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HMRC extends RTI late filing easement until April 2019

Adrian Mooy - Wednesday, July 18, 2018


HMRC has extended the payroll Real Time Information (RTI) late filing easement until April 2019.


Under RTI payroll obligations employers must submit details of payments made to employees on or before the day that wages are paid via a Full Payment Submission.


The updated guidance extends the easement, introduced in April 2015 to April 2019. The easement applies where an employer’s FPS is late but all reported payments on the FPS are within three days of the employees’ payday. This easement applies from 6 March 2015 to 5 April 2019.


However, HMRC go on to clarify that employers who persistently file after the payment date but within three days may be contacted or considered for a penalty. Potential monthly penalties range from £100 to £400 depending on the size of the employer.


Workers' rights for Pimlico Plumber

Adrian Mooy - Tuesday, July 17, 2018

A plumber has won a legal battle for working rights in a Supreme Court ruling.


The Supreme court has backed up an earlier ruling by an Employment Tribunal in the case of a contractor engaged by Pimlico Plumbers.


Plumber Gary Smith carried out plumbing jobs for Pimlico Plumbers. He was VAT registered and paid tax on a self employed tax basis.


The Supreme Court has ruled that Gary Smith was entitled to workers' rights and confirmed that the Employment Tribunal was ‘entitled to conclude’ that Mr Smith was a worker.


As a worker, Mr Smith was entitled to rights including holiday and sick pay. Details of workers rights can be found GOV.UK worker


Pimlico Plumbers chief executive Charlie Mullins said that he was ‘disgusted by the approach taken to this case by the highest court in the United Kingdom.’


‘This was a poor decision that will potentially leave thousands of companies, employing millions of contractors, wondering if one day soon they will get a nasty surprise from a former contractor demanding more money, despite having been paid in full years ago. It can only lead to a tsunami of claims.’

Small businesses say the Government should simplify business rates

Adrian Mooy - Monday, July 16, 2018


A survey has revealed strong support from the UK’s small business community for measures to simplify business rates.


A total of 71 per cent of the small businesses questioned said business rates should be simpler and have a greater degree of flexibility.


Meanwhile, 49 per cent of SMEs said the Government is doing too little to assist with business rate relief, with just 36 per cent satisfied with its efforts.


Of those questioned for the research, carried out by Close Brothers Asset Finance, 56 per cent had seen their bills increase in the last two years.


“The message from SMEs is clear that more needs to be done,” said Neil Davies, CEO of Close Brothers Asset Finance.


“Our study has found that it’s a nuanced picture out there and what I mean by that is that the call for clarity is not driven by cost concerns.”


Chancellor Philip Hammond has previously made concessions following concerns from SMEs. This includes bringing forward the next business rates revaluation from 2022 to 2021.

A quarter of dads may be missing out on paternity pay, according to a new report

Adrian Mooy - Friday, July 13, 2018
The TUC has launched a new campaign calling on the Government to extend paternity pay to more workers, after discovering that a quarter of fathers may be missing out.


It found that of the 620,000 new working dads last year, more than 140,000 did not qualify for paternity pay, which provides up to two weeks’ paid time off.
This figure, it has said, is the result of two factors, either self-employment or because the individual hadn’t been with their employer for long enough.
The current rules regarding paternity pay give working dads the opportunity to claim up to two weeks’ paid leave if they are expecting a child, or adopting, including through a surrogacy arrangement – as long as they have at least six months’ service with their current employer by the 15th week before the baby is due.
During this time and while on leave, a father’s employment rights, including any pay rises and paid holiday time must be protected.
Unfortunately, the current regulations do not cover self-employed workers or freelancers, unlike self-employed mums, some of whom are eligible for a maternity allowance.
The TUC said that to address this inequality in the pay arrangements for men, all new and working dads should be given the same rights.
It is also calling on the Government to address statutory paternity pay, which is just £145.18 a week – less than half what a person working 40-hours a week would earn on the National Living Wage (£313.12). The TUC argues that paternity pay should at least meet the National Living Wage of £7.83 an hour.
TUC General Secretary Frances O’Grady said: “It’s so important for dads to be able to spend time at home with their families when they have a new baby.
“But tens of thousands of fathers are missing out on this special time because they don’t qualify for paid leave – or because they can’t afford to use their leave.
“We need a radical overhaul of family pay. The current system is too complicated, pays too little, and excludes too many workers.”

Professionals call on Treasury not to lower VAT threshold before MTD and Brexit

Adrian Mooy - Monday, July 09, 2018


The Low Incomes Tax Reform Group (LITRG) of the Chartered Institute of Taxation (CIOT) has called on the Treasury to resist pressure to reduce the VAT threshold from its current £85,000 until after the implementation of Making Tax Digital (MTD) and Brexit.


The call came after the Office of Tax Simplification (OTS) urged the Treasury to review the current threshold, prompting it to issue a call for evidence on the matter.


The level at which the VAT threshold is set is currently particularly sensitive as small businesses across the UK gear up for the introduction of MTD for VAT in April 2019, which will entail digital quarterly reporting using ‘designated software packages’. A lowering of the threshold would force even more businesses to comply with the new rules.


LITRG Chair, Anne Fairpo, said: “As VAT is based on a business’ turnover and not its profits, very many small businesses with low profits still find themselves having to deal with VAT on a day-to-day basis.


“We are hugely concerned that any lowering of the VAT threshold at this time could threaten seriously a small business’ ability to remain competitive in its marketplace if its trade is mainly with non-VAT registered customers.


“Lowering the registration threshold should only be considered if a smoothing mechanism can be incorporated into the VAT system to ease the tax cost and competition issues on crossing the threshold. Ideally, this should be in tandem with simpler VAT accounting and compliance requirements so that the additional administration a business must carry out on a day-to-day basis when it becomes VAT registered does not become too burdensome.


“We strongly believe that the prospect of a small business becoming a VAT registered trader is a daunting one for many and so may have the impact of stunting growth for some businesses.


“But if the threshold is set too low, this may entice some smaller businesses which might otherwise be compliant into the hidden economy. This is due to the overwhelming burden that they perceive VAT compliance to be and because they do not feel they can be competitive in their industry if they have to charge VAT.”

More than two-fifths of small business owners still unaware of MTD

Adrian Mooy - Friday, July 06, 2018


According to a new study, Making Tax Digital (MTD) is currently one of the biggest concerns for VAT-registered small business owners.


The research, prepared by Intuit QuickBooks, found that more than three-quarters of SME owners found the legislation challenging and difficult to understand.


It also reveals that 70 per cent were struggling to find the right new tools to help them comply, including 63 per cent of owners who weren’t sure which cloud-based software they would use.


Other concerns about MTD highlighted in the survey by SMEs include finding the additional time and managing the additional work.


This study shows that few SMEs are ready for the new MTD regime, which is due to come into effect in April 2019.


Under the current rules, VAT registered businesses with turnovers exceeding £85,000 will be required to maintain a digital record of their VAT transactions and submit their VAT returns using MTD-compliant software on a quarterly basis.


Worryingly nearly half (41 per cent) of small business owners are still unaware of MTD, with a further 22 per cent aware of what it is, but only planning to file taxes digitally if they are likely to incur financial penalties.


Accountants have also cited client education as their top concern in the lead up to MTD, with 29 per cent of those surveyed having concerns. This came just ahead of adapting their own practice to comply with MTD (27 per cent), and training clients on online software (27 per cent).

Building contractors will have to comply with complex new VAT rules

Adrian Mooy - Thursday, July 05, 2018


Those working in the construction and building industry are being encouraged to get to grips with a new way of accounting for VAT.


From 1 October 2019, builders, contractors and other trades associated with the construction industry will have to change the way they invoice supplies of standard or reduced-rated building services between VAT-registered businesses in the supply chain.


Under the new Reverse Charge for construction services (RC) rules, a main contractor must account for the VAT on the services of any sub-contractor, while the supplier does not invoice for VAT.


It is then down to the customer (main contractor) to account for VAT on the net value of the supplier’s invoice and at the same time deduct that VAT – leaving a nil net tax position.


The complex new RC rules only apply to other construction businesses that then use them to make a further supply of building services, and not to end users, such as retailers, landlords or private individuals. The RC also does not apply to associated businesses.


Despite its title, the new legislation will apply to a wide range of services connected to the building trade, including:


 - construction

 - alteration

 - repairs

 - demolition

 - installation of heat, light, water and power systems

 - drainage

 - painting and decorating

 - erection of scaffolding

 - civil engineering works

 - associated site clearance

 - excavation

 - foundation works.


The legislation also includes a list of exempted works and services, such as:


 - professional services of architects or surveyors, or of consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape


 - drilling for, or extraction of, oil, natural gas or minerals, and tunnelling or boring, or construction of underground works, for this purpose


 - manufacture of building or engineering components or equipment, materials, plant or machinery, or delivery of any of these things to a site


 - manufacture of components for systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection, or delivery of any of these things to a site


 - signwriting and erecting, installing and repairing signboards and advertisements


 - the installation of seating, blinds and shutters or the installation of security.


Introduced after a long initial consultation period, the recently released draft RC legislation, explanatory memorandum and tax information and impact note are designed to combat missing trader VAT fraud in the construction sector’s labour supply chains, which HM Revenue & Customs (HMRC) has identified as a significant risk to the public purse.


The main challenge for those working in the trade will be identifying which customers are liable for the RC. This will require businesses to check VAT registration numbers and obtain evidence that a customer is an ‘end user’ or not, so that if VAT is due it is invoiced correctly.


This will create a significant new burden that many companies and sole traders may struggle with. Therefore, businesses affected by the new RC legislation are being encouraged to plan ahead to ensure that as suppliers they do not charge VAT incorrectly, or as recipients, they apply the RC correctly.


Failure to operate the RC correctly could lead to error penalties. Output VAT wrongly applied on an invoice will also be collected by HMRC, but will not be recoverable by the recipient.

270,000 late penalty notices cancelled by the Revenue

Adrian Mooy - Monday, July 02, 2018
A response to a freedom of information request has revealed that HM Revenue & Customs (HMRC) cancelled 270,000 late penalty notices in 2016.
However, this figure was dwarfed by the 610,000 cancellations in 2015 and the 400,000 cancellations in 2014.
The request was made by a partner in a ‘magic circle’ law firm, who was himself issued with a late penalty notice, despite having submitted his tax return in December, ahead of the 31 January deadline.
Despite having filed on time, when HMRC overturned the penalty in March this year, it nevertheless issued a letter, stating “if you file on time we won’t charge penalties”.
While HMRC revealed the number of late penalty notices that were cancelled over the three-year period, it did not disclose how many of these were the consequence of errors on the part of the Revenue, as opposed to the taxpayer having a reasonable excuse for late filing.
A spokesperson for HMRC said: “We don’t want penalties, we just want tax returns. Taxpayers with a reasonable excuse for filing late or who have been taken out of SA do not have to pay penalties. Taxpayers who file on time are not issued with penalties.”

What happens if I want to protect my assets from IHT?

Adrian Mooy - Tuesday, June 26, 2018
In the UK, individuals and families who wish to pass on their legacy need to tread very carefully in order to ensure they are not hit with a hefty Inheritance Tax (IHT) bill.


IHT is levied at a rate of 40 per cent of an estate’s total value on all estates valued at £325,000 or more. This £325,000 threshold is known as the ‘nil rate band’ and, despite ever-rising wealth across the country, has remained frozen at this amount for several years.
According to up-to-date figures from HM Revenue & Customs (HMRC), the Treasury collected a record £5.3 billion in IHT last year – up 13 per cent on the amount of IHT brought in the previous year.
Reports continue to emerge suggesting that more and more middle-class families are falling foul of the so-called ‘death tax’, which is why it is now more important than ever to plan ahead by seeking specialist tax planning advice.
Individuals and families who want to explore ways of mitigating their IHT liability should investigate all of their options in order to determine which methods of tax planning are most suitable.
One option worth exploring might be the additional residence nil rate band (RNRB). First introduced in April 2017, this is an additional tax-free threshold families can tap into if they plan on leaving a residential property to their direct lineal descendants in their Wills.
As of 6 April 2018, individuals can pass on an additional £125,000 in property value to children, grandchildren, step children and foster children completely tax-free using this allowance.
As married couples or those in a civil partnership can combine their allowances, this means that couples can effectively pass on £900,000 worth of property completely tax-free if they seek appropriate advice to incorporate the RNRB into their Wills.
But there are many other beneficial tax savings available. For example, individuals can reduce the rate at which they will incur IHT on the total value of their estate by passing a portion of it to a charity when they die.
By leaving 10 per cent of their estate to a charity, individuals will pay IHT at a rate of just 36 per cent as opposed to 40 per cent, for example.
There are a number of ways in which families and individuals can mitigate their eventual IHT liability and it is always worth seeking tailored advice to determine which methods are most suitable.


OTS calls for overhaul of ‘complex’ tax charges and reliefs

Adrian Mooy - Monday, June 25, 2018

An overhaul of tax charges and reliefs affecting businesses is urgently required, the OTS has said.


In a report published midway through April, the OTS looked closely at business taxes, charges and reliefs, identifying a number of areas in which it believes simplification or streamlining ought to be considered.


In total, the OTS identified as many as 32 areas where it felt streamlining and simplification was needed.


12 of these were highlighted as priorities for immediate consideration, including, amongst others, the Entrepreneur’s Relief (ER) scheme, which the OTS said was ‘disincentivising’ some founder shareholders from bringing in external venture capital by requiring shareholders to hold a minimum of five per cent of a company’s share capital in order to be eligible for the relief.


Its report also criticised the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS). It said that these schemes, along with the Venture Capital Trust (VCT) scheme, were not necessarily targeted effectively in line with the capital needs of future businesses and that ‘complexities’ built into the legislation governing them often caused confusion.


The OTS added that, while those who invest in start-up businesses through such schemes can benefit from several tax reliefs, these schemes do not currently provide any reliefs for the actual founders of the emerging businesses involved – something which the OTS said must be examined.


In addition, the report recommended that a ‘one-stop shop’ registration and filing facility be introduced for small incorporated businesses.


Under existing rules, such businesses need to register separately with HM Revenue & Customs (HMRC) and with Companies House.


Paul Morton, Tax Director at the OTS, described the report as “a significant first step towards meeting the pressing need to undertake a detailed review of the tax system as it operates across the business lifecycle.” He added that the paper was “aimed at helping the businesses that are the lifeblood of the UK economy to maximise their opportunities” by making Britain’s business tax system clearer and more “simple to understand and use.”