Happy New Year
We hope you all had an enjoyable festive break.
Some individuals had a very enjoyable Christmas break, HMRC data shows that almost 3,000 people filed their self-assessment tax returns on Christmas Day! Across Christmas Day and Boxing Day, 31,000 taxpayers filed their returns.
As Harbour Key enters into one of its busiest months of the year with tax return season, HMRC announced an extension of the 31 January filing deadline by waiving late filing penalties by one month to 28 February. Late payment penalties have also been waived until 1 April. However, please note that this is not as generous a gift as it appears:
- Late payment interest will be charged on payments not made by 31 January, which has been increased to 2.75% following the rise in the Bank of England rate. (So as a minimum an estimated tax payment should be made, if not filing a return).
- By failing to file a tax return by 31 January, the enquiry window for the return will be extended until 30 April 2023, as opposed to 31 January 2023. This gives HMRC more scope to look at the return.
- We at Harbour Key will also have to consider our workload position if any overrun to February, as we have already factored completing self-assessment returns in January to enable other work to be commenced, as well as having to cope with staffing issues related to the increased covid infection rate.
HMRC is advising that anyone who cannot, or will struggle, to pay their tax liability to set up a Time to Pay arrangement with HMRC by 1 April 2023. Failure to do so will result in a late payment penalty.
It should also be flagged that the 2021 tax return is required to report any covid support grants or payments received, which are taxable. As we have reported previously, HMRC are also looking at crypto assets.
Another popular area arising from the growth in home working as result of the pandemic will be “home as office” claims, which can be included as part of the self-assessment return. Our blog below gives more detail on use of home as office.
We would also warn our clients to be careful at this time of self-assessment tricksters. HMRC sends emails and texts to taxpayers as reminders, but be on your guard.
Last year 800,000 tax-related scams were reported.
If any text is received from HMRC, or calls advising that a payment needs to be made, or a repayment is due, requesting bank details, speak to us before taking any action. We will be aware of what you have to pay or are entitled to receive.
OMICROM BUSINESS GRANTS
Businesses in the hospitality and leisure sectors in England will be eligible for one-off grants of up to £6,000 per premise, plus more than £100 million of discretionary funding will be made available for local authorities to support other businesses. Government will also cover the cost of Statutory Sick Pay for Covid-related absences for small and medium-sized employers across the UK. As previously, these grants will be operated by the Local Authorities.
SMALL & MEDIUM SIZED BUSINESSES LATE PAYMENT CRISIS
The Federation of Small Business (FSB) is warning that a worsening of the UK's late payment crisis, high inflation and mounting admin for firms that trade internationally (see below re further changes) will cause the business community to further shrink in size if left unaddressed, as it releases fresh findings from its quarterly Small Business Index (SBI).
The study of more than 1,200 business owners finds that close to one in three (30%) has seen late payment of invoices increase over the last three months, with a further 8% experiencing other forms of poor payment practice. In addition to late payment, 78% reported business costs rising, which was adding to cash flow pressure. The FSB survey is nothing different from what we are hearing from our clients who are experiencing flashpoint after flashpoint:
- From the 1st Jan, as set out below, a new wave of admin for importers and exporters took effect;
- From 1st April the increase in national insurance contributions, the rise in dividend taxation, increase in business rates bills and an increase in the national living wage;
- In addition to the above, operating costs are surging, including energy and fuel.
As we always advise, cash is king, cash flow is of vital importance to the health of any business, and with the current pressures on businesses, this is more important than ever. See our tips for managing cash HERE.
FULL CUSTOMS CONTROLS STARTED ON 1 JANUARY 2022
New requirements were introduced for importing some sanitary (human and animal health) and plant health (“SPS”) goods, such as meat or plants, into the UK from the EU from 1 January 2022. Pre-notification will be required for imports to the UK of most products of animal origin, animal by-products, high risk food not of animal origin and regulated plants and plant products from the EU. Businesses (or a representative acting on their behalf) importing these goods from the EU may be required to pre-notify authorities on the relevant IT system that their consignment will be entering the UK. All current controls, including pre-notification, for products of animal origin under safeguard measures, live animals and high-priority plants and plant products remain unchanged. Full customs declarations were also introduced on 1 January 2022. More information can be found HERE.
HMRC PAID £2M TO TAX INFORMANTS
Over the last five years, HMRC has paid out nearly £2m to informants who reported incidents of tax-evasion, and almost £400,000 in the last financial year. With an estimated £6bn lost from Government covid support schemes rolled out during the pandemic, HMRC is urging individuals with information about suspected tax fraudsters to come forward. It has been reported that there has been a 27% rise in Covid-19 self-employment fraud cases in the last three months. With the rush to file self-assessment returns, many taxpayers may forget that they are required to report and pay tax on the Government financial support received, with designated spaces on the self-assessment return. Failure to report and pay tax, is likely to be taken seriously by HMRC, who are urging those who claimed support in error to make a disclosure and repay the funds received.
DATES FOR YOUR DIARY
- 31 January 2022 - filing and payment deadline for 2021 self-assessment returns and personal tax payments.
- 1 February 2022 -payment deadline for Corporation Tax liabilities due for year end accounts April 2021.
- 7 February 2022 -VAT filing deadline for quarter ending 31 December 2021.
Should you wish to speak with us about a specific matter, or just to be a sounding board or for a chat, please do not hesitate to give us a call.
Please do not hesitate to give us a call us on 01452 713277