We are pleased to send you our latest E-News Update
Coronavirus has certainly adversely affected some
of our clients and their families and as 2021 draws to a close, we continue to
see both our business and our personal lives impacted upon by new variants of
the Covid Virus.
Despite this, we remain positive and upbeat about
the year which lies ahead and we send you and those close to you our very best
wishes for the upcoming festive season.
HMRC's tax take falls by billions due to pandemic
HMRC saw a drop of almost £30 billion in tax revenues in the latest
financial year because of the pandemic, according to its annual accounts.
In its 2020/21 annual report, HMRC reported that it had
collected £608.8 billion in tax revenues, which is down from £636.7 billion
collected in 2019/20.
HMRC said the drop was due to the 'unprecedented economic
circumstances caused by COVID-19, and because pandemic restrictions meant HMRC
had to reduce its compliance activity'.
The reduction in compliance activity resulted in a drop of 18% in
the additional tax generated by HMRC's work tackling avoidance, evasion, and
other non-compliance. This fell from £36.9 billion to £30.4 billion. The
tax authority has estimated that the tax gap is now 5.3%.
HMRC reported that it delivered £60.7 billion in
grants through the Coronavirus Job Retention Scheme (CJRS).
Jim Harra, HMRC's First Permanent Secretary and Chief Executive,
said:
‘Throughout this
exceptionally challenging year, we kept all our core services running and
ensured customers could access the right help when they needed it. To do this,
we had to make choices about how we balanced our resources – for example, we
took the conscious decision to divert some of our skilled advisers from PAYE
and Self Assessment services to provide COVID-19 support because that’s what
individuals and small businesses needed from us most urgently at a time of
acute crisis.’
Internet link: GOV.UK
The UK government marked the inaugural Tax Administration and
Maintenance (TAM) Day with the publication of 30 papers covering a wide range
of tax issues.
Chancellor Rishi Sunak made the commitment to have a TAM Day in the
Autumn Budget. The aim was for a dedicated day for the administration and
maintenance of the UK tax system. The 30 publications released by the
government on TAM Day (30 November) include Calls for Evidence, Draft
Regulations, Policy Papers and Corporate Reports.
The government has set out further detail on the conclusions to its
review of business rates, including more frequent revaluations, improvement
relief, exemptions for green technology, and administrative reforms.
A report on Research and Development (R&D) tax reliefs was
published, providing further details on announcements made at the Budget which
included refocusing relief in the UK; targeting abuse; and supporting
innovation by expanding qualifying expenditure to capture cloud and data costs.
Additionally, an update on reforms to Small Brewers' Relief was
published, which will see the government invest around £15 million of
additional funding into the craft brewing sector.
Jim Harra, HMRC's First Permanent Secretary and Chief Executive,
said:
'As we continue our work to
improve the tax system for UK taxpayers and clamp down on avoidance and
evasion, we know that an open dialogue with our stakeholders is vital.
'With thanks to the tax
profession for their views, we can now announce the next steps for how we will
simplify the legislative framework and raise standards in the tax advice
market. We are also announcing new areas on which we are inviting views, including
reforming Income Tax Self-Assessment registration for the self-employed.'
Internet link: GOV.UK
The standard three-day waiting time for Statutory Sick Pay (SSP)
will be reinstated for coronavirus (COVID-19)-related claims from 25 March
2022, unless the government intervenes.
Under standard rules in the UK, employers do not have to pay SSP to
an employee until the fourth qualifying day in the Period of Incapacity for
Work (PIW). The PIW is a period of sickness lasting four or more consecutive
calendar days, not all of which may be qualifying days.
During the COVID-19 pandemic, the government suspended the three-day
wait for COVID-related SSP, meaning that employers must pay it from the first
qualifying day.
The amendment to the SSP rules was made in the Coronavirus Act 2020
which is due to expire after two years. This means that, unless there is an
intervention to continue the measure, COVID-related SSP waiting time will
automatically revert to three days on 25 March 2022.
Frank Haskew, Head of the Tax Faculty at the Institute of Chartered
Accountants in England and Wales (ICAEW), said:
'The SSP rules were not
really designed with a highly infectious global pandemic in mind, which is why
the current easements have been welcome.
'While some employees who
are ill from coronavirus or required to self-isolate may be unable to afford
not to go to work unless they are paid SSP for the first three days, there are
also small businesses where the unreimbursed cost of paying three days'
coronavirus-related SSP to employees is a real burden.'
Internet links: ICAEW
website
HMRC issues warning on self assessment scams
HMRC has warned taxpayers completing their 2020/21 tax returns to
'be on their guard' and stay vigilant in regard to tax-related scams.
Nearly 800,000 tax scams were reported in the last year, HMRC
revealed. It said that fraudsters use self assessment to attempt to steal money
or personal information from taxpayers.
In the last year, HMRC received almost 360,000 bogus tax rebate
referrals. HMRC will send more than four million emails and SMS messages this
week to self assessment taxpayers, prompting them to think about how they
intend to pay their tax bill.
It is warning taxpayers 'not to be taken in' by malicious emails,
phone calls or texts, and to not mistake them for genuine HMRC communications.
Myrtle Lloyd, Director General for Customer Services at HMRC, said:
'Scams come in many forms.
Some threaten immediate arrest for tax evasion, others offer a tax rebate.
Contacts like these should set alarm bells ringing, so if you are in any doubt
whether the email, phone call or text is genuine, you can check the 'HMRC
scams' advice on GOV.UK and find out how to report them to us.'
The self assessment deadline is 31 January 2022.
Internet link: HMRC
press release
New rules to help protect pension savers from scammers have become
law.
Under the regulations, pension trustees and scheme managers will be
given the power to stop suspicious transfers before cash gets into the hands of
fraudsters.
Fraudsters frequently offer 'too good to be true' incentives to
pension savers, such as free pension reviews, early access to pension cash and
other time-limited offers. Lured in by these bogus offers, individuals are then
tricked into transferring their savings into a scam scheme and defrauded out of
their money.
Between January and May 2021, pension scam losses totalling over
£2.2 million were reported to Action Fraud.
The new regulations will take force on 30 November. From this date,
trustees and scheme managers will be able to prevent transfer requests if
suspicious activity is suspected by giving it a 'red flag'. If a red flag is
present, the transfer cannot go ahead.
Where fraud is suspected, trustees and scheme managers will be able
to pause transfer requests by giving it an 'amber flag'. In this scenario, the
pension saver will need to prove they have taken scam specific guidance from
the free Money and Pensions Service before the transfer can go ahead. This is
the only way a transfer can then proceed.
Nicola Parish, The pension Regulator’s (TPR) Executive Director of
Frontline Regulation, said:
‘We welcome these new
regulations which further empower trustees to act as the first line of defence
against scammers.
‘We are pleased
these new rules enshrine in legislation two of the key parts of the pledge
to combat pension scams – around due diligence measures and issuing members
warnings of high-risk transfers.
‘We urge all trustees and
pension providers to take note of these new rules and continue to play their
part in stopping scams.’
Internet links: TPR
website
Optimism improved for firms across the services sector in the three
months to November, according to the latest Service Sector Survey from the
Confederation of British Industry (CBI).
However, cost growth continued to pick up, increasing at the fastest
pace since survey records began in 1998. Additionally, business volumes
continued to grow at a strong pace across the services sector, although there
are signs of slowing growth.
The CBI found that cost pressures are building, with both consumer
services and business and professional services seeing costs rise at the
fastest pace in survey history.
As a result, selling price growth accelerated too, with expectations
for significantly faster growth in the coming quarter for both sub-sectors.
Despite elevated cost pressures, profitability grew in business, professional
and consumer services, with the strongest growth recorded since February 2018
for the latter.
Charlotte Dendy, Head of Economic Surveys and Data at the CBI, said:
'With COVID still a concern
with impacts for consumer confidence together with cost and supply chain issues
continuing to bite, a difficult winter lies ahead.
'It is therefore vital that
the government works with business to help address these challenges, ease cost
and supply pressures, giving businesses the platform to ensure the recovery
does not fizzle out before Christmas.'
Internet link: CBI
website
New company car advisory fuel rates have been published and took
effect from 1 December 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
December 2021 are:
|
Engine size |
Petrol |
|
1400cc or less |
13p |
|
1401cc - 2000cc |
15p |
|
Over 2000cc |
22p |
|
Engine size |
LPG |
|
1400cc or less |
9p |
|
1401cc - 2000cc |
10p |
|
Over 2000cc |
15p |
|
Engine size |
Diesel |
|
1600cc or less |
11p |
|
1601cc - 2000cc |
13p |
|
Over 2000cc |
16p |
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 5p 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
A report published by the Federation of Small Businesses (FSB) has
revealed that the costs associated with going green have impacted small firms'
plans for becoming more sustainable.
The FSB's report found that the majority of UK small firms are
concerned about climate change but just one in three has plans in place to
combat it.
67% of firms polled stated that they have started to address their
energy usage, and 18% said they have invested in microgeneration.
However, 24% of businesses said that uncertainty around return on
investment has prevented them from taking action, and 22% cited a lack of
sufficient capital to invest in assets as a barrier.
The business group is urging the government to launch a 'Help to
Green' initiative and roll out a nationwide scrappage scheme.
National Chair of the FSB, Mike Cherry, said:
'If we are to successfully
transition to net zero, it'll be through grassroots action, enabled by smart
and supportive policies.
'Whilst the Chancellor
rightly embraced some of our proposed changes in this area at the Budget, it
was disappointing to see that the government's recent net zero strategy
contained only four specific mentions of small business.'
Internet links: FSB
website
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