Readers will have noted a common theme through our newsletters over the last few months, re the performance of HMRC and banks.  Unfortunately, the position with both is not getting better, as reports have shown!


A recent survey regarding HMRC performance found that three quarters of people who phoned HMRC in February had to wait an average 24 minutes for their call to be answered, with 650,000 calls abandoned.  1.3m callers managed to get through to an HMRC adviser, with a third (656,622) of callers giving up.

As part of HMRC’s drive to reduce reliance on phone lines and promotion of the webchat service, HMRC’s web bot was used 130,000 times in February, accounting for 4.4% of interaction with HMRC. This compares to only 51,000 interactions in April 2023. We have had periods where HMRC’s phone lines are closed, and announcements made encouraging taxpayers to use webservices etc, it is clear in our view that HMRC will gradually reduce advice and support services, with taxpayers having to rely on web-based interaction. This will enable resource to be diverted to enquiries, checks and investigations, which has we have reported on many occasions is being targeted and driven by information obtained via its AI driven software known as Connect. Our recent blog re HMRC services can be found HERE. 

If you wish to have some input in respect of HMRC services, The Administrative Burdens Advisory Board has a survey running regarding performance, in particular for small business. The survey can be found at HERE


A report by the House of Commons Treasury select committee concluded, “banks must stop making life tough for small businesses.” Unfair banking practices, inadequate regulation, and barriers to accessing finance for smaller businesses are posing a risk to growth and innovation in the UK are the conclusions of the report.  The committee recommends giving the Financial Conduct Authority powers to force banks to disclose the number of accounts they close and the reasons behind the decision. It also suggests giving the Financial Ombudsman Service new powers to address unfair requests for guarantees. The committee urges the government to crack down on debanking and raise the minimum notice period for bank account closures.

The report aligns with the experience of team Harbour Key, with banks increasing the level of requests and information required from accountants.  The first week of May, we had one request every working day but one, and on that one day, we had two!  Most of the time these requests are not simple, take time and generally lead to follow-up requests, which diverts us from doing our proper jobs, and on occasion we have to charge.


May is the month when a number of employer returns will need to be submitted, in the run up to the 6 July deadline for employee benefits, and employment related securities/option scheme reporting. 

  • All the annual employer payroll reporting needs to be completed and all employees who were on the payroll at 5 April are required to receive a P60 by 31 May;  
  • Employment benefits (company car, medical insurance, cheap overdrawn loan accounts, etc.) which have not been payrolled, have to be reported via the form P11D and filed by 6 July.

Employers are also required to report to HMRC details of directors or employees acquiring shares or being granted share options in the tax year (to 5 April), by the following 6 July using HMRC’s online system. In addition, annual returns for approved share option schemes, such as EMI, need to be filed by 6 July. These returns can only be filed electronically, which means the employer will need to have set up online access, which takes a few weeks.  The Employment Related Securities service is part of the PAYE Online for employers’ service. More detail can be found HERE. 

Please note that reporting and payment of income tax and Class 1A NICs on benefits in kind will all have to be made through payroll software from April 2026.  The reporting change to employment benefits will be mandatory and is part of HMRC’s plans for a move to a digital first tax authority. We have raised this change in pre-year end meetings, and many clients have already changed to payrolling benefits.

From recent experience, Employment Related Securities (“ERS”) is becoming a major issue in respect of transaction due diligence, the implications of which can be catastrophic, when an employee who has been incentivised with shares believing on a sale that they will be subject to lower rate capital gains tax (10% or 20%), only to be told that income tax and national insurance applies at 47%!  We would highly recommend that you take a look at our article regarding ERS which includes a case study, so you can avoid getting into difficulties.  See our full blog HERE.


Despite high lending interest rates (bank base rate still at 5.25%), the official rate of interest for beneficial loan arrangements like director’s loans is to be held at 2.25% for the second year running. This seems strange, taking in to account that the HMRC interest rate for late tax payments has been 7.75% since August 2023. You would normally expect with a high base rate, the HMRC rate to be similar, when bank base rate fluctuated between a rate of 5.25% and 5.75% in the 2007/08 tax year, the official rate of interest was set at a level of 6.25% in the same year and 6.1% in the subsequent tax year.

Harbour Key clients will come across this interest charge, where they have an overdrawn loan account at year-end having borrowed funds from their company on which interest has not been charged, and the loan has not been repaid within nine months of the year-end. The HMRC rate of interest is charged, giving a taxable benefit that has to be reported via form P11D. (Please don’t charge interest, and then roll it up, adding to the loan, thinking this avoids the benefit in kind charge. It doesn’t, interest has to be paid).



Analysis by wealth manager Charles Stanley shows that a fifth of UK start-ups are initially funded by an inheritance, thereafter:

  • 19% cash from parents;

  • 14% family trust;

  • 10% cash from grandparents.

The survey also shows that a number of small business owners have turned to their families to fund growth once the enterprise is established, with 15% using an inheritance and 13% relying on their parents.

Although it is assumed that Charles Stanley as a wealth management business, surveyed its wealthy clients, their results are no different from Harbour Key’s view, who also see the first people to invest in start-ups are the three fs, friends, family and fools!  However, we would recommend seeking advice at this early stage, making sure the legal documents supporting the family investor engagement, (the investor agreement and/or shareholders agreement) are in place to minimise business/family disputes down the road. Although close family members connected to the founder(s) of the Company can’t benefit, it may be possible for other family members (and friends) to benefit from tax efficient reliefs available under either the Seed Investment Scheme or Enterprise Investment Scheme.


Onvio: A secure communication hub for streamlined interactions and electronic signatures.

Experience seamless communication and secure data sharing between Harbour Key and you through your Onvio hub. Used by Harbour Key for transmitting engagement letters, annual accounts, and self-assessment returns, Onvio also facilitates clients in securely transferring confidential personal information and electronically signing documents.

As part of using Onvio and familiarising self with its functionality, we would encourage all clients to set up a Client Centre account to get the maximum benefit from the systems, including being able to retrieve documents a later date. (Think mortgage broker requesting sets of accounts).  We will be pushing clients to use the portal, as GDPR rules tighten.

  • Key tax dates for the period 1 May 2024 to 31 July 2024 can be found HERE!