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 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 sole basis for making decisions.
New VAT Deadline – 1 November
From 1 November VAT registered businesses will have the choice of either using MTD-compatible software or facing penalties. HMRC are closing the facility on their portal for you to enter your VAT return figures manually.
The closure will inevitably catch out many smaller businesses who thought they had found a way to avoid using compatible accounting software.
The facility will still be available for businesses that file annual returns until 15 May 2023.
The message from MRC is that the best way for businesses to avoid penalties is to start using MTD now and that businesses that fail to do so will be hit with a default surcharge or late submission penalties and interest from January 2023.
Businesses that haven’t signed up to MTD VAT are being instructed to first choose MTD-compatible software such as QuickBooks, enable it to work with MTD, and then sign up for MTD and start filing their returns after 1 November.
The Help to Grow: Digital option
For businesses that currently don’t use MTD software, you may get a discount by taking advantage of the Help to Grow: Digital scheme which offers a 50% discount on digital technology of up to £5,000. QuickBooks is eligible for the scheme.
The VAT online account remained open for businesses under the £85k threshold to file their returns, to allow them time to get software and to sign up to MTD.
Employer Sued over Drinking-Game Brain Injury
An employee is seeking damages from a firm of accountants (not us) after an incident during a work event resulted in a serious head injury. This was a planned social event of drinking with colleagues.
The team were celebrating the end of the busy season with a round of pub golf, a drinking game that challenges players to stop at nine different drinking establishments or “holes” and have at least one drink at each venue. This game in particular also rewarded those involved for the speed in which they consumed their beverages leading to, as court papers noted, “excessive consumption of alcohol”.
The employee contends that this left him “so intoxicated” that he couldn’t remember the events that lead to him being found lying in the street after his fall. The employee claims that his manager who organised the drinks, had added additional pressure to attend the event,
The case is yet to be heard but if the employee is successful, could this put an end to office social events?
MTD for income tax – Recent Updates
The basic legislation says that taxpayers with property and trading income must keep digital records, make periodic submissions and submit an End of Period statement.
The appointed day when MTD for income tax goes live is 6 April 2024.
The current regulations do not apply to partnerships but these are expected to join MTD in 2025 or later.
There are three digital requirements:
1. Record digital records and preserve them for the required period.
2. Provide quarterly updates.
3. Provide an end of period statement (EOPS).
You are required to us “ functional compatible software” which basically means that once you enter your transactions, there is no more re-keying or cutting and pasting. The software takes care of everything including submitting the quarterly updates.
For property and trading businesses with a turnover less than £85,000, it is still possible to file what is known as “3-line accounts” so just showing total income less total expenses. There is a school of thought that says that as a result you do not need a digital records listing setting out all the various categories of expenditure that would be required for a larger business. However, this is by no means certain and we will need to wait for this to be clarified in due course.
If HMRC does allow this, they could see a huge uptake by sole traders filing 3 line accounts.
An end of period statement (EOPS) is required for each tax year which must be uploaded to HMRC by 31 January after the end of the fiscal year.
An EOPS will be required separately for each trade or property business. The Property EOPS will cover UK FHLs, UK other rentals, overseas FHLs and overseas rentals.
The EOPS will include a declaration confirming that it is correct and complete just like your tax return at the moment.
The MTD ITSA requirements must be met from 6 April 2024. Taxpayers who are eligible to sign up to MTD ITSA will need to first submit their self-assessment tax return for 2022/23 by 31 January 2024. HMRC will review that return and check if your qualifying income is more than £10,000. HMRC will then write to you and inform you of your requirement to sign up.
Filing Accounts at Companies House
‘It’s the directors’ responsibility to file a company’s accounts, generally within 9 months of the year end.
For those that cannot file online, Companies House will still accept paper accounts but they take longer to process. You should only send paper accounts if your company cannot file online.
If a business is filing a company’s first accounts and those accounts cover a period of more than 12 months, they must be delivered to Companies House within 21 months of the date of incorporation for private companies, or three months from the accounting reference date (whichever is longer); or
Failure to deliver accounts on time is a criminal offence. In addition, the law imposes a civil penalty for late filing of accounts on the company.
Late filing penalties are as follows:
|Length of period||Private company|
|Not more than 1 month||£150|
|6 months plus||£1,500|
The penalty is doubled if you are also late in the next year.
Tax Plan for Incoming PM
The President of CIOT (The Chartered Institute of Taxation) Susan Ball has written to the two Tory hopefuls setting out three priorities for the tax system which the new prime minister needs to prioritise.
- Poor performance levels at HMRC – Currently, HMRC’s performance standards are well below expectations and need to be improved if HMRC is to play its essential role in supporting taxpayers and businesses, according to the letter. The CIOT believes that a properly funded and efficient HMRC is vital to the future of the UK, ensuring that tax revenues are collected efficiently and properly.
- MTD – CIOT is also calling for a review of existing digitalisation plans as part of the Making Tax Digital programme in view of the significant technical challenges to be addressed and currently limited choice of approved software available to taxpayers. As a result there should be an early review of the current MTD programme and its implementation timetable.
- Tax simplification – CIOT is calling for a more ambitious tax simplification agenda to reduce the complexity of tax rules. The CIOT added that the UK tax system has become far too complicated for taxpayers to understand and comply with. As a result, a complicated tax system is far harder to digitalise, as well as making it more challenging for HMRC to administer it effectively.
Liz Truss initially said she would hold an immediate emergency Budget but this has now been reframed as a ‘significant fiscal event’. Rishi Sunak would also need a budget in view of the present financial issues affecting the population of the UK.
The Treasury Committee is calling for assurance that the Treasury is assisting the OBR on a forecast to be published alongside any emergency Budget or significant fiscal event. It is the Committee’s view that this should at least include all changes to government policy and economic and fiscal data up to the date the new Prime Minister assumes office on 5 September.
In a letter to the OBR, the Committee asks what forecasting would be possible in the time available, including costings of any measures announced by the new Prime Minister, and any new measures included in an emergency Budget.
Mel Stride MP, chair of the Treasury Committee, said: ‘OBR forecasts provide transparency and reassurance to the markets on the health of the nation’s finances. The reassurance of independent forecasting is vital in these economically turbulent times. To bring in significant tax cuts without a forecast would be ill advised. It is effectively ‘flying blind’.’
Scale-up Visa set to Expand Business Growth
The government has launched a two-year visa programme to help businesses employ highly skilled staff, including accountants and financial advisers, from abroad
The scale-up visa will allow businesses to employ high-skilled individuals who will receive two years’ leave to remain in the UK without requiring further sponsorship or permission beyond the first six months.
Unlike other sponsored visas, individuals are only required to work for their sponsors for six months and are free to also take other types of employment, providing they continue to undertake their sponsored job.
Those applying for the scale-up worker visa will need to pay a £715 application fee, a healthcare surcharge of £624 per year, alongside providing at least £1,270 for financial support when they arrive in the UK.
Applicants will have to meet eligibility requirements, including a job offer from an approved scale-up business lasting a period of six months, alongside holding a certificate of sponsorship from their employer. They must also meet the English language requirements.
Sponsors will also have to pay applicants a salary which equals or exceeds £33,000 per year or £10.10 per hour.
Eligible occupations include chartered and certified accountants, finance and investment analysts and advisers, alongside a range of others – over 34,000 businesses currently meet the criteria.
If you have any questions about any of these, you know where to find us. If you prefer, just give me a ring on 07770 738770 or email me at email@example.com.