All posts by Asif Malik

COVID-19: Deferral of VAT payments

By | COVID-19 Support | No Comments

Deferral of VAT payments due to coronavirus (COVID-19)

Temporary changes to the VAT payments due between 20 March 2020 and 30 June 2020 to help businesses manage their cash flow.

If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:

  • defer the payment until a later date
  • pay the VAT due as normal

It does not cover payments for VAT MOSS or import VAT.

HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement.

You will still need to submit your VAT returns to HMRC on time.

HMRC will continue to process VAT reclaims and refunds as normal during this time.

If you choose to defer paying your VAT

If you choose to defer your VAT payment as a result of coronavirus (COVID-19), you must pay the VAT due on or before 31 March 2021.

You do not need to tell HMRC that you are deferring your VAT payment.

Payments made by Direct Debit

If you normally pay by Direct Debit you should contact your bank to cancel your Direct Debit as soon as you can, or you can cancel online if you’re registered for online banking.

After the VAT deferral ends

VAT payments due following the end of the deferral period will have to be paid as normal. Further information about how to repay the VAT you’ve deferred will be available soon.

Full Guidance Link

COVID-19: Self-employment Income Support Scheme

By | COVID-19 Support | No Comments

Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme

Use this scheme if you’re self-employed or a member of a partnership and have lost income due to coronavirus.

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

Who can apply

You can apply if you’re a self-employed individual or a member of a partnership and you:

  • have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
  • traded in the tax year 2019-20
  • are trading when you apply, or would be except for COVID-19
  • intend to continue to trade in the tax year 2020-21
  • have lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:

  • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
  • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.

HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.

How much you’ll get

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

  • 2016 to 2017
  • 2017 to 2018
  • 2018 to 2019

To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.

It will be up to a maximum of £2,500 per month for 3 months.

We’ll pay the grant directly into your bank account, in one instalment.

How to apply

You cannot apply for this scheme yet.

HMRC will contact you if you are eligible for the scheme and invite you to apply online.

Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.

You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

After you’ve applied

Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.

If you claim tax credits you’ll need to include the grant in your claim as income.

COVID-19: Business Update

By | COVID-19 Support | No Comments

Covid19 – Business Update

Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

Support for Businesses Paying Sick Pay

The Government will bring forward legislation to allow small-and medium-sized businesses (under 250 employees) and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. This refund will cover up to two weeks’ SSP per eligible employee who has been off work because of COVID-19 (subject to eligibility)

Deferring Value Added Tax (VAT) Payments

The Government will support businesses by deferring Valued Added Tax (VAT) payments for three months. The deferral for VAT will apply from 20 March 2020 until 30 June 2020 and is an automatic process with no applications required

Support for retail, hospitality and leisure businesses that pay business rates

A business rates holiday will be implemented for retail, hospitality and leisure businesses in England for the 2020/ 2021 tax year. Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property depending upon the property’s rate-able value. The local authority will write to eligible businesses.

Support for businesses that pay little or no business rates

The Government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

Support for businesses through the Coronavirus Business Interruption Loan Scheme

The new Coronavirus Business Interruption Loan Scheme supports SMEs with access to working capital (including loans, overdrafts, invoice finance and asset finance) of up to £5 million in value and for up to six years. The Government will pay to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will not face any upfront costs and will benefit from lower initial repayments.

Insurance

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met. Most businesses won’t be covered, as standard business interruption insurance policies depend on damage to property and exclude pandemics.

Corona virus (COVID-19) Job Retention Grant

By | COVID-19 Support | No Comments

Date: 27/03/2020
Re: Corona virus (COVID-19) Job Retention Grant for Employers

We have an extract from guidance regarding Corona virus (COVID-19) Job Retention Grant. The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. We expect the scheme to be up and running by the end of April. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19) Employers can use a portal to claim for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month. Employers can use this scheme anytime during this period.
Who can claim
Any UK organisation with employees can apply
Furloughed employees must have been on your PAYE payroll on 28 February 2020
This scheme is only for employees on agency contracts who are not working. If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme

If your employee is on Statutory Sick Pay
Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this. At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.
What you’ll need to make a claim
Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

Full time and part time employees
For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.

Employees whose pay varies
If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
• the same month’s earning from the previous year
• average monthly earnings from the 2019-20 tax year
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

To claim, you will need:
• your ePAYE reference number
• the number of employees being furloughed
• the claim period (start and end date)
• amount claimed (per the minimum length of furloughing of 3 weeks)
• your bank account number and sort code
• your contact name
• your phone number
You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

Claim
You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable.
What to do after you’ve claimed
Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.

Tax Treatment of the Coronavirus Job Retention Grant
Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

Full guidance link: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme#employees-you-can-claim-for 

Kindly email us clear instructions which workers you would like to notify HMRC as Furlough (not working during COVID-19).

Yours Faithfully,
City Accountants

HMRC warns of landline scams

By | Uncategorized | No Comments

Those with landline phones are warned to be cautious due to criminals using phones to contact victims following a rising focus on SMS and email phishing.

placeholder

Households with a landline number should be vigilant of phone calls from fraudsters pretending to be the tax authority, warns HM Revenue and Customs.

As HMRC has increasingly cracked down on email and SMS phishing, a rising number of criminals are turning to the traditional method of cold-calling publicly available phone numbers to steal money from taxpayers. Often these calls are to landline numbers.

According to Ofcom, nearly 26 million homes have a landline, many of which could be at risk from scams, especially if they are not ex-directory.

See examples of HMRC-related bogus contact.

Phone scams often target the elderly and vulnerable using HMRC’s brand as it is well known and adds credibility to a fraudster’s call.

HMRC received more than 60,000 reports of phone scams in 6 months up to January 2019. This is an increase of 360% compared to the 6 months before this.

Financial Secretary to the Treasury, Mel Stride MP, said:

We have taken major steps to crackdown on text and email phishing scams leaving fraudsters no choice but to try and con taxpayers over the phone.

If you receive a suspicious call to your landline from someone purporting to be from HMRC which threatens legal action, to put you in jail, or payment using vouchers: hang up and report it to HMRC who can work to take them off the network.

Head of Action Fraud, Pauline Smith, said:

Fraudsters will call your landline claiming to be from reputable organisations such as HMRC. Contact like this is designed to convince you to hand over valuable personal details or your money.

Don’t assume anyone who calls you is who they say they are. If a person calls and asks you to make a payment, log in to an online account or offers you a deal, be cautious and seek advice.

The tax authority will only ever call you asking for payment on a debt that you are already aware of, either having received a letter about it, or after you’ve told us you owe some tax, for example through a Self Assessment return.

During the last 12 months, HMRC has worked with the phone networks and Ofcom to close nearly 450 lines being used by fraudsters using boiler room tactics to steal money.

If anyone is ever in doubt about who they are speaking to, HMRC advises you end the call and contact the department using one of the numbers or online services available from GOV.UK

Further Information

I know someone who could fall for this, what should I do?

If you know someone who has a landline, particularly those who may need protecting such as vulnerable relatives and neighbours, our advice is:

  • recognise the signs – genuine organisations like banks and HMRC will never contact you out of the blue to ask for your PIN, password or bank details
  • stay safe – don’t give out private information, reply to text messages, download attachments or click on links in emails you weren’t expecting
  • take action – forward suspicious emails claiming to be from HMRC and details of suspicious calls to phishing@hmrc.gsi.gov.uk and texts to 60599. Alternatively, contact Action Fraud on 0300 123 2040 or use its online fraud reporting tool, especially if you suffer financial loss
  • check GOV.UK for information on how to avoid and report scams and recognise genuine HMRC contact
  • if you think you have received an HMRC-related phishing/bogus email or text message, you can check it against the examples shown in this guide

Lost Your UTR Number?

By | Self Assessment Tax Return | No Comments

Whether you’re someone who likes to file your annual self-assessment tax return nice and early, or you leave all the scrabbling around until the last minute, there are a number of factors which will impact your ability to file yours with HMRC.

One of these is if you end up losing your UTR number.  Here’s what this means and how to find it if it goes astray.

Your Unique Taxpayers Reference Number, or UTR, is what identifies you personally with HMRC for all things related to your personal tax obligations. It’s 10 digits in length and is quoted on any correspondence you receive from HMRC, including:

    • Your tax return
    • A Welcome to Self-Assessment letter (SA250)
    • Notice to File a Tax Return
    • Statement of Account
    • Payment Reminders

If it comes to it and you’ve lost your UTR number, or the above correspondence, your best option is to contact HMRC directly. Do this either via their helpline on 0300 200 3310, or alternatively speak to your local tax office.

What happens next?

You will need to pass a series of security checks to allow HMRC to confirm your identity. Once this has been done they will post your UTR number to you which can take up to 7 days. This is the only way HMRC will send your UTR number to you, so get a move on if it’s approaching the deadline!

Your alternative is to appoint an agent (usually an accountant) to act on your behalf when it comes to your tax affairs. The same security rules apply however, with an agent normally getting your UTR number from you at the point you sign up for their service. There is a dedicated number at HMRC they can call if you have definitely lost your UTR number.  Agents will have to have formal authorisation from you and can therefore pass the security checks.  Again, the UTR number will be confirmed in writing by post, so allow 7 days.

Want to remove the hassle of your Self-Assessment?

If you’re looking for a bit of help to get your self-assessment tax return filed this year, why not let us do it for you? Our price structure is fixed and highly competitive, and we’ll do all the work to prepare and submit a return for you using the details you supply after your approval.  To get started simply give us a call at 0121-7778000.

 

Contractor vs Employee

By | Information Centre | No Comments

Uncertain if making the move into contracting is for you?

For many people, the idea of working as a permanent employee as opposed to a contractor, would mean a lot more security by knowing that a set wage is coming in every month.  However, the times are changing, particularly with the growing economic uncertainty, so is there really such a thing as a secure permanent position anymore?

Contracting is being used less as an avenue for those people forced into redundancy and is now becoming the chosen working style for many.

Of course with most things in life there are both positives and negatives, and the same can be said of contracting. Here are a list of the advantages and downsides that come when making the move into contracting:

Advantages

  • An average contractor rate can easily be double that of a full time employee, or even more – as the client is not required to pay for your holiday, travel, sick pay, pension contributions or any employee benefits.
  • Unlike permanent workers, you are able to claim back on expenses that are made wholly and exclusively for the purposes of your business, and, as you only get taxed for your profits, this can lower your tax bill.
  • You have the freedom to work when you choose, where you choose and for however long you like.
  • The company that you work for is not your employer, but is instead your client, meaning you have far more control over your contract than what a permanent worker would have. This means that you will have a lot more flexibility and control over agreeing working conditions and negotiating payment terms.
  • Taking holiday will be a lot easier, as you will not be in the position of having to juggle your days off around other colleagues. You can also choose to have as much time off as possible, instead of the standard few weeks in a year.
  • Dealing with a variety of different clients will give you the ability to build up a wide-ranging skill set, CV and allow you to establish an extensive list of references.

A few downsides

  • Of course, becoming a contractor never means that you are guaranteed work and so this is a factor that you must take into consideration.
  • Contracting is an extremely rewarding way of working, but being your own boss does mean that you have a lot more responsibility than a permanent employee, which includes having to be in charge of your own finances. This can be worrying for some people, knowing what forms to fill out and when, but with the help of a good accountant this won’t be an issue to be concerned about.

How to contract?

There are two options recommended for contractors – to either trade through your own Limited company, or through a PAYE umbrella company.

Any accountant will tell you that contracting through your own Limited company is the most tax efficient way of working, this will typically see you take home around 75% – 80% of your contract value, compared to around just 60%-65% of your contract when working through and umbrella company.

However, there will be a number of factors that will mean one will suit you better than the other.  For example if your contract is short term and less than a certain limit, then you would probably be better off trading through an umbrella company. To see which way of contracting would suit you please get in touch with City Accountants, we can provide expert advise based on your personal circumstances.