How to Defer VAT – COVID-19 Reply

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

 

All UK businesses are eligible. How to access the scheme

 

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

 

Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return.

 

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

steve@bicknells.net

How to get Extra Time to File Accounts – COVID-19 Reply

Companies to receive 3-month extension period to file accounts

during COVID-19

Businesses will be given an additional 3 months to file accounts with Companies House to help companies avoid penalties as they deal with the impact of COVID-19.

From today (25 March 2020), businesses will be able to apply for a 3-month extension for filing their accounts.

This joint initiative between the government and Companies House will mean businesses can prioritise managing the impact of Coronavirus.

There are approximately 4.3 million businesses on the Companies House register, and all companies must submit their accounts and reports each year. Under normal circumstances, companies that file accounts late are issued with an automatic penalty.

As part of the agreed measures, while companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.

To apply use this link https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts

When to apply

You can apply to extend your accounts deadline if you cannot send your accounts because of an event that’s outside of your control – for example, because of an unexpected illness or if a fire has destroyed company records a few days before your filing deadline.

How to apply

To apply online you’ll need:

  • your company number
  • information about why you need more time
  • any documents to support your applications (optional)

Why are you applying for an extension?

You can add more reasons later

Illness

COVID-19

Accounting issues

I’m applying for another reason

If your application is based on issues around COVID-19, you’ll be automatically and immediately granted a 3 month extension.

Extension reason

COVID-19

steve@bicknells.net

 

 

Accessing Government Help for COVID-19 Coronavirus Reply

Over the last few days its been hard to keep up with the changes and the additional support being offered by the Government, our phone has been ringing constantly with clients asking for help and wanting to know how to access the Government support.

The Government published guidance on the 20th March 2020 for both Business and Employees available at:

There is also advice at

https://www.gov.uk/coronavirus

https://www.nhs.uk/conditions/coronavirus-covid-19/

https://www.bbc.co.uk/news/explainers

https://www.moneysavingexpert.com/news/2020/03/uk-coronavirus-help-and-your-rights/#mortgagesection

Support for Business

The Chancellor has set out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19.

This includes a package of measures to support businesses including:

  • a Coronavirus Job Retention Scheme
  • deferring VAT and Income Tax payments
  • a Statutory Sick Pay relief package for SMEs
  • a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
  • small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
  • a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
  • the HMRC Time To Pay Scheme

The full details are at https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

These are all massive but I think the most useful are

Support for businesses through the 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.

Eligibility

All UK businesses are eligible.

How to access the scheme

You will need to:

  • designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.

Support for businesses through deferring VAT and Income Tax payments

We will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

VAT

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

Eligibility

All UK businesses are eligible.

How to access the scheme

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Income Tax

For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.

Eligibility

If you are self-employed you are eligible.

How to access the scheme

This is an automatic offer with no applications required.

No penalties or interest for late payment will be charged in the deferral period.

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

Support for businesses through the Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts.

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.

Eligibility

You are eligible for the scheme if:

  • your business is UK based, with turnover of no more than £45 million per year
  • your business meets the other British Business Bank eligibility criteria

How to access the scheme

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

The scheme will be available from early next week commencing 23 March.

Support for Workers

There is support with

  • SSP
  • Benefits
  • Furlonged Workers
  • Rent
  • Mortgages

The Full details are at https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees

The most valuable support is

Furloughed workers

If your employer cannot cover staff costs due to COVID-19, they may be able to access support to continue paying part of your wage, to avoid redundancies.

Claiming benefits

Whether you are currently in or out of work, if you are on a low income and affected by the economic impacts of COVID-19, you will be able to access the full range of the welfare system, including Universal Credit.

From 6 April we are increasing the standard allowance in Universal Credit and the basic element in Working Tax Credit for 1 year. Both will increase by £20 per week on top of planned annual uprating. This will apply to all new and existing Universal Credit claimants and to existing Working Tax Credit claimants.

If you have COVID-19 or are staying at home

You are now able to claim Universal Credit, and if required can access advance payments upfront without needing to attend a jobcentre.

If you are self-employed

You are able to claim Universal Credit, providing you meet the usual eligibility criteria.

To support you with the economic impact of the outbreak, and allow you to follow government guidance on self-isolation and social distancing, from 6 April the requirements of the Minimum Income Floor will be temporarily relaxed. This change will apply to all Universal Credit claimants and will last for the duration of the outbreak.

New claimants will not need to attend the jobcentre to demonstrate gainful self-employment.

Support for rent costs

You should check your eligibility for Universal Credit, which is available for people in and out of work. Support for rental costs will be paid through Universal Credit.

From April, we are increasing Local Housing Allowance rates to the 30th percentile of market rents. This applies to all private renters who are new or existing Universal Credit housing element claimants and to existing Housing Benefit claimants.

Three Month Mortgage break for home owners and landlords

If keeping up with your bills and food on the table may be a challenge, speak to your bank. On Tuesday 17 March, banks agreed with the Chancellor that they will offer ‘forbearance’ (tolerance and help) on mortgages.

This means they all should offer those struggling a three-month ‘holiday’, allowing customers a temporary break from having to make mortgage payments during this time. (Though it’s worth noting this is a voluntary agreement with banks – it isn’t compulsory for them to offer mortgage holidays.)

https://www.moneysavingexpert.com/news/2020/03/uk-coronavirus-help-and-your-rights/#mortgagesection

Renters will also be protected from Eviction.

steve@bicknells.net

Probate – The Risks for Personal Representatives and Executors Reply

Liability of personal representatives for inheritance tax

  • Section 4, Inheritance Tax Act 1984 (“IHTA”) provides that inheritance tax is charged on the death of an individual as if, immediately before the death, the individual had made a transfer of value equal to the value of his estate immediately before his death.
  • Section 200, IHTA provides that, with limited exceptions the deceased’s personal representatives are liable for the inheritance tax arising on the deemed transfer on death.
  • Section 216, IHTA requires the personal representatives to deliver an inheritance tax return and pay any inheritance tax due before the court issues the grant of representation to them.  However, where the estate includes land, the inheritance tax arising in respect of that land can be paid in ten equal annual instalments (s227 IHTA) – save that if the land is sold, any unpaid instalments (together with accrued interest) then become immediately payable.

Harris v HMRC [2018] UKFTT 204 (TC)

1.              Mr Harris was appointed as personal representative of the late Helena McDonald by letters of administration  issued in the High Court on 12 June 2013.

2.              On 28 April 2013, Mr Harris filed IHT400 – an inheritance tax account – with HMRC.  On 16 April 2014, HMRC opened an enquiry into the account and on 7 October 2015 issued an inheritance tax determination on the basis that the value transferred on Helena McDonald’s death was £1,178,196.92 and that the inheritance tax payable was £341,278.76.

HMRC pursued payment of £341,278, Mr Harris said he didn’t have the money because he had distributed the estate mainly to the deceased brother, Mr Harris believed the the beneficiary would pay the tax.

The beneficiary then moved to Barbados and would not respond to Mr Harris.

Mr Harris was unsuccessful in his defence if ignorance of obligations or inability to pay.

He was found personally liable.

Clearance

HMRC can be slow in dealing with IHT400 returns and pressure can be significant from beneficiaries requesting distributions. There is a facility (in IHTA 1984, s239(2) to apply to HMRC for a ‘clearance certificate’ (form IHT30) if the personal representatives  believe that all assets and liabilities have been reported to HMRC. If HMRC gives clearance, it normally discharges taxpayers from further liability.

 

Simple Probate Ltd

Authorised by the Institute of Chartered Accountants in England & Wales to carry out the reserved legal activity of non-contentious probate in England and Wales.

Details of our probate registration are available to be viewed at icaew.com/probate under our registration number C006147902

www.simple-probate.co.uk

Coronavirus Business Strategies Reply

Surprised OMG shocked woman

Number of cases

As of 9am on 11 March 2020, 27,476 people have been tested in the UK, of which 27,020 were confirmed negative and 456 were confirmed as positive. Six patients who tested positive for COVID-19 have died.

Government Support for Businesses

Measures to mitigate the effect of the coronavirus outbreak include:

  • Statutory sick pay for “all those who are advised to self-isolate” even if they have not displayed symptoms
  • Business rates for shops, cinemas, restaurants and music venues in England with a rateable value below £51,000 suspended for a year
  • A £500m “hardship fund” to be given to local authorities in England to help vulnerable people in their areas
  • A “temporary coronavirus business interruption loan scheme” for banks to offer loans of up to £1.2m to support small and medium-sized businesses
  • The government will meet costs for businesses with fewer than 250 employees of providing statutory sick pay to those off work because of coronavirus
  • Plans to make it quicker and easier to get benefits for those on zero hours contracts
  • Benefit claimants who have been advised to stay at home will not have to physically attend job centres

https://www.bbc.co.uk/news/uk-politics-51835306

What if your employees contract the virus?

 According to a government press release issued 3 March 2020, up to one-fifth of employees may be absent from work during peak weeks of the present outbreak. Obviously, you will not want infected employees in the workplace. You will need to review your contracts of employment with affected staff to determine your liability to cover sick pay.

Statutory sick pay (SSP) amounts to £94.25 per week (2019-20) and for staff who qualify, can be paid for a maximum period of 28 weeks. If you have payroll software the management of SSP is normally included.

You may also benefit from contingency planning. How can you reorganise tasks if key staff are incapacitated? Spending a little time to plan for these possibilities may save you head-aches should staff be unable to work.

Have you considered Home Working arrangements?

Is it possible to organise a home working scheme for staff? This will not be feasible for all staff, production workers or retail staff for example, but staff that spend their days in front of a computer screen could be supplied with a laptop and work from home.

Where appropriate, there are a wealth of online meeting services that could be utilised to keep in touch with home workers.

Do you depend on the services of sub-contractors?

If yes, you may want to organise a list of alternative contractors you can call on if needed. This should help to minimise disruption if your present sub-contractors are unable to work.

How secure are your supply lines?

You may want to consider sourcing alternative suppliers if your present supply lines are adversely affected by the flu. China, as we know, supplies a growing number of components many of which find their way into British made goods.

Should you be rethinking your business plans?

It is difficult to gauge the possible spread of the Coronavirus but if epidemic conditions arise there is a real possibility that we may see a downturn in global, and therefore UK, economic activity. This, combined with any Brexit fallout, may indicate that the time is right to rethink your business plans for 2020.

Be prepared.

steve@bicknells.net

Off Payroll Working Rules – April 2020 Changes Reply

The organisation receiving an individual’s services will be responsible for determining whether the off-payroll rules apply, so in other words the fee payer is responsible for tax and NI deductions.

From April 2020 the rules apply to Large and Medium business as well as the Public Sector, the rules are to combat none compliance with IR35.

A client organisation could be

  • a company
  • a limited liability partnership
  • an unregistered company
  • an overseas company

You can check status using the CEST – Check Employment Status for Tax – tool.

The changes don’t apply to Small businesses/organisations employing contractors, to qualify a business or organisation must

  1. Have a turnover below £10.2 million
  2. Balance Sheet worth less than £5.1 million
  3. not more than 50 employees

If the rules apply the Fee Payer is not responsible for

  • Statutory Payments
  • Deducting Student Loan repayments
  • Automatic Enrolment into a pension
  • Holiday Pay

The Client has to demonstrate reasonable care in testing employment status and apply the new rules.

The Fee Payer (Client) is responsible for

  • Calculating deemed direct payment
  • Deducting tax and employee NI
  • Reporting and paying tax and NI including employer contribution
  • Consider if Apprenticeship Levy applies

Client Organisation now need to:

  • Review current contracts and arrangements
  • Establish processes for status decisions
  • Review internal systems for Payroll, HR and on-boarding

The changes don’t affect VAT

steve@bicknells.net

Are you an agent for supplies to your clients? VAT Reply

You’re an agent if you act for, or represent, someone else (your principal) in arranging supplies of goods or services. The supplies that you arrange are made by, or to, the principal you represent.

Principals cannot avoid their liability to account for VAT on their supplies or to pay VAT on their purchases by using an agent.

Persons who carry on a business on their own account sometimes use the words ‘agent’ and ‘agency’ to describe their trading style. For example:

# distributors, sole concessionaires and motor agents usually trade as principals on their own account
# employment agencies and travel agents are not usually agents in all their activities

On the other hand, some people who normally trade as principals, such as solicitors and architects, may occasionally arrange supplies as agents for their clients.

To act as an agent, you must have agreed with your principal to act on their behalf in relation to the particular transaction concerned. This may be a written or oral agreement, or merely inferred from the way you and your principal conduct your business affairs. Whatever form this relationship takes:

# it must always be clearly established between you and your principal, and you must be able to show to HMRC that you’re arranging the transactions for your principal, rather than trading on your own account
# you will not be the owner of any of the goods, or use any of the services which you buy or sell for your principal
# you will not alter the nature or value of any of the supplies made between your principal and third parties

https://www.gov.uk/guidance/vat-guide-notice-700#section22

Supplies made through an undisclosed agent are those where the supplier and purchaser are not known to each other as the agent acts in his own name.

Supplies of goods through an agent acting in his own name are treated as to him and by him and consequently count towards his turnover for VAT registration.

VQOTW: Agency Status and Impact on VAT Turnover

steve@bicknells.net

How can Husband and Wife split Furnished Holiday Let Income? Reply

Normally the rules is that income is split 50/50 but there are some special rules for FHLs

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1030

Jointly owned property: husband & wife or civil partners

Husbands and wives or civil partners living together should generally be treated as entitled in equal shares to income from jointly held property.

See:
ICTA88/S282A for years up to 2006-07, and
ITA07/S836 for 2007-08 onwards.

However, this rule will not apply in any of the following instances:
# the income is earned income (or, like furnished holiday lettings, treated as earned income); ICTA88/S282A (4)(a), ITA07/S836 Exception D,
# there is actually a partnership; ICTA88/S282A (4)(b), ITA07/S836 Exception C. In this case the income is divided according to the terms of the partnership agreement,
# both husband and wife, or both civil partners, have signed a declaration under ICTA88/S282B or ITA07/S837 stating their beneficial interests in both the property and the income arising from it. However, a declaration is only valid if their interests in the income and in the property itself correspond.

Further guidance can be found at TSEM9800 onwards. Any problems about joint ownership which cannot be dealt with by reference to the TSEM guidance should be submitted to HMRC Trusts Bootle.

https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9820

Property held jointly by married couples or civil partners: The 50/50 rule: Income from furnished holiday lettings

The 50/50 rule does not apply to income arising from a UK property business which consists of, or so far as it includes, the commercial letting of furnished holiday accommodation.

# If a spouse or civil partner carries on the activity alone: that spouse or civil partner is taxable on the income.
# If a spouse or civil partner carries on the activity with others: the income is split for tax purposes in the way the parties have agreed to split the profits amongst themselves.

 

steve@bicknells.net