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.

 

 

Congratulations Karen!

Chartered accountant Karen Scholes is the latest president of the Institute of Chartered Accountants of Scotland (ICAS), the sixth woman to hold the role in 171 years.

Karen began her career in the family firm, AJB Scholes, founded by her father and headquartered in Orkney and now with offices in Kirkwall, Edinburgh and Aberdeen.

She graduated from Napier University in Edinburgh, where she gained a BA in accounting in 1984, then trained with Whitelaw Wells. In 1988, she qualified as a CA and returned to Orkney to manage the family firm, incorporating the business in 2008.

ICAS is the world’s oldest professional accountancy body

The Long Partnership is also headquartered in Orkney with 5 offices in Kirkwall, Thurso, Inverness and two in Elgin and currently with around 40 staff in all.

We are delighted to see Karen appointed as President of ICAS and to be recognised for her contribution to the accounting profession in Scotland.

 

 

HMRC Cuts Postage

HMRC is committed to modernisation and becoming a digital first organisation.

One of the ways of achieving this is by moving to contacting taxpayers via email and SMS, estimated to save £50m a year by 2028-29.

The email and text notifications will only be sent to HMRC app users, and alerts will be sent when new documentation or information has been uploaded to the individual’s app by HMRC.

Uptake of the HMRC app has been relatively strong, with 1.7 million people using the app each month.

The text and email approach could potentially increase fraudulent activity, as previously HMRC has been clear that it will never contact taxpayers via SMS or email, but now if people are expecting it, they could become less wary of being contacted this way.

HMRC also plans to simplify the language used in the letters. This will apply to both bespoke, and generic letters.

From June 2025, HMRC is going to stop issuing six different corporation tax letters deemed as ‘non-essential’, again to reduce the overall number of letters sent out and reduce costs.

There are also plans to make it clearer to taxpayers when they need to register for a self-assessment tax.

The HMRC app is available for Android and IOS users. If you have not downloaded it yet, we recommend that you do. This is a very useful and easy to use tool.

 

 

The Accountant 2

The Accountant 2 is the sequel to the 2016 Warner Bros. Films’ release starring Ben Affleck who stars as Christian Wolff, a reserved but wily accountant, who recruits his rogue younger brother to help hunt down the murderer of his friend, a director from the US Treasury Department.

Affleck is accountant to a major crime gang who ends up the other side of the desk in the original, and this time teams up with his brother, Brax, played by Jon Bernthal to get revenge.

Wolff has a talent for solving complex problems. When an old acquaintance is murdered, leaving behind a cryptic message to ‘find the accountant’, Wolff is compelled to solve the case.

Wolff recruits his estranged and highly lethal brother, Brax, to help.

The film opens on 25 April at cinemas around the country.

Watch the trailer for The Accountant 2.

 

 

Living Wage

The real Living Wage is a voluntary initiative that employers can choose to join, which seeks to improve the pay of those in typically low-paid sectors.

When setting its rates, it focuses on the needs of the employee, rather than the employer, and tries to reflect the actual cost of living.

Unlike the national minimum wage (NMW), there are separate rates for London and the rest of the UK.

There is no legal obligation to pay the real living wage. Employers who choose to do so can receive accreditation from the Living Wage Foundation.

There are currently over 15,000 accredited employers in the UK.

The new living wage rates were announced on 23 October 2024, and employers wishing to maintain or gain an accreditation have until 1 May 2025 to implement them. The rates apply to all workers aged 18 and over and are:

• £12.60per hour for the UK
• £13.85 per hour in London

 

 

International Employees

Changes came into effect from 6 April 2025 for operating pay as you earn (PAYE) for globally mobile or treaty non-resident employees, and also overseas workdays relief.

Where an employee works both in and outside of the UK, it is possible for the employer to apply to HMRC for a direction to only operate PAYE on the UK proportion of the employee’s earnings.

Up to 5 April 2025, HMRC approval was required before the employer could operate the reduced withholding. From 6 April 2025, the employer can operate reduced withholding as soon as they submit a notification and HMRC acknowledges receipt.

All existing determinations are no longer valid, and new notifications for tax year 2025/26 must be submitted.

Overseas workdays relief is a relief on earnings relating to overseas employment duties, where certain conditions are met. Some globally mobile employees will still be, or will become entitled to, overseas workdays relief under the new foreign income and gains (FIG) regime. Other taxpayers may no longer meet the eligibility criteria for the relief.

• Overseas workdays relief under the FIG regime is available for the first four years of UK tax residence rather than the year of arrival plus the following two tax years.
• New residence criteria applies, meaning that an employee must be a qualifying new resident for the tax year in question and not a UK resident in any of the 10 tax years immediately preceding that year.
• Under the new regime, there is no requirement to pay the earnings outside the UK, or for the employee to retain this income outside the UK, in order to benefit from the tax relief, unless any of the income relates to a period ending before 5 April 2025.
• Overseas workday relief is now capped at the lower of 30% of qualifying employment income and £300,000 per tax year.

 

 

Fakes Explosion

Scammers have developed fake banking apps. They can apparently show money being transferred by the scammer to you for something, but it never arrives. You’ve been duped.

If you are a small business that accepts bank transfers, don’t release the goods until you receive confirmation of the funds being in your own account. Don’t trust some else’s App.

AI can generate fake receipts for fraudulent expense claims with logos, creases, stains, real barcodes and VAT numbers, dates and times which match up with diaries and other markers used by expense software.

Invoice fraud is also on the rise at the same time as these new scams are emerging.

The government has been producing resources and plans for bolstering the security and resilience of the UK. It recently published the results of the annual cyber breaches survey, which found that while the number of breaches seems to have declined from the previous year, external reporting of breaches was still poor, cybercrime is still prevalent, and awareness of many of the government’s resources to support smaller businesses was in steady decline.

 

 

The Trump VAT Tariff

It appears that President Trump interprets VAT as a tariff.

On 9 February, White House Deputy Chief of Staff Stephen Miller warned European countries to expect stern tariff treatment from the second Trump administration, in return for having VAT systems.

According to Miller, when the US ships a car to Europe, that vehicle is taxed at 30%, while a European car dispatched to America is taxed at “basically zero” and that is why President Trump would pursue “a policy of reciprocity” on VAT.

US sales tax applies just once, to the final transaction with the consumer. For example, a business selling a car to a New York resident must charge sales tax. But the rest of the supply chain, from raw-material suppliers to the vehicle’s manufacturer, is unaffected. By contrast, VAT applies at every level of the supply chain.

 

 

Government Action to Reduce Tax Debt

At the Spring Statement 2025, the government announced a package of new measures to tackle tax debt, including:

• increasing late-payment penalties for VAT from April 2025 and for income tax self-assessment (ITSA) taxpayers as they join Making Tax Digital (MTD) income tax;
• investing £87m over the next five years in HMRC’s existing partnerships with private sector debt collection agencies;
• recruiting an additional 600 HMRC debt management staff at a cost of over £144m over the next five years; and
• Restarting direct recovery of tax debts owed by individuals and companies. The government will also explore options for automating the process for some lower value debts.

These changes significantly increase the penalties for late payment of VAT and MTD income tax, making timely payment more critical than ever for businesses.

The penalty element can be avoided if a time to pay arrangement is put in place in time.

 

 

Taxing Individuals – Cryptoassets

Employment income

Cryptoassets may be taxable as employment income if received in connection with an employment relationship. National insurance contributions (NIC) may also be payable if the cryptoasset is a readily convertible asset.

Miscellaneous income

Where tokens are received, which are income in nature, but where the activity undertaken falls short of trading and does not arise from an employment relationship, the income will be taxable as miscellaneous income. These might include:

• income from mining activities. Allowable expenses may include equipment and electricity costs; and
• ‘interest’ from crypto lending and staking activities. HMRC’s position is that such returns are not taxed as interest, because cryptoassets are not money or currency.

Capital gains

CGT commonly applies to gains or losses made on the disposal of tokens that were purchased from a third party, or on an eventual disposal of tokens that were originally received as income (and taxed as such), but which were retained as an investment.

Chargeable disposals can occur whenever tokens are disposed of, whether or not cash is received, such as when one cryptoasset is exchanged for another.

 

 

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.