Archive for January, 2019

Government fiddles over Brexit

Tuesday, January 29th, 2019

Leaving aside the fact that there were no violins available, it’s interesting to seek a comparison between the supposed musical antics of Nero in AD64 as Rome burned and our government, preoccupied with important political matters as British industry slips ever closer to the cliff edge of a no-deal Brexit.

There are just under 60 days left until the present withdrawal deadline is reached, 29 March 2019.

Last month, HMRC published an update for businesses on what to do before 29 March in the event that we disengage from the EU with no agreement.

They suggest that there are three actions you should be considering now:

According to HMRC this is what you should do

 

  1. Register for a UK Economic Operator Registration and Identification (EORI) number at www.gov.uk/hmrc/get-eori. You’ll need an EORI number: to continue to import or export goods with the EU after 29 March 2019, if the UK leaves the EU without a deal; before you can apply for authorisations that will make customs processes easier for you – we’ll tell you more about applying for these early next year.
  2. Decide if you want to hire an agent to make import and/or export declarations for you or if you want to make these declarations yourself (by buying software that interacts with HMRC’s systems). If you want to: declare through an agent, contact one to find out what information they’ll need from you; use software to make declarations yourself, talk to a software provider to make sure that their product meets your needs, depending on whether you import, export or both.
  3. Contact the organisation that moves your goods (for example, a haulage firm) to find out if you will need to supply additional information to them so that they can make the safety and security declarations for your goods, or whether you will need to submit these declarations yourself.

Readers in Northern Ireland should take note that the instructions are slightly different.

Are your contractors disguised employees

Thursday, January 24th, 2019

What is a disguised employee? Very definitely, it is not an individual holding a clock card in fancy dress. It is contractor, usually in the guise of a limited company, that is undertaking work as if an employee, but more importantly, is being paid as a business contractor: this saves the “employer” paying National Insurance and gives the employee/contractor opportunities to apply some useful tax planning.

What do HMRC make of this?

Unsurprisingly, HMRC were not enamoured of this tactic and way back in 2000 they introduced the notorious IR35 legislation. In effect, IR35 dictates that where certain criteria are met the contractor has to treat his income from contracts where he or she is basically an employee, as if they were a salary, thus precluding any tax or NIC advantages for the contractor.

The problem with IR35 is the definition of the “certain criteria” that contractors need to follow in order to decide if a contract falls under IR35 or not.

A shift in emphasis

HMRC have lost numerous tax cases since 2000 on this issue, and clearly the revenue they were gaining hardly matched the costs of chasing contractors to comply.

Their solution seems to be to shift the responsibility for deciding if a contractor should be treated as a de facto employee, from the contractor to the “employer”.

Public Sector Bodies (PSBs) were the guinea pigs for this change in emphasis.

Following the apparent success of shifting the responsibility for a decision – if a contractor was, or was not, a disguised employee, to PSBs – HMRC have now resolved that this system will be rolled out to the private sector.

Who will be affected and when?

Draft legislation is expected by September 2019, and HMRC have intimated that the legislation will only be applied to medium and large companies – the 1.5m small companies will be exempt.

There is no doubt that shifting the responsibility for deciding if an engager/contractor is an arms-length commercial arrangement or disguised employment will likely be as problematic as the existing IR35 regulations.

We will be keeping a keen eye on these changes and will report back as they unwind later this year.

Tax Year End – Review

Tuesday, January 22nd, 2019

January 22nd 2019

Although the Scottish Budget is not yet approved and we live in times where “Brexit” could change much, you can find our routine end of year tax commentary here:

CLICK HERE : –

2018-19 Year End Tax Review

 

Please contact your usual Milne Craig contact, or Donald Parbrook (donald.parbrook@milnecraig.co.uk), our head of tax, with any queries.

Needless to say the focus just now is on the outstanding personal tax returns – human nature is many people leave things to the last minute…….

Unbelievable excuses and dubious expenses

Tuesday, January 22nd, 2019

HMRC seem to be working on their people skills, either that or they have decided to soften their hard sales approach to tax compliance by injecting a little humour. Last week they published the following responses they had received for late payment of tax and claims for expenses that failed.

This what they said:

Excuses for not paying tax on time

As the deadline approaches for submitting returns and paying tax for 2017-18, HMRC reveals some of the most bizarre excuses it has received for not paying on time.

Most of our customers complete their tax returns honestly and on time but every year HM Revenue and Customs (HMRC) receives some outlandish excuses and expense claims.

Some of the most bizarre excuses HMRC received from customers who missed the Self-Assessment deadline include being too short to reach the post box and having fingers too cold to type. Here are some of the strangest from the past year:

  • my mother-in-law is a witch and put a curse on me
  • I’m too short to reach the post box
  • I was just too busy – my first maid left, my second maid stole from me, and my third maid was very slow to learn
  • our junior member of staff registered our client in Self-Assessment by mistake because they were not wearing their glasses
  • my boiler had broken, and my fingers were too cold to type

Claims for dubious expenses

As well as unbelievable excuses, every year we also receive some dubious expenses claims for unconvincing items like woolly underwear and pet insurance for a dog. Some of the most questionable include:

  • a carpenter claiming £900 for a 55-inch TV and sound bar to help him price his jobs
  • £40 on extra woolly underwear, for 5 years
  • £756 for my pet dog insurance
  • a music subscription, so I can listen to music while I work
  • a family holiday to Nigeria

All these excuses and expenses were unsuccessful.

How do we prepare for Brexit when so much is undecided?

Thursday, January 17th, 2019

It is hardly surprising that Brexit is fast becoming as big a turnoff as tax. How on earth are we supposed to react or adapt to such far-reaching changes when the exact details of our exit are still undecided just a few weeks before the March 2019 deadline?

Businesses that buy or sell goods to the EU must be pulling their corporate hair out – just how will their supply lines be affected?

A new government website covering possible Brexit consequences

The government has already published a bunch of documentation setting out the consequences of a no-deal outcome and they have now doubled up this resource by creating an EU exit website aimed at advising UK businesses.

The HM Government site’s URL is https://euexitbusiness.campaign.gov.uk/

The main points of focus are:

  • Employing EU citizens
  • Importing, exporting and transporting
  • Operating in the EU
  • Regulations and standards for products and goods
  • Using personal data
  • European and domestic funding
  • Intellectual property
  • Energy and climate, and
  • Public sector procurement.

If you have neither time or inclination to for this level of detail what can be done to safeguard your situation and have ongoing benefits for your business?

Action to take now to avoid downside risks of Brexit

It would seem to make sense to take a hard look at supply line issues by undertaking a formal impact assessment and we are aware that many importers and exporters already have this process underway.

The other action you could consider is to work on your business fitness. If, as has been suggested by the pundits, Brexit does create a slowdown in economic activity, then being in good financial shape will not be wasted effort.

If you think this is an idea with traction please call so we can discuss your options.

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