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Welcome to Busy Season!

imjasondsmith@gmail.com (Jason Smith) — Fri, 07 Oct 2022 11:23:17 GMT

It's coming up to that time of year again...

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Self-Assessment - Why Wait?

imjasondsmith@gmail.com (Jason Smith) — Fri, 26 Aug 2022 07:49:01 GMT

Self-Assessment is never worth putting off until January

Everyone in business is busy. If it's not doing the actual work we do, it's finances, ordering, replying to emails, stocking up, dealing with staff - you name it, we all do it.

However, one thing we never suggest putting off is your self-assessment. Sure, you get nearly 9 months to do it, but what's the benefits of doing it early?

- Find out how your business has done over the last period.

- See if there's anything your doing really well on, and things you may need to try improve.

- Find out what your tax bill is (If any) and have time to prepare for July & January payments.

- Peace of mind, no more worrying what it is and if you can afford it.

The quicker you get your tax return done, the quicker the surprise of the tax bill is away, and you can get on with running the business. No-one likes their tax return going in bear the end of January and their accountant surprising them with a tax bill they can't afford. Get it done today, and you've got nearly 5 months to settle the bill with HMRC and plan your finances accordingly, instead of 5 days before!

VAT - MTD Filing

Fri, 19 Aug 2022 11:10:34 GMT

The End of an era - MTD fully kicks in

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P11d's - What, why, when?

imjasondsmith@gmail.com (Jason Smith) — Wed, 29 Jun 2022 08:58:51 GMT

P11d's - Does your company need to fill one in?

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Busy times, including VAT clients!

imjasondsmith@gmail.com (Jason Smith) — Fri, 13 May 2022 21:19:13 GMT

It's not just us who should be busy...

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Capital Gains Tax on Residential Properties

imjasondsmith@gmail.com (Jason Smith) — Fri, 15 Apr 2022 10:01:19 GMT

Capital Gains Tax on Residential Properties - Why, when and how much?

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It's that time again...

imjasondsmith@gmail.com (Jason Smith) — Fri, 01 Apr 2022 10:54:30 GMT

Is this the year you get your tax return in early?

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Making Tax Digital - Non VAT Threshold (2022) & Income Tax/Self-Assessment (2024)

imjasondsmith@gmail.com (Jason Smith) — Fri, 25 Mar 2022 10:29:03 GMT

Makign Tax Digital - Coming 2024 - Act Now

A few people are aware of the changes coming up in the next couple of years, but a lot aren't. It's going to be one of the biggest shakeups in recent history to the way personal taxes are reported, and it's better to be aware of them now, or else you could be scrambling to get ready at the deadline.

HMRC have been modernising their IT systems, which allow them to handle more information. In turn, they want more from businesses on a more regular basis The first phase was Making Tax Digital for VAT, which is currently mandatory (With a few exemptions) for anyone VAT registered and earning over £85,000 gross per year. In April, this begins to affect all VAT registered businesses, regardless of turnover, and in April 2024, it will affect all businesses and income tax assessable individuals, regardless of VAT registration, if they earn over £10,000 per year from nearly any income source (Self-Employment, property rental, dividends etc).

Long story short, you'll be required to make a quarterly return to HMRC stating your income and expenditure for the 3 months, starting from April to June 2024. These need to be submitted either on HMRC recognised software, like Quickbooks, Xero etc, or by excel and bridging software, but that will only be a temporary fix.

If you're VAT-registered but earning underneath the threshold, this effects you next month. Why not get in touch to see what we can do about modernising your bookkeeping systems? If you're self-employed and looking to get off the manual papers and get more relevant information at your fingertips, we can get you set up in plenty of time before the new deadlines come in!

Minimum Wage Increase - 2022/2023

imjasondsmith@gmail.com (Jason Smith) — Sat, 12 Mar 2022 13:06:52 GMT

Minimum Wage Increase - 2022/2023 & The Health & Social Care Levy

Once again, the minimum wage for everyone is going up from the 1st of April 2022, and the changes are below:

The National Living Wage (23+) - From £8.91 to £9.50 per hour (Increase of 59p per hour)
21-22 Year old rate - From £8.36 to £9.18 per hour (Increase of 82p per hour)

18-20 Year old rate - From £6.56 to £6.83 per hour (Increase of 27p per hour)

16-17 Year old rate - From £4.62 to £4.81 per hour (Increase of 19p per hour)

Apprentice rate - From £4.30 to £4.81 per hour (Increase of 51p per hour)

Everyone should also note that from the 6th of April 2022, the Health & Social Care levy comes into force, by adding a further 1.25% to Employee's NI (Up to 13.25%), Employer's NI (Up to 15.05%), self-assessment profits (Up to 10.25%)

MTD - Phase 2 - Check Now!

Thu, 01 Apr 2021 13:48:21 GMT

It was delayed, but now it's here! Time to check if you need to do anything.

At the end of this month, it’s the big one – the delayed phase II of HMRC’s Making Tax Digital for VAT (‘MTD’). Over one million VAT registered businesses face tough new obligations on digital recordkeeping and the ‘digital journey’ on their VAT data. HMRC is looking to expunge over half a billion pounds in VAT errors with this phase of digitising VAT reporting. What that means for businesses of all sizes is the outlawing of manual data adjustments, manipulation in spreadsheets or most manual calculations of VAT data.

To back this up, HMRC are imposing full VAT penalties, which had been suspended in late filings for two years. This is very important: HRMC has acknowledged its current missed VAT return penalty regime inflicts disproportionate fines on small businesses. It wants to reform this in 2022. But for now, it’s absolutely fundamental for cash flows that you digest and follow the new rules.

What are the new rules that apply from next month? And what are HMRC’s motives behind an expensive overhaul of UK VAT reporting, when all it will do is to deliver the same nine boxes of information as before? The answer is that it probably wants free access to all your accounting records.

Phase I – digital filing April 2019

You will recall phase I from April 1, 2019. This imposed digital filings of the nine boxes of VAT return data via HMRC’s new API-portal. This was introduced for all VAT registered businesses over the annual registration threshold of £85,000.

This resulted in over 1.4 million businesses scrambling for accounting software updates or inexpensive Excel-enabled bridging software to be able to digitally file their returns.

And it didn’t go totally smoothly for HMRC, which saw heavy loads bring down its filing portal across the summer of 2019. This reflected the three big filing ‘staggers’ under the new regime between August and October. In fairness to HMRC, they did introduce a one-year soft-landing, with no fines for late returns.

Phase II – digital bookkeeping and journey April 2021

The major change; the ending of most manual processes in completing the VAT data and return, was saved for phase II. This was originally scheduled for April 1, 2020 but was postponed by HMRC just 36 hours before its implementation as the lockdown closed down the economy.

The main changes for phase II include:

Digital bookkeeping – all VAT records (sales, purchases, stock, and fixed asset transactions etc) must be maintained in digital form. For most businesses, this means in accounting or ERP software and similar systems for invoicing processes. This can include spreadsheets with some restrictions – see below. There must be no manual element to this. Practically, for small businesses, this means invoice date may initially be manually keyed-in to accounting packages or spreadsheets. But there can be no further manual adjustments.
Digital journey – where VAT data is then moved between accounting or invoicing systems prior to the digital filing, this may only be done via ‘digital links’. These include spreadsheet formula links, emailing data, memory sticks, and up/downloads of data in CSV or XML formats. What is strictly forbidden by HMRC is manual cut and paste in spreadsheets or adjustments. This will affect businesses of all sizes. In particular companies that consolidate data in spreadsheets from various systems or divisions prior to filing. Anyone producing group VAT returns will likely struggle too, as that is typically done through manual spreadsheet processing.
Mind the missed return penalties

The current missed return penalty system means you enter a 12-month surcharge period. If you then miss a further return, the 12-month period is extended and you will have to pay a surcharge. The surcharges ratchet up from two percent for a second missed return to 15 percent for a fifth missed return in the surcharge period. Note: HMRC plan to overhaul this regime in 2022 as it does produce the risk of huge, disproportionate fines on missed returns.

The regular penalties for missed VAT payments have been in place throughout the launch of MTD.

What’s next for MTD – HMRC wants your accounting records?

The question that has always loomed around MTD is why the extraordinary effort and expense for HMRC and over a million taxpayers when the result is the same as pre-April 2019 – nine boxes of VAT numbers are still filed? The answer lies behind the choice of the API technology, which enables huge and fast exchanges of data. At some point in the not-too-distant future, HMRC may require taxpayers to submit all VAT transactions to them for verifying the VAT calculations.

It’s a point to ponder: soon, HMRC may ‘own’ the source of tax data, your accounting records. That will signal a colossal shift of power from FD’s and accounting departments to HRMC.

Minimum Wage Increase & Changes - From 01/04/2021

Thu, 01 Apr 2021 13:41:24 GMT

This year's changes have now came into law.

National Minimum Wage and National Living Wage rates

The hourly rate for the minimum wage depends on your age and whether you’re an apprentice.

You must be at least:

school leaving age to get the National Minimum Wage
aged 23 to get the National Living Wage - the minimum wage will still apply for workers aged 22 and under

Current rates

These rates are for the National Living Wage (for those aged 23 and over) and the National Minimum Wage (for those of at least school leaving age). The rates change on 1 April every year.

23 and over 21 to 22 18 to 20 Under 18 Apprentice

23 & Over - £8.91

21 to 22 - £8.36

18 to 20 - £6.56

Under 18 - £4.62

Apprentice - £4.30

Apprentices

Apprentices are entitled to the apprentice rate if they’re either:

aged under 19
aged 19 or over and in the first year of their apprenticeship

Example

An apprentice aged 21 in the first year of their apprenticeship is entitled to a minimum hourly rate of £4.30.

Apprentices are entitled to the minimum wage for their age if they both:

are aged 19 or over
have completed the first year of their apprenticeship

Example

An apprentice aged 21 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £8.36.

Domestic Reverse VAT Charge for Building & Construction Services

Thu, 01 Apr 2021 13:35:17 GMT

HMRC love making changes - Here's the breakdown

The new Domestic Reverse VAT Charge for Building and Construction Services (DRC) came into force on 1 March 2021, having been delayed twice since its original implementation date of 1 October 2019. Once live, this new regime will require the recipient of certain services, rather than the supplier, to account for the VAT due to HMRC.

What does the Domestic Reverse VAT Charge apply to?

The DRC will apply to supplies of ‘specified services’ between VAT registered businesses in a construction supply chain. The specified services that fall within the DRC are those construction services which are required to be recorded under the Construction Industry Scheme (CIS); HMRC’s published guidance, attached, provides a list of the services included and excluded from the regime.

https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services

What do construction companies need to know?

Construction businesses need to ensure that they understand the changes and how these will affect their business. The charge will apply to standard and reduced-rate VAT services provided to other business or individuals that are registered for VAT in the UK and report those services under the CIS, unless the customer is an end-user.

An end-user is a customer that receives the specified services for its own use, or use by a connected party, and will therefore not make an onward supply of the services received. End users are required to notify the supplier of their end-user status at the time of contracting for services; if no confirmation of DRC status is provided, HMRC have confirmed that the DRC will apply.

What do I need to do?

To be fully prepared for the new rules, businesses may need to make changes to their accounting systems to ensure they can accommodate both the receipt and supply of reverse charge supplies. At the same time, staff who agree contracts with suppliers and customers will need to understand the changes to ensure contracts reflect the correct VAT treatment and that, in turn, accounts and finance staff understand how to post transactions.

Some businesses may also need to consider how the DRC will affect their cash flow, as reverse charge supplies will result in a 20% reduction in receipted income for many sub-contractors. As input tax incurred on expenses can be recovered as normal, many contractors may find themselves in a repayment position and might consider requesting monthly VAT returns, to ease the cash flow burden.

Find out more:

Full details of how the DRC will impact construction industry businesses can be found in HMRC’s technical guide, which can be accessed via the following link:

https://www.gov.uk/guidance/vat-reverse-charge-technical-guide

Also, HMRC’s flow charts are an easy reference tool to help both suppliers and customers work out whether supplies fall within the DRC - these can be found at:

https://www.gov.uk/guidance/vat-reverse-charge-technical-guide#flowcharts