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 planning should not be acted upon without looking into 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 sole basis for making decisions.
HMRC have been concerned about possible fraud where CIS deductions are set off on the EPS but:
- the business is not operating within the construction industry
- the contractor is not an incorporated business
- the deductions have not, in reality, been suffered, and/or
- the claims are overstated.
So from April 2022 contractors who wish to reclaim CIS deductions via their EPS, will be required to include details of their Corporation Tax Unique Taxpayer Reference (CT UTR) number and the online EPS form will be amended to include an additional field to accommodate this new requirement.
Where an incorporated business is unable to provide a CT UTR, then it cannot reclaim any CIS deductions suffered until after the end of the income tax year.
HMRC systems will be set up to validate the CT UTR number against its records to ensure that the business seeking an off-set is entitled to do so.
SSP Rebate Scheme: Claims Portal Opens
HMRC’s online claims portal is now live.
Provided you have fewer than 250 employees SSPRS covers COVID-related sickness absences occurring from 21 December.
The maximum claim per employee is two weeks at the statutory sick pay (SSP) rate of £96.35 per week (£192.70 in total). The employer’s claim is also capped at the number of employees in its PAYE scheme on 30 November 2021.
The claims portal reopened on 19 January 2022. A claim may not be made after the end of 24 March 2022.
EU’s VAT in the Digital Age Project
The EU Commission is undertaking a public consultation on the VAT in the Digital Age Project covering e-invoicing, VAT rules for the platform economy and a single EU VAT registration.
If the proposals are implemented, this could have a major impact on any business operating with and within the EU.
The proposals have been prompted by the scale of VAT revenue losses estimated at some €134bn per year.
The Commission has put forward the Action Plan consisting of three pillars:
- The modernisation of VAT reporting obligations and the facilitation of e-invoicing;
- Updating the VAT rules for the platform economy; and
- Moving to a single VAT registration in the EU.
Queen’s Platinum Jubilee – Holidays
The late May bank holiday, which would normally have fallen on Monday 30th May 2022, will be moved to Thursday 2nd June 2022 and there will be an additional bank holiday on Friday 3rd June 2022.
However employee contracts could have an impact as it depends on the wording in relation to Bank Holidays especially in relation to the extra day. There may be no obligation to give an additional day.
R&D Tax Relief for implementing new software
Whether or not there is an R&D project depends on whether the project:
- looked for an advance in science and technology
- had to overcome uncertainty
- tried to overcome this uncertainty
- could not be easily worked out by a professional in the field
HMRC accept that the ICT sector is fast-moving with new developments coming onstream very quickly. What is important is that a project represents an advance at the time of development not just for the company itself, but the sector as a whole.
HMRC has specific guidance on software.
For an activity to qualify as R&D it must satisfy the accounting requirements and also the requirements of the Guidelines; where there is a conflict between GAAP and the Guidelines, the Guidelines take precedence.
It is therefore unlikely that buying in software and modifying systems to implement it would qualify for the R&D Relief. You are using established software, not developing it, and modifying your systems is hardly ground-breaking.
Reduced Vat Rate -Empty Dwellings
Where work is carried out to an eligible dwelling that has not been lived in during the two years immediately before the work starts the reduced rate of 5% can be applied.
Where there are people living in the premises whilst the work is carried out there are two empty house rules that can be considered. If one of the rules is met, the reduce rate applies.
Rule 1: the premises have not been lived in during the two years immediately before your work starts, so you cannot move in the day before.
Rule 2: All of these conditions are met:
- In the two years immediately before the occupier acquired the dwelling it had not been lived in.
- No renovation or alteration had been carried out in the two years before the occupier acquired the dwelling
- The building services are supplied to the occupier – not a subcontractor.
- The services take place within one year of the occupier acquiring the dwelling.
This exception to occupation will not apply to the renovation or alteration of multiple occupancy dwellings.
Working from Home Tax Relief
It has been reported that the Treasury and HMRC are looking into the relief and are planning to change the eligibility requirements and how much can be claimed from the scheme.
According to HMRC, since March 2020 the relief has cost the Exchequer around £348.6m however the true figure could possibly be closer to £500m as workers can backdate their claims for the past four years.
In the 2020-21 tax year, 4.9m people successfully claimed the relief although it was estimated that 13.4m people were now working from home.
The relief was introduced in 2003 to help home workers with gas, heating, internet, and other utility bills.
The tax-free relief is £6 a week. Over a year, this adds up to £62.40 for basic rate payers and £124.80 for higher earners.
Tax relief for working from home is there to help people with the additional household costs of having to work from home. However, many are saving money from not travelling.
HMRC are now looking at this relief and it is clear that they want to restrict its us and thereby the cost to the government.
HMRC – £2000 for Childcare Costs
Tax-free childcare is a 20% childcare top-up which provides eligible working families with up to £500 every three months (or £1,000 if their child is disabled) towards the cost of holiday clubs, before and after-school clubs, childminders and nurseries, and other accredited childcare schemes.
It is available for children aged up to 11, or 17 if the child has a disability. For every £8 deposited into an account, families will receive an additional £2 in government top-up.
Parents and carers can check their eligibility and register for Tax-Free Childcare via GOV.UK.
By depositing money into their accounts, families can benefit from the 20% top-up and use the money to pay for childcare costs when they need it. Accounts can be opened at any time of the year and can be used straight away.
Tax-free childcare is also available for pre-school aged children attending nurseries, childminders, or other childcare providers.
Childcare providers can also sign up for a childcare provider account via gov.uk to receive payments from parents and carers via the scheme.
Each eligible child requires their own tax-free childcare account. If families have more than one eligible child, they will need to register an account for each child.
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