HOT SUMMER DAYS ARE HERE!
Welcome to Harbour Key’s July newsletter and hopefully a continuing sunny summer.
As the summer holiday season approaches, we remain busy at HK with a number of business transactions taking place, despite the bleak outlook for the economy with rising inflation and the cost-of-living increases, there are still investment funds and businesses with cash looking for opportunities.
Compliance work (accounts and tax) continues at pace, as we note lenders are wishing to stress test businesses earlier than normal and, with continued interest rate increases, clients are seeking new mortgage deals. Please note that if you are applying for a mortgage or other borrowing, the lenders are seeking up to date information. If your year-end is 31 March, most lenders will now require 2022 year-end results before considering an application and, if we have not been provided the information or started the work, we are unlikely to be able to deliver on demand due to the needs of other clients who have already had their work planned in our schedule and information delivered to us.
Team HK are recruiting due to growth of our client base.
Find out more about our roles and opportunties below.
We are also looking for administration support by way of an apprentice.
BUSINESS ADMIN APPRENTICE.
We are always pleased to hear from potential team members who are seeking a new working environment and career development. Contact Helen or Phil in the first instance.
We continue with our engagement letter update project as reported in the April newsletter. If you have not been contacted yet, your new engagement pack will be coming via our new client portal Onvio and you will receive a link on how to use and access Onvio, which we will use going forward for the secure delivery of client information, as some clients who have already had their self-assessment return completed will have had engagement with the system.
TAX PAYMENT DUE FOR THOSE IN THE SELF ASSESSMENT SYSTEM
Payments on account to HMRC are due by 31 July. We have contacted those clients with reminders and instructions on how to pay. Late payments will result in interest added, with HMRC increasing the rate to 3.75% last week.
COST SAVING & OTHER FINANCIAL HELP
Following on with our theme of providing our clients with advice and support in these testing times, this month we look at cost savings and other financial help which may be available, following May’s article regarding grants and June’s article on tax efficient benefits in kind.
There are many ways to cut costs, and the article provides a number of ideas to start you thinking about what can be considered. A company or an individual can customize their cost saving plan by selecting the right methods for them, managing resources well, minimizing waste and avoiding new expenses. In addition to reducing costs, greater efficiency can boost a company's profits and even decrease environmental impact and so a review of working practices, which may not result in a cost saving, could still increase profits. See our blog.
HMRC TARGETED ACTIVITY
Over the last few months, we have highlighted how HMRC have significantly changed their approach to a more aggressive targeted range of activities. Last month we reported that HMRC had halted the payment of research and development (R&D) tax credits while it investigates irregularities in claims for the relief. HMRC having contacted accountancy firms recently informing them of the decision to pause the payment of R&D tax credits as it investigates what it referred to as ‘irregular claims’ for the tax credit payments, to ‘ensure they prevent abuse of the relief’. This situation has now progressed with HMRC’s Fraud Investigation Service (FIS) sending out letters to businesses indicating that they have fraudulently claimed R&D tax relief and credits. More details can be found on this HERE.
Other recently announced targeted activity being undertaken by HMRC:
- HMRC is working with Puerto Rico authorities to investigate hundreds of UK taxpayers who used the Euro Pacific Bank to evade UK taxes. The Puerto Rico authorities suspended the operations of Euro Pacific Bank, as it alleged the bank used a sophisticated system to conceal and transfer wealth anonymously, enabling individuals to evade their tax obligations and launder the proceeds of crime. HMRC is now investigating the tax affairs of hundreds of UK customers linked to the bank and urge those with connections to the bank to contact HMRC and consider a disclosure under the Worldwide Disclosure Facility.
- HMRC is ramping up anti-avoidance activity against high-net-worth earners who fail to pay tax or submit tax returns. Their information shows that the tax gap for those with income greater than £200,000 or assets of more than £2m was estimated at £1.2bn in the 2020/21 tax year. The tax authority’s Wealthy External Forum has announced they are in the process of sending reminder letters to wealthy taxpayers who have yet to file tax returns for 2018-19, 2019-20 and 2020-21, failure to act is likely to lead HMRC to escalate matters, and they may commence a full-scale investigation.
- HMRC are contacting non-UK domiciled taxpayers (remember the news a couple of months ago re the then Chancellor, Rishi Sunak’s spouse) and their tax agents about the remittance basis charge. Data from self-assessment returns indicates that there are around 100,000 individuals who benefit from the remittance basis. HMRC believe those claiming non-UK domicile status are not fully up to speed with the rules, and the letter states the steps required, allowing taxpayers time to amend their 2020-21 tax returns. It is important that recipients make any amendments to last year’s return (the 2020/21 return) within 60 days of receiving the letter to avoid a tax enquiry.
Details of other target activities being undertaken by HMRC can be found in our article in our April Newsletter HMRC Takes The Gloves Off and last month’s newsletter.
The Trust Registration Service (TRS) is a register of the beneficial ownership of trusts. It was set up in 2017 as part of an EU anti-money laundering directive aimed at combatting money laundering, serious crime, and terrorist financing. All UK express trusts liable to pay UK tax were required to register. New rules came into force in October 2020 that require all UK trusts, apart from a few exceptions and some non-UK trusts in existence on or before 6 October 2020, to register with HMRC by 1 September 2022, including trusts that have closed since that date.
The new rules have widened the TRS to all UK trusts including ones not liable to tax unless the trust is specifically excluded, which is not many - pension schemes, charitable trusts (both of these are reportable on other registers), will trusts that are wound up within two years of death, policy trusts paying out on death or critical illness and existing trusts with a value of less than £100 created prior to 6 October 2020. This means basically anything else, for example if you are holding shares for another, for example an adult holding shares for their child under a simple bare trust arrangement until they reach 18 – this is reportable.
- Interest Rates - Following the increase in the Bank of England base rate to 1.25% at the end of June, HMRC has confirmed that it will raise interest rates on late tax bills by a further 0.25%. Late payment interest rate increases to 3.75% from 5 July 2022. This is the highest rate since the height of the financial crisis in January 2009.
- £20 & £50 Notes - The Bank of England will be withdrawing legal tender status of the old paper £20 and £50 banknotes at the end of September. After 30 September, paper £20 and £50 banknotes will no longer be legal tender. Anyone who still has old paper notes needs to use them or deposit them at their bank or a Post Office during these last 100 days. In total, there are over £14bn worth of old paper notes still in circulation.
- Tax credits - Claimants will shortly be receiving their annual renewal pack from HMRC asking them to check their details to renew claims. You must tell HMRC about any changes to your circumstances or if anything in your pack is incorrect. You must renew your tax credits by the date shown on your renewal pack. For most people, the date is 31 July 2022.
DATES FOR YOUR DIARY
- 19 July 2022 - Employer non-electronic payments of Class 1A NICs for 2021/22 on benefits returned on a declaration of expenses and benefits
- 31 July - Tax credit renewal deadline.
- 31 July - Second payment on account.
- 5 October 2022 - Deadline for Self-Assessment registration to notify chargeability of Income Tax/Capital Gains Tax for 2021/22.
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