Accounting and Taxation advice in Hexham, Northumberland

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Thoughts for the week commencing 14th April

 

Thoughts 14th April

I hope you all had a Happy Easter under the circumstances? I was expecting an announcement from the Government by now with it being 3 weeks since the last one, but it appears we must wait until Thursday. We must therefore continue to comply with the social distancing regulations a while longer.


It being a rather strange Easter I found myself counting the Wedgewood Eggs my mother used to give me as an Easter gift before I had children. I have nine of these beautiful Jasper Eggs - memories of very different Easters from my youth!

Self-Employed?

The self-employed income support scheme (SEISS) is supposed to work as follows:

  • You will be assumed to qualify for this if you filed a tax return with self-employed income for the 2018/19 tax year.
  • The first test you need to pass is that your income for the 2018/19 tax year was under £50,000, and that your self-employed income overall was more than 50% of your total income.
  • If you fail that test then your average self-employment income for the three years to April 19 is looked at, and if that is under £50,000 then again you will be able to claim it if it is more than 50% of your total income.
  • It is thought the income figure that will be being looked at will be the taxable income figure after allowing for any adjustments including claims for capital allowances.
  • HMRC will notify taxpayers in June and will tell them what they think they are due to get.
  • You won’t get this if your self-employed income started after 5th April 2019, and you won’t get it if your business failed to continue to trade in 2019/20.
  • There is nothing you can do to bring this claim forward and we are advised that amending your 2018/19 return in respect of claims for capital allowances in order to enhance or enable an SEISS claim will be considered abusive.


Scams - Beware!!

More news on bank scams: Fraudsters are contacting people asking them to update their email contact details and payment instructions, claiming to work for suppliers or businesses associated with suppliers. Do not give any information if you have any doubts they’re not genuine. Instead hang up the call, and ring the contact number you know you be correct for said suppliers.


Capital Gains Tax reminder:

If the consequences of the Coronavirus has meant you have had to delay moving house until after the end of the tax year (5th April 2020), then the rules for paying any CGT owed are different than if you moved before 5th April. Any CGT due will need paying 30 days after the date of completion. There seems to be no concession on this at present. Can the Treasury be persuaded to be lenient here?  


Get ready for the Coronavirus Job Retention Scheme: https://content.govdelivery.com/accounts/UKHMRCED/bulletins/285ab1c


Parents of newborns:

If the registration of your baby’s birth has been delayed due to Coronavirus make sure you still claim child benefit. This can be backdated for up to 3 months and doesn’t require you to have the child registered. Here’s how to claim: https://www.gov.uk/child-benefit/how-to-claim


Keep well as always.
Tricia

 

Thoughts 15th April

 STOP PRESS – the date from which an employee will qualify for the job retention scheme has been changed from 28th February to 19th March. This is very good news for those who have changed employers recently.

A danger of having ‘Thoughts for the day’ is that matters can change from when the ‘thought’ is produced to when it is delivered! Later last night the Government declared that from the 6 April 2020 if you sell a residential property and it is subject to CGT, then you must report the CGT position to HMRC within 30 days of the sale and pay any CGT due.  HMRC say, to allow tax payers to familiarise themselves with the new rules, that there will be no late filing penalty between 6 April and 31 July if the CGT is reported late.  So this applies to transactions between 6 April and 30 June.  However, interest will still accrue on any CGT paid late. In addition, as a reaction to the Covid19 crisis, HMRC will take a flexible approach in considering requests for time to pay any CGT arising on a case by case basis. This may be particularly relevant if the disposal is a gift, or the seller needs to invest the money into their business in response to the Covid19 crisis.

Good news: HMRC tax payer enquiries have been suspended whilst the pandemic continues.

The Financial Reporting Council have said that UK companies should consider whether they can continue trading as a going concern with regard to audit reports made on businesses. This could be more of a challenge with the current circumstances.

Time to pay support: Business and individual taxpayers can seek a Time to Pay Agreement (TTPA) with HMRC if they cannot afford to pay their tax debts in full and on time. The tax helpline number is 0800 024 1222 - and is an addition to other HMRC phone contact numbers. Opening hours are Monday to Friday 8am to 4pm.

Energy prices have dropped again. If you haven’t already done so, it may be worth switching your supply to save you vital pennies?

Enjoy the sunshine if you can on this bright spring day.
Kind regards,
Tricia

 

Thoughts 16th April

 I’ve received a report from a client who recently had reason to contact the Child Maintenance Service (formerly the CSA) and found them both polite and helpful. They were supportive and pleased that the client had contacted them to make them aware of a change in circumstances due to the coronavirus. This is good to know as the CMS have not always been easy to approach!

Whilst we wait for a highly anticipated Government announcement later on today, I thought it might be helpful to list a few normal tax planning reminders for you today. Whatever happens with Coronavirus, you do have consider your usual tax planning:


Don’t fall into the high income for child benefit bracket – a self-employed coronavirus grant might do that for you. If that happens, you will need to look at ways later of achieving reliefs to prevent any benefit being lost in higher tax.


If you run your own business from home and have the children to look after – you might want to consider paying your children for tasks they’re possibly doing to help you. You’d need to check the rules on this but it may be a useful method of occupying them whilst giving you tax relief?


Self-employed persons using their home for work can also claim ‘use of office’ expenses. Do vary the things you’re claiming for though. Also be careful that it doesn’t impact on the only or main residence relief on your house.


Could a change of your year-end be helpful? A Company can lengthen their accounting period once every 5 years, and shorten it whenever they like.  If you are self-employed the relief of any overlap profit relief may be helpful.


Bad debt relief will most likely be easier to prove than before with debts arising during this period due to customers being unable to pay.


Could you deregister for VAT? This may help if your turnover has fallen.


Always consider the usual pre year-end tax planning techniques such as the appropriate planning of equipment purchases and pension payments. This year such decisions may be ‘mothballed,’ so here are some ideas where you can hang on to your cash and still avoid any detrimental effects on your tax bill:

  • Keep stock purchases to a minimum
  • Entertaining wasn’t tax deductible anyway.
  • Bills that are due but not paid will be taken into account on an accruals basis

 

Operate your income tax on a Cash Basis for a change. It’s complicated but it could reduce your tax bill over a period whilst your business is affected by coronavirus.

This is not the time to move house but……why don’t you transfer investment properties to a family member or trust? Low values bear much less tax than they would in a buoyant market.


If you’re cashing in any stock market investments, make sure they’re in the right name. Transfer are free between husbands and wives which could shelter any losses.

Let’s see what tomorrow brings!
Keep well,

Tricia

 

Thoughts 17th April

 Hi folks,
Well another three weeks it is then - necessary but challenging.

Captain Tom Moore set himself a fantastic goal to get him through the last three weeks. I think we will need some goals for the next three weeks! Any ideas?

Here is some practical support to those of you in business who are trying to find a way through this and please Mr Chancellor follow the example of Switzerland and provide us with 100% guaranteed loans - not because of the guarantee, but because it will shorten the loan process and we will get the bank’s money into the businesses NOW when they need them!

Summary of the Coronavirus Job Retention Scheme:

  • The CJRS claims portal opens 20th April
  • They expect 450,000 companies an hour to be able to use it, it will be open 24/7 so try early or late
  • It will be “self service” – businesses need to get themselves in a position to use it and whilst there will be helplines, HMRC will struggle with call volumes
  • The first payment run will be made before 30th April
  • More detailed guidance will be issued by HMRC in the next 7 days about the practicalities
  • Payments will be made 4-6 days after the claim is submitted, to allow for fraud checking
  • Claims will be able to be made up to 14 days before a payroll run in the future
  • A company with e.g. weekly payroll runs as well as monthly payroll runs, will be able to make claims per each payroll run
  • A claim has to be made per PAYE scheme
  • The requirement to use PAYE Online is part of the anti-fraud steps
  • Payroll Bureaus, where not operating clients on PAYE Online, won’t be able to process the claims for their clients, unless they are an Agent on that (this appears to be an anti fraud measure)
  • Allowing continued training by employers of staff who are on furlough is excellent
  • Whistleblowing of fraudulent claims by staff who believe that their employer is making fraudulent claims will be encouraged
  • After the event, enquiries will be raised by HMRC on high risk claims, etc, and HMRC will use historic RTI information to carry out risk assessments
  • Once the various tax deferral measures, and Time to Pay, had expired, HMRC would revert to their normal mechanisms on debt collection.   One of their key objectives of HMRC in normal times was stated to be “collect all taxes due”.    The inference here was relatively clear, that whilst HMRC would help businesses now, when the measures are lifted and payment dates go back to their normal dates (including the deadlines for deferred taxes) then HMRC will expect businesses to pay on time.

 
An update on the Business Interruption Loan – banks have agreed that the information they will require is as follows:

  • 3 years of Statutory Accounts
  • 12 months of bank statements
  • Up to date Management Accounts to whatever date they are normally prepared to
  • List of aged debtors
  • List of aged creditors
  • Details of any outstanding finance arrangements
  • A Statement of Assets, Liabilities, Income and Expenditure (SALIE)
  • A brief assessment of the impact of Coronavirus on your business
  • Processes you’re assisting yourself with, for example furlough, delaying VAT, payment holidays
  • A 12 month cash flow forecast, with things looking better by the end of the year!

Applications since 3rd April have been dealt with quite quickly. Apparently it takes a bank manager 1-2 days to get an application through to the lending committee. The big problem will be the capacity of the banks to process applications in a timely manner. Watch this space!


Have a good weekend as we go into week 4.

Regards,
Tricia

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