JANUARY E-NEWSLETTER 2023
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 3,275 people filed their self-assessment tax returns on Christmas Day! Peak time was between midday and 1pm (must have been nothing to do while waiting for the turkey to cook!).
As Harbour Key enters into one of its busiest months of the year with tax return season, HMRC has announced that 5.7 million taxpayers still have to file their tax return by the 31 January deadline, or they will face automatic £100 penalties. There are about 12 million individuals who are required to file a tax return, which based on HMRC announcement re the 5.7m means 48% are outstanding, nearly 50%, with less than three weeks to go.
We deal with clients’ returns in order of receipt, and you can guess from the numbers above we also have a considerable number still to complete, in addition to other work, such as VAT returns, transactions etc.
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. In the 12 months to August 2022, HMRC responded to more than 180,000 referrals of suspicious contact from the public, of which almost 81,000 were scams offering fake tax rebates.
If any text is received from HMRC, 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 be repaid.
VAT TO AID CASHFLOW
Following on with our theme of providing our clients with advice and support in these testing times, this month we look at how VAT can help. A recent report found that a quarter of UK small and medium-sized enterprises (SMEs) already have trouble accessing finance from their banks, and lending could become more restricted in the coming months.
Companies looking to boost their cash flow might find solutions in the area of VAT. VAT managed correctly can bolster the liquidity position.
See our full blog by clicking here!
Previous articles to support your business in these testing times are listed below:
- Tax Relief Investment Schemes;
- Employers Helping Employees - STOP AND THINK!;
- Can your pension fund help your business;
- Cost cutting for all Businesses & Individuals;
- Meeting the Workforce Challenge (or at least a contribution);
- Successfully applying for Business Grants.
HMRC TO USE THE REGISTER OF OVERSEAS ENTITIES
The Register of Overseas Entities requires overseas entities, including overseas partnerships, companies and trusts that acquired land and property in England or Wales after 1 January 1999, to register and disclose details of their beneficial ownership. (Scotland and Northern Ireland have separate registers). All overseas owners must sign up to the register by 31 January 2023 or face penalties. More details about the register can be found HERE.
The register will provide a wealth of information for HMRC, who are planning to use it to target tax evaders who may be hiding funds offshore to reduce their tax liabilities. HMRC already uses information obtained through international agreements to identify offshore non-compliance. In addition, to tax evasion, technical areas HMRC will be looking at include the following:
- Since April 2019, gains made by overseas companies on UK non-residential property held as an investment, or from rights or interests in companies that derive at least 75% of their value from UK property or land, have been taxable. This means overseas companies that have disposed of this type of property or entity since April 2019 should have paid tax on any gains.
- Since April 2020, UK rental income received by overseas companies has been subject to corporation tax. This means there may be restrictions on interest that may affect how profits are calculated.
In readiness for a targeted action, HMRC is encouraging overseas companies to come forward to report any unpaid taxes through the worldwide disclosure facility. HMRC requires any overseas entity to make a notification to it before 23 February 2023, that a full disclosure and tax payment will be paid. If the entity has not notified HMRC that they wish to make a disclosure, then penalties will be higher.
ELECTRONIC SALES SUPPRESSION (ESS)
We have reported previously that HMRC are looking into ESS. We have learnt the reason for this is that HMRC has intelligence that software and hardware tools are in circulation to manipulate the sales recorded by an electronic point of sale (EPOS) device, such as a shop till. Traders may think that HMRC won‘t find out about the sales hidden using ESS tools as the transactions are put through the till as normal, but selected sales are not recorded or are deleted.
To ensure the trader‘s bank receipts match the total amount of sales recorded by the till, the card payments for those missing sales are routed through an offshore bank account. In this way both the record of the sale and the revenue disappears. The use of ESS is the modern equivalent of cash-in-hand sales which are never put through the business‘ books. You should check that your EPOS software used in your tills is legitimate and doesn‘t include a facility to manipulate the sales recorded.
If HMRC discovers that your business uses or possesses an ESS tool you will receive a letter asking you to remove the ESS tool and prove that you have done this. If you do not remove the ESS tool when requested you may be charged up to £1,000 as a fixed penalty, and additional penalties of up to £75 per day until you can convince HMRC that the ESS tool has been removed. HMRC will also charge penalties for any inaccuracies and late tax payments where tax has been underpaid due to the operation of ESS tools.
From 6 January to 28 February 2023 HMRC will be inviting businesses to make a disclosure that they have used till systems (such as ESS) to reduce their tax liabilities. If a notification is made in this way any penalties will be reduced. In November HMRC‘s fraud department raided 90 businesses and arrested five people who are suspected of designing and selling the systems. The penalty for supplying ESS tools can be up to £50,000, and that applies for each copy of the ESS tool supplied.
- Spring Budget - The Treasury has confirmed that the Spring Budget will be held on 15 March 2023. In a written statement to MPs, the Chancellor confirmed: ‘I can inform the House that I have asked the Office for Budget Responsibility (OBR) to prepare a forecast for 15 March 2023 to accompany a Spring Budget.
It is hoped that with such a crazy 2022 tax year with three Budgets, that no further tax announcements will be made!
- Capital gains tax (CGT) take up again! – HM Treasury CGT annual take has increased by 27% year on year to £15bn, up from £12bn in the previous year. The main reason for the increase is business owners selling, with the increases in taxes. In 2020 the Government reduced the lifetime allowance of business asset disposal relief (formerly entrepreneurs’ relief) from £10m to £1m. The rise in CGT bills is also due in part to large numbers of buy-to-let investors selling off properties to capitalise on high property valuations, as house prices soared at the end of the Covid pandemic.
- As of 6th January 2023, late tax payment interest increased to 6%.
DATES FOR YOUR DIARY
- 31 January 2023 – filing deadline for 2022 self-assessment returns and personal tax payments.
- 31 January 2023 - Overseas entities that own property in the UK to sign up to the register of overseas entities.
- 15 March 2023 – Spring Budget.
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