fpdteam, Author at Bennetts Accountancy

Protecting intellectual property

27th June 2023 by fpdteam

Having the right type of intellectual property protection helps you stop people stealing or copying:

the names of your products or brands;
your inventions;
the design or look of your products; and
things you write, make or produce.

Copyright, patents, designs and trademarks are all types of intellectual property protection. You get some types of protection automatically, others you have to apply for.

You own intellectual property if you:

created it (and it meets the requirements for copyright, a patent or a design);
bought intellectual property rights from the creator or a previous owner; and
have a brand that could be a trademark, for example, a well-known product name.

Intellectual property can have more than one owner, belong to people or businesses, and be sold or transferred.

If you have concerns that your ideas or business brands are vulnerable contact a professional patent or trademark attorney.

Source:Other| 26-06-2023

VAT Exempt services

22nd June 2023 by fpdteam

A business that incurs expenditure on taxable and exempt business activities is partially exempt for VAT purposes.

This means that the business is required to make an apportionment between the activities using a 'partial exemption method' in order to calculate how much input tax is recoverable.

Businesses that make both taxable and exempt supplies must keep a separate record of exempt supplies along with details of how much VAT has been reclaimed.

There are a number of partial exemption methods available. The standard method of recovering any remaining input tax is to apply the ratio of the value of taxable supplies to total supplies, subject to the exclusion of certain items which could prove distortive. The standard method is automatically overridden where it produces a result that differs substantially from one based on the actual use of inputs. It is possible to agree a special method with HMRC.

The VAT incurred on exempt supplies can be recovered subject to two parallel de-minimis limits.

The tests are met where the total value of exempt input tax:

Is under £625 a month (£1,875 a quarter/£7,500 a year); and
Is less than half of the total input tax incurred.

If both tests are met the VAT can be recovered. Businesses that are partially exempt, need to complete this calculation on a quarterly basis as well as completing an annual calculation.

Source:HM Government| 19-06-2023

Capital Gains Tax Gift Hold-Over Relief

22nd June 2023 by fpdteam

Gift Hold-Over Relief is a tax relief that results in a deferral of Capital Gains Tax (CGT). The relief can be claimed when assets are given away (including certain shares) or sold for less than they are worth to help benefit the buyer. The relief means that any gain on the asset is 'held-over' until the recipient of the gift sells or disposes of them. This is done by reducing the donee's acquisition cost by the amount of the held over gain.

The person gifting a qualifying asset is not subject to CGT on the gift. However, CGT may be payable where the asset is sold for less than it’s worth. Gifts between spouses and civil partners don’t trigger capital gains. A claim for the relief must be made jointly with the person to whom the gift was made.

If you are giving away business assets, you must:

be a sole trader or business partner, or have at least 5% of voting rights in a company (known as your 'personal company'); and
use the assets in your business or personal company.

You can usually get partial relief if you used the assets only partly for your business.

If you are giving away shares, then the shares must be in a company that is either:

not listed on any recognised stock exchange; or
your personal company.

The company's main activities must be of a trading nature, for example, providing goods or services rather than non-trading activities like investment.

Source:HM Revenue & Customs| 19-06-2023

Regulated businesses hit with Anti-Money Laundering fines

22nd June 2023 by fpdteam

The Money Laundering Regulations (MLR) are designed to protect the UK financial system and put in place certain controls to prevent businesses being used for money laundering by criminals and terrorists.

HMRC has named 240 supervised businesses that have been fined a total of £3.2 million for not complying with the anti-money laundering rules. The fines were issued between 1 July and 31 December 2022 for breaches of the regulations designed to stop criminals laundering money from illegal activity.

One of the businesses, based in London, was hit with a large fine of £1.4 million for failing to carry out risk assessments, not having appropriate anti-money laundering controls, and failing to conduct proper due diligence checks.

This crackdown on money service businesses has resulted in a significant reduction in these types of firms over the last number of years.

HMRC is clear that money service businesses provide vital services to the community, offering currency exchange, money transmission and cheque cashing. However, criminals can exploit them to launder the proceeds of crime and so must have a robust risk assessment and policies, controls, and procedures to prevent this.

Source:HM Revenue & Customs| 19-06-2023

HMRC’s Self-Assessment line summer closure

22nd June 2023 by fpdteam

HMRC’s Self-Assessment helpline closed on 12 June 2023 and will re-open on 4 September 2023. This closure is part of a trial to direct Self-Assessment queries from the helpline to HMRC’s digital services, including online guidance, digital assistant and webchat.

This move has been planned for a ‘quiet’ time for Self-Assessment queries and the helpline will reopen on 4 September 2023 so taxpayers can receive expert support in the 5 months running up to the Self-Assessment deadline on 31 January 2024.

HMRC says that the helpline receives far fewer calls over the summer, with calls around 50% higher between January and April compared with June to August. It remains to be seen what the impact of the closure will be, but this is likely to result in significant disruption for taxpayers.

The Chair of the Treasury Committee said:

'Given the potentially significant impact closing the Self-Assessment helpline may have on taxpayers, we’re looking for clarification that HMRC has fully considered the costs and benefits of this decision.

There are also concerns around the short notice with which this was announced. HMRC must be open, upfront and transparent when making decisions which could impact so many individuals.'

HMRC has stressed that this trial will free up 350 advisers (full-time equivalent) to take urgent calls on other lines and answer customer correspondence. HMRC also stresses that the vast majority of Self-Assessment taxpayers use HMRC’s online services, with 97% filing online.

If you have any Self-Assessment queries and are unable to reach HMRC, please call, we will be happy to assist.

Source:HM Revenue & Customs| 19-06-2023

Deadline to top-up NIC contributions extended

22nd June 2023 by fpdteam

In certain circumstances it can be beneficial to make voluntary National Insurance Contributions (NICs) to increase your entitlement to benefits, including the State or New State Pension.

Usually, HMRC allow you to pay voluntary contributions for the past 6 tax years. The deadline is 5 April each year. However, there is currently an opportunity for people to make up for gaps in their NICs for the tax years from April 2006 to April 2017 as part of transitional measures to the new State Pension.

This deadline was set to expire on 5 April 2023 but had been extended until 31 July 2023. The deadline has now been further extended until 5 April 2025 to help allay continued concerns that the existing deadline would not have allowed many taxpayers to fill gaps in their NIC records. HMRC’s helplines have been struggling to meet the demands for information and processing claims to pay additional NIC contributions.

HMRC has also confirmed that all relevant voluntary NIC payments will be accepted at the rates applicable in 2022-23 until 5 April 2025.

You might want to consider making voluntary NICs if:

You are close to State Pension age and do not have enough qualifying years to get the full State Pension.
You know you will not be able to get the qualifying years you need to get the full State Pension during the remainder of your working life.
You are self-employed and do not have to pay Class 2 National Insurance contributions because they have low profits.
You live outside the UK but want to qualify for benefits.

If you fall within any of these categories, it may be beneficial to get a State Pension forecast and examine whether you should consider making voluntary NICs to make up missing years, known as topping up. Not everyone will benefit from making voluntary NICs and a lot depends on how close you are to retirement age and your NIC payments to date. If you think this opportunity may be relevant to your circumstances, please be in touch.

Source:HM Revenue & Customs| 19-06-2023

Offshore taxpayers offered chance to come clean

22nd June 2023 by fpdteam

HMRC is currently writing to UK residents who were named in the leaked Pandora Papers and offering them the chance to regularise their tax affairs. The letters are being sent to UK residents named in the files of 14 offshore financial service providers.

During 2021 and 2022, the International Consortium of Investigative Journalists released more than 11 million records from 14 offshore service providers, this is known as the Pandora Papers. HMRC has been analysing this data, which is the largest ever release of financial documents to identify UK residents with untaxed offshore assets.

HMRC’s letters, which started distribution earlier this month, warn recipients to report all their overseas income or gains on which they owe UK tax or face penalties of up to 200% of any tax due or prosecution.

There are typically two methods for making a disclosure.

The Contractual Disclosure Facility (CDF) is a facility for taxpayers to disclose serious tax fraud to HMRC. The CDF is only suitable for taxpayers who want to confess to tax fraud. It is not a method to notify HMRC about errors, mistakes or avoidance schemes where no fraud has taken place. HMRC will not criminally investigate and prosecute taxpayers over fraud disclosed as part of the CDF contract. This is in return for the taxpayer meeting some important conditions including making a full, open, and honest disclosure of all the tax fraud committed. If all the conditions are met, the investigation will be conducted using civil powers, with a view to a civil settlement for tax, interest and a financial penalty.
The Worldwide Disclosure Facility (WDF) was launched in September 2016 and is open to those who want to disclose a UK tax liability that relates wholly or partly to an offshore issue. Unlike previous disclosure opportunities, the WDF does not offer any special terms for settling tax affairs and in most cases any interest and penalties levied will be charged in full. The WDF Facility does not provide any protection from prosecution and so where there is deliberate and/or fraudulent conduct, such as evasion, the CDF is the more appropriate facility.

Recipients of these letters should seek professional advice as a matter of urgency.

Source:HM Revenue & Customs| 19-06-2023

New powers for charities

19th June 2023 by fpdteam

From 14 June 2023, the latest set of changes mandated by the Charities Acts 2022 came into force.

Changes now in place include simplified legal requirements that charities must comply with before selling, transferring or leasing land, and new statutory powers to enable:

Charities to spend, in certain circumstances, a proportion or all of their permanent endowment fund where the market value of the fund is (£25,000 or less) without Commission authorisation.
Charities to borrow, in certain circumstances, up to 25% of the value of their permanent endowment fund without Commission authorisation.
Charities that have opted into a total return approach to investment to use permanent endowment to make social investments with a negative or uncertain financial return, provided any losses are offset by other gains.
The Commission to direct a charity to stop using a working name if it is too similar to another charity’s name or is offensive or misleading.
The Commission to delay registration of a charity with an unsuitable name or delay entry of a new unsuitable name onto the Register of Charities. Working with the principal regulator, the Commission can also use these naming powers on exempt charities.

The Director of Legal & Accounting Services at the Charity Commission said:

“The latest changes introduced by the Charities Act 2022 give the charities we regulate more flexibility and greater powers. These are positive changes that will impact a significant number of charities, so it is important all organisations, big or small, take the time to check what this means for them. This is especially important if they are looking, for example, to dispose of land. We have updated our guidance to help trustees understand the changes, and our contact centre is open to those who need further support.”

Source:Other| 18-06-2023

Effects of settlement legislation

15th June 2023 by fpdteam

The settlement legislation is intended to prevent an individual from gaining a tax advantage by diverting his or her income to another person who is liable at a lower rate of tax or is not liable to Income Tax.

Where a settlor has retained an interest in a property in a settlement the income arising is treated as the settlor’s income for all tax purposes. A settlor can be said to have retained an interest if the property or income may be applied for the benefit of the settlor, a spouse or civil partner.

In general, the anti-avoidance settlements legislation can apply where an individual enters into an arrangement to divert income to someone else and in the process, tax is saved.

These arrangements must be:

bounteous, or
not commercial, or
not at arm’s length, or
in the case of a gift between spouses or civil partners, wholly or substantially a right to income.

However, there are a number of everyday scenarios where the settlements legislation does not apply. In fact, after much case law in this area, HMRC has confirmed that if there is no 'bounty' or if the gift to a spouse or civil partner is an outright gift which is not wholly, or substantially, a right to income, then the legislation will not apply.

Source:HM Revenue & Customs| 11-06-2023

Tax exempt private medical costs

15th June 2023 by fpdteam

There is no requirement for employers to pay tax and National Insurance on certain health benefits covered by tax concessions or exemptions. For example, there is no requirement to report employees’ medical or dental treatment or insurance if they are a part of a salary sacrifice arrangement.

In addition, the following health benefits can be provided tax free:

A maximum of one health-screening assessment and one medical check-up in any year.
Eye tests required by health and safety legislation for employees who use a computer monitor or other type of screen.
Glasses or contact lenses required by employees for working on computer monitors or other types of screen.
Medical treatment for employees working overseas. The employer must have committed in advance to pay for this treatment or must pay the provider directly for the employee’s treatment or insurance.
Medical treatment or insurance related to injuries or diseases that result from your employee’s work.
Medical treatment to help an employee return to work. This allows the employer to pay up to £500 in costs for an employee to return to work.
Any medical or dental treatment or insurance provided that is not exempt must be reported to HMRC. Employers may be required to deduct and pay tax and National Insurance on these amounts.

Source:HM Revenue & Customs| 11-06-2023