MOVING FORWARD AND FEELING POSITIVE!
April felt like a short month at Harbour Key HQ with the Easter break, or it may have been because we were still very busy dealing with the end of the tax year planning and filing the first 2021 self-assessment returns for our well-trained clients! Some further returns have been filed in the early part of May, a flying start and the team will be chasing our personal tax clients for their 2021 tax return information shortly.
There are definite sounds of positivity from our clients and businesses, a few having received proper unsolicited offers for their businesses (not the “bottom feeder”, chancer offers received through the pandemic), which has meant advising clients on the sale and dealing with due diligence. In addition, April was the first main month where VAT returns had to be prepared and filed following the UK leaving the EU, which generated its own problems/issues that needed to be worked through.
1 April 2021 brought in more making tax digital (“MTD”) obligations for UK VAT registered businesses. These obligations were due to be implemented on 1 April 2020, but postponed due to the pandemic. The new obligations are accompanied by the threat of penalties for non-compliance. MTD is part of the government’s plan to make it easier for businesses to stay on top of their day-to-day accounts and tax reporting, but also a tool to close the tax gap (the tax due compared to tax collected, due to evasion, avoidance and errors). Our latest MTD update, together with dates for the next phases (which includes landlords whose rental income is greater than £10,000) can be found HERE.
RESEARCH & DEVELOPMENT TAX CREDITS
R&D Tax Credits are a Government tax break that enables a company (only companies can claim) to reclaim up to 33% of their R&D costs, even if the project failed. With such a generous tax relief, HMRC are paying attention to claims, and we reported in last month’s tax summary new rules on the level of the relief that can be surrendered for a cash repayment now apply. We have also heard (not seen one yet) HMRC are issuing nudge letters in relation to R&D software claims. The letters are not enquiries and they do not mean that the claim submitted is invalid or incorrect but ask if your R&D claim is valid (similar to the offshore income nudge letters we have written about on a number of occasions). Following some concerns voiced by HMRC a few years ago re whether the software development was really R&D (not just a rebuild of a website) the software sections of HMRC’s R&D manuals were updated to provide guidance on features which might indicate that a claim was not valid. HMRC appear now to be reminding claimants that they should read the software claim guidance before submitting the claim to ensure that only qualifying claims are made.
Should you receive a letter and need to discuss it, please do not hesitate to contact us.
BANKS MAY PASS SAVING DETAILS ON TO HMRC
Above we mentioned the tax gap and HMRC’s attempts to close this gap. One measure being considered is banks and wealth managers being asked to pass client information directly to HMRC, so that HMRC can check against taxpayers’ tax returns. A review by the Office of Tax Simplification has called on financial services firms to offer views on how they might send information on things such as interest payments, dividends and pension contributions direct to HMRC. “Instead of millions of individuals having to provide to HMRC details of potentially taxable income and gains on their investments, the review will consider whether it could instead be uploaded by their investment or wealth management company.”
ANNUAL REPORTING - PAYROLL, P11D & EMPLOYER SHARE SCHEMES.
May is the month when all the annual employer payroll reporting needs to be completed, with all employees who were on the payroll at 5th April required to receive a P60 by 31st May. With RTI reporting, the software makes the production and delivery of the P60 much easier and the majority of these will have been issued already. The more difficult one is the P11D reporting of employment benefits that have not been payrolled, which have to be completed and filed by 6th July. Employers are also required to report to HMRC by 6th July using HMRC’s online system where a director or employee has acquired shares or share options in the previous tax year (to 5 April). In addition, annual returns for approved share option schemes, such as EMI need to be filed by 6th July. Details of what is required can be found HERE.
COVID-19 BUSINESS UPDATE
As we hopefully head towards the end of the national lockdown with the next phase of the roadmap going ahead as planned from 17th May, we continue with our Business Forward Covid-19 Updates. The most recent articles can be found HERE
DATES FOR YOUR DIARY
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 30 June 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.
ASK FOR HELP
We know that this is a very difficult time for all businesses, with constant change and some difficult decisions having to be made. 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 - 01452 713277