Archive for July, 2020

Making Tax Digital – getting prepared

Thursday, July 30th, 2020

We have been waiting for some time for government to announce an extension to its Making Tax Digital (MTD) program; this they did last week.

What is MTD?

HMRC are keen to digitise the collection of information to calculate your tax liabilities. At present they are reliant on you submitting a variety of tax returns to do this.

MTD means that they will require you to link your data, your accounts information, directly with HMRC’s personal tax account in your name if you are an individual or your company’s tax account if incorporated.

Essentially, your VAT records and other accounts data will be summarised by your accounts software and sent to HMRC electronically once a quarter. In this way HMRC will build a picture of your current trading position and eventually, you will not need to file an annual tax return.

MTD and VAT

Presently, the majority of VAT registered traders with turnover above £85,000 (the present VAT registration threshold) are filing their returns using MTD approved software. From April 2022, this requirement will be extended to include all VAT registered businesses with turnover below the £85,000 threshold.

MTD and income tax

From April 2023, the accounting data of the self-employed and property letting businesses will need use MTD compliant software and file quarterly updates to HMRC. Initially, this will apply to those with business or property income in excess of £10,000 a year.

Many property letting businesses and smaller self-employed traders are used to preparing figures manually for their annual tax return. From April 2023, these traders will need to invest in converting to an approved electronic record keeping process.

Certainly, we are confident that the bookkeeping software we recommend clients use will be MTD compliant. We are currently filing MTD VAT returns and see no reason why this will not be successfully extended to include MTD filing of accounts information from April 2023.

Will be in touch with clients in the coming months to discuss actions that need to be taken in order to comply with these new regulations. Needless to say we will aim to minimise disruption for clients already stretched by COVID disruption.

 

Brexit – get someone to deal with customs for you

Tuesday, July 28th, 2020

It seems fairly likely that we are heading for a no-deal exit from the EU, 1 January 2021. Many smaller businesses that presently import or export goods from and to the EU will need to deal with a complex raft of customs and VAT issues if they continue trade with the EU after this date.

The GOV.UK website has a whole section that promotes the idea that you get someone to deal with customs for you. They have even published a lift of firms, 600 of them, that can act as freight forwarders, customs agents or brokers or fast parcel operators.

Will all the present COVID related issues, it is likely that many businesses will not relish a further list of red-tape chores in order to continue cross-border trade with the EU. In which case, hiring someone to do this for you may be appealing.

A summary of the information posted by government on this topic follows:

Freight forwarders

Freight forwarders move goods around the world for importers. A freight forwarder will arrange clearing your goods through customs. They will have the right software to communicate with HMRC’s systems. You can find out how to use a freight forwarder on the British International Freight Association and Institute of Export websites.

Customs agent or broker

Customs agents and brokers make sure your goods clear through customs. You can hire a customs agent or broker to act as a:

  • direct representative
  • indirect representative

Fast parcel operators

Fast parcel operators transport documents, parcels and freight across the world in a specific time frame. They can deal with customs for you, as part of their delivery. They cannot act on your behalf without written instructions from you. The instruction must show whether they’re acting for you directly or indirectly. HMRC will only ask for evidence of the authorisation if we need it.

Get someone to act directly

You can hire a person or business to act in your name. You’ll be liable for:

  • keeping records
  • the accuracy of any information provided on your customs declarations
  • any Customs Duty or VAT due

If you give clear instructions and they make a mistake, they may become jointly and severally liable. You cannot ask someone to act directly if they’re submitting your declarations using:

  • simplified customs procedures
  • entry in the declarant’s records

When acting directly, even if they have authorisation, they can only submit those types of declarations if you have authorisation.

Get someone to act indirectly

You can get someone to act for you in their own name, this means they’re:

  • equally responsible for making sure the information is accurate
  • jointly and severally liable for any duty or VAT

If they have authorisation, you can get an indirect agent to make declarations using:

  • simplified customs procedures
  • entry in the declarant’s records

You cannot ask someone to act indirectly if you’re declaring goods for:

  • inward processing
  • outward processing
  • temporary admission
  • end-use relief
  • private customs warehousing

Flexible Furlough and Other Support – update

Friday, July 24th, 2020

Our latest updated guidance note on support for business during the Covid pandemic can be found here:-

CJRS Guidance at July 23rd

 

Losses and loans

Thursday, July 23rd, 2020

Many businesses in vulnerable sectors may have slipped into a loss making position following lock-down. Some of those businesses may have availed themselves of government backed “soft” loans to provide them with the cash-flow to survive the process.

Even with rigorous planning to reduce costs, furlough employees and benefit from other COVID related grants, businesses that cannot re-establish income streams (sales) will inevitably face the likelihood that outgoings are more than incomings.

The resulting losses will gradually eat away at cash resources – usually funds created and retained from pre-COVID trading activity – and loans may be the only way that affected businesses can hope to ride out the present coronavirus disruption.

Loans, of course, need to be repaid. Even the government guaranteed loans will need to be repaid.

If you find yourself in this position, then being vigilant – and in particular, reviewing monthly accounts – need to move closer to the top of your to-do list.

Companies that rely on loans from third-parties to provide working capital, when they have much reduced turnover, should spotlight their balance sheet. When total liabilities – including loans – are more than total assets the company may be insolvent. If you are consulting with your advisers on a regular basis this will come as no surprise, if you are not in the habit of seeking support from your accountant then pick up the phone.

Self-employed traders with no limitation to their personal liability are in a more difficult position as any potential business insolvency may give creditors recourse to claim against their personal assets including their home. Note, that this recourse – to use a self-employed trader’s home as security – should not apply to certain government backed loans.

A further complication is taxation. Many of the grants received to support all manner of businesses during the pandemic are treated as taxable income. If the grants are subsequently used to defray allowable business costs then no tax should be payable. However, as part of your monthly review it is worth asking your tax adviser to factor in tax considerations.

Clearly, the resumption of normal trading conditions is of prime importance to all businesses. Without a healthy income, businesses will eventually run out of resources and will be forced to close.

The key is to stay vigilant; keep yourself informed. If you are concerned that you need to act based on the contents of this post please get in touch. We can help.

Audiences back in theatres from 1 August

Tuesday, July 21st, 2020

Social distancing will be challenging theatre and other performance arts facilities as they grapple with the news announced last week that indoor performance with socially distanced audiences will be able to take place across the country from 1 August 2020.

The idea that an audience can be socially distanced is mind boggling, adds a whole new dimension to the rush for refreshments and use of facilities in the interval.

The Prime Minister’s announcement on the topic is reproduced in part below.

Audiences adhering to social distancing will be able to return to indoor theatres, music and performance venues from 1 August.

The announcement marks a major step in getting the arts and cultural sectors fully back up and running and follows the government’s announcement of £1.57 billion of funding for the arts, culture and heritage sector earlier this month…

The Department for Digital, Culture, Media and Sport is working with the sector on pilots of performances with socially distanced audiences that will inform final guidance for venues in the run up to August 1. These include the London Symphony Orchestra at St Luke’s, London with a variety of further events in the coming weeks.

This announcement marks the move to stage 4 of the government’s 5-stage roadmap for the return of professional performing arts. Under the new regime, audiences, performers and venues will be expected to maintain social distancing at all times.

Guidance for the performing arts, published earlier this month, also sets out further measures to support the safe return of audiences, including:

  • Reduced venue capacity and limited ticket sales to ensure social distancing can be maintained
  • Tickets will be purchased online and venues encouraged to use e-tickets to reduce contact and help with track and trace
  • Venues should have clearly communicated social distancing marking in place in areas where queues form and adopt a limited entry approach
  • Increased deep cleaning of auditoriums
  • Performances should be scheduled to allow sufficient time to undertake deep cleaning before the next audience arrives
  • Performers, conductors, musicians must observe social distancing wherever possible

Singing and the playing of brass and wind instruments in groups or in front of an audience is still currently limited to professionals only.

This guidance will be for organisations in England. Organisations in Scotland, Wales and Northern Ireland should adhere to the advice of the devolved administrations at all times.

  1. guidance will be updated as the evidence develops around singing, wind and brass instruments, and the wider public health context. The five stages of the phased return to professional performing arts is as follows:
  • Stage One – Rehearsal and training (no audiences and adhering to social distancing guidelines)
  • Stage Two – Performances for broadcast and recording purposes (adhering to social distancing guidelines)
  • Stage Three – Performances outdoors with an audience plus pilots for indoor performances with a limited distance audience from July 11. We will now also work with the sector to get small pilots started as soon as possible and will set out further details in due course
  • Stage Four – Performances allowed indoors / outdoors (but with a limited distanced audience indoors)
  • Stage Five – Performances allowed indoors / outdoors (with a fuller audience indoors)

Switch to our mobile site