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 Cuts Helpline Services or Do They?
HMRC announced that the self-assessment phoneline will close between April and September the VAT and PAYE helplines will be cut back and you will be directed to the online services.
HMRC closed their self-assessment helpline for three months from 12 June which was seen as a temporary measure. The new cuts in services are announced as permanent so that between October and March, the self-assessment helpline would be open to deal only with priority queries. Everyone else will be redirected to online services.
They also announced that the VAT helpline would be open for five days every month ahead of the deadline for filing VAT returns and the PAYE helpline would no longer take calls relating to refunds.
The restriction of services to certain times and dates would cause high demand and long waiting times.
These cuts in services were despite criticisms levelled at HMRC by the Public Accounts Committee and were seen by some as an indication that HMRC can’t cope, being starved of the resources it needs to properly fulfil its role.
But less than 24 hours later, the changes to the Self-Assessment, VAT and PAYE helplines that were announced are being halted while HMRC engages with stakeholders about how to ensure all taxpayers’ needs are met as the department shifts more people to online self-service in the longer term.
The Treasury Committee has stated that the planned changes to the operation of HMRC’s phone lines have been mismanaged from the beginning and questions still remain over the extent to which the department is prioritising its own needs over those of law-abiding and vulnerable taxpayers.
It is the second such U-turn within a matter of weeks, following the government’s decision to reverse new guidance that classed double-cab pickups as cars rather than vans.
What sort of mess are they in?
Post Office Compensation Payments.
The Treasury confirmed that no income tax, capital gains tax, national insurance contributions, corporation tax or inheritance tax will be payable on compensation for postmasters affected by the Horizon scandal.
The exemption from tax will affect compensation payments made to postmasters whose convictions are overturned by the Post Office (Horizon System) Offences Bill or by those who benefit from a £75,000 fixed sum payment on the Horizon shortfall scheme.
The government will legislate via secondary legislation to exempt these payments in due course.
MTD for Income Tax – Pilot Coming Soon
The pilot is for agents and accountants to trial out the Making Tax Digital for Income Tax Self-Assessment reporting environment. It will start in April.
The pilot will go live from 22 April 2024 and HMRC has written to tax agents and accountants asking them to get involved with the first phase of the trial, which will be targeted at firms with clients who are self-employed or landlords with an annual income over £50,000.
These groups will be legally required to start keeping digital records and send quarterly updates of income and expenditure to HMRC using compatible software from April 2026. The system will be extended to those with an annual income over £30,000 from April 2027.
Minimum Wage and Sick Pay
Statutory sick pay, maternity and national minimum wage are all set to change from April.
| Ages | Old rate | New rate |
| Workers aged 23 and over | £10.42 | – |
| 21‒22-year-olds | £10.18 | – |
| Workers aged 21 and over | – | £11.44 |
| 18‒20-year-olds | £7.49 | £8.60 |
| 16‒17-year-olds | £5.28 | £6.40 |
| Apprentices under 19, or over 19 and in the first year of the apprenticeship | £5.28 | £6.40 |
Statutory sick pay will also rise from 6 April 2024 from £109.40 to £116.75.
The will also be increases in statutory maternity, adoption, paternity, shared parental and parental bereavement pay.
NIC Abolition
Jeremy Hunt faced MPs on the Treasury Committee yesterday about Sunak’s remark about the
Jeremy Hunt told the Committee: ‘We’re not putting a timeline on it, this is a long-term ambition to make work pay in the British economy, it’ll be the work of many parliaments and we will make progress, but only when it’s affordable to do so.
‘We won’t do so at the expense of public services, and we won’t do it through borrowing.’
He continued by saying that this is going to be the work of many parliaments and depends on such factors as the growth of the economy.
He said: ‘We want to bring down tax on work and the unfairness of double taxation on work because that brings more people into the labour market’.
He remained silent on the question of funding this policy.
HMRC and Double Cab Pickups
On 12 February 2024, HMRC announced that, from 1 July 2024, it would no longer follow VAT rules in determining if a vehicle is a car for the purposes of the benefit-in-kind (BIK) and capital allowances rules.
On 19 February 2024, however, HMRC announced that its new guidance would be withdrawn.
A vehicle is therefore treated as not being a car for VAT if it has a payload of one tonne or more.
Double cab pickups will now continue to be treated as goods vehicles where they have a payload of one tonne or more. HMRC states that this U-turn was made in response to feedback from farmers and the motoring industry.
The legislation will be included in a future Finance Bill to ensure that double cab pickups with a payload of one tonne or more continue to be treated as goods vehicles for tax purposes.
Insolvencies increase
The number of company insolvencies in February was 17% higher than a year ago and nearly double pre-pandemic figures.
Compulsory liquidations were up by 35% on February 2023, and administrations were up 54% on the same time last year.
Some of this is seen as resulting from higher interest rates for a sustained period of time after businesses built up high cheap debt in the previous few years.
The worst affected sectors were construction, hospitality, and retail.
Some commentators are predicting a difficult year ahead for business owners with insolvencies continuing to rise..
‘A reduction in interest rates and lower inflation at some point this year should eventually feed through and impact businesses financially.’
Flexible Working Law Change
There will be new flexible working laws in place from 6 April giving employees greater rights to flexible working.
Under the new regime, employees will be able to make two flexible working requests in any 12-month period, instead of the current one.
Employees will have the legal right to make a statutory request for permanent changes to their contract, including when, where and how long they work, from their first day of employment.
Employers must respond to a request within two months unless there is a mutually agreed extension; currently, employers have three months to respond to a request. Employers will also be required to consult with their staff before rejecting a flexible working request. The existing law has no requirement for a consultation.
Employers can of course reject a request, but the rejection will have to comply with seven stated reasons,
Employers aren’t expected to be inundated by a massive influx of new requests just because the right exists from day one: as most employees are unaware of new legal changes.
The new laws are likely to force employers to make adjustments that will ultimately impact the company culture and may require employers to invest in new or different technologies to ensure teams can still collaborate and communicate effectively, irrespective of their physical location.
AI Used to Detect Possible Fraudulent Activity
The government plans to use AI to identify entities registering and bankrupting successive companies to avoid paying debts, i.e. phoenixing.
The system detects suspicious networks, activity and users that warrant further investigation for organised crime and sanctions evasion. The system has been upgraded to take account of 647,000 dormant companies as well as details on 18,000 UK and US-sanctioned entities.
The aim is to detect fraudulent claims on public funds through contracts, grants and loans.
Questions?
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 alan.long@thelongpartnership.co.uk.
