Many small businesses have gained financial benefit by way of grants
over the course of the Coronavirus pandemic.
These have principally been through the Job Retention Scheme “furlough”,
SSEIS grants or through local authority schemes which have in the main,
targetted smaller businesses. We are reminding everyone that any financial
assistance of this nature is taxable income and as such, failure to disclose
will be treated seriously by
HM Revenue & Customs. In many cases, HMRC are able to easily cross reference the receipt by businesses against other records to check for disclosure.
However, we are aware that in some cases, Directors or business owners
may have given local authorities the details of non-business bank accounts
either accidentally or deliberately leading to such receipts not being included
within the business accounts. We would
warn any taxpayer who may have found themselves in this situation to put the
relevant sums back into the business account.
HMRC will treat any misdirection of monies as “Deliberate &
Concealed” which can lead to a 100% penalty on any tax becoming due. For Company Directors the matter could be
more serious as it would be considered misfeasance or potentially fraud.
It is important for our clients to alert us to any grant claims made
during the pandemic and to ensure that they are recorded in the business
records.
HMRC has published a policy paper
outlining the forthcoming changes to the penalties for late payment and
interest harmonisation for taxpayers.
The government intends to reform
sanctions for late submission and late payments to make them 'fairer and more
consistent across taxes'. Initially the changes will apply to VAT and Income
Tax Self Assessment (ITSA).
The changes will see interest charges and
repayment interest harmonised to bring VAT in line with other tax regimes,
including ITSA.
Under the new regime, there are two late
payment penalties that may apply: a first penalty and then an additional or
second penalty, with an annualised penalty rate. All taxpayers, regardless of
the tax regime, have a legal obligation to pay their tax by the due date for
that tax. The taxpayer will not incur a penalty if the outstanding tax is paid
within the first 15 days after the due date. If tax remains unpaid after day
15, the taxpayer incurs the first penalty.
This penalty is set at 2% of the tax
outstanding after day 15.
If any of the tax is still unpaid after
day 30 the penalty will be calculated at 2% of the tax outstanding after day 15
plus 2% of the tax outstanding after day 30. If tax remains unpaid on day 31
the taxpayer will begin to incur an additional penalty on the tax remaining
outstanding. This will accrue at 4% per annum.
HMRC will offer taxpayers the option of
requesting a Time To Pay arrangement which will enable a taxpayer to stop a
penalty from accruing by approaching HMRC and agreeing a schedule for paying their
outstanding tax.
For VAT taxpayers, the reforms take
effect from VAT periods starting on or after 1 April 2022. The changes will
take effect for taxpayers in ITSA from accounting periods beginning on or after
6 April 2023 for those with business or property income over £10,000 per year
(that is, taxpayers who are required to submit digital quarterly updates
through Making Tax Digital for ITSA).
For all other ITSA taxpayers, the reforms
will take effect from accounting periods beginning on or after 6 April 2024.
Internet
link: GOV.UK
HMRC has published a consultation that outlines plans to implement
reporting rules for digital platforms first put forward by the Organisation for
Economic Co-operation and Development (OECD).
In February 2020, the OECD consulted on proposed rules setting out
how digital platforms should collect information about the income of sellers
and report it to tax authorities.
Under the new rules, websites and applications based in the UK will
be required to report sellers' income arising in the previous calendar year to
HMRC. The reporting deadline will be 31 January of the year following the
calendar year.
HMRC stated that the new rules will improve international
co-operation in regard to the exchange of information for tax purposes. They
will also allow HMRC to access data from platforms based outside the UK quickly
and efficiently, which should encourage compliance and increase the visibility
of transactions.
The rules will also help taxpayers to get their tax right and will
assist HMRC in detecting and tackling tax non-compliance.
HMRC's consultation will close on 22 October 2021.
Internet links: GOV.UK
The CIOT has warned that some claims being made by firms offering
help with Stamp Duty Land Tax (SDLT) refunds are too good to be true.
The CIOT says an increasing number of firms are contacting buyers of
properties after completion of a purchase, suggesting that SDLT has been
overpaid.
The most common issues raised are that
multiple-dwellings relief (MDR) has not been claimed or that the buyer
could have paid non-residential rates of SDLT (which are generally lower than
residential rates) because the property was a mixture of residential and
non-residential land.
The CIOT said:
'SDLT is complicated and
sometimes reliefs are overlooked, so it can be worth revisiting transactions if
a letter is received.
'However, many unsolicited
approaches are indeed too good to be true and responsible taxpayers should act
with caution and check independently whether a refund is due.
'The suggested fee
arrangements can also seem attractive as it appears that the claims are made on
a 'no win no fee' basis. But it is important to remember that receiving a
refund is not necessarily a win as HMRC may revisit the claim and deny that it
was valid. In these circumstances, the fee may already have been paid.'
Internet link: CIOT
website
The national roll-out of the new £100 spending limit for contactless
card payments will begin from 15 October 2021, banking trade body UK Finance
has confirmed.
The decision to raise the contactless limit from £45 to £100 was
made by HM Treasury and the Financial Conduct Authority (FCA) following a
public consultation and discussions with both the retail and banking sectors.
It follows on from the successful increase in the limit from £30 to £45 in
April 2020.
From 15 October 2021, consumers will start to see retailers
accepting contactless payments up to the new £100 limit, which will give
customers more flexibility when shopping in store.
David Postings, Chief Executive of UK Finance, said:
'Contactless payment has
proved very popular with consumers and an increasing number of transactions are
being made using contactless technology.
'The increase in the limit
to £100 will allow people to pay for higher value transactions like their
weekly shop or filling up their car with fuel. The payments industry has worked
hard to put in place the infrastructure to enable retailers to update their
payments systems so they can start to offer their customers this new higher
limit.'
Internet link: UK
Finance website
HMRC has urged taxpayers to stay alert to the threat of digital
scams and scammers claiming to represent HMRC.
Research published by HMRC revealed that the number of tax-related
scams has doubled in the past 12 months.
In the past year HMRC has received more than one million referrals
from the UK public in regard to suspicious contact, with many fraudsters
offering 'tax refunds' or 'rebates'. The research showed that HMRC received
441,954 reports of phone scams and more than 13,315 reports of malicious
websites.
HMRC also stated that, over the last year, it has asked internet
providers to take down 441 coronavirus (COVID-19) support scheme scam webpages.
Mike Fell, Head of Cyber Security Operation at HMRC, said:
'The pandemic has given
criminals a fresh hook for their activity and we've detected more than 460
COVID financial support scams alone since early 2020.
'HMRC takes a proactive
approach to protecting the public from tax-related scams and we have a
dedicated Customer Protection Team that works continuously to identify and
close them down.'
Internet link: ICAEW
website
The BCC has urged the government to extend skills training in light
of the publication of research which showed that one in five companies are
considering making redundancies as a result of the coronavirus (COVID-19)
pandemic.
The BCC has stressed concerns that older workers could go unutilised
unless support for retraining is put into place immediately.
The BCC survey, which polled over 250 businesses with employees
still on furlough, revealed that one in five are planning to make staff
redundant following the rise in employer contributions to the Coronavirus Job
Retention Scheme (CJRS).
Jane Gratton, Head of People Policy at the BCC, said:
'The changes to the
furlough scheme will likely result in many thousands of people being released
back into the labour market, as employers who are still struggling to recover
from the recession are forced to make redundancies and cuts to working hours.
'With widespread skills
shortages across the economy, some will find new jobs where their skills are in
demand, while others will need to retrain for opportunities in a different
sector.'
Internet links: BCC
website
New company car advisory fuel rates have been published and took
effect from1 September 2021.
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 2021 are:
|
Engine size |
Petrol |
|
1400cc or less |
12p |
|
1401cc - 2000cc |
14p |
|
Over 2000cc |
20p |
|
Engine size |
LPG |
|
1400cc or less |
7p |
|
1401cc - 2000cc |
8p |
|
Over 2000cc |
12p |
|
Engine size |
Diesel |
|
1600cc or less |
10p |
|
1601cc - 2000cc |
12p |
|
Over 2000cc |
15p |
HMRC guidance states
that the rates only apply when you either:
•
reimburse employees for
business travel in their company cars
•
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 4p per
mile. Electricity is not a fuel for car fuel benefit purposes.
If you would like to discuss your company car policy, please contact
us.
Internet link: GOV.UK
AFR
The government has 'named and shamed' 191 companies that have broken
National Minimum Wage (NMW) laws.
Following investigations by HMRC, the named firms have been fined
for owing £2.1 million to over 34,000 workers. The breaches took place between
2011 and 2018. Named employers have since been made to pay back what they owed
to employees and were fined an additional £3.2 million.
According to HMRC, 47% of firms wrongly deducted pay from workers'
wages, including for uniforms and expenses. In addition, 30% failed to pay
workers for all the time they had worked, such as when they worked overtime,
while 19% paid the incorrect apprenticeship rate.
Business Minister Paul Scully said:
'Our minimum wage laws are
there to ensure a fair day's work gets a fair day's pay – it is unacceptable
for any company to come up short.
'All employers, including
those on this list, need to pay workers properly.
'This government will
continue to protect workers' rights vigilantly, and employers that short-change
workers won't get off lightly.'
Internet link: GOV.UK
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