- A warning about COVID related grants
- HMRC outlines changes to late payment penalty regime
- Digital marketplaces to report sellers’ incomes from 2023
- CIOT warns over stamp duty refund claims
- Contactless limit to increase to £100 from 15 October
- HMRC urges taxpayers to stay alert to digital scams
- BCC calls for government to extend skills training
- Advisory fuel rates for company cars
- Employers ‘named and shamed’ for paying less than minimum wage
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 from 1 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:
|1400cc or less||12p|
|1401cc – 2000cc||14p|
|1400cc or less||7p|
|1401cc – 2000cc||8p|
|1600cc or less||10p|
|1601cc – 2000cc||12p|
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