. Larger employers are required to pay a levy of 0.5% of their annual pay bill. However an annual allowance of £15,000 is available so employers only pay the Levy if their annual pay bill is over £3 million. The Levy is reported and paid through Pay as You Earn (PAYE).
According to ICAEW, the benefits for non-levy paying employers are particularly enticing, with the government committing to paying 95% of its apprenticeship training costs, however, the complexities in accessing the funds are putting SMEs off applying. Apprenticeship funding is devolved across the UK.
Iain Wright, Director for Business and Industrial Strategy at the ICAEW, said:
‘In our interactions with businesses up and down the country, we find SMEs more and more reluctant to run their own apprenticeship schemes due to the complexity of accessing Levy funds and the lack of flexibility built into the scheme.
‘The SME sector has traditionally been a big recruiter of 16-18 year-olds for apprenticeships, so this is a concerning development which could mean that talented young people are unable to access the skills and training they need to prosper in the workplace.’
Internet link: ICAEW news
HMRC ISSUES CUSTOMS EORI NUMBERS
In order to try and ensure that businesses are ready to trade post-Brexit, HMRC is automatically enrolling them in the customs system.
HMRC has confirmed that more than 88,000 VAT-registered businesses across the UK will be allocated an Economic Operator Registration and Identification (EORI) number in order to enable them to keep trading with customers and suppliers in the EU after the UK has left.
The government announced that 72,000 businesses have already registered for EORI numbers and numbers will be allocated to VAT-registered businesses to speed up the rollout of the scheme and help ensure the smooth transit of goods.
EORI numbers are a unique ID number allocated to businesses that enables them to be identified by Customs authorities when doing business with other traders.
HMRC has warned that if businesses do not have an EORI number post-Brexit, they will be unable to continue to trade with EU Member States.
Internet link: GOV.UK news
TRUSTS WITH SMALL AMOUNTS OF SAVINGS INCOME
In the latest Trusts and Estates Newsletter HMRC has confirmed the continuation of the interim arrangement for interest reporting.
In 2016 the requirement for payers to deduct tax at source on bank and building society interest was removed and income from these sources is now paid gross. Due to this change, trustees and personal representatives had increased reporting requirements.
HMRC introduced an interim arrangement so trustees do not have to submit returns, or make payments under informal arrangements, where the only source of income is savings interest and the tax liability is below £100.
HMRC has confirmed that these arrangements have been extended to include the 2019/20 and 2020/21 tax years. The situation will continue to be reviewed in the longer term.
Contact us for help with trusts.
Internet link: GOV.UK Newsletter
ADVISORY FUEL RATES FOR COMPANY CARS
New company car advisory fuel rates have been published which take effect from 1 September 2019. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.
The advisory fuel rates for journeys undertaken on or after
1 September 2019 are:
Engine sizePetrol
1400cc or less12p
1401cc – 2000cc14p
Over 2000cc21p
Engine sizeLPG
1400cc or less8p
1401cc – 2000cc10p
Over 2000cc14p
Engine sizeDiesel
1600cc or less10p
1601cc – 2000cc11p
Over 2000cc14p
HMRC guidance states that the rates only apply when you either:
  • reimburse employees for business travel in their company cars or
  • require employees to repay the cost of fuel used for private travel.
You must not use these rates in any other circumstances.
The Advisory Electricity Rate for fully electric cars is 4 pence per mile. Electricity is not a fuel for car fuel benefit purposes.
If you would like to discuss your car policy, please contact us.
Internet link: GOV.UK AFR
PAYE LATE FILING AND LATE PAYMENT PENALTIES
HMRC has confirmed that it will continue its risk-based approach to payroll Real Time Information (RTI) late filing and late payment penalties this tax year.
Rather than late filing and late payment penalties being issued automatically, HMRC will continue to issue them on a risk-assessed basis during 2019/20. HMRC has also confirmed that penalties for 2019/20 will be issued from September 2019.
The August issue of the Employer Bulletin confirms:
‘HMRC will not charge penalties automatically for 2019/20, provided a Full Payment Submission (FPS) is filed within three days of the payment date. Where there is a pattern of persistent late-filing within three days of the statutory filing date, employers will be reviewed and may be charged a filing penalty as part of HMRC’s risk-based approach.’
The deadline for cleared electronic payments is the 22nd of the month following the end of tax month. For cheque payments or other non-electronic methods, payment is due by the 19th.
HMRC may charge interest on the amount outstanding for late payment, which will accrue until the total amount is paid. Contact us for help with payroll matters.
Internet link: Employer Bulletin
SELF ASSESSMENT DEADLINES
Two self assessment deadlines are approaching:
  • 5th October 2019
For those individuals who have not previously completed a tax return but need to report a liability for 2018/19.
  • 31st October 2019
For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2018/19 return is 31 October 2019. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.
If you would like any help with the completion of your return, please do get in touch.
Internet link: HMRC deadlines
HMRC LATEST GUIDANCE FOR EMPLOYERS
HMRC has published the latest edition of the Employer Bulletin. This guidance for employers, and their agents, includes articles on:
  • Class 1A liabilities payable on Termination Awards and Sporting Testimonial Payments
  • Off-payroll working rules from April 2020
  • Disguised Remuneration
  • Seasonal Workers
  • Contractors operating CIS – new VAT reverse charge on building and construction services
  • ‘Trivial Benefits’
  • Welsh rates of Income Tax
  • Student Loans
  • Good Work Plan proposals to support families
  • Sickness absence costs £9 billion per year
For help with payroll matters, please contact us.
Internet link: Employer Bulletin
STRONG CUSTOMER AUTHENTICATION
The Financial Conduct Authority (FCA) has agreed a plan to give the payments and e-commerce industry extra time to implement Strong Customer Authentication (SCA).
From 14 September 2019, new European Union (EU) rules apply that impact how banks or payment services providers verify their customers’ identities and validate payment instructions. The Strong Customer Authentication (SCA) rules are intended to enhance the security of payments and limit fraud.
The FCA has agreed an 18-month plan to implement SCA with the e-commerce industry which includes card issuers, payment firms and online retailers. The plan reflects the opinion of the European Banking Authority (EBA) that more time was needed to implement SCA given the complexity, lack of preparedness and the potential for a significant impact on consumers.
Jonathan Davidson, Executive Director for Supervision – Retail and Authorisations, said:
‘The FCA has been working with the industry to put in place stronger means of ensuring that anyone seeking to make payments is not a fraudster. While these measures will reduce fraud, we want to make sure that they won’t cause material disruption to consumers themselves; so we have agreed a phased plan for their timely introduction’.
The FCA has confirmed that it will not take enforcement action against businesses if they do not meet the relevant requirements for SCA from 14 September 2019 in areas covered by the agreed plan as long as there is evidence that they have taken the necessary steps to comply with the plan. At the end of the 18-month period, the FCA expects all businesses to have made the necessary changes and undertaken the required testing to apply SCA.
Internet link: FCA press release
VAT DOMESTIC REVERSE CHARGE FOR BUILDING AND CONSTRUCTION SERVICES DELAYED
HMRC has announced a one-year delay to the introduction of the VAT domestic reverse charge for building and construction services.
The reverse charge represents part of a government clamp-down on VAT fraud. According to the government, large amounts of VAT are lost through ‘missing trader’ fraud. As part of missing trader fraud, VAT is charged by a supplier, who then disappears, along with the output tax. The VAT is thus lost to HMRC. The construction industry is considered a particularly high-risk sector.
The reverse charge when introduced will not change the VAT liability but instead it will change the way that VAT is accounted for. In the future, the recipient of the services, rather than the supplier, will account for VAT on specified building and construction services. This is called a reverse charge. The reverse charge is a business-to-business charge, applying to VAT-registered businesses where payments are required to be reported through the Construction Industry Scheme (CIS).
The charge was due to come into effect on 1 October 2019. It has now been delayed by 12 months until 1 October 2020 due to fears that businesses in the construction sector were not ready.
HMRC says it remains ‘committed to the introduction of the reverse charge’, and has put a robust compliance strategy into place in order to tackle fraud in the construction sector.
INDEPENDENT REVIEW OF THE LOAN CHARGE
The government has initiated a review of the Loan Charge and whether the policy is an appropriate way of dealing with disguised remuneration loan schemes used by individuals who entered directly into these schemes to avoid paying tax.
Sir Amyas Morse, the former Comptroller and Auditor General and Chief Executive of the National Audit Office (NAO), will lead an independent review of the Loan Charge.
The government has asked Sir Amyas Morse to report back by mid-November, giving taxpayers certainty ahead of the January Self Assessment deadline.
Internet link: GOV.UK news
SENIOR CLINICIANS' PENSIONS CONSULTATION
The government has launched a consultation on proposals to give senior NHS doctors and nurses access to more flexible pensions. The proposals aim to offer senior clinicians more control over their pensions growth.
The consultation follows reports that senior NHS clinicians pension tax charges are making them retire early or change their working habits. The Department of Health and Social Care estimates that a third of consultants and GPs may be turning down extra shifts because of how the NHS Pension Scheme interacts with the wider pension tax rules.
The new proposals are designed to allow those affected to have freedom to individually control how much their pension fund grows, allowing them to maximise the amount they can save without facing significant pension tax bills having breached limits on tax relief.
The new proposals include:
  • a ‘flexible accrual’ option where scheme members can choose an accrual level in 10% increments
  • the option to ‘fine tune’ pension growth towards the end of the scheme year, when total earnings are clearer.
The consultation closes on 1 November 2019.
Internet link: GOV.UK news
HMRC COLLECTS RECORD AMOUNTS OF IHT
The government has announced that HMRC collected a record sum of £5.4 billion in inheritance tax (IHT) during the 2018/19 tax year.
The increase comes on the back of a 15% rise in the number of estates liable for IHT. Between 2015/16 and 2016/17, the number of estates paying IHT rose by 3,600 to 28,100.
Rising asset values, particularly in regard to properties in London and the South East of England, have been a key factor behind the increased number of estates falling into the IHT net. The freezing of the tax-free nil-rate band threshold also played a key role.
The residence nil-rate band (RNRB) gives an additional allowance to people leaving their family home to direct descendants, such as children or grandchildren. The amount of relief is £150,000 for 2019/20, rising to £175,000 for 2020/21.
Despite the increase in estates paying IHT, the tax only applies to 4.6% of deaths in the UK. The average amount of tax paid was £179,000.
Please contact us for advice on estate and IHT planning.
Internet link: GOV.UK IHT statistics
'MAJOR GAPS' IN NO-DEAL BREXIT GUIDANCE
According to the British Chambers of Commerce (BCC) there are ‘major gaps’ in the government’s no-deal Brexit guidance for UK businesses.
The BCC carried out a review of official government no-deal Brexit guidance for businesses, and found that 31 of 36 critical areas are still marked amber or red, suggesting that businesses have ‘incomplete or insufficient information available to plan thoroughly for a no-deal outcome’.
Dr Adam Marshall, Director General of the BCC, said:
‘While the government has ramped up communication to businesses in recent weeks, there are still big gaps in the guidance available to help businesses to prepare for Brexit, with just weeks to go until 31 October.
Our business communities don’t want to see a disorderly no-deal exit on 31 October, which would lead to an overnight change in trading conditions.
Averting a messy and disorderly exit is still critical. Businesses across the UK want politicians on all sides to come together and find a way forward – fast.’
Internet link: BCC news
BREXIT-READINESS EVENTS FOR BUSINESS
The Department for Business has launched a nationwide programme of events to help businesses prepare for Brexit.
The free events are designed to provide free advice on a range of Brexit-related topics, including exporting, importing and employing EU citizens. Attendees will also have the opportunity to hear from senior government officials and access support tailored to their location and business.
More than 30 Brexit-readiness events have been scheduled to take place across the UK.
Internet link: GOV.UK news
EXPERTS WARNING OVER INSOLVENCY DEBTS
Prioritising HMRC over other creditors in insolvencies will have a ‘negative impact on the UK’s economic growth’, experts have warned Chancellor of the Exchequer Sajid Javid.
The warning was issued in a letter from 11 business organisations and insolvency experts to the Chancellor. Signatories of the letter include the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants of Scotland, the Insolvency Practitioners Association and the City of London Law Society.
The letter says that the proposed change will make it more difficult to rescue businesses. According to the organisations, it will also reduce access to finance for small businesses, increase the harm done to other businesses in insolvencies and could ultimately result in losses to the Exchequer.
Writing in the letter, the organisations said:
‘While we understand that the government wishes to increase the value of taxes repaid in the event of insolvency, there is a serious risk that the wider costs of the government’s approach will outweigh any expected benefit.
This proposed policy would reverse successive governments’ attempts to encourage a culture of business rescue in the UK, and would undermine the government’s recent work to strengthen the UK’s insolvency and restructuring framework.’
The proposal, which was announced in the 2018 Budget and is now included in the draft Finance Bill, will see a change implemented from 6 April 2020. This would entail taxes, including the VAT, Pay as You Earn (PAYE), CIS and employee national insurance contributions (NICs) owed by an insolvent company to be paid to HMRC ahead of floating charge holders and unsecured creditors.
Internet link: Economia news
MONEY LAUNDERING NON-COMPLIANCE
HMRC has published details of businesses that have failed to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
HMRC is also advising that the published person may have changed their behaviour or no longer be based at the published address. Also that the business currently at the published address may have no connection with the published business, or may have the same name as the published business but could be under new, and completely different, management.
If you would like advice on anti-money laundering procedures please contact us.

Wednesday, 7 August 2019

Newsletter 139


OFF-PAYROLL RULES FOR THE PRIVATE SECTOR

The government has published the draft legislation for the next Finance Bill including the rules for off-payroll working in the private sector. The legislation is open for consultation until 5 September 2019.

The new rules will apply from April 2020 and the effect of these rules, if they apply to intermediaries, typically Personal Service Companies (PSC), will be:

         the medium or large business (or an agency paying the PSC) will calculate a 'deemed payment' based on the fees the PSC has charged for the services of the individual
         generally, the entity that pays the PSC for the services must deduct PAYE and employee National Insurance contributions (NICs) as if the deemed payment is a salary paid to an employee
         the paying entity will have to pay to HMRC not only the PAYE and NICs deducted from the deemed payment but also employer NICs on the deemed payment
         the net amount received by the PSC can be passed onto the individual without the company deducting any further PAYE and NICs.

Please contact us for advice on how these changes will impact your business.

Internet links:GOV.UK finance bill

DIGITAL SERVICES TAX

From April 2020, the government will introduce a new 2% tax on the revenues of search engines, social media platforms and online marketplaces which derive value from UK users. However, this only applies when the group's worldwide revenues from these digital activities are more than £500m and more than £25m of these revenues are derived from UK users.

Jesse Norman, Financial Secretary to the Treasury and Paymaster General, said:

'The UK has always sought to lead in finding an international solution to taxing the digital economy. This targeted and proportionate Digital Services Tax is designed to keep our tax system in this area both fair and competitive, pending a longer term international settlement.'

Internet links: GOV.UK news   GOV.UK publications

INSOLVENCY HIERARCHY CHANGES

From 6 April 2020, insolvency legislation will be amended to move HMRC up the creditor hierarchy for the distribution of assets in the event of insolvency by making HMRC a secondary preferential creditor in respect of certain tax debts held by a business (this includes individuals and partnerships) on behalf of their customers and employees. This includes VAT, PAYE income tax and CIS deductions.

The rules will remain unchanged for taxes owed by businesses themselves, such as corporation tax and employer National Insurance contributions.

In addition, directors and other persons connected to companies subject to an insolvency procedure will be made jointly and severally liable for amounts payable to HMRC by the company in certain circumstances. This will apply mainly in cases where the company has engaged in avoidance, evasion or 'phoenixism'.

Internet link: GOV.UK insolvency

PRIVATE RESIDENCE RELIEF CHANGES
The government published draft legislation for the next Finance Bill including draft clauses on the changes to Private Residence Relief (PRR). The draft legislation is subject to consultation which closes on 
5 September 2019.

Following consultation this Spring, changes are proposed to the Private Residence Relief (PRR) regime from April 2020. For properties that have not been occupied throughout the period of ownership, available deductions for capital gains tax purposes will be limited as follows:

           the final period exemption will be reduced from 18 months to 9 months (there are no changes to the 36 months that are available to disabled persons or those in a care home) and
           lettings relief will be reformed so that it only applies in those circumstances where the owner of the property is in shared-occupancy with a tenant. Letting relief will be restricted or curtailed for disposals on or after 6 April 2020, regardless of when the period of letting took place.

Brian Slater, Chair of CIOT's Property Taxes Sub-committee, said:

'HMRC need to put the 'PR' into 'PRR' and publicise these changes effectively.'

'Many home owners are still unaware that the final period exemption was reduced from 36 months to 18 months in 2014. A further reduction to just nine months is likely to bring more property disposals within the scope of CGT. Whilst the average time to sell a property is around four and a half months, there will be many exceptions due to regional variations, separation and divorce, and other complexities.'

Another aspect of the relief which is also changing from 6 April 2020 is lettings relief, limiting it to narrowly defined circumstances in which the owner shares occupation of their house with a tenant.

Brian Slater continued:

'The practical effect of these changes will be that very few sellers will qualify for lettings relief if they sell their home after 6 April 2020. Further, any 'accrued' letting relief will be lost, as no apportionment can be made between gains attributable to pre and post 6 April 2020 disposals. Again, this change brings more disposals within the scope of CGT.'


WORKING PARENTS MAY BE ELIGIBLE FOR TAX-FREE CHILDCARE THIS SUMMER
The government is reminding working parents that they could ease this summer's childcare costs by using Tax-Free Childcare (TFC). The scheme is worth up to £2,000 a year for each child and allows parents to save regularly for childcare costs. For each £8 saved the government will make a top-up payment of £2. The money saved can be put towards a range of registered childcare options from more than 68,000 childcare providers. These include summer camps across the UK, as well as before and after school care during term time, nurseries and childminders.

The scheme is open to working parents, including the self-employed, who earn between the 16 hours a week at the minimum wage and £100,000 per year and have children under the age of 12 (or under 17 for children with disabilities).

The government will top-up up to £500 per quarter for each child, or £1,000 if the child is disabled.

Commenting on TFC, Liz Truss, Chief Secretary to the Treasury, said:

'We understand making arrangements for summer childcare at this time of year is important and can be a stressful time for parents.'

'TFC makes things easier, putting more money in the pockets of parents and supporting as many families as possible to secure high-quality, affordable childcare.

'Parents should visit the Childcare Choices website and take advantage of the range of offers to help balance their work and family lives while saving money.'

Internet links: GOV.UK news   Childcarechoices

VAT CHANGES MAY CAUSE CONSTRUCTION CHAOS
The Federation of Master Builders (FMB) is warning that a major change in the way that VAT is accounted for in the building and construction sector which takes effect later this year may cause chaos.

The VAT domestic reverse charge for building and construction services applies from 1 October 2019. It is an anti-fraud measure - an administrative change, impacting invoicing and VAT return procedures. With a reverse charge, a VAT-registered recipient of services accounts for VAT, rather than the supplier.

The rules will apply to VAT-registered businesses where payments are required to be reported through the Construction Industry Scheme (CIS), the charge will be used along the supply chain, until the recipient is no longer a VAT-registered business making an onward supply of specified construction services.

With the new rules, suppliers (VAT-registered subcontractors), will state on their invoices that supplies are subject to the reverse charge. Contractors will then use their VAT returns to account for output VAT on supplies received, instead of paying output VAT to their suppliers. Subject to normal VAT rules, the contractor can reclaim VAT on supplies received as input tax, usually leaving no net tax payable on the transaction. Where there is an 'end user', it will be expected to provide notification of end user status to suppliers, signalling that a supplier should charge VAT as usual.

Reverse charge will not affect zero-rated supplies: nor some circumstances where suppliers are connected to end users, for example landlords and tenants. The reverse charge covers 'specified services' – essentially construction services as defined for CIS purposes. Where services – such as those of architects, surveyors and some consultants – are supplied on their own, they are not covered by the reverse charge. If supplied along with supplies subject to the charge, the whole supply will be subject to the charge. The reverse charge also includes goods, where supplied with specified services.

The FMB are warning that the government has not properly prepared the construction industry for this major VAT change. New data from FMB shows that:

           over two-thirds of construction SMEs (69%) have not even heard of the reverse charge VAT and
           of those who have, more than two-thirds (67%) have not prepared for the changes.

Brian Berry, Chief Executive of the FMB, said:

'Construction companies are already struggling with Brexit uncertainty, sky-rocketing material price rises and skill shortages and reverse charge VAT is yet another thing for them to deal with. What makes things worse is that HMRC has failed to deliver on its promise to help the industry to prepare. The guidance is not user-friendly and even tax experts are scratching their heads over it.'

'It's therefore not surprising that the vast majority of construction SMEs are not aware of the impending changes, despite widespread promotion by the FMB. Small business owners are busy people and clearly they don't have time to read everything we send them. For those who are aware, they haven't had a chance to change their systems yet as they were waiting for guidance to be published that has only just emerged. That's why we are calling on the Government to delay the changes by another six months and to use the extra time to improve the guidance and work with us to undertake a more intensive communications campaign. HMRC should also consider holding workshops across the country to explain the changes.'

Businesses affected by the new rules are recommended to plan now to adapt accounting and IT systems. The reverse charge may also impact business cash flow. Please do not hesitate to contact us for further advice.

Internet links: FMB news   GOV.UK guidance

WAGE GROWTH AT A HIGH


Data published by the Office for National Statistics (ONS) has revealed that UK wage growth increased to 3.6% in the year to May 2019, the highest rate since the financial crisis in 2008.

According to the ONS, wages have been rising faster than inflation since March 2018 and that increases to the National Minimum Wage and the National Living Wage have helped wage growth to accelerate. However, the data also showed that average pay is still lower than pre-2008 levels. When average regular pay of £503 is adjusted for inflation to £468 per week it is £5 less than its pre-recession total of £473 a week.

Commenting on the data, Alpesh Paleja, Principal Economist at the Confederation of British Industry (CBI), said:

'Despite signs that employment growth is tailing off, the labour market remains tight, with the unemployment rate at a multi-decade low. It's encouraging that pay growth has picked up further, putting more money in people's pockets.'

'But as recent data shows, productivity remains in the doldrums. Reinvigorating efforts to boost productivity is critical. Firms must focus on innovative ways to share new ideas and invest in people and technologies.'

Internet links: GOV.UK bulletins   CBI article

UPDATED GUIDANCE ON SPOTTING HMRC SCAMMERS
HMRC has updated their list of examples of websites, emails, letters, text messages, WhatsApp messages and phone calls used by scammers and fraudsters to obtain an individual's personal information.

The guidance can be used to help you decide if a contact from HMRC is genuine and provides examples of the different methods that fraudsters use to get individuals to disclose personal information.

You can also read about how to recognise genuine contact from HMRC, and how to tell when an email is phishing/bogus.