The start of the new year brings with it new challenges once more, following the Prime Minister's announcement of a third national lockdown, which is due to last until at least mid-February. Hopefully, there is light at the end of the tunnel with the vaccines roll-out plan.
Every day through our work and contact with clients, we hear and get an understanding of how aggressive the most recent strain of the coronavirus is, with a significant number of clients being infected, and some having been hospitalised. We appreciate the dedication of healthcare workers, local communities and others who are on the front line working to contain the virus.
The Harbour Key team would like to reassure you during this difficult time that we are following the latest Government advice with reference to COVID-19 working safe practices. The majority of the team are now working from home, with the office only open to a few team members to deal with post and deliveries, and with individual Covid tests being provided to all employees. Employee wellbeing is a top priority. As with the previous lockdowns, we do not see our remote working or current office situation impacting us operationally to deliver client services.
The current environment is challenging for a number of our clients, both for their business and personally. For example, some client businesses are locked down again having only been open for 16 days since the 5th November (the second lockdown) whilst others are having to sort childcare/home schooling arrangements at very short notice or are dealing with infection itself.
The start of the year has been the busiest we have known for Harbour Key since it was formed, for a month that is always our busiest. This newsletter covers the areas that the business has been working on and covering in recent months.
The rapid acceleration of regions through the tier system, before the third national lockdown, has meant businesses and individuals are having to rapidly adapt.
In light of the recent UK lockdown, the Chancellor announced additional one-off top up grants, available to businesses in the retail, hospitality and leisure sector in order to support and protect jobs through to the spring.
HMRC have also recently announced that there will be an extension to the payment date under a new “Deferred VAT Payment Scheme” for those businesses which deferred their VAT due between 20 March 2020 and 30 June 2020. Businesses will have to opt into the scheme, and it will allow for the deferred VAT to be paid between 2 to 11 equal monthly installments up to 31 March 2022. No interest will be added to these deferred payments.
At the date of the release of this newsletter, other than the above no new Government support measures have been announced for businesses or individuals, previous measures having already been extended. The Government has advised that announcements will be made in the Budget, scheduled for 3 March 2021. There were rumours in the press over the weekend that support may be introduced for those groups who to date have not been able to access support, in the main the self-employed whose profits were above £50k in 2019 (excluding them from the self-employed grant) and those who operate their business via a limited company( but have remunerated themselves via a low salary and a high dividend policy) however nothing official as been released. With no work these individuals have been unable to declare dividends, but with the amount that can be assessed under the furlough scheme being minimal due to the low salary.
Details of the newly announced grants, VAT deferment and a refresher on the Government support measures, for those businesses who may not have claimed/applied previously, can be found here.
In addition, the weekend press was reporting that due to the current situation the March Budget would delay any tax rises, but the residential property stamp duty holiday would not be extended.
Leaving the EU
Not featured in the news as much as the Covid situation but still causing a number of our clients some major issues, is the end of the UK EU transition agreement, replaced by a trade agreement with the EU following the UK’s exit on 31 December 2019. The agreement was announced late on Christmas Eve, the full details of which can be found HERE.
The big headline and good news is that there are to be no tariffs on imports and exports of goods between the UK and EU. However, there are number of procedural changes that businesses need to be up to speed with, the rules for Northern Ireland are different and some trade areas are not covered by the agreement and remain to be agreed. In speaking with one of our clients whose business is moving product between the EU and the UK (food produce found in the main supermarkets), who is very much up to speed and is becoming a customs agent, he is finding the process very frustrating, believes it is going to take a period of time for processes and procedures to catch up with the agreement put in place less than 7 days before taking effect. In addition to which, the different treatment of moving goods into and from Northern Ireland is catching businesses out.
Our summary of the changes and implications can be found HERE. Government guidance is now starting to be released, and the best comprehensive guide we have seen can be found at HERE.
Self-Assessment
Despite Covid, the 31 January self-assessment tax return filing deadline is rapidly approaching! It is understood at the time of release that HMRC will show unprecedented leniency on late filing by the taxpayer for Covid-related reasons. Our professional institutes are lobbying for the deadline to be moved (to 31 March), but at the moment, but The Treasury have not given in. The weekend press reported that the Chancellor is rumoured to be considering a blanket extension, but nothing further yet.
HMRC, in recognizing the extenuating circumstances, taxpayers can appeal a late filing penalty (which are issued automatically) showing how the virus has affected them and their ability to meet their filing responsibilities and that they will rectify the situation as soon as possible. At the moment, the reasonable excuse guidance accepts suffering a serious or life-threatening illness, having an unexpected stay in hospital and the death of a partner or other close relative, as reasonable excuses for not being able to file. Weekend press reported the pressures of home schooling could be deemed a valid reason for delay, however this is not seen in HMRC guidance, so it would be a risk to rely on this.
In our view, unless it is impossible to file due to illness, best efforts should be made to meet the filing deadline and the Harbour Key team will help you where they can. In completing your return, you will understand your tax liability and potentially take advantage of HMRC’s deferred tax payment arrangement scheme announced by The Chancellor, in his Winter Economy Plan Statement at the end of September 2020. HMRC are urging that returns be filed on time, so that payment plans can be agreed. An instalment plan to help spread the payment of tax liabilities for 2019–20, up to the value of £30,000 can be sorted with HMRC via self-service. This arrangement involves paying HMRC 2.6% interest on any outstanding tax after February 1st, but any late payment penalties will be avoided. For payment plans above £30,000, the usual time to pay arrangement will need to be agreed with HMRC and should be done in advance of 31 January. In addition, up to date tax return filing is normally required for mortgage applications and may be a requirement for future Government supports schemes, for example the self-employed scheme required the taxpayer to have filed their 2019 tax return.
Some individuals had a great Christmas Day with more than 2,700 people filing their tax-return on Christmas day!
Companies House
Companies House is no longer sending paper reminders by post and is urging all companies to sign up for e-mail reminders. Stopping the paper reminder letters will save around £1.2 million each year.
It is the directors’ responsibility to ensure that accounts and confirmation statements are filed on time and late filing penalties, fines and even criminal prosecutions can take place for failures, so please sign up and set up reminders.
DATES FOR YOUR DIARY
1 March 2021 – Construction Industry reverse charge measures take effect after being delayed. The aim of this measure is to combat VAT fraud in the construction sector, known as missing trader fraud, charging VAT on the sale of goods, and then instead of paying this over to HM Customs, simply absconding with the VAT. Further details can be found here.
3 March 2021 – The Chancellor’s Budget Statement.
BE VIGILANT
In these difficult times, scammers and fraudsters will continue to try and exploit the coronavirus pandemic as an opportunity for financial crime, so please be vigilant. For example, HMRC will never request your bank details by phone, email or text. There is expected to be an increase in criminal activity as individuals rush to complete house purchases to beat the 31 March stamp duty holiday. Guard your identity, check post, never make any payments to anyone who rings you, confirm who you are making payments to, check details before giving details or transferring money. A fraud protection checklist is available at https://takefive-stopfraud.org.uk/
ASK FOR HELP
We know that this is a very difficult time for all businesses and some difficult decisions are having to be made. We have spoken to hopefully all of you and if not, we would like you to know that we are here ready to help if you need us to provide advice, deal with queries, or just be a business sounding board.
Please do not hesitate to give us a call - 01452 713277
It's vital that everyone follows the guidelines & remember:
