JUNE E-NEWSLETTER 2021
HERE COMES THE SUN!
As the Government’s Covid-19 roadmap to opening up continues to roll along, although potentially hitting some bumps in the road with the Delta variant of Covid-19, the majority of team HK have returned to work at Midway House, although we are keeping client meetings to essential only.
The office is open during normal working hours should you need to drop off your paperwork at our door. We can arrange for safe cloud storage for sharing information, if you require this as an alternative to visiting the office.
We have made the decision to cease our Business Forward monthly Covid-19 update, the last being April’s edition. Our dedicated Covid-19 webpage will remain in place, where you can find all our updates over the last 15 months, including a summary of all the current Government support available, which can be found in our March update.
Key updates or reminders will now be contained within our regular monthly newsletter.
VAT ONLINE TRADERS
More changes following the UK leaving the EU are due to take place from 1st July 2021 regarding sales taxes, this time in the main for online traders. If you are an E-commerce business you need to prepare for new EU rules that will remove the VAT exemptions for small and medium sized companies, following changes to the treatment of sales taxes on products from outside the EU. From the 1st July small and medium sized UK businesses lose VAT exemptions for sales worth €22 or less, as all imports into the EU will be subject to the local sales tax. The UK has imposed similar rules for businesses importing into the UK. Businesses will have to register for VAT in the country they are supplying or sign up to a new universal Import One Stop Shop Scheme.
More details can be found at HERE.
We have already assisted clients who are being contacted by European country tax authorities, seeking local sales taxes for supplies they have made.
PLEASE BE VIGILANT
Over the last year, HMRC has received 975,420 referrals from the public of suspicious contact with 552,885 of these relating to bogus tax rebates. This is an increase of 71.3%, with 2019 recording 569,140 referrals. There has also been a huge 1,350% increase in Covid-19 relief scams, as criminals target Covid-19 furlough scheme recipients and businesses, as well as the self-employed. In February 2020, HMRC recorded 34,538 complaints of fraudulent activity rising by 206% with 105,906 complaints reported in January 2021.
HMRC have detected almost 450 Covid-19 related financial scams since March 2020, most were sent by text message seeking to tempt people to respond with information about furlough payment claims. The latest tax scam uses SEISS and comes in a very genuine-looking email from 'no reply @ http://atsfare .com', however as we have advised on a number occasions, the SEISS grant can only be applied for by logging on via a Government personal tax account. Never give your personal information to anyone via text or over the phone, and only via email once you have tested the source of the request and checked it is genuine.
As the tax credit renewal deadline approaches (31st July), HMRC is warning that a surge in scams targeting tax credits claimants is increasing the risk of fraud with more than one million attacks.
Outside of criminals using HMRC or tax scams, clone firm investment scams are one of the latest trends being reported from by FCA (Financial Conduct Authority). Clone firm investment scams are financial operations which involve fraudsters using literature and websites that mirror the details of authorised firms such as pension providers or investment platforms. They’ll try to convince you that they work for a genuine company and use high-pressure selling tactics to get you to buy ‘investments'. These ‘investments’ are worthless and often are not even offered by the company they’re pretending to relate to.
Detail of the current scams, how to protect yourself and report them can be found at the Action Fraud website.
CAPITAL GAINS TAX
The Office for Tax Simplification (OTS) issued its second report on Capital Gains Tax (CGT), at the end of May. The latest paper follows last November’s report (reported in our November newsletter) and makes recommendations to more closely align CGT and income tax rates, and cut reliefs, also making recommendations to simplify CGT reporting.
The report covers several areas of CGT dealing with moving home as part of a divorce, running or investing in a business, or in relation to particular issues affecting land transactions. The OTS has also highlighted a broader concern about the low level of public awareness of the tax, and the extent to which the administrative systems could do more to support taxpayers. As these are all recommendations, and none of the recommendations in the November paper have been implemented yet, or have been discussed further, we will not go into any further detail on the May paper, until we understand if any of the recommendations will take place.
For those who are interested in reading the report, it can be found HERE.
It is corporation tax that has been making the news headlines, with an agreement between the G7 countries, driven by the USA, to create a minimum global corporation tax rate of 15%. The agreement is designed to prevent big tech companies from being able to shift profits around the world to jurisdictions with low tax rates. The agreement looks to make businesses pay tax not only where their headquarters are, but in other countries where they operate. It should be noted that this plan is in its very early stages, with only the G7 countries agreeing, and it will take a significant period of time to implement to make the plan work. At the moment, the UK has the eighth lowest rate of corporation tax in the world at 19% (without getting into the very low tax jurisdictions like Bermuda & British Virgin Islands both British dependant territories), but with the Budget announcement to increase the rate to 25% for profits above £250k in April 2023, the UK will move to about 25th if the increase is implemented.
- HMRC has confirmed that a fifth self-employment income support scheme (SEISS) will be available from the end of July, covering May to September 2021, for those who are still impacted by the pandemic.
- Furlough scheme - From July employers will have to pay 10% of staff wages to anyone on furlough as the Government reduces its level of support.
- VAT payments deferred between 20 March and 30 June 2020 need to either be paid in full or, if VAT-payers wish to join the VAT deferral new payment scheme, the online service is open until 21 June 2021. You may be charged a 5% penalty or interest if you do not pay in full or alternatively make an arrangement to pay by 30 June 2021.
- Landlords can now call-in bailiffs on tenants who have not paid rent as the ban on evictions lifted at the end of May.
The Insolvency Service has been given new powers to sanction directors found to have misused the insolvency process to avoid repaying state-backed, emergency pandemic loans such as the bounce back loan. (Claiming the loan for the business, using the funds personally, then closing the company).
City of London police commenced 50% more fraud probes in connection with the government’s Bounce Back Loan scheme in February. The National Audit Office (NAO) estimated that the taxpayer could lose up to £26bn on the Bounce Back Loan scheme, with more than 1.5m businesses taking out a loan before the scheme closed on 31 March 2021. Due to increased risk of credit and fraud risk related to the scheme, it has been estimated that between 35% and 60% of borrowers could default on the loans. As with furlough and self-employed grant fraud, investigations will be accelerated to prevent the loss of Government funds. We have reported earlier in this newsletter The Insolvency Service is being given powers to target individuals whose businesses have taken a bounce back loan, but then closed the company having used the funds personally. Outside of London, a joint action by the National Investigations Service and Yorkshire Police arrested four people suspected of money laundering for using false information to obtain bounce back loans.
To minimise the risk of an adverse decision or a prolonged compliance check to any Covid-19 Government backed support claimed, please make sure you have your supporting documents and workings in place and any errors are rectified at the earliest opportunity.
DATES FOR YOUR DIARY
PAYROLL & P11d and Employee Share reporting, all of which have forthcoming deadlines.