Monthly Archives: April 2019

are-you-registered-for-making

Are you registered for Making Tax Digital yet?

Launched on 1 April 2019, most VAT registered businesses are now required to comply with the new Making Tax Digital for VAT regime.

However, many businesses may not be aware that they are required to register to use the new system and that this process can take up to seven working days to complete.

If you pay VAT by direct debit you will need to sign up seven working days before sending your first MTD VAT return and you cannot sign up within five working days after sending your last non-MTD VAT return.

Once businesses have registered, HM Revenue & Customs (HMRC) will send a confirmation email within 72 hours of signing up.

Companies will not have to file their first digital quarterly VAT return until 1 July at the earliest, although dates will differ depending on the business’s previous VAT quarter end. However, the digital reporting requirements of Making Tax Digital become mandatory from April.

There will be a ‘soft landing’ period during the first 12 months, in which HMRC has promised not to penalise companies if they make a genuine reporting error.

As the use of software is integral to the process of recording and reporting VAT, HMRC has also launched a new tool that allows businesses to filter certain criteria to find the software package that they require.

At present, the number of filters is extremely limited, but the Institute of Chartered Accountants in England and Wales’ Tax Faculty have learned that HMRC intends to expand the number of filters in future.

HMRC has also launched new guidance on the software required to report income tax under MTD, as it is expected that businesses will be required to report and record this information digitally from April 2020 at the earliest.

Link: Find software for Making Tax Digital for VAT

itv-presenter-lorraine

ITV presenter Lorraine Kelly wins important IR35 appeal

Lorraine Kelly has won an appeal against HM Revenue & Customs (HMRC) at a First Tier Tribunal (FTT) following a £1.2 million demand for unpaid income tax and National Insurance Contributions (NICs).

HMRC claimed that Lorraine Kelly should have been working inside the rules of IR35 at ITV Breakfast Ltd during the relevant period.

This would have meant she was effectively an employee of ITV and income tax and NICs should have been paid.

HMRC accepted that Kelly’s other assignments charged through her limited company were outside of IR35.

Kelly appealed on the basis that the nature and range of her work meant all her assignments should be treated as outside of IR35.

Kelly argued that she did not receive sick pay or a pension, she chose her own hours and ultimately there was no guarantee her contracts would be renewed.

Although the ITV programmes were aired throughout the year, Kelly was only required to provide her services for 42 weeks each year.

She also played an ‘instrumental’ role in helping find substitute presenters for the time she was absent.

ITV was not obligated to pay Kelly if she was unable to present the show and additional appearances on ITV would be negotiated under separate contracts.

HMRC argued that ITV retained control over Kelly due to OFCOM obligations and that it was the editor of the programmes who exercised that control.  However, the tribunal found that OFCOM’s role as a regulator was irrelevant and there was minimal control or supervision of Kelly by the editors.

After examining all the evidence, the tribunal decided that the relationship between Kelly and ITV was a contract for services and not that of employer and employee and found in her favour.

The FTT also contested whether Kelly was a ‘theatrical artist’; as if she were treated as an entertainer her limited company would be able to deduct her agent’s fees from its income. HMRC claimed she was a current affairs journalist.

Ms Kelly stated that she viewed the term “theatrical artist” widely and that she acted every day as a version of herself and was not reliant on ITV for her work.

The judge found Kelly’s ITV contract was outside of the rules of IR35 and the deduction of agent’s fees didn’t have to be resolved.

A spokesperson for HMRC said: “We are disappointed that the FTT has decided that the intermediary rules (also known as IR35) did not apply in this case. Moving forward, we will carefully consider the outcome of the tribunal before deciding whether to appeal.”

Link: Albatel Ltd v Revenue & Customs

uk-smes-hit-by

UK SMEs hit by £17.4 billion cybercrime bill in 2018

New research from internet service provider, Beaming, has revealed that in 2018 UK small and medium-sized enterprises (SMEs) were affected by cybercrime to the tune of £17.4 billion.

Business cybercrime is the flavour of the month for fraudsters, with hacking, phishing and data breaches affecting millions of UK companies and causing billions of pounds of damage each year.

As part of Beaming’s annual cybersecurity report, research consultancy Opinium conducted a survey of 500 business leaders.

The survey found that almost two-thirds of UK SMEs with between 10 and 49 employees were the victims of cybercrime within the last 12 months. That works out to around 130,000 businesses across the nation at a cost of £13.6 billion pounds.

For those businesses with less than 10 workers, a mammoth 1.72 million businesses were the victims of online attacks, however, the overall cost is much lower at £705 million.

Whilst larger SMEs with between 50 and 249 members of staff were found to have suffered a similar fate and there were 21,000 victims of cybercrime in the past year at a cost of £3.1 billion – taking the total overall cost for SMEs to £17.4 billion.

With the constant technological advancements, SMEs need to take greater measures to protect against these risks.

Link: Small businesses hit hardest by £17bn cybercrime bill in 2018

tax-free-hmrc-scheme

Tax-free HMRC scheme assists families with childcare costs

A Government scheme set up by HM Revenue & Customs (HMRC) is advising parents to apply for the Tax-Free Childcare scheme, which provides contributions on savings used to cover childcare costs.

Research has revealed that more than a million families are failing to make use of the Tax-Free Childcare scheme.

The Tax-Free Childcare scheme is set to replace the already defunct Childcare Vouchers scheme. It is open to both self-employed and employed parents, giving more than a million families the chance for financial help.

The scheme ensures that for every 80p a family pays in to the online childcare account, HMRC adds an extra 20p, which is equal to the basic tax rate – meaning that some parents could get up £2,000 per year, per child towards the cost of childcare.

However, if one parent earns more than £100,000 per year or if parents don’t live in the same residence as their child, they will be unable to use the scheme.

Parents who receive Working Tax Credit, Child Tax Credit or Universal Credit are also not eligible to take part in the Tax-Free Childcare scheme.

Link: Tax-Free Childcare

invoice-fraud-cost

Invoice fraud cost UK firms £93 million last year

A recent survey conducted by UK Finance revealed that more than four in 10 UK businesses are unaware of the potential risks associated with invoice fraud.

Last year these scams cost UK firms almost £93 million, with 3,280 invoice and bank scam cases reported – costing on average £28,000 per case.

Fortunately, in 2018, £29.6 million of the money lost to this type of fraud was returned to business customers.

UK Finance’s survey indicated that 84 per cent of large businesses were aware of the threat of invoice fraud, compared with 68 per cent of small businesses and just 55 per cent of sole traders.

Even though large firms were more likely to have taken the necessary precautions to protect themselves against these scams, they were also more likely to be the target of invoice fraud.

Managing Director of Economic Crime at UK Finance, Katy Worobec, said: “Invoice fraud could happen to businesses of all sizes. The gangs behind this type of fraud are increasingly sophisticated and will often get hold of details that allow them to pose convincingly as regular suppliers.”

If you feel like you have been a part of an invoice or mandate scam, it is important that you contact your bank straight away.

Link: Businesses lose £93m to invoice scams in 2018 but four in ten unaware of risk

businesses-get-to-grips

Businesses get to grips with new employment costs

Employers across the UK are starting April with a sudden increase in employment costs following a rise in workplace pension contributions and minimum wage costs.

The sharp increase in expenditure on staff couldn’t come at a worse time for business who are experiencing growing uncertainty over the UK and wider global economy.

Minimum contributions for workplace pensions have risen to eight per cent this month, with a minimum contribution of three per cent from employers.

The five per cent gap between minimum employer contributions and the minimum overall contributions must be made up by contributions from the employee. However, employers can increase their contribution to reduce the impact on employees, should they wish.

The minimum contribution only applies to employees earning £10,000 a year or more and percentage contributions are calculated using only the employee’s earnings between £6,136 and £50,000. This is an increase from 2018’s income threshold of £6,032 to £46,350.

Meanwhile, many employers will also see wage costs increase with the introduction of new statutory wage levels. As of 6 April 2019, employers must pay the following hourly rates for staff on the minimum or national living wage:

  • 25 and over (national living wage) – £8.21
  • 21 to 24 – £7.70
  • 18 to 20 – £6.15
  • Under 18 – £4.35
  • Apprentice – £3.90

In some cases, the increase in the statutory minimum wage could push up the additional amount that employers are required to pay towards workplace pensions, meaning that employers with a large number of minimum wage workers, will be hit harder.

Link: National Minimum Wage and National Living Wage rates & Workplace pensions