fpdteam, Author at Bennetts Accountancy

Domicile and IHT

26th May 2022 by fpdteam

Domicile is a general legal concept which in basic terms is taken to mean the country where you permanently belong. But actually, determining domicile status can be complex. HMRC guidance states that domicile cannot be defined precisely, but the concept rests on various basic principles.

Although domicile can change, there is generally a presumption in favour of the continuation of an existing domicile. To change a domicile, lots of factors are considered for example, the location family, property and business interests.

There is also a further UK concept of deemed domicile, whereby under rules introduced from April 2017, any person who has been resident in the UK for more than 15 of the previous 20 years are deemed to be domiciled in the UK for tax purposes. This makes them liable to Inheritance Tax (IHT) on their worldwide assets.

IHT is generally chargeable to people domiciled (or deemed domiciled) in the UK or with assets sited in the UK. For example, HMRC’s manuals states that if someone creates a settlement with assets outside the UK, when they are not domiciled in the UK, the settlement could be excluded from the charge to IHT. There are also double tax agreements that can, depending on the circumstances, change a person’s liability to IHT.

Source:HM Revenue & Customs| 23-05-2022

Agent authorisation re SEISS grants

26th May 2022 by fpdteam

Self-employed individuals (including partnerships) who have overclaimed the Self-Employed Income Support Scheme (SEISS) must pay back the overpayment to HMRC. The rules for repayment state that you must tell HMRC if you were not eligible to have claimed the grant. There can also be penalties for not informing HMRC.

However, there are complications with the agent authorisation process for SEISS grants. This is because HMRC’s existing process – the 64-8 agent authorisation – was not designed to cover the support provided in response to coronavirus, such as SEISS grants, in which case the usual taxpayer confidentiality rules apply. For this reason, additional authorisation is required.

HMRC’s advice to agents states as follows, if you plan to contact us regarding your client’s SEISS grants, please speak to them and make sure relevant consent is in place where necessary and allow time for required authorisation to be processed by us.

The fifth and final SEISS grant was available for the period between 1 May 2021 and 30 September 2021. The last date for making a claim was 30 September 2021.

Source:HM Revenue & Customs| 23-05-2022

HMRC wins disguised remuneration case

26th May 2022 by fpdteam

HMRC has welcomed a recent Court of Appeal decision concerning a disguised remuneration case. These types of schemes provide employees with the bulk of their earnings in the form of loans that are used to try and avoid paying Income Tax and National Insurance contributions (NICs).

In the case in question, an IT contractor used a disguised remuneration tax avoidance scheme, entering into an arrangement whereby he worked through an umbrella company based outside the UK to provide his services to UK-based financial service companies.

He received most of his earnings in the form of loans, organised by the umbrella company, which were initially claimed not to be taxable. The taxpayer eventually accepted that he had received taxable income, but he claimed he should not have to pay anything because he was entitled to a notional PAYE credit.

The Court of Appeal’s agreed with HMRC’s assertion that the taxpayer was not entitled to a PAYE credit. The taxpayers appeal (and cross-appeals) was rejected and HMRC’s right to collect unpaid Income Tax was allowed, without any setoff for a notional PAYE credit.

HMRC is reminding other taxpayers with similar arrangements that they can still make a settlement under the Disguised remuneration settlement terms 2020. This includes individuals who received loans before 9 December 2010, where HMRC still has open enquiries or assessments.

Source:Court of Appeal| 23-05-2022

VAT Flat Rate Scheme – are you a limited cost trader?

26th May 2022 by fpdteam

The VAT Flat Rate Scheme has been designed to simplify the way a business accounts for VAT and in so doing reduce the administration costs of complying with the VAT legislation. The scheme is open to businesses that expect their annual taxable turnover in the next 12 months to be no more than £150,000.

A limited cost trader check was introduced in April 2017 and can increase the VAT flat rate percentage used by VAT registered businesses that use the Flat Rate scheme. If you meet the definition of a 'limited cost trader' you are required to use a fixed rate of 16.5%. The highest 'regular' rate is 14.5%.

A limited cost trader is defined as one whose VAT inclusive expenditure on goods is either:

less than 2% of their VAT inclusive turnover in a prescribed accounting period;
greater than 2% of their VAT inclusive turnover but less than £1,000 per annum if the prescribed accounting period is one year (if it is not one year, the figure is the relevant proportion of £1,000).

For some businesses – for example, those who purchase no goods, or who make significant purchases of goods – the outcome of the test will be self-evident. Other businesses need to complete a simple test, using information they already hold, to work out whether they need to use the higher 16.5% rate. If so, the use of the flat rate scheme will probably not be beneficial.

Source:HM Revenue & Customs| 23-05-2022

Completing P11D forms to report benefits in kind

26th May 2022 by fpdteam

The deadline for submitting the 2021-22 forms P11D, P11D(b) and P9D is 6 July 2022. The forms can be submitted using commercial software or via HMRC’s PAYE online service. Employees must also be provided with a copy of the information relating to them on these forms by the same date. P11D forms are used to provide information to HMRC on all Benefits in Kind (BiKs), including those under the Optional Remuneration Arrangements (OpRAs) unless the employer has registered to payroll benefits.

This is known as payrolling and removes the requirement to complete a P11D for the selected benefits. However, a P11D(b) is still required for Class 1A National Insurance payments regardless of whether the benefits are being reported via P11D or payrolled. The deadline for paying Class 1A NICs is 22 July 2022 (or 19 July if paying by cheque).

Where no benefits were provided from 6 April 2021 to 5 April 2022 and a form P11D(b) or P11D(b) reminder is received, employers can either submit a 'nil' return or notify HMRC online that no return is required. Employers should ensure that they complete their P11D accurately, including all the details of cars and loans provided. There are penalties of £100 per 50 employees for each month or part month a P11D(b) is late. There are also penalties and interest for late payments.

Any tax or National Insurance due for 2021-22 under a PAYE Settlement Agreement (PSA) needs to be paid electronically to clear into HMRC’s bank account by 22 October 2022 (19 October 2022 for payments by cheque). This does not need to be reported on a P11D.

Source:HM Revenue & Customs| 23-05-2022

HMRC advice to counter spoof emails or texts

26th May 2022 by fpdteam

HMRC continues to warn of the ever-present problem of fraudulent phishing emails, suspicious phone calls and texts. These unwanted emails, phone calls and texts are being sent from all around the world and the fraudsters are continuing to find new ways to target unsuspecting taxpayers.

These messages typically look to obtain taxpayers personal and or financial information such as passwords, credit card or bank account details. The phishing emails and texts often include a link to a bogus website encouraging the recipient to enter their personal details.

HMRC recommends that if you have the slightest doubt that an email or text is fake:

do not open attachments, they could contain a virus
do not click on links, they could take you to a fake HMRC site
do not disclose personal/confidential information
forward suspicious HMRC text messages to 60599 (charged at your network rate)
forward suspicious emails to the HMRC phishing team at, phishing@hmrc.gsi.gov.uk
check our security guidance: Dealing with HMRC Phishing and scams.

If you have suffered financial loss should contact Action Fraud on 0300 123 2040 or use their online fraud reporting tool.

Source:HM Revenue & Customs| 23-05-2022

Tax Diary June/July 2022

19th May 2022 by fpdteam

1 June 2022 – Due date for corporation tax due for the year ended 31 August 2021.

19 June 2022 – PAYE and NIC deductions due for month ended 5 June 2022. (If you pay your tax electronically the due date is 22 June 2022).

19 June 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2022.

19 June 2022 – CIS tax deducted for the month ended 5 June 2022 is payable by today.

1 July 2022 – Due date for corporation tax due for the year ended 30 September 2021.

6 July 2022 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2022 – Pay Class 1A NICs (by the 22 July 2022 if paid electronically).

19 July 2022 – PAYE and NIC deductions due for month ended 5 July 2022. (If you pay your tax electronically the due date is 22 July 2022).

19 July 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2022.

19 July 2022 – CIS tax deducted for the month ended 5 July 2022 is payable by today.

Source:HM Revenue & Customs| 18-05-2022

Corporation Tax – reminder HMRC contact details

19th May 2022 by fpdteam

HMRC can be called by phone on 0300 200 3410 for help with general Corporation Tax enquiries. You will need your 10-digit Unique Tax Reference (UTR) when calling HMRC and this reference number cannot be provided over the phone.

The UTR is the primary identifier for a company and should be used whenever HMRC is contacted. The number can be found on all letters from HMRC and also in HMRC’s business tax account portal – if the company has registered for online tax services and attached the UTR to their profile.

HMRC’s Corporation Tax phone lines are open Monday to Friday: 8am to 6pm and closed weekends and bank holidays. The phone lines are typically less busy between 8.30am and 11am.

You can also write to HMRC at the following address for help with general Corporation Tax enquiries.

Corporation Tax Services
HM Revenue and Customs
BX9 1AX
United Kingdom

You should include your UTR in the letter and on the first page of any documents you send. If you are replying to a letter you’ve received about your Corporation Tax, you should use the address on that letter.

Source:HM Revenue & Customs| 16-05-2022

Intrastat – trading goods with EU

19th May 2022 by fpdteam

Intrastat declarations were historically used to collect information on the movement of goods from the UK to other EU countries and vice versa. Any business that exceeded the exemption threshold for either arrivals or dispatches of goods were obliged to submit monthly returns.

This changed following Brexit and there were further changes from 1 January 2022. Since 1 January 2022, Intrastat declarations only apply for movements of goods between Northern Ireland and the EU.

There is no requirement to submit a declaration for goods you move from Great Britain (England, Scotland and Wales) to the EU. Intrastat no longer covers these movements of goods.

The exemption threshold for arrivals in 2022 is £500,000 and the exemption threshold for dispatches is £250,000. Intrastat filings must be made electronically. The deadline for submission is the 21st day of each month following the end of the period to which the declarations relate e.g., the return for the month ending 31 January 2022 is due by 21 February 2022.

Source:HM Revenue & Customs| 16-05-2022

VAT – discounts and free gifts

19th May 2022 by fpdteam

When you issue an invoice to your customer, you must ensure that you charge the correct rate of VAT. Whilst most businesses in the UK charge VAT at the standard rate of 20% there are a number of different VAT rates and exemptions that you should be aware of.

In the UK, there are three separate VAT rates, the standard rate @ 20%, the reduced rate @ 5% and the zero rate @ 0%.

There are special rules when charging VAT where there are discounts or free gifts. The rules are complex, but we have summarised the main aspects below.

Discounts and free gifts

Offer	How to charge VAT
Discounts	Charged on the discounted price (not the full price)
Gifts	Charged on the gift’s full value. There are some specific exceptions on gifts given to the same person if their total value in a 12-month period is less than £50.
Multi-buys	Charged on the combined price if all the items have the same VAT rate. If not, VAT is ‘apportioned’ as mixed-rate goods
Money-off coupons, vouchers etc	No VAT due if given away free at time of a purchase. If not, VAT due on the price charged
‘Face value’ vouchers that can be used for more than one type of good or service	‘Face value’ vouchers that can be used for more than one type of good or service No VAT due, if sold at or below their monetary value
Redeemed face value vouchers	Charged on the full value of the transaction
Redeemed face value vouchers sold at a discount	Charged on the discounted value of the transaction
Link-save offers (buy one get one free or discounted)	VAT is apportioned as mixed-rate goods – there are exceptions

Source:HM Revenue & Customs| 16-05-2022