30th July 2021 – Hillmans Weekly Update

Below I have summarised all the main tax related updates we have seen this week.

• July 2021 Self-Assessment Payment on Account
• New Recovery Loan Scheme
• Reporting Property Gains Within 30 Days
• Coronavirus and its impact on UK hospitality: January 2020 to June 2021

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a great weekend.

Stay safe and well.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Recovery Loan Scheme

The new Recovery Loan Scheme (RLS) helps give UK businesses ongoing access to finance as they recover from the economic impact of the COVID-19 pandemic. The scheme can be used for any legitimate business purpose, including managing cash flow, investment and growth. It is designed to appeal to businesses that can afford to take out additional debt finance for these purposes.

Finance of up to £10 million per business is available. Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts. The annual effective rate of interest is capped, and lenders can’t take personal guarantees for facilities of £250,000 or less.

The scheme is open until the 31st December 2021 and you can apply direct with your business bank provider. For businesses who have already taken a loan via the Bounce Back Loan Scheme (BBLS) the RLS is still available, although the amount already borrowed may limit the amount you may borrow under RLS.

See: https://www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/ 

Coronavirus and its impact on UK hospitality: January 2020 to June 2021

The Office for National Statistics (ONS) have released a survey on the hospitality sector during coronavirus with a focus on the most recent easing of restrictions in spring 2021. This Includes details of how the sector has performed and the future of employment in hospitality.

The key findings are not unexpected and are summarised below:

Hospitality has been hit hard by the coronavirus (COVID-19) pandemic and the impact has been uneven; bars and clubs have fared the worst, but campsites had a relatively better year than the rest of the sector.

Consumer spending on hospitality started to increase in May 2021 but remains at less than 70% of pre-pandemic levels; a similar picture is seen in turnover - in May this remained one-quarter lower than 2019 levels.

Spending by businesses in the hospitality sector has seen smaller increases compared with consumer spending in May 2021; payments to suppliers from food and drink businesses have remained around half of pre-pandemic levels.

Confidence of business survival in the hospitality sector started to increase in May 2021 but remains below the all-sector level.

Job vacancies in the hospitality sector have seen large increases and are higher than pre-pandemic levels; however, in June 2021, the number of employees within the sector remained 11% below February 2020 levels.

See: https://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/articles/coronavirusanditsimpactonukhospitality/january2020tojune2021

July 2021 Self-Assessment Payment on Account

Taxpayers who made their first payment on account in January 2021 towards their tax liability for 2020/21, will need to ensure they have paid their second tax payment on account by the 31st July 2021 to avoid any late payment interest charged by HMRC.

Unlike last year, the July 2021 payment on account has not been automatically deferred due to the pandemic.

If you have not received a statement from HMRC, or if you’re not sure whether you have to make a payment by the 31st July 2021, please contact us and we’d be pleased to assist you. 

Reporting Property Gains Within 30 Days

Since 6 April 2020 where UK residential property is disposed of, the resulting capital gain needs to be reported and the capital gains tax paid within 30 days of completion of the disposal. 

Taxpayers need to obtain a Government Gateway account and apply for a CGT or property reference number to report disposals, although they can authorise their accountant to report the disposals on their behalf.

23rd July 2021 – Hillmans Weekly Update

23rd July 2021 – Hillmans Weekly Update:

Below I have summarised all the main tax related updates we have seen this week.

• Intellectual Property Office launches digital IP renewal service
• Summer Staff: National Minimum Wage rate reminder for employers
• Off-Payroll Working – Will HMRC accept CEST result?
• Are digital banking platforms suitable for businesses?

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a great weekend.

Stay safe and well.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Intellectual Property Office launches digital IP renewal service

Following a successful trial period, the Intellectual Property Office (IPO) has officially launched their new digital renewals service: https://www.gov.uk/renew-patent-trademark-registered-design.

The online service offers IPO's customers a way to renew up to 1,500 intellectual property (IP) rights in a single digital transaction. These rights include combinations of patents, trademarks and designs.

The service offers several benefits to the IPO's customers. It:

• streamlines the bulk renewals process
• provides instant validation of renewal applications
• eliminates errors resulting from a manual process

Customers also benefit from automated electronic delivery of correspondence and receipts, certificates, and ability to complete transactions at the time and place that suits them.

The renewals service offers a taster of what you can expect from the IPO in future. As part of their One IPO Transformation Programme (https://www.gov.uk/government/publications/one-ipo-transformation-prospectus/one-ipo-transformation-prospectus), work is underway to develop a single, integrated system for all registered IP rights. The new, paper-free system would allow IP owners to access all IPO's services through one digital account, and easily manage all of their IP rights in one place.

For updates about the IPO's transformation programme, you can email transformation@ipo.gov.uk.

Summer Staff: National Minimum Wage rate reminder for employers

All workers are legally entitled to be paid the National Minimum Wage (NMW). This includes temporary seasonal staff, who often work short-term contracts in bars, hotels, shops and warehouses over the summer.

The National Minimum Wage hourly rates from 1 April 2021 are:

• £8.91 - age 23 or over (National Living Wage)
• £8.36 - age 21 to 22
• £6.56 - age 18 to 20
• £4.62 - age under 18
• £4.30 - apprentice

Employers who do not pay the NMW can be publicly ‘named and shamed’ and those who blatantly fail to comply can face criminal prosecution.

Employers can contact the Acas helpline (https://www.acas.org.uk/contact) for free help and advice or visit GOV.UK (https://www.gov.uk/government/news/national-minimum-wage-rate-reminder-for-summer-staff) to find out more.

Off-Payroll Working – Will HMRC accept CEST result?

Since 6 April 2021 large and medium-sized organisations, based on the Companies Act criteria, have had to determine whether or not a worker supplying his services via their own personal service company would be treated as an employee if directly engaged. This replaced the IR35 rules for these larger organisations.

HMRC suggest organisations use their Check Employment Status for Tax (CEST) tool on their website to check the worker’s status, although that is not obligatory. The tool is an interactive database of questions and will normally provide a ruling after 15 to 20 questions depending on the answers given about the contractual relationship.

See: Check employment status for tax - GOV.UK https://www.gov.uk/guidance/check-employment-status-for-tax

HMRC have recently confirmed that they will be bound by the result of the software provided the information is accurate and it is used in accordance with their guidance.

See: ESM11010 - Employment Status Manual - HMRC internal manual - GOV.UK https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm11010

HMRC have also stated that they will not stand by results achieved through contrived arrangements that have been deliberately created or designed to get a particular outcome. They would see that as deliberate non-compliance, and potentially levy financial penalties.

Note that the end-user organisation is required to issue a Status Determination Statement to the worker with a copy to any agency to be passed to any fee payer in the labour supply chain making payments to the personal service company.

Are digital banking platforms suitable for businesses?

Digital banking platforms such as Starling Bank or Monzo have risen in popularity, but are they suitable for business use?

Digital banks have built popular apps for personal users to manage their current accounts from their smartphones. The apps allow users to easily manage their money, make payments and track their transactional activity. The digital banking model has proven popular and now Monzo, Starling, and others offer business accounts. Opening a business account with a traditional bank can be a long-winded process involving branch appointments, submitting paperwork, etc. 

The apps used by digital banks can save you a lot of time as users can apply online at any time and get a quick decision, rather than waiting weeks as is often the case with high street banks.

The Monzo Business Lite account is free and an upgraded Business Pro version costs £5 per month. Starling Bank also offers a free business banking service as well as a more feature-rich business account costing £7 per month. Both Monzo Business and Starling Bank Business accounts offer free UK transfers, free ATM withdrawals, fee-free spending abroad, cash and cheque deposits and 24/7 customer support.

The paid-for ‘Pro’ version of both Monzo and Starling’s business accounts add features such as VAT management, spending alerts, and integration with accounting systems which are helpful features for business users. Physical cards are issued to users and they are full debit cards. IBAN transfers are possible on both Starling Bank and Monzo Business accounts. Receiving transfers from abroad is free unless a payment is sent in a currency other than GBP, which results in foreign exchange charges. For businesses that regularly deal in Euros as well as GBP, there are Euro Account add-ons available to users.

Monzo and Starling are regulated by the Financial Conduct Authority (FCA).  This means that up to £85,000 of your money is protected by the Financial Services Compensation Scheme if the bank were to become insolvent. Businesses must be UK registered companies or sole traders.

There is a lot to like about digital banking platforms and their business offerings, but there are some limitations too. Both Monzo and Starling have limits on the amount of cash that users can deposit in their business accounts. 

These business accounts are generally aimed at small businesses and sole traders so they may not offer the features that a medium to large size business might require.

16th July 2021 – Hillmans Weekly Update

Below I have summarised all the main tax related updates we have seen this week.

• Economy Update
• HMRC publish details of the Fifth SEISS grant claim
• New Company Loss Carry Back Rules
• Horizon Europe funding for Innovators

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a great weekend.

Stay safe and well.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Economy Update

It seems that the UK is now starting to “bounce-back”, with monthly gross domestic product (GDP) growing by 0.8% between April and May 2021 but remaining 3.1% below its level in February 2020, which was the most recent month not affected by the Pandemic. The rise in GDP was led by a month-on-month rise of 0.9% in services, although this sector remained 3.4% below its February 2020 level.

The accommodation and food service activities sector contributed 0.87 percentage points to the month-on-month growth in services, with output growing by 37.1% from April; this was driven by growth in food and beverage service activities, which grew by 34.0%, as coronavirus restrictions were eased.

Monthly production grew by 0.8% between April and May 2021 leaving it 2.6% below its February 2020 level; the monthly growth was led by the electricity, gas, steam and air conditioning supply sector, as cold weather and low wind speeds contributed to high demand for gas production in May.

Monthly construction declined by 0.8% between April and May 2021 leaving it 0.3% above its February 2020 level.

As restrictions ease further we expect this growth to continue. 

New Company Loss Carry Back Rules

HMRC have updated their guidance on claiming relief for company trading losses to take account of the extended carry back announced in the Spring Budget and now legislated in the Finance Act 2021. The guidance sets out the details required by HMRC where a company is making a claim for loss relief in advance of submitting its CT600 corporation tax return, where the loss is no more than £200,000.

Temporary extension to carry back of trade losses

In the Budget 2021, the Chancellor announced a temporary extension to the carry back of trading losses from one year to 3 years, for losses up to £2,000,000 for accounting periods ending between 1 April 2020 and 31 March 2022. Losses must be set against profits of most recent years first before carry back to earlier years.

There is no change to the current one-year unlimited carry back of trade losses, however, for the extended relief, the amount of loss that can be carried back to the earlier 2 years of the extended period is capped for each of those 2 years. This is a cap of £2,000,000 of losses for all relevant accounting periods ending in the period 1 April 2020 to 31 March 2021 (financial year 2020).

Groups will be subject to a group cap of £2,000,000 for each relevant period.

Extended loss carry back claims will need to be made in a return, however, claims below a de minimis limit of £200,000 may be made outside a return. This means that any stand-alone or group company with losses capable of providing relief up to a maximum of £200,000 may make a claim in respect of a relevant accounting period without having to wait to submit its company tax return.

Make a de minimis claim

If you want to make a de minimis claim outside the company tax return, you can send a claim submission to HMRC.

HMRC publish details of the Fifth SEISS grant claim

Full details of the fifth Self-Employed Income Support Scheme (SEISS) grant, including a new turnover test which determines the level of the grant, were published by HMRC on 6th July.

Unlike the CJRS Furlough Grants to support employees’ wages, Tax Agents are not allowed to make SEISS grant claims on their client’s behalf.  This seems unreasonable as most self-employed traders will find the HMRC guidance inexplicable and will need their accountant/ tax agent’s assistance in determining how much they are entitled to!

Although the eligibility for the fifth grant is the same as the fourth grant, the amount of the fifth grant will be determined by how much the turnover of the business(es) have reduced compared to the turnover in the reference year.

See: Check if you can claim a grant through the Self-Employment Income Support Scheme - https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

The fifth grant is 80% of three months’ average trading profits capped at £7,500 for those whose turnover has reduced by 30% or more. Those with a turnover reduction of less than 30% will receive a grant based on 30% of three months’ average trading profits, capped at £2,850.

We have been waiting for the precise rules for determining turnover, but HMRC guidance provides more questions than answers and further clarification is still required.

See:  Work out your turnover so you can claim the fifth SEISS grant - https://www.gov.uk/guidance/work-out-your-turnover-so-you-can-claim-the-fifth-seiss-grant

The turnover figure required is for a 12-month period starting on any date between 1 and 6 April 2020. Those who prepare accounts on a tax year basis will be able to use the same figure that will appear on the 2020/21 tax return.

That turnover figure is then compared to the turnover in the “reference period” which for most individuals will be the turnover figure from their 2019/20 tax return and there is an option to use 2018/19 if 2019/20 was not a normal year for the business.

The turnover figure will be the sum of all of the taxpayer’s businesses but should exclude coronavirus support payments (for example previous SEISS grants, eat out to help out payments and local authority grants).

The rules for partners seem particularly illogical, especially where they are also involved in another business. We will keep you updated if and when further clarification is published.

Please contact us if you need help with making the claim.

Horizon Europe funding for Innovators

Applications are now open for UK businesses, innovators and researchers to access funding through the EU’s Horizon Europe programme. UKRI (UK Research and Innovation) is urging businesses, innovators and researchers to apply for access to new markets, capabilities and technologies as well as billions of pounds of funding through the Horizon Europe scheme. Horizon Europe is the EU’s key funding programme for research and innovation with a budget of €95.5 billion.

Prospective UK funding recipients are eligible to participate in the first calls for proposals for Horizon Europe and can learn more about Horizon Europe by visiting UKRI’s Horizon Europe information page: https://www.ukri.org/apply-for-funding/horizon-europe/

9th July 2021 – Hillmans Weekly Update

Below I have summarised all the main tax related updates we have seen this week.

• Tax Free Childcare Account Subsidises Summer Camp Costs
• HMRC guidance on re-importing and re-exporting
• Fifth Self-Employed Income Support Grant to be paid in July
• The Furlough Scheme and Employee Travel – “Temporary Workplaces” and COVID-19

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a great weekend.

Stay safe and well.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Tax Free Childcare Account Subsidises Summer Camp Costs

If you have children under 12 who attend a nursery, after school club, playscheme, childminder or you are considering sending them to a summer camp you should think about setting up a tax-free childcare account. The government adds 25% to the amounts that you save in the account up to £2,000 for each child so £8,000 is topped up to £10,000 (a higher amount applies for disabled children). The account is then used to pay Ofsted registered childcare providers.

Note that it doesn’t need to be the child’s parents paying into the account, uncles, aunts, grandparents and others can also make payments.

Note also that you are not eligible if you or your partner have adjusted net income in excess of £100,000 for the current tax year.

This scheme will gradually replace childcare vouchers which many employers continue to provide to employees. These are free from tax and national insurance (there are limits) and can be used to pay for childcare until the child is 16. Childcare voucher schemes can no longer be set up but employees already eligible can continue to benefit.

HMRC guidance on re-importing and re-exporting

HMRC have released guidance about some of the approvals and special procedures that help simplify customs processing and reduce VAT and Customs Duty owed. These are useful if you are a business that usually re-imports or re-exports as part of your business process.

Inward processing

This is a customs special procedure that allows you to suspend Customs Duty and import VAT on goods you bring into the UK for repair or as materials for manufacturing. You will not need to pay duty or import VAT on the goods if you re-export them following processing or repair.

For example, this may apply if you’re bringing your camera equipment into the UK from France for repairs with the intention of returning them to France. Or, if you are bringing in fabric to be made into dresses which you will then export.

Find more information on using inward processing at https://www.gov.uk/guidance/using-inward-processing-to-process-or-repair-your-goods. 

Outward processing

This allows you to temporarily export goods outside the UK for processing or repair and pay less Customs Duty and import VAT when you re-import them into the UK.

This may apply, for example, if you are exporting a batch of computers to Germany to be repaired and returned to the UK. Or if you’re exporting bales of fabric to Romania to be made into prom dresses and then re-imported into the UK.

Find out more on using outward processing at https://www.gov.uk/guidance/using-outward-processing-to-process-or-repair-your-goods.

Temporary Admission

This is a special procedure that allows you to temporarily import goods into the UK or move goods from Great Britain into Northern Ireland without paying Customs Duty or import VAT. You may use the goods for up to two years or more, before re-exporting them.

For example, this may apply if you are temporarily bringing in samples, professional equipment or items for auction, exhibition or demonstration into the UK.

You can apply for Temporary Admission if you are the person using the goods or you’re arranging for the goods to be used on your behalf.

Find more information on how to apply to import goods temporarily at https://www.gov.uk/guidance/apply-to-import-goods-temporarily-to-the-uk-or-eu#who-can-apply.

Returned Goods Relief

This allows you to claim relief from Customs Duty and import VAT if you are re-importing items into the UK that have previously been exported. When you re-import your items, you will need to make sure they have not been altered, apart from work to maintain them.

This may apply, for example, if you are re-importing office furniture, equipment or instruments because you’re moving back to the UK from an EU country where you previously exported the goods to.

Find out more on paying less import duty and VAT, when re-importing goods at https://www.gov.uk/guidance/pay-less-import-duty-and-vat-when-re-importing-goods-to-the-uk-and-eu

Customs warehousing

This allows you to suspend Customs Duty and VAT on goods that you import into the UK and store in a warehouse to be re-exported. Duty and VAT will only become payable when the goods are removed from the warehouse into UK circulation.

For example, no duty or VAT will be payable if you import goods from China to be stored in a warehouse in the UK before being re-exported to Europe. 

Find out more information on how to use a customs warehouse at https://www.gov.uk/guidance/apply-to-operate-a-customs-warehouse.

See: Customs processing: Check if you can make them quicker, simpler or cheaper (https://content.govdelivery.com/accounts/UKHMRCED/bulletins/2e580c3)

Fifth Self-Employed Income Support Grant to be paid in July

The fifth (and final) SEISS grant will be available for the self-employed to claim towards the end of July.

The eligibility criteria remain broadly the same as the fourth grant. Self-employed profits in 2019/20 must not exceed £50,000 and must be more than 50% of your total income. If that test is not met, then the same £50,000 and 50% tests are applied to average profits and total income over the four fiscal years to 2019/20.

Self-employed traders need not have claimed grants under the previous scheme to qualify for the July payment and will be required to confirm that their business continues to be adversely affected by Covid-19. The amount that traders will be able to claim will depend on how much their turnover has reduced by. If the reduction is more than 30% the grant will be 80% of average profits capped at £7,500 but if less than 30% only 30% of average profits, capped at £2,850.

We are still waiting for more details from HMRC on the basis for the turnover comparison.

The Furlough Scheme and Employee Travel – “Temporary Workplaces” and COVID-19

Several professional bodies have requested clarification from HMRC concerning their interpretation of the “temporary workplace” rules where employees have had their posting extended due to the coronavirus pandemic.

HMRC has confirmed that its approach remains unchanged. Under the 24-month rule, employees who are seconded to a temporary workplace for no more than 24 months of “continuous work” are entitled to tax relief on their travel expenses. However, if it becomes apparent that the placement at the temporary workplace will go on for longer than 24 months then the travel (and subsistence) to that workplace will not qualify for relief.

This means that employees working at a temporary workplace and then furloughed will no longer be entitled to claim tax relief on their remaining time at the temporary workplace if the furloughed time takes them over 24 months of “continuous work”.

Example

An employee was due to work at a temporary workplace for 21 months but say three months after the secondment started they were placed on furlough for five months.

When they return to the temporary workplace for 18 months to complete the 21 months of work, they are no longer entitled to claim relief for business travel and, where reimbursed by the employer, the amounts would be taxable emoluments. This is because it was known that the initial three months of work, the five months of furlough and the 19 months of work would together be greater than 24 months.

HMRC have confirmed that: “The government’s position remains that any period of furlough or working from home, whilst attending a temporary workplace, will be considered a period of continuous work.”

Please talk to us if you need anything clarifying, we are here to help. 

2nd July 2021 – Hillmans Weekly Update

Below I have summarised all the main tax related updates we have seen this week.

• Apply for a grant to help small and medium-sized businesses new to importing or exporting
• UKCA marking – Find out if you need to use the UKCA marking and how to use it
• VAT deferred due to coronavirus
• HMRC warn employers not to use Unfunded Pension Arrangements

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a great weekend.

Stay safe and well.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

 

Apply for a grant to help small and medium-sized businesses new to importing or exporting

The SME Brexit Support Fund could give you up to £2,000 to help with training or professional advice if your business has up to 500 employees and no more than £100 million annual turnover.

You can use the grant for training on:

• how to complete customs declarations
• how to manage customs processes and use customs software and systems
• specific import and export related aspects including VAT, excise and rules of origin

It can be used to help you get professional advice so your business can meet its customs, excise, import VAT or safety and security declaration requirements.

Your business must:

• be established in the UK
• have been established in the UK for at least 12 months before submitting the application, or currently hold Authorised Economic Operator status
• not have previously failed to meet its tax or customs obligations
• have no more than 500 employees
• have no more than £100 million turnover
• only import or export goods between Great Britain and the EU, or move goods between Great Britain and Northern Ireland, if you already import or export goods from or to a non-EU country you are not eligible for his grant

Your business must also either:

• complete (or intend to complete) import or export declarations internally for its own goods
• use someone else to complete import or export declarations but requires additional capability internally to effectively import or export (such as advice on rules of origin or advice on dealing with a supply chain)

See: Apply for a grant to help small and medium-sized businesses new to importing or exporting -https://www.gov.uk/guidance/grants-to-help-small-and-medium-sized-businesses-new-to-importing-or-exporting