Every week we take a look at what is trending in the accountancy and tax press and share items that we think will interest you. However, these are only outlines and where they relate to tax should not be acted upon without looking into the them more completely as everyone’s circumstances are particular to them. You need to take specific advice appropriate to your own circumstances. While every effort is made to deliver accurate, informative and balanced articles this content is general in nature and should not be used as the basis for making decisions without seeking further advice and guidance.
You will fall within MTD if your income from property and/ or self-employment totals £10,000 or more.
The turnover threshold is calculated per person for property income, but per business for self-employed income. If you are a sole trader you must aggregate your self-employment income with your property income to check if you exceed the £10,000 limit. But you do not aggregate partnership income.
Thus, a partnership with gross turnover of £10,000 or more must comply with MTD ITSA. However, it is the partnership that must make the MTD ITSA submissions, not the individual partners.
When looking at property, married couples are treated as receiving income from property equally unless they have submitted a form 17 to HMRC.
If either of them is a sole trader they must add their self-employed income to their rental income to decide if they are subject to MTD.
However, if they are in a partnership, their respective profit shares are not added to their rental income.
In contrast, where a property is jointly owned by individuals who are not married or in a civil partnership, those owners are free to allocate the property income between them as they see fit.
Animal Charity – Regulator Steps In
The Charity Commission has disqualified two trustees of the Lincolnshire-based Alternative Animal Sanctuary. Chair of the charity Tamara Lloyd was disqualified for the maximum period of 15 years with the other trustee being disqualified for 10 years.
The remaining funds of the charity totalling £407,000 was distributed to 10 other charities with similar purposes in the area.
The Charity Commission opened its inquiry into the charity in March 2017 to examine serious concerns about the charity’s management. They appointed two Interim Managers to review the charity’s governance and operation. The inquiry found that the total income raised from the charity’s arrangement with a fundraising agency from 2008 to 2020 was over £10m. However, just £1.8m was directly received by the charity, due to significantly high costs and fees of the agreement.
The trustees were not clear with potential donors about how much of their donated funds would go towards the charity’s purposes and failed to comply with their legal duties by not properly overseeing the arrangement.
The Charity Commission’s investigation revealed that there was a complete lack of basic financial controls and separation between the personal finances of the chair and those of the charity.
This caused the charity’s funds to be at risk and resulted in significant losses to the charity which had not been documented as the trustees did not keep adequate financial records and repeatedly failed to comply with their legal accounting responsibilities
The inquiry found that the charity also failed to manage conflicts of interests appropriately and did not have a conflict of interest policy in place, despite its trustee board including three members of the same family
The charity was removed from the register of charities on 28 June 2021.
Is Cryptocurrency Tax Free Income?
HMRC’s official guidelines state that cryptocurrencies are not officially ‘money’ But being paid this way will not provide any tax savings
According to UK legislation, tax is due on someone’s ‘earnings’ and this is classed as money or anything which has a ‘money’s worth’ and this includes cryptocurrencies.
This means that the payment of part of someone’s earnings in a cryptocurrency would need to be converted to Sterling, using the relevant exchange rate at the time of payment and subject to PAYE at the date of payment. It may well also be subject to National Insurance for the same reasons.
It has been announced that Lionel Messi has signed a two-year deal with Qatari-owned Paris Saint-Germain that will earn him $41m (£29.7m) in an annual salary plus bonuses. The club also revealed that Messi’s welcome package includes cryptocurrency Paris Saint-Germain fan tokens.
Plumbers at Risk of MTD Penalties. Are you?
Apparently, plumbers were the most in-demand tradespeople of 2020 and overall, they are the fourth-most in demand trade across all industries and sectors.
A survey of 200 plumbers identified that 83% risk falling foul of penalties when the law is enforced due to not using online apps or software to keep a track of income.
Under the new rules, which come into play in April 2023, any business, sole trader, or landlord with an income of over £10,000 will fall withing MTD and be liable to make quarterly submissions to HMRC.
There are millions of small businesses in the UK and extrapolating these results across the whole self employed community, means that many people will fall foul of the new rules. Also, the number of self-employed may well be at a peak because of the number of lay offs arising from the pandemic.
Its going to be an interesting couple of years. Make sure you don’t become a statistic.
Electric Cars – £30BN Tax Hole
The research published by the Tony Blair Institute for Global Change states that the government needs to act with ‘real urgency’ to create an alternative to fuel duty revenues which will dry up as motorists shift to electric cars.
The report estimates that the number of electric cars will rise from around 100,000 now to 3m by 2025, 10m by 2030 and 25m by 2035.
The Treasury collects just over £40bn in vehicle taxes, with £28bn from fuel duty, £6bn on VAT from fuel and another £6.5bn from vehicle excise duty (VED).
The report states that as battery electric vehicles (BEVs) pay no fuel duty or vehicle excise duty they warn that income will plummet from 2030 when the government bans the sale of new petrol or diesel cars.
The report also said that income from fuel duty would ‘plummet’ by £30bn a year within less than two decades. Without road pricing, this will require ‘tax rises elsewhere’, equivalent to adding 2p on income tax by the end of the next Parliament and 6p in the pound to income tax by 2040.
File Early – Save Companies House Penalties
Companies House has stated that it is continuing to follow Covid-19 government guidelines to work safely which means that it could possibly take longer to process paper documents by post.
Companies House is therefore encouraging businesses to file their accounts online with their online service which is available 24 hours a day seven days a week. It also includes inbuilt checks to help avoid mistakes.
The department states filing accounts can take as little as 15 minutes from start to finish. They also say that once the accounts are filed than you will receive an email to confirm that Companies House has received the accounts and another notifying you when Companies House has registered them.
In order to be able to file online you need a company authentication code and if a business needs a new code than it should request it from companies House and allow five days for it to arrive.
Sending the documents earlier rather than later means that it gives plenty of time to resend them if the accounts are rejected or a change needs to be made.
The responsibility to file a company’s accounts is down to the company director and that businesses and directors could face a criminal record, a fine and a disqualification if the accounts are not delivered on time.
MTD and VAT– the next wave on 6 April 2022
The next intake of VAT-registered businesses will be going into the Making Tax Digital (MTD) online filing regime on 6 April 2022.
Businesses who are already within MTD for VAT (VAT registered with taxable turnover above £85,000) need to remember their ongoing MTD for VAT obligations and ensure they remain compliant and in particular, the requirement for digital link as the HMRC soft landing period has now ended.
If you will be within MTD for VAT from April 2022 (VAT-registered businesses with taxable turnover below £85,000) check your upcoming obligations to join MTD especially the requirement for digital records and MTD-compatible software.
If you are not VAT registered you won’t be impacted by the MTD for VAT changes, unless your turnover breached £85000 in an 12 month period.
Although MTD for VAT will be mandated for all businesses who are VAT registered from their first VAT period starting on or after 1 April 2022, it is possible to voluntarily opt into the MTD for VAT regime now. You could avoid the rush.
HMRC – Scam Warning
You are being urged to remain cautious of digital approaches claiming to be from HMRC, as tax-related scams have almost doubled in the past 12 months.
HMRC warns that these crimes often target the busy, unwary, or vulnerable, but anyone can become a victim.
The coronavirus pandemic had given criminals a “fresh hook for their activity”, with more than 460 COVID financial support scams detected by HMRC since early 2020, mostly by text message.
Furthermore, in the last year HMRC:
- received more than a million referrals from the public about suspicious contact, nearly half offering bogus tax ”rebates” or “refunds”;
- worked with the telecoms industry and Ofcom to remove nearly 2,460 phone numbers being used to commit tax phone scams;
- received 441,954 reports of phone scams in total, 117% up on the previous year;
- reported more than 13,315 malicious webpages for takedown; and
- asked internet service providers to take down 441 COVID-19 scam web pages.
At the end of July 2021, HMRC published a webpage to help taxpayers check that the contact they have received is genuinely from HMRC.
Coronavirus: Filing deadlines
From 6 April 2021, companies must file documents at Companies House by their usual filing deadlines. For their accounts and reports, this means:
- Private companies must file within nine months of the end of their accounting reference period;
- Public companies must file within six months of the end of their accounting reference period.
Companies may, however, apply for a 3-month extension to their accounts filing deadline. Companies that are eligible and that cite COVID-19-related issues in their application, will be granted an extension. It should be noted that the law only allows a maximum filing period of 12 months. Therefore, companies that have already had their accounts filing deadline extended may not be eligible to apply for a further extension.
The temporary changes to filing deadlines for annual accounts and other documents outlined below, introduced to support companies during the COVID-19 pandemic, expired on 5 April 2021.
The Regulations also extended the time given to companies to file:
- the confirmation statement
- details of certain company events such as changes in directors or persons with significant control; and
- deliver details of a mortgage charge
The usual 14-day deadline to file a confirmation statement and to make specific event-driven filings was automatically extended to 42 days. There are no further automatic extensions for confirmation statement or event-driven filings after 5 April 2021; documents should therefore be filed by the usual 14-day deadline.
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