fpdteam, Author at Bennetts Accountancy

Tax and customs duties for goods sent from abroad

27th January 2022 by fpdteam

There are special rules to help ensure that goods sent from abroad are taxed appropriately and to ensure that UK businesses supplying goods in the UK, for example by having to compete with VAT free imports, are not disadvantaged. This includes goods that are new or used and bought online, bought abroad, and shipped to the UK and goods received as gifts.

This means that in order to receive your goods you may have to pay VAT, Customs Duty or Excise Duty if they were sent to:

Great Britain (England, Wales and Scotland) from outside the UK
Northern Ireland from countries outside the UK and the European Union (EU)

VAT is charged on all goods (except for gifts worth £39 or less) sent from:

outside the UK to Great Britain
outside the UK and the EU to Northern Ireland

Online marketplaces that are involved in facilitating the sale of goods are usually responsible for collecting and accounting for the VAT. If the VAT has not been collected, then you will have to pay VAT to the delivery company either before the goods are delivered or when you collect them. If you have to pay VAT to the delivery company, it’s charged on the total package value which includes the value of the goods, postage, packing, insurance and any duty owed.

As a general rule, there is no Customs Duty payable on non-excise goods worth £135 or less. There are various rates payable above this level and on excise goods of any value.

Source:HM Revenue & Customs| 24-01-2022

Filing obligations for private limited companies

27th January 2022 by fpdteam

It is important that anyone responsible for the accounts and tax filing regime for private limited companies is aware of their obligations.

After the end of its financial year, a private limited company must prepare full annual accounts and a company tax return. The deadline for filing the first set of accounts with Companies House is 21 months after the date the company was registered with Companies House. Further annual accounts must be submitted 9 months after the company’s financial year ends.

There is a fixed date for the payment of Corporation Tax which is 9 months and 1 day after the end of the relevant accounting period. Note that a company is usually required to pay the tax due in advance of the filing deadline for a company tax return.

In most cases a company’s tax return must be submitted within 12 months from the end of their accounting period. Online Corporation Tax filing is compulsory for company tax returns. Company tax returns have to be filed using the iXBRL data standard using either HMRC’s own software or third-party commercial software.

The accounting period for Corporation Tax is normally the same 12 months as the company financial year covered by the annual accounts. Note that there are penalties for filing late with Companies House and HMRC.

Source:HM Revenue & Customs| 24-01-2022

Government nudges local authorities

27th January 2022 by fpdteam

The Secretary of State for Business, Energy & Industrial Strategy has written a letter to local authorities in England urging them to help support businesses in the hospitality and leisure sectors as efficiently as possible.

Just before Christmas, the Chancellor, Rishi Sunak announced a support package for businesses most impacted by the Omicron variant. The biggest single measure was the re-introduction of one-off grants of up to £6,000 for businesses in the hospitality and leisure sectors (in England). It is thought that some 200,000 businesses will be eligible for these new grants.

We are reminding eligible businesses in these sectors that they can apply to their local authority for one-off grants of up to £6,000 per premises, depending on rateable value:

Businesses with a rateable value of £51,000 or above: £6,000
Businesses with a rateable value between £15,000 and £51,000: £4,000
Businesses with a rateable value of £15,000 or below: £2,667

The government also announced that £102 million top-up for discretionary funding would be made available for local authorities to support other businesses outside the hospitality and leisure sectors, for example, suppliers to these sectors.

In the letter, we are told that the Secretary of State for Business, Energy & Industrial Strategy has personally written to those local authorities who have more than 5 per cent of previous funds left over, instructing them to distribute the money to those that need it.

Local authorities have also been told that the sooner applications are processed, and funds are distributed, the sooner the government will be able to provide businesses with the confidence and security they urgently need.

The devolved administrations in Scotland, Wales and Northern Ireland have received an additional £150m through the Barnett formula to offer similar measures. This will see approximately £80 million allocated to the Scottish Government, £50 million to the Welsh Government and £25 million to the Northern Ireland Executive.

Source:HM Revenue & Customs| 24-01-2022

Company reconstructions – liabilities restriction

20th January 2022 by fpdteam

The rules for the Corporation Tax treatment of carried forward losses changed from 1 April 2017. The changes increased flexibility to set off carried forward losses against total profits of the same company or another company in a group whilst at the same time introducing new restrictions as to the amount of profits against which carried forward losses can be set.

However, there is a specific restriction in respect of company reconstructions that disallows carried forward losses to a successor company. Broadly speaking, the losses disallowed equate to the amount of the debts the predecessor company is unable to pay.

The restriction is calculated as follows:

add up the liabilities, except share capital and reserves, kept by the predecessor,
deduct the value of the assets kept by the predecessor,
deduct the sale consideration given for the transfer.

If the result is a positive sum, that is the amount of the relevant liabilities restriction. Losses up to and including that amount are then disallowed (any losses in excess of that sum being allowed). If the result is a negative sum, there is no disallowance.

Source:HM Revenue & Customs| 17-01-2022

HMRC “sweetheart” deals

20th January 2022 by fpdteam

HMRC has issued an interesting press release stating that ‘Fact: HMRC does not do ‘sweetheart deals’. HMRC makes sure every taxpayer, no matter what their size, pays everything they owe.’

This denial could be in response to many claims that have been made over the years in Parliament and the press suggesting that HMRC offers better settlement terms when dealing with certain taxpayers (usually the largest UK businesses and multinationals). HMRC refutes these claims saying they seek to collect the right amount of tax due under UK law and that they make sure every taxpayer, no matter what their size, pays everything they owe.

The press release also states that at any given time HMRC has around half of the UK’s 2,000 largest businesses under investigation. This compares with around one in ten small businesses. This rate of investigation is because the largest companies often pose the biggest tax risks.

HMRC has also said that robust measures were put in place to control error and fraud in the key coronavirus support schemes and that HMRC's customer service has not been impacted by staff working from home during the pandemic.

Source:HM Revenue & Customs| 17-01-2022

Global minimum Corporation Tax of 15%

20th January 2022 by fpdteam

A new consultation has been published by the UK government seeking views for how a worldwide 15% minimum Corporation Tax should be enforced domestically. This follows more than 130 countries signing up to a new global minimum tax framework in October 2021, after the G7 agreed in principle to this measure during UK’s presidency.

We have also seen publication of the Global Anti-Base Erosion Model Rules (Pillar Two) by the OECD/ G20 on 20 December 2021. This paper states that implementation of these new rules is envisaged by 2023.

This new agreement is expected to ensure large international firms pay at least 15% tax rate on profits in each country in which they operate, helping to tackle avoidance and ensure a more level playing field for UK businesses.

The consultation will run for 12 weeks and seeks views on the application of the global minimum Corporation Tax in the UK, as well as a series of wider implementation matters, including who the rules apply to, transition rules and how firms within scope should report and pay.

Source:HM Government| 17-01-2022

Replacement of domestic items in let property

20th January 2022 by fpdteam

The replacement of domestic items relief has been in place since April 2016. The relief allows landlords to claim tax relief when they replace movable furniture, furnishings, household appliances and kitchenware in a rental property. The allowance is available for the cost of domestic items such as free-standing wardrobes, curtains, carpets, televisions, fridges and crockery.

The amount of the deduction is based on:

the cost of the new replacement item, limited to the cost of an equivalent item if it represents an improvement on the old item (beyond the reasonable modern equivalent); plus
the incidental costs of disposing of the old item or acquiring the replacement;
less any amounts received on disposal of the old item.

There is an important distinction between deciding whether or not a new item represents a replacement or an improvement. Where the new item is an improvement on the old item the allowable deduction is limited to the cost of purchasing an equivalent of the original item.

HMRC’s internal guidance provides an example highlighting when a brand-new budget washing machine costing circa £200 is not an improvement over a 5-year-old washing machine that cost around £200 at the time of purchase (or slightly less, considering inflation).

However, if a replacement item is for a reasonable modern equivalent for example a new energy efficient fridge replacing an old fridge this is not considered an improvement and the full cost of the new item is eligible for relief.

Source:HM Revenue & Customs| 17-01-2022

Tax relief for working from home

20th January 2022 by fpdteam

If you are an employee working from home, you may be able to claim tax relief for some of the bills you pay that are related to your work.

Employers can reimburse employees for the additional household expenses incurred through regularly working at home.

The relief covers expenses such as business telephone calls or heating and lighting costs for the room you are working in. Expenses that are for private and business use (such as broadband) cannot be claimed. Employees may also be able to claim tax relief on equipment they have bought, such as a laptop, chair or mobile phone.

Employers can pay up to £6 per week (or £26 a month for employees paid monthly) to cover an employee’s additional costs if they have to work from home. Employees do not need to keep any specific records if they receive this fixed amount.

If the expenses or allowances are not paid by the employer, then employees can claim tax relief directly from HMRC. Employees will get tax relief based on their highest tax rate. For example, if they pay the 20% basic rate of tax and claim tax relief on £6 a week, they will get £1.20 per week in tax relief (20% of £6). Employees can claim more than the quoted amount but will need to provide evidence to HMRC. HMRC will accept backdated claims for up to 4 years.

These tax reliefs are available to anyone who has been asked to work from home on a regular basis, either for all or part of the week including working from home because of coronavirus.

Source:HM Revenue & Customs| 17-01-2022

Leaving gifts to charity in your Will

20th January 2022 by fpdteam

The government introduced new rules to encourage charitable giving on death in 2012. The rule which has remained unchanged ever since means that a reduced rate of Inheritance Tax (IHT) of 36% (reduced from 40%) applies where 10% or more of a deceased’s net estate is left to charity. The lower rate applies where 10% or more of the ‘net value’ of the estate is left to charity.

The current IHT nil rate band is £325,000 per person, below which no Inheritance Tax is payable. Any unused nil rate band can usually be transferred to a surviving spouse or civil partner.

HMRC also have a calculator tool that will help work out the charity donation required to qualify for the reduced rate and will check whether an existing bequest is sufficient to qualify for the reduced rate. The calculator can be found at www.hmrc.gov.uk/tools/iht-reduced-rate/calculator.htm

In order to use the calculator, you will need to know:

•   the value of the assets in the estate
•   how the assets are owned
•   the total value of the assets in each part of the estate (‘component’)
•   the value of any debts and liabilities that must be paid out of the estate
•   the amount of any Inheritance Tax relief and exemptions
•   the amount of any charitable donations already made
•   the value of the threshold (‘nil rate band’)
•   the value of gifts the deceased made in the 7 years before death

A gift smaller than 10% can also be left to charity in your Will. If this is the case, the charitable donation will be taken off the value of your estate before IHT is calculated.

The donation to charity can be a fixed amount, an item, or the balance of what’s left after other gifts have been given out.

Source:HM Revenue & Customs| 17-01-2022

Customs controls from 1 January 2022

13th January 2022 by fpdteam

There are special procedures for importing goods into the UK. Following the end of the Brexit transition period on 31 December 2020, the process for importing goods from the EU effectively mirrors the process for all other international destinations.

A number of easements to help ensure a smooth transition for goods coming from the EU after Brexit, ended on 31 December 2021. This means that since 1 January 2022, businesses are no longer able to delay making import customs declarations under the Staged Customs Controls rules that applied during 2021.

The changes that came into force on 1 January 2022 include:

A requirement for full customs import declarations for all goods at the time businesses or their courier/freight forwarder bring them into Great Britain, except if they are non-controlled goods imported from Ireland to Great Britain
customs controls at all ports and other border locations
requirement for a suppliers’ declaration proving the origin of goods (either UK or EU) if they are using the zero tariffs agreed in the UK’s trade deal with the EU
commodity codes, which are used to classify goods for customs declarations, are changing

There are different rules in place for the movement of goods into, out of or through Northern Ireland.

Affected businesses should ensure that they consider as a matter of urgency how they are going to submit customs declarations and pay any duties that are due. Businesses can appoint an intermediary, such as a customs agent, to deal with their declarations or can submit them directly although this can be complex for businesses unused to the process.

There is a ‘Simplified Declarations’ authorisation from HMRC that allows some goods to be released directly to a specified customs procedure without having to provide a full customs declaration at the point of release. However, this needs specific authorisation from HMRC and there are also other requirements that must be met.

Source:HM Revenue & Customs| 10-01-2022