fbpx

New redundancy protections for furloughed employees

The government has unveiled an important new law that will protect furloughed workers who are made redundant. This will ensure that any employee who was furloughed under the Coronavirus Job Retention Scheme (CJRS) will receive their full basic statutory redundancy entitlement. This amount will be based on their normal wages, rather than the reduced furlough rate. The legislation came into effect on 31 July 2020.

Employees are normally entitled to statutory redundancy pay if they have been working for their current employer for 2 years or more. The exact amount of statutory redundancy pay they are entitled to is dependent on age and length of service (capped at 20 years).

The new law also affects other entitlements, including Statutory Notice Pay which must be based on normal wages rather than employees’ wages under the CJRS, and basic awards for unfair dismissal cases, which will be based on full pay rather than wages under the CJRS. The new legislation does not alter any enhanced redundancy pay provisions as part of an employee’s individual employment contract.

The government has also confirmed that other changes are coming into force that will ensure basic awards for unfair dismissal cases are based on full pay rather than wages under the CJRS.

Source: HM Government Thu, 30 Jul 2020 05:00:00 +0100

£50 bike repair voucher scheme launched

The government has launched a new scheme – open to anyone in England – with a bike in need of repair. The Fix your Bike Voucher Scheme is a new initiative that has been championed by the Prime Minister, Boris Johnson, to help fix old bikes by offering a £50 bike repair voucher towards the total cost of repairs needed. The scheme hopes to provide an alternative to using public transport, reduce short car journeys and keep more people fitter whilst using a socially distanced form of transport.

The scheme opened just before midnight on 28 July when the first batch of 50,000 vouchers were due to be released. It is expected that up to 500,000 bike vouchers will be available in total. However, there have been issues with the website and vouchers are being rolled out in batches in order to reflect the capacity of the bike repairers signed up to the scheme. If you are interested in requesting a voucher, the sign up page is on the Energy Saving Trust website at https://fixyourbikevoucherscheme.est.org.uk/

Vouchers can only be used with authorised bike repairers or mechanics that are registered for the scheme in England. Up to two vouchers can be claimed per household, but only one used per bike. You will need to have the voucher before going to get your bike repaired.

The government is also moving ahead with plans to encourage alternative ways of travelling such as cycling and walking. This includes the provision of pop-up bike lanes with protected space for cycling, wider pavements, safer junctions, and cycle and bus-only corridors in England as part of a £250 million emergency active travel fund.

Source: HM Government Wed, 29 Jul 2020 05:00:00 +0100

How elastic is demand for your products?

Many will remember the empty shelves in supermarkets when lock-down commenced March 2020. In particular, the absence of toilet rolls…

Compare this with supplies of TVs and other luxury goods where there was no noticeable absence of supply.

These examples point to a basic economic theory; that a product with few substitutes (toilet rolls) and where demand is constant, is inelastic.

Products where there is no immediate, compelling need, chocolates or a new iPad, are said to be elastic from a demand perspective.

Why does this matter?

If you sell products that are demand inelastic – toilet rolls for example – there will be less resistance to price increases if supply becomes an issue. Witness the prices we all had to pay for loo-rolls when available earlier this year.

You might like to consider the range of goods and services that your business sells from this perspective.

If most of the goods you sell are demand elastic, price increases will tend to result in a lower volume of sales: customers will simply defer buying until prices reduce.

Alternatively, if supplies of inelastic goods start to reduce, sellers will be able to pass on price increases more effectively, as demand will remain constant. 

It is worth considering these basic facts of economic life when you next consider the range of goods you offer.

Source: Other Wed, 29 Jul 2020 05:00:00 +0100

What are the maximum weekly working hours?

There are working time limits that state the legal maximum weekly working hours that a person has to work. They should not exceed 48 hours a week on average. The maximum hours for under 18’s is fixed at no more than 8 hours a day or 40 hours a week.

The average working hours are calculated over a 17-week period and includes overtime. This means that an employee may work more than 48 hours in some weeks as long as the average over the 17-week period does not exceed 48 hours. A person can choose to work more by opting out of the 48-hour week but cannot be forced to do so or suffer any detriment by not signing. This is known as an opt-out agreement.

There are some exceptions where employees may have to work more than 48 hours a week on average. This includes the following:

  • where 24-hour staffing is required;
  • in the armed forces, emergency services or police;
  • in security and surveillance;
  • as a domestic servant in a private household;
  • as a seafarer, sea-fisherman or worker on vessels on inland waterways;
  • where working time is not measured and you are in control, e.g. you are a managing executive with control over your decisions.
Source: HM Revenue & Customs Tue, 28 Jul 2020 05:00:00 +0100

VAT option-to-tax changes extended

To accommodate coronavirus disruption HMRC temporarily changed the time limit from 30 to 90 days for notifying a VAT option-to-tax for land and buildings. This extension was set to expire on 30 June 2020 but has been extended to 31 October 2020.

The option to tax rules allows businesses to make an election to standard rate the supply of most non-residential and commercial land and buildings. This means that subsequent supplies by the person making the option to tax will be subject to VAT at the standard rate.

The ability to convert the treatment of VAT exempt land and buildings to taxable can have many benefits. The main benefit is that the person making the option to tax will be able to recover VAT on costs (subject to the usual rules) associated with the property including the purchase and refurbishment of the property.

However, any subsequent sale or rental of the property will attract VAT. Where the purchaser or tenant is able recover the VAT charged this is not normally an issue. However, where the purchaser / tenant is not VAT registered or not fully taxable (such as bank) the VAT can become an additional (non-recoverable) cost.

Once an option to tax has been made it can only be revoked under limited circumstances. This includes within a specified 'cooling off' period in the first 6 months. An automatic revocation applies where no interest has been held for more than 6 years and after 20 years has elapsed.

Source: HM Revenue & Customs Tue, 28 Jul 2020 05:00:00 +0100

HMRC to gain new civil information powers

A new measure that will provide HMRC with additional civil information powers is expected to take effect when the Finance Bill 2020-21 receives Royal Assent. The new measure known as a Financial Institution Notice (FIN) will be used to require financial institutions to provide information to HMRC, when requested, about a specific taxpayer and without the need for approval from the independent tribunal that considers tax matters.

Currently it takes HMRC on average 12 months to respond to requests for third party financial information from other tax authorities when an information notice is needed, whereas the target under international standards is six months. The introduction of the new FIN will remove the current requirement for HMRC to obtain approval from the tax tribunal before obtaining information from financial institutions and therefore bring the UK into line with international standards on tax transparency and on the quality and speed of exchange of tax information.

The FIN will be balanced by a number of taxpayer safeguards, including:

  • the information sought will have to be reasonably required for the purpose of checking a known taxpayer’s tax position. For international requests, the information in the FIN will need to be relevant to the administration or collection of tax and the jurisdiction requesting the information would need to have exhausted all reasonable domestic ways to get the information;
  • documents subject to legal professional privilege cannot be requested;
  • HMRC will be required to tell the taxpayer why the information is needed, unless a tax tribunal rules this condition should not apply;
  • an authorised officer of HMRC (someone with the relevant experience and training) will need to approve the decision to issue a FIN;
  • if a Financial Institution does not comply with a FIN, and as a result HMRC charges penalties, the Financial Institution will be able to appeal against the penalties

In addition, HMRC is required to report to Parliament annually on the use of the FIN.

Source: HM Revenue & Customs Tue, 28 Jul 2020 05:00:00 +0100

New measures to tackle promotion of tax avoidance

HMRC has published a series of a consultations together with details of proposed legislative changes to existing anti-avoidance regimes to strengthen HMRC’s ability to further clamp down on the market for tax avoidance.

The proposals include:

  • ensuring HMRC can effectively issue stop notices to promoters, under the Promoters of Tax Avoidance Scheme (POTAS) rules, to make it harder to promote schemes that do not work
  • preventing promoters from abusing corporate entity structures to avoid their obligations under the POTAS rules
  • ensuring HMRC can obtain information about the enabling of abusive schemes (for the purposes of the Enablers Penalty Regime) as soon as they are identified and ensuring enabler penalties are felt without delay when a scheme has been defeated at tribunal
  • ensuring that HMRC can act quickly and decisively where promoters fail to provide information on their avoidance schemes under the Disclosure of Tax Avoidance Schemes (DOTAS).
  • making further technical amendments to the POTAS regime so that it continues to operate effectively and to ensure that the General Anti Abuse Rule (GAAR) can be used to counteract partnerships as intended.

The consultation is open for comment until 15 September 2020. The new measures are expected to be included in the Finance Bill 2020-21.

Source: HM Revenue & Customs Tue, 28 Jul 2020 05:00:00 +0100

Are you due a tax refund?

HMRC’s annual reconciliation of PAYE for the tax year 2019-20 is well under way. HMRC uses salary and pension information to calculate if you have paid the correct amount of tax. The calculation is usually generated automatically by HMRC’s computer systems on what is known as a P800 form. P800 forms are sent out from the end of the tax year with HMRC expecting all forms to be sent by the end of November. The P800 form is also used if you have not paid enough tax so be sure to read the document carefully.

If you are due a refund, the P800 form will usually tell you that you can claim a refund online. Once you complete the claim online, the refund will be paid within 5 working days and will be in your UK account once your bank has processed the payment. If you do not claim the refund online within 45 days, HMRC will send you a cheque payment. 

If your P800 tells you that you will be repaid by cheque, then you do not need to take any further action and you should receive a cheque within 14 days of the date on the P800 Tax Calculation.

If you have not received a P800 form but think that you have overpaid tax then you can contact HMRC to inform them. If HMRC agrees that you are due a tax refund they will send you a P800 form.

You may be able to claim a refund if, for example, you:

  • are employed and had too much tax taken from your pay;
  • have stopped work;
  • sent a tax return and paid too much tax;
  • have paid too much tax on pension payments;
  • bought a life annuity.

We would be happy to assist you in ensuring that you claim back all the money you are owed from HMRC.

Source: HM Revenue & Customs Tue, 28 Jul 2020 05:00:00 +0100

Customs declarations for exporters of goods from 1 January 2021

The Brexit transition period is due to end 31 December 2020. The UK and EU have agreed there will not be any further extensions, although with the COVID-19 outbreak nothing appears certain. As things currently stand, no formal trade deal has been reached with the EU. Consequently, it seems likely that the process for exporting goods to the EU will change from 1 January 2021.

Current guidance published by HMRC states that from 1 January 2021, businesses will need to make customs declarations when exporting goods to the EU. These rules currently apply to exporting goods to the rest of the world, including Switzerland, Norway, Iceland and Liechtenstein. Businesses, especially those that only trade with EU, should be making the necessary preparations for how they will trade with the EU next year. Businesses can make customs declarations themselves or hire a third-party such as a courier, freight forwarder or customs agent.

Some important points to bear in mind are as follows:

  1. Make sure you have an EORI number that starts with GB. You will need an Economic Operator Registration and Identification (EORI) number starting with GB to import/export goods from 1 January 2021.
  2. Check the rules for your type of goods. For example, check what import/export licences or certificates you need, check the labelling and marketing standards for food, plant seeds and manufactured goods and check the rules for importing/exporting alcohol, tobacco and certain oils.
  3. Find out if you can charge VAT at 0% on goods exported to the EU.
  4. There are likely to be different rules if you are exporting goods from Northern Ireland to Ireland.
Source: HM Revenue & Customs Tue, 28 Jul 2020 05:00:00 +0100

Beware £5,000 company fine

As well as filing accounts with Companies House, there is an important requirement to check that the information Companies House has about your company is correct every year. This is facilitated by the filing of an annual company confirmation statement. The confirmation statement was introduced in June 2016 and replaced the annual return. You could be subject to a fine of up to £5,000 for failing to send a confirmation statement. Companies House can also prosecute a company and its officers for failing to file a confirmation statement and the company can be struck off.

A confirmation statement must usually be filed at Companies House once every 12 months and rather than resubmitting data every year the confirmation statement only needs to be updated if you have changes to report. If there are no changes then you just need to confirm the information is correct and submit the statement. The due date is usually a year after either the date your company incorporated or the date you filed your last annual return or confirmation statement. You can file your confirmation statement up to 14 days after the due date.

The following details need to be checked:

  • the details of your registered office, directors, secretary and the address where you keep your records
  • your statement of capital and shareholder information if your company has shares
  • your SIC code (the number that identifies what your company does)
  • your register of 'people with significant control' (PSC)

Any necessary updates to the statement of capital, shareholder information and SIC codes can be made when submitting the confirmation statement. However, the confirmation statement cannot be used to report changes to your company’s officers, the registered office address, the address where you keep your records, people with significant control. These changes must be filed separately with Companies House and this should be done at the same time or prior to submitting the confirmation statement. The confirmation statement can be filed online (at a cost of £13) or by post (at a cost of £40).

Source: Companies House Tue, 28 Jul 2020 05:00:00 +0100

Get in touch

Whether you require a tax return, payroll or a fully supportive accounting service, we are here to help you thrive and get on with business.

Instant quote
Xero on mobile