- Business Payment Support Service
- Changes to the advisory fuel rates from 1 January 2009
- Demand for advice on redundancy and lay-offs
- Cut in interest rates
- VAT – Extension of 14 day limit
- Double up on your duty free
- Capital allowances on cars
The Business Payment Support Service, announced in the Pre-Budget Report 2008, is designed to meet the needs of businesses affected by the current economic conditions. Any business that is worried about being able to meet tax, National Insurance or other payments owed to HMRC, or anticipates that payments becoming due will cause them problems, can get in touch with HMRC to discuss payment options to help them deal with temporary cash flow difficulties on 0845 302 1435.
The service is designed to help all businesses (large and small) that are struggling to pay their tax. The service is primarily available to self-employed people and companies but can be used by anyone who is having difficulty in meeting their tax liabilities. The service covers most taxes and duties including Income Tax, Corporation Tax, VAT, PAYE and National Insurance.
To qualify, the business/individual must be:
- in genuine difficulty
- unable to pay their tax on time
- likely to be able to pay if HMRC allow them more time.
HMRC have stated that ‘…we will look to be flexible and agree time to pay arrangements on a case-by-case basis to bring the businesses’/client’s tax back up to date on a timescale that is reasonable and appropriate to the situation.’
Please do get in touch if you would like help in this area.
Internet link: HMRC guidance
To reflect the reduction in fuel prices, HMRC have issued new advisory fuel rates for employees driving employer provided cars. These take effect for all journeys undertaken from 1 January 2009, so employers using the advisory rates should advise affected employees and update any expense forms as soon as possible.
The advisory fuel rates should be used for journeys undertaken on or after 1 January 2009.
1400cc or less
1401cc – 2000cc
HMRC are supposed to give employers a month’s notice of changes to these rates. However, according to the HMRC guidance:
‘As was done for the July 2008 changes, HMRC is content for the new rates to be implemented immediately where employers are able and wish to do so.’
Other points to be aware of about the advisory fuel rates:
- employers do not need a dispensation to use these rates.
- employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
- the advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.
If you would like to discuss your car policy, please contact us.
Internet link: HMRC advisory fuel rates
Acas, the Advisory, Conciliation and Arbitration Service, have reported a sharp increase in the number of businesses and employees seeking advice on redundancy, lay-offs and business transfers.
‘…the employers are most likely to ask about their legal responsibilities, consultation periods and how to decide which employees to make redundant. Common enquiries from employees include asking about their own notice period and redundancy pay levels.’
Ed Sweeney, Acas Chair, commented:
‘Given the challenging economic environment, these figures are not surprising. We are urging businesses to resist any knee-jerk reactions, and ensure that decisions are assessed well ahead of being made.
Thinking about the longer term or looking at alternatives to redundancy, such as redeployment, are just two areas where businesses may be able to save jobs and money in the medium-long term.’
Please do talk to us if you have any concerns in this area.
Internet link: Acas guidance
Commenting on the decision by the Bank of England’s Monetary Policy Committee to reduce interest rates by 1% to 2% earlier this month, Ian McCafferty, CBI Chief Economic Adviser, said:
‘The economy needs a significant monetary stimulus and the Bank has clearly decided this will be best achieved by another big cut in interest rates. What is critical for business and consumers alike is that this reduction is passed on.
The economy is stalling, inflation is expected to undershoot the Bank’s own target and the headline RPI rate of inflation is likely to turn negative for at least a few months in 2009. We need to see lending improve and to keep business working.’
Please do get in touch if you have concerns or issues about you business.
Internet link: CBI press release
HMRC have issued further guidance to businesses on the reduction in the standard rate of VAT from 1 December 2008. The guidance clarifies certain issues regarding the ‘tax point’ rules for the date of supply.
In normal circumstances, where a business invoices within 14 days after the supply of goods and services, this is generally the effective tax point for VAT, replacing the basic date of supply rule. This does not apply where payment is received in advance, as this triggers the tax point earlier. It does mean that goods and services supplied between 18 and 30 November but invoiced from 1 December 2008 onwards should be charged at 15% where provided within 14 days of the supply date. Concern that businesses would not be able to effect the necessary changes to their accounting systems in time has resulted in a prompt response by HMRC.
HMRC have agreed that the normal 14 day limit can be extended to 30 days for goods or services provided between 18 November 2008 and 30 November 2008 inclusive. Such supplies can be invoiced at 15% at any time up to 30 days after the supply was made, provided that the invoice is raised on or after 1 December 2008. This is to apply to all businesses without the need to obtain formal approval. This effectively allows businesses additional time to amend their accounting systems following the rate change.
Where a business has previously agreed an extension to the 14 day limit with HMRC, it can continue to use that time limit but where it is less than 30 days it can opt to use the 30 day limit instead.
The link at the bottom of this article will take you to the guidance on the change in the standard rate of VAT. However, please do get in touch if you have any queries on the VAT changes.
Internet link: HMRC VAT guidance
Travellers can now bring back more than double the amount of gifts and souvenirs from outside the EU without paying UK duty. The changes are as a result of a proposal that Gordon Brown made to the European Commission in 2004. The government has announced an increase to the allowance for what are known as ‘other goods’, which includes souvenirs, clothing, electrical goods and perfume.
The tax and duty free allowance increased from £145 to £300 from 1 December 2008. The allowance is due to rise again to £340 in January 2009. This further increase is to take account of recent changes in the Sterling/Euro exchange rate.
Travellers and holiday makers will also be able to bring back more alcohol, with a new allowance for beer of 16 litres and a doubling in the allowance of still wine, from two to four litres.
Financial Secretary to the Treasury, Stephen Timms, said:
‘This new rate for all EU member states will be a welcome boost to holiday makers and all others travelling outside the EU. The changes stem from an initiative by the then Chancellor, Gordon Brown, and demonstrate the benefits of the UK working at the heart of Europe.’
Internet link: Press release
HMRC have issued some draft legislation and guidance on how the tax relief on business cars, known as capital allowances, will be calculated from April 2009.
The new rules apply to expenditure incurred on or after 6 April 2009 (1 April 2009 for companies). The 100% immediate write off for expenditure on cars with CO2 emissions of 110 gm/km or less remains but the old expensive car rules are abolished.
The rate of annual writing down allowances for expenditure on other cars will be determined by the car’s CO2 emissions. The new rules provide that expenditure on cars with CO2 emissions:
- not exceeding 160gm/km will be pooled in the main 20% pool: and
- over 160gm/km will be pooled in the 10% pool.
The legislation is draft at present and we will keep you informed of developments.
Meanwhile do get in touch if you are planning significant expenditure in this area.
Internet link: Treasury note