VAT deregistration strategy

If you are presently registered for VAT but your turnover has dropped below £83,000 you could deregister for VAT. However, you do not have to deregister.

Disadvantages and advantages of deregistration

  • If you buy significant amounts of goods and services that include a VAT charge, then if you deregister you will not be able to recover any VAT charged.
  • If most of your sales are zero-rated or most of your customers are registered for VAT and can recover the VAT you charge, deregistering means you will lose any recovery of input VAT on purchases and your customers will gain no advantage.
  • If, however, you sell to the general public who cannot reclaim the VAT you charge, and if the VAT on your purchases is not significant, then deregistering could provide an opportunity to reduce your prices and regain a competitive advantage.

The process of deregistration is quite straightforward, but it is worth considering any knock-on effects before taking this option. Please call as we can help you crunch the necessary numbers.

Redundancy pay

If you are faced with making employees redundant, the terms that determine the amount payable may be written into your staff contracts of employment.

Otherwise, employees will normally be entitled to statutory redundancy pay if they have been working with you for two years or more.

Entitlement is usually based on:

  • half a week’s pay for each full year you were under 22 years of age,
  • one week’s pay for each full year you were 22 or older, but under 41
  • one and half week’s pay for each full year you were 41 or older

Length of service is capped at 20 years.

Your weekly pay is the average you earned per week over the 12 weeks before the day you got your redundancy notice.

 

Coronavirus furlough scheme

If an employee was furloughed prior to being made redundant the average weekly pay is their normal wage rather than any reduced amount they may have been paid during furlough.

According to HMRC sources, if you were made redundant on or after 6 April 2020, your weekly pay is capped at £538 and the maximum statutory redundancy pay you can get is £16,140. If you were made redundant before 6 April 2020, these amounts will be lower.

Also, please note that employees are not entitled to statutory redundancy pay if you offer to keep them on or if you offer suitable alternative work which an employee refuses without good reason.

Take advice

If you are faced with making staff redundant you should consider taking advice to ensure the process is dealt with correctly.

Tenants protection under the Coronavirus Act 2020

From the 26 March 2020, the following rights of landlords and tenants regarding eviction apply. A summary of the provisions is set out below:

  • The Coronavirus Act 2020 protects most tenants and secure licensees in the private and social rented sectors by putting measures in place that say where landlords do need to issue notices seeking possession, the notice period must be for three months. Landlords can choose to give a longer notice period. Any claims in the system or about to go into the system will be affected by the stay of possession hearings and orders. Court actions to evict a tenant will not be progressed before 20 September 2020.
  • At the expiry of the three-month notice, a landlord cannot force a tenant to leave their home without a court order. When the three-month notice period expires, a landlord would still need to take court action if the tenant was unable to move.

The government strongly advise landlords not to commence or continue eviction proceedings during this challenging time without a very good reason.

Tax Diary September/October 2020

1 September 2020 – Due date for Corporation Tax due for the year ended 30 November 2019.

19 September 2020 – PAYE and NIC deductions due for month ended 5 September 2020. (If you pay your tax electronically the due date is 22 September 2020)

19 September 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2020.

19 September 2020 – CIS tax deducted for the month ended 5 September 2020 is payable by today.

1 October 2020 – Due date for Corporation Tax due for the year ended 31 December 2019.

19 October 2020 – PAYE and NIC deductions due for month ended 5 October 2020. (If you pay your tax electronically the due date is 22 October 2020.)

19 October 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2020.

19 October 2020 – CIS tax deducted for the month ended 5 October 2020 is payable by today.

31 October 2020 – Latest date you can file a paper version of your 2020 self-assessment tax return.

Claiming the Job Retention Bonus

As readers will no doubt be aware the present Coronavirus Job Retention Scheme is due to cease at the end of October 2020. However, there is a bonus claim that certain employers can make next year if they retain employees beyond the present 31 October 2020 deadline.

The Job Retention Bonus (JRB) is subject to its own set of rules. These are copied in below from the GOV.UK website:

Job Retention Bonus

The Job Retention Bonus allows employers to claim a one-off payment of £1,000 for every employee they have previously received a grant for under CJRS and who remains continuously employed through to the end of January 2021.

To be eligible, the employee must have received earnings in November, December and January and must have been paid an average of at least £520 per month, a total of at least £1,560 across the three months.

Employers will be able to claim the bonus after they have filed PAYE information for January 2021, and the bonus will be paid from February 2021.

More detailed guidance, including how you can claim the bonus online, will be available by the end of September.

What employers need to do now

If employers intend to claim the Job Retention Bonus, they must:

  • ensure all employee records are up to date
  • accurately report employees’ details and wages on the Full Payment Submission (FPS) through the Real Time Information (RTI) reporting system
  • make sure all CJRS claims have been accurately submitted and they have told us about any changes needed (for example if they’ve received too much or too little).

Readers who are still undecided on the position of staff when the present CJRS closes later this year will need to factor the JRB into their calculations.

Planning for staff retention or lay-offs when government support ceases without a doubt exposes employers and employees to stressful choices. Pleas call if you want to discuss your options. We can help.

Windfall for thrifty teenagers

Thrifty teenagers, or rather teenagers with thrifty parents, will soon gain access to their Child Trust Fund (CTFs) savings, and some, may not even know it is there…

 

CTFs were originally set up for children born between 1st September 2002 and 2nd January 2011, with a live Child Benefit claim. Parents and guardians received a voucher to deposit in a Child Trust Fund (CTF) account on behalf of the child.

At 16 years, the child can choose to operate their account or have their parent continue to operate it, but they cannot withdraw the funds. At 18 years of age, the CTF account matures and the child is able to withdraw money from the fund or move it to a different savings account. Over 700,000 accounts will mature each year.

The accounts are not held by HMRC, but by a number of CTF providers who are financial services firms. Anyone can pay into the account, with an annual limit of £9,000, and there’s no tax to pay on the CTF savings interest or profit.

As the earliest accounts were opened 1 September 2002, come 1 September 2020, those celebrating their eighteenth birthday will be able to access their CTF savings.

It is estimated that approximately 55,000 will mature each month – starting September 2020 – and HMRC have created a simple online tool to help young people track down where their CTF is held. Google “Find a child trust fund GOV.UK”. To use the facility, you will need to have a Government Gateway ID and password. If necessary, this can be created when you make the application.

For many eighteen year olds embarking on further education or vocational training this will provide a boost to their funding at this critical time.

Clearing myths on student loans

Students grappling with the latest A level results will no doubt be faced with decisions regarding student loans to finance their time at university if they chose that option. There are a number of myths surrounding this source of funding and in a recent news story government attempted to dispel some of these myths. They are:

Myth: If I get a place through Clearing it’s too late to apply for student finance.

 

BUSTED: No, but if you haven’t applied for student finance yet, you need to apply right away. It can take up to six weeks to process your application. You might not get all of your money in time for the start of your course, but Student Finance England (SFE) will try to make sure you have at least some money as close to the start of your course as possible.

 

Myth: If I’ve already applied for student finance and my course changes through Clearing, I don’t have to do anything.

 

BUSTED: If you have already applied for student finance but want to change your course, university or college you need to update your course details to make sure that you receive your student finance at the start of term.

The easiest way to update course details is to log into your online account and choose ‘Change your application’: www.gov.uk/student-finance

 

Myth: I need to send my Passport and a signed terms and conditions to receive my student finance.

 

BUSTED: If you have an in-date UK Passport you can provide your Passport details on your online application form which will be automatically checked with the Government Identity and Passport Service. When your application has been processed you can even accept the terms and conditions using a digital e-Signature.

 

Myth: It takes ages to apply for student finance because my parents or partner need to send paper forms and evidence.

 

BUSTED: If your parents or partner are providing financial information to support your application, they can do this online and we’ll verify their information with HMRC. If you are asked to send some additional paperwork to support your application this can be uploaded from your account using the new digital evidence upload service.

 

Myth: There’s no information available on student finance and Clearing.

 

BUSTED: There’s a range of helpful tools and guidance on SFE’s student finance zone Clearing page

 

You can also access the SFE YouTube Clearing playlist. Don’t forget you can also contact SFE Monday to Friday from 9am-5pm and Saturday from 9am-4pm:

Contractors urged to go green

The government is keen to sell its Green Home Grant policy to the building trade. In a recent press release Business Secretary, Alok Sharma, said:

Tradespeople across England are urged to step forward and sign up to be able to offer services through the government’s new Green Homes Grants scheme – as over 1,000 businesses across the country have already applied to do so far.

The £2 billion Green Homes Grant Scheme will see the government fund up to two-thirds of the cost of home improvements up to £10,000 to make over 600,000 homes across the country more energy efficient, supporting over 100,000 jobs in green construction, cutting carbon emissions and helping people save money on their energy bills.

The scheme will cover green home improvements ranging from insulation of walls, floors and roofs, to the installation double or triple glazing when replacing single glazing, and low-carbon heating like heat pumps or solar thermal – measures that could help families save up to £600 a year on their energy bills.

To take part and offer their services through the scheme, all tradespeople must register with TrustMark. Where tradespeople are installing energy efficiency measures, they must also be certified to installation standards. To install low carbon heat measures, tradespeople must be TrustMark registered and certified through the Microgeneration Certification Scheme for the relevant heating technology.

Anyone wishing to do so can simply register with TrustMark via their website, with accreditation taking as few as 5 working days for those who already have membership of a recognised trade body such as the Federation of Master Builders, the Cavity Insulation Guarantee Agency and Building Engineering Services Association, or who are already certified under the Microgeneration Certification Scheme.

The authorities are not asleep

It is tempting to assume that government departments are drawing back from exercising their powers to challenge taxpayers due to COVID disruption, but it would be unwise to assume this is the case. For example, in a recent legal action undertaken by the Insolvency Service, a construction boss was banned from running companies for nine years after he caused a company to submit false tax returns.

Although the charges related to activity that pre-dated the coronavirus outbreak, this action – and many others reported by HMRC and other government departments – confirms that the powers-that-be are not idle.

In the above case, investigators uncovered that between November 2011 and February 2015, the director knowingly caused the company to submit false tax returns. Invoices had been brought down to zero rated sales to reduce the company’s tax liability. The tax authorities determined that just over £225,000 was owed by the company, which increased to more than £426,000 when interest and penalties were applied for the deliberate concealment and failure to pay.

A voluntary undertaking has the effect that without specific permission of a court, a person with a disqualification cannot:

  • act as a director of a company
  • take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
  • be a receiver of a company’s property

Deliberate attempts to evade tax will always be pursued as and when the authorities discover the wrong-doing.

However, we all make mistakes and HMRC will be sympathetic if you can offer a reasonable excuse for any apparent transgressions. These reasonable excuses might include:

  • your partner or another close relative died shortly before the tax return or payment deadline
  • you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
  • you had a serious or life-threatening illness
  • your computer or software failed just before or while you were preparing your online return
  • service issues with HM Revenue and Customs (HMRC) online services
  • a fire, flood or theft prevented you from completing your tax return
  • postal delays that you could not have predicted
  • delays related to a disability you have

You could probably add to this published listing disruption created by the COVID outbreak.

Stamp duty changes- residential property

In his recent Summer Statement, Rishi Sunak announced changes to the nil rate band of Stamp Duty Land Tax (SDLT) to be applied in England and Northern Ireland.

This was followed by announcements from the Scottish and Welsh regional assemblies who set the rates in Scotland and Wales.

Here is a brief summary of the regional changes aimed at stimulating the UK property market. In all cases rates will revert to previous levels 31 March 2021.

England and Northern Ireland

From 8 July 2020, if you purchase a residential property you will only pay SDLT on the amount you pay above £500,000. This applies whether or not you have purchased a property before – it is not restricted to first time buyers.

Scotland

From 15 July 2020, if you purchase a residential property in Scotland you will only pay the Land and Building Transaction Tax on the amount you pay above £250,000.

Wales

From 27 July 2020, if you purchase a residential property in Wales you will only pay the Land Transaction Tax on the amount you pay above £250,000.

In all regions, it is presumed that buyers of second homes and buy-to-let residential properties will still pay the additional stamp duty charge.