HLAS

On 20 July 2021, the Treasury and HMRC issued a number of policy papers and consultations flagging up possible future tax changes. Draft legislation for inclusion in the next Finance Bill has also been issued alongside some of the measures. Among the documents these are probably the most significant: Abolition of basis periods for income tax A draft clause and Schedule propose to abolish basis periods for income taxed as trading profits for the tax year 2023/24 and subsequent years and provide transitional rules for the tax year 2022/23. These measures were announced as a “simplification” measure and will facilitate [...]

We are awaiting further information on MTD from HMRC this summer but one significant announcement on 20 July was draft legislation to abolish basis periods for unincorporated businesses for the 2023/24 tax year to simplify MTD reporting. That change would apply to sole traders, partnerships, as well as trusts with trading and property rental income. There would also be complicated transitional rules for 2022/23 which could result in a big tax bill that year for some traders. The Treasury are also consulting on changing the tax year itself from the archaic 5 April year end to 31 March or even 31 [...]

The precise details of what needs to be reported each quarter have yet to be finalised, but the categories of income and expenditure are likely to be the same as currently reported for self-assessment. The accounting software will need to record income and expenditure into the following main categories: Turnover/gross rents Costs of goods sold Materials Wages and salaries of employees Sub-contractor costs Rent, rates, power, insurance Repairs and renewals Professional fees Telephone and other office costs Interest on bank and other loans Motor and travel expenses   It is unclear at this stage how loans to finance residential lettings [...]

Since 6 April 2021 large and medium-sized organisations have had to determine whether or not a worker supplying their services via their own personal service company would be treated as an employee if directly engaged. HMRC suggest organisations use their Check Employment Status for Tax (CEST) tool on their website to check the worker’s status, although that is not obligatory. HMRC have recently confirmed that they will be bound by the result of the software provided the information is accurate and it is used in accordance with their guidance. However, they will not stand by results achieved through contrived arrangements [...]

The fifth (and final) SEISS grant will be available for the self-employed to claim towards the end of July. HMRC will contact those traders that may be eligible with their claim date. The eligibility criteria remain broadly the same as the fourth grant. Self-employed profits in 2019/20 must not exceed £50,000 and must be more than 50% of your total income. If that test is not met, then the same £50,000 and 50% tests are applied to average profits and total income over the four fiscal years to 2019/20. Self-employed traders need not have claimed grants under the previous scheme [...]

Where a company makes a trading loss of no more than £200,000 in an accounting period it is now possible to claim relief for that loss even though the corporation tax return CT600 has not been submitted. This will enable the company to carry back the loss to earlier years and obtain a repayment of tax previously paid. HMRC will however need evidence of the loss to support the claim, in particular a PDF of the company’s management accounts for the period. In determining whether the loss is no more than £200,000 the company is required to claim all available [...]

VAT registered business making taxable supplies above the £85,000 registration threshold have been grappling with Making Tax Digital (MTD) since April 2019. The next roll-out will be the introduction of MTD for income tax which is scheduled to start in April 2023. The obligation to keep records in a digital format and report information quarterly will apply to unincorporated businesses and property landlords with gross income in excess of £10,000 a year. Businesses operating MTD for VAT will already have MTD compliant accounting software but the extension of MTD to income tax will mean a major change for property rental [...]

Businesses can delay sending HMRC full information about goods by up to 175 days before the deadline of 31 December 2021. After that full customs declarations must be made at the point of import for all goods. For goods brought into Great Britain (England, Wales and Scotland) from the EU, you (or someone who deals with customs for you) may be able to delay sending HMRC the full information about your goods by up to 175 days after import. However, you cannot delay declarations and must follow the normal rules for making an import declaration if either: your goods are controlled HMRC has [...]

Since 6 April 2021 large and medium-sized organisations, based on the Companies Act criteria, have had to determine whether or not a worker supplying his services via their own personal service company would be treated as an employee if directly engaged. This replaced the IR35 rules for these larger organisations. HMRC suggest organisations use their Check Employment Status for Tax (CEST) tool on their website to check the worker’s status, although that is not obligatory. The tool is an interactive database of questions and will normally provide a ruling after 15 to 20 questions depending on the answers given about [...]

Duty suspensions are designed to help UK and Crown Dependency businesses remain competitive in the global marketplace. They do this by suspending import duties on certain goods, normally those used in domestic production. These suspensions do not apply to other duties that may be chargeable like VAT or the anti-dumping duty. Duty suspensions allow unlimited quantities to be imported into the UK at a reduced tariff rate. Autonomous Tariff Quotas (ATQs) allow limited quantities to be imported at a reduced rate. Duty suspensions and ATQs are temporary and can be used by any UK business while in force. They are [...]