ALISEM

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An affordable fixed fee is agreed with you upfront and service can be cancelled anytime, no tie in.
Fees include unlimited email & telephone support for all your accounting and tax queries.
The following are our two most popular packages but please get in touch for a quick personalised quote based on your requirements.Self Employed / Sole Trader package
Free subscription to Quickbooks online for easy bookkeeping & invoicing
Annual Accounts preparation
Personal Tax Returns preparation & Submissions
HMRC correspondence
Email & Phone supportLimited Company package
Free subscription to Quickbooks online for easy bookkeeping & invoicing
Free company incorporation at Companies House
Annual accounts, returns and corporation tax returns produced & submitted
Personal tax returns for two directors (more on request)
Monthly payroll processing for two directors (more on request)
Tax and dividend planning
HMRC correspondence
Email & Phone supportExtras:
Bookkeeping
Quarterly VAT returns
Additional Director payroll
Additional Director tax return
HMRC investigation insurance

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articles

• Making tax digital (MTD) for Income Tax - Jan 2022
• Capital allowance - Super Deduction - Jul 2021
• Basic tips to reduce Corporation Tax Bill - Apr 2021
• Summary of 2021 Budget - mar 2021
• Domestic VAT Reverse charge - mar 2021
• NEST Pension Scheme - FEB 2021
• So what is IR35 & Shoud I worry? - Jan 2021
• Self Assessment Deadline - JAN 2021
• Post Brexit - Rules for Businesses - DEC 2021
• POST BREXIT - UK BORDER CONTROL - NOV 2020
• MAKING TAX RELIEF EASIER - OCT 2020
• WHICH ACCOUNTANT WOULD YOU CHOOSE? - SEP 2020
• PERFORMANCE MANAGEMENT DURING PANDEMIC - AUG 2020
• YOUR DATA PROTECTION RESPONSIBILITY - Dec 2019

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PERFORMANCE MANAGEMENT DURING PANDEMIC

Assessing staff during a pandemic
Performance management has become challenging as Covid-19 has disrupted normal working patterns.
It has been a year like no other. Some have lost their jobs or changed them; some have continued to physically attend work to deliver key services at significant personal risk; and some have gone home to work. Hardly a job remains unchanged.
For many working from home, the initial sense of enjoyment has been replaced by feelings of isolation, frustration and generalised stress. Gains at the beginning of national lockdowns – no more commute, school drop-off or noisy offices – have been replaced with losses: no more water-cooler conversations, a sense of digital surveillance, a feeling of being always-on and, for many, home-schooling on top of it all.
Managers, many of them approaching the end of the performance year, face a conundrum. How do they assess employees? Do they continue using the old system or break for something new? And how do they motivate them while the future remains uncertain?
‘People feel they’re being checked up on and micromanaged’
Think of others
Fiona Rowley, managing director of Empower People, says that leaders should take stock of the obvious, but also think about the not-so-obvious. ‘Our lives are loaded with uncertainty at the moment – everyone’s environment has changed – and some people have more resilience than others.’
You can use the existing performance system, she says, but the important thing is for managers to really prepare for performance reviews. ‘Employees put a lot of time into recording their thoughts on their performance, but many managers don’t take the time to really read the resulting paperwork and reciprocate with thought through commentary to support a really useful conversation.’
Rowley says that this can appear disrespectful and that managers should ‘put themselves in their employees’ shoes and assess their contribution this year in the context of what’s going on for them’.
Professor Na Fu, an expert on strategic human resource management at Trinity College Dublin, agrees. ‘Since the 1960s performance management has really been performance measurement,’ she says.
This year, she says, organisations should provide consistent criteria and procedures for assessment, since this delivers fairness. But they should use systems that recognise that individual needs and contributions are different. This year should really be about managing people, not measuring them.
Psychological safety
Communication is key too, says Alan Lyons, a business psychologist at KinchLyons. ‘People feel they’re being checked up on and micromanaged,’ he says – a disaster for psychological safety. ‘Psychologically safe teams are resilient teams, and we need resilient teams now,’ says Lyons.
He also advises managers to involve their teams in redefining formal and informal communication ‘contracts’. ‘We all have ways of working that are specific to organisations and teams,’ he says. ‘Now is the time to figure out if they make people feel safe in their work.’
It seems as though most leaders’ work is about keeping their teams’ heads above water. But what about motivating them? Is it possible to get people fired up when everything around them seems negative?
‘It’s a global experiment,’ says Fu. ‘Initial studies are showing that levels of wellbeing are very low.’ But all is not lost and leaders have a role to play.
‘Direct leadership will help – it can even reduce things like loneliness. If you give clear instructions and you’re empathetic, you will get results,’ adds Fu. But, most importantly, ‘you have to really hear rather than listen’, and that requires vulnerability on the part of the leader.
Rowley agrees and says there are a few simple ways of doing that. ‘Perhaps share where you’ve been struggling too,’ she suggests. ‘Ask lots of questions. You will be rewarded with talent, innovation and creativity in your team.’
Hope for the future
Although it continues to be a struggle for many, working from home hasn’t been all bad. We might even like to keep some things after the pandemic is over, and we can learn from our experience.
As Fu points out, for organisations, leaders and managers, the starting point is changing the mindset from simply measuring and assessing people to one with a focus on developing people. Leaders and managers will need to investigate and design tools to improve employee experience by hearing people’s contribution rather than just listening, and by checking in rather than checking out. ‘If we have learned all of this during this pandemic, we will be confident to embrace any challenges and disruptions in the future – which will be coming for sure,’ she says.
Rowley says that so many people have had to change their business in what they do and how they do it. ‘We’ve pivoted in our businesses, so we can pivot in the way we engage our people – we’re not stuck, so use this time as an opportunity and see performance conversations as an interdependent relationship’, she says.
Lyons agrees that after all this, our resilience should teach us something. ‘We can’t change what we’re going through, but we can change at least a little bit of how we react to it. Find out what’s worked well over the past year and hold on to it. Be a dealer in hope,’ he says.
F. Hawksley

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Your data protection responsibility

GDPR, the new General Data Protection Regulation, came into effect on 25 May 2018. Although GDPR originated with the European Union, it is not affected by Brexit. GDPR builds on existing data protection law to strengthen the protection of individuals’ personal data.
If your business collects or uses personal data, you must comply with GDPR. You’ll need to review any existing data protection systems, policies and procedures to take account of the changes from the old Data Protection Act.1. Does GDPR apply to you?
GDPR applies to both ‘data controllers’ and ‘data processors’
• Most businesses are data controllers. For example, you might hold personal data on your employees and customers.
• Data processors process personal data on behalf of the data controller. For example, that includes payroll service providers, ‘cloud’ services that process personal data and so on.
• If your business holds or uses any personal data systematically, GDPR is likely to apply to you.
The definition of personal data is wider than it was under previous regulations
• Employee records, customer databases and so on continue to count as personal data.
• Technical data such as IP addresses, smartphone device IDs or location information can count as personal data if it can be linked to an individual.
• ‘Pseudonymised’ information that cannot be linked to an individual is not included.
• The rules apply to manual filing systems as well as computerised records.
There are stricter rules for sensitive personal data
• Sensitive data continues to include information on racial or ethnic origin, political opinions, religious beliefs, trade union membership, health, and information on sex life or sexual orientation.
• Genetic or biometric data are also sensitive data.
• There are separate rules on handling information about an individual’s criminal convictions.
Fines for non-compliance can be very substantial
• Maximum fines are up to 4% of annual turnover for the worst offenders.
• In practice, the Information Commissioner’s Office (which regulates data protection) aims to work with businesses to improve compliance rather than issuing fines.
• Keeping good records and taking prompt action if there is a problem will help reduce the risk of any penalty.
Notification and fees
The existing system of ‘notifying’ with the Information Commissioner’s Office has changed
• Under the Data Protection Act, businesses that use personal data for other than ‘core business purposes’ (such as staff administration and marketing your products) are required to notify and pay a fee.
• GDPR removes this requirement to notify, but data controllers will still be required to pay a data protection fee.
Fees will vary for different organisations
• Small businesses that do not process large volumes of data pay the lowest fees of up to £55.
• Small businesses that process over 10,000 records pay up to £80.
• Larger businesses, with over 250 employees or turnover above £50m, pay up to £1,000.
• There is an additional direct marketing top up of £20 for businesses that use electronic marketing.
The new system came into effect on 1 April 20182. When can you use personal data?
You can only collect and use personal data for a limited number of lawful reasons.
You may need to in order to carry out a contract with that individual
• For example, you might need to record a customer’s name and contact details, send them updates on order progress and so on.
• This does not mean that you can keep customer data and carry on sending them marketing emails indefinitely (see the PECR point, below).
You can ask individuals for their consent
• For example, you might ask customers for permission to ‘stay in touch’ after you have completed an order. Your website might include a box for visitors to sign up to your mailing list.
• You must ask in clear, easily understood language. Privacy notices must give clear information about who you are, how you will use data and details of anyone you will share it with.
• The individual must positively opt-in. Pre-ticked consent boxes are not allowed.
• Consent must be freely given.
• You must inform individuals of their rights, including the right to withdraw consent. Withdrawing consent must be as easy as giving it was.
• Special rules apply for children. Any consent request needs to be in appropriate language, and you will normally need the consent of their parent or guardian as well.
• A business can process any employee details it needs to for the purposes of running the business. For example, this can include their contact details (including next-of-kin), birthday, PAYE, salary and pensions details, medical information and criminal records. You do not need the consent of the employee to process this information provided it is required to operate the business.
You may be able to process data when it is in the legitimate interests of the business
• You need to balance the interests of the business against the rights of the individuals.
• For example, you might have legitimate reasons for wanting to monitor employees’ use of the internet. You would need to make sure employees know what you are doing and why. You would also need to make sure monitoring isn’t excessive or abused in any way.
• Direct marketing is a legitimate use of personal information. However, the Privacy and Electronic Communication Regulations 2003 (PECR) apply.
It is PECR, rather than GDPR, regulations that restrict the circumstances in which you can send marketing to people by phone, fax, email, text, or picture or video message. For example, businesses can only email customers and former customers without their explicit consent if an email opt out option is offered.
See the ICO’s handy Direct Marketing Checklist and read its Direct Marketing Guidance.
You can process personal data when this is required to comply with other legal obligations
• For example, to deal with PAYE, produce payslips for your employees and so on.
Other lawful reasons are unlikely to apply to your business
• You can process personal data when this is necessary to protect the vital interests of an individual. Typically, this would be in a life-or-death situation.
• You can process personal data in the public interest or where you have official authority.
Tighter conditions apply to the processing of sensitive personal data
• It’s safest to do this only with the individual’s explicit consent or when you are legally required to.
• Personal data can be used when needed for medical diagnosis or treatment, and for making or defending a legal claim.3. Managing privacy in the business
Take data protection seriously
• Assign someone to take responsibility for GDPR. Make sure they have the resources to understand the organisational, legal and technical issues involved. If necessary, get external advice from a specialist.
• Make a top-level commitment to comply with GDPR. For example, data protection should be an item on the board’s agenda. Whoever is responsible for compliance should report directly to senior management.
• Institute training for all employees to make sure they are aware of the importance of data protection and understand the procedures they must follow.
• You must appoint a data protection officer if your business carries out large-scale monitoring (eg online behaviour tracking) or processing of sensitive data. This can be an employee or an external specialist.
Make sure you understand how your business is processing personal data
• What data are you processing, how? What is the legal basis for each type of processing you do?
• Keep clear records of what you are doing, and what steps you take to protect the data.
Make data protection a key part of your approach
• Minimise the personal data you collect. For example, there may be no need to know a customer’s age, gender and so on. Don’t collect extra information just because it might be helpful later on.
• Don’t keep data longer than you need to.
• Check that you have adequate technologies and procedures to protect personal data.
• Assess and minimise the privacy impact of any new project involving personal data at the start: for example, if you decide to upgrade your IT, install CCTV or introduce a new CRM system.
Check any suppliers you share personal data with
• For example, if you are using an agency to track and analyse website visitors, do they have adequate security and procedures for complying with GDPR?
• Only share the personal data they need to provide the service. If they don’t need to know individuals’ names, can data be pseudonymised?
• You must have a clear contract limiting how they can use the data. They must not share the data with anyone else (including any subcontractors they use) without your permission.
• Make sure the data will be returned to you (or erased by them) at the end of the contract.4. Individuals’ rights
You must respect individuals’ rights. You may need to upgrade your systems and procedures to help you do this.
The right to be informed
• You need to let individuals know what personal data you are processing. Typically you do this with a privacy notice. Privacy notices must be clear, easy to find and easy to understand.
• The privacy notice must include your business name and contact details, why you are processing the information (eg for direct marketing or to personalise the website experience) and how long you will keep it. You also need to give details if the information will be shared with anyone else.
• You must inform the individual of their rights (such as the right to withdraw consent).
• If you are collecting information from the individual (eg asking for cookie consent on your website), the privacy notice should be provided at the time.
• If you collect data elsewhere (eg by buying a mailing list), you should provide the information when you first contact them and at the latest within a month.
Seeing and correcting data
• Individuals have the right to see a copy of the information you hold, within a month of asking. You cannot charge for providing this.
• For electronic requests, you should provide the information in a suitable electronic form. Individuals can also ask for data to be provided electronically so that they can share it with another service.
• They can ask for inaccurate information to be corrected.
Objections and data erasure
• Individuals have a right to have their data erased in most circumstances: for example, if they withdraw consent or if you no longer have a legitimate need for the data.
• You may need to stop processing (but not erase) an individual’s data if they object to the processing or say the data is inaccurate.
• Individuals also have the right to object to automated decision-making: for example, if their application for credit is automatically assessed and declined, or your recruitment process automatically rejects their CV.5. Security and data breaches
You must protect personal data with appropriate security
• This will typically include technical security such as firewalls and anti-virus software, passwords and so on. Make sure data is encrypted, so that it cannot be read even if your systems are hacked.
• Physical security (eg for your premises) also helps protect against theft or loss of data, either on computer systems or paper-based.
• Portable devices (eg laptops and smartphones) and data on employees’ own systems (eg for homeworking) can be at greatest risk.
• The biggest weakness in most security is people. Make sure your employees understand and follow security procedures.
You must report most security incidents to the ICO
• You must report any data breach that is likely to harm individuals – for example, because personal data has been put at risk. You would not need to report the loss of a securely-encrypted USB containing personal data.
• You must report the incident within 72 hours of becoming aware of it.
• You should tell the ICO what you know about what has happened, including what data and individuals are at risk. You should also tell them what you are doing about it.
You may need to report security incidents to the individuals affected
• You must do this if they have been put at high risk: for example, if a hacker may have gained access to credit card details, or be in a position to commit identity fraud.
• They should be informed without undue delay and given clear information on what has happened.
• A breach that only disclosed the names and addresses of customers or employees would be unlikely to be high risk if these are already publicly available.

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POST BREXIT - UK BORDER CONTROL

This document is intended to provide an overview of the UK government’s phased approach to the new Border Operating Model. An in-depth guide may be found at bit.ly/gov-BOM.From 1 January 2021, the transitional period with the EU will end and the UK will take independent control of border processes. These processes will be introduced in three stages up to July 2021.Stage one: January 2021
• Prepare for basic customs requirements for non-controlled goods (bit.ly/gov-contr), including keeping records of imports and making arrangements towards accounting for and paying VAT.
• Full customs declarations needed for controlled goods (bit.ly/gov-contr), which will also be subject to physical checks at the point of destination or other approved premises.
• Export declarations and UK exit Safety and Security declarations will be required
for all goods.
• Traders importing and exporting goods using the Common Transit Convention will need to follow all of the transit procedures – these will not be introduced in stages.
• Traders have up to six months to complete import declarations; tariffs may become due on relevant items but this can be deferred until the declaration is madeStage two: April 2021
• Products of animal origin (POAO) will require pre-notification and health documentation. Some products will be in higher risk categories and may require pre-authorisation from January – please do check APB categories (bit.ly/gov-apb). Checks will be made at the point of destination until July 2021.Stage three: July 2021
• Customs declarations will be due at the point of import (deferrals are expected to end) for all goods as well as VAT and excise duties where necessary.
• Prepare for customs compliance checks; this may be done at the port or an inland centre.
• Safety and security declarations are to be made (in accordance with current rest-of-world trade).
• Commodities subject to sanitary or phytosanitary (SPS) controls will need to arrive at an established point of entry with a border control post (bit.ly/gov-bcp-sps).**How can I prepare? **
• Identify how your goods will be classified and what tariff commodity codes might apply – if you are uncertain, your accountant may be able to ask HMRC to confirm the correct code.
• Register for a GB EORI number if you do not currently have one. If your current one does not start with GB, you may need a new one; this may take up to one working week to arrive.
• If you will be dealing with EU customs, check your existing EU EORI or register for an EU EORI.Helping businesses get ready for changes to trade with Europe from 1 January 2021
HMRC has written to 206,000 VAT-registered businesses about the steps they need to take to get ready (bit.ly/gov-letter-vat). The government has also launched a series of short information videos and webinars (bit.ly/gov-brexit-webinars).
HMRC also has an online forum where you can submit questions: community.hmrc.gov.uk.

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which "accountant" WOULD YOU CHOOSE?

Legally anyone can call themselves an ‘accountant’ – you don’t need any training, qualifications or experience.
With a chartered certified accountant you can be guaranteed of all three.
Grow your business, protect your finances and have confidence in your accountant.
Always appoint a chartered certified accountant.Chartered certified accountants:
- Following years of training and experience, can help you make the most efficient use of your money and make your business grow.
- Bring so much more to the table than just bookkeeping.
- Are regulated by a professional body and bound by a Code of Ethics, meaning you can have total confidence in their professionalism.
- If you are unhappy with their work, you have recourse with a professional regulator who’ll investigate their professional conduct.
- Are required to complete continuing professional development each year. Their knowledge is therefore kept up to date and they understand how the latest regulations affect you or your business.
- Hold a practising certificate and professional indemnity insurance, meaning you are protected against work they perform that harms you or your business.Unqualified individual:
- Hold no accountancy qualifications, so there are no guarantees about their accountancy knowledge and quality of work.
- Are unlikely to be able to offer the full range of services and expertise a chartered certified accountant can.
- Are not regulated by a professional body, so they are not bound by a code of ethics and there is no avenue of complaint if you are unhappy with their professional conduct.
- Are not obliged to keep their knowledge up to date, meaning they could be working to outdated standards and regulations – leaving your accounts open to question.
- May not hold a practising certificate or professional indemnity insurance, meaning you are not protected or insured against any work they do that harms you or your business.

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MAKING TAX RELIEF EASIER

The Office for Tax Simplification is recommending changes to the tax administration system so that people get the tax reliefs they are entitled to.
How many tax reliefs are there available for individuals and business in the UK? At the last count, the answer was 1,190, almost all of which require the taxpayer to make a claim. However, filling in forms can be time-consuming, costly and confusing, so it is probably no wonder that many of these reliefs go unclaimed.
But now the Office of Tax Simplification (OTS) has set out plans to ensure that the money does indeed end up in the pockets of the right people and businesses.
In its recent report Claims and elections review: Simplifying administrative processes, the OTS explores the general principles that could simplify the process of claiming tax reliefs. It also makes a series of recommendations that it hopes will support HMRC’s vision of a modern tax administration system.
The report is timely, as it will inform the government’s 10-year strategy for the future of UK tax administration. That future clearly lies in the land of digital, though there is recognition that the needs of the digitally excluded should not be ignored.
‘The sheer number of possible claims, all with their own rules and time limits, mean many people do not obtain tax reliefs intended for them’
The report is timely, as it will inform the government’s 10-year strategy for the future of UK tax administration. That future clearly lies in the land of digital, though there is recognition that the needs of the digitally excluded should not be ignored.Key recommendations
In all, the OTS makes 15 broad recommendations for simplifying the process of claiming tax reliefs. The top recommendation, however, is that expanding the functionality of the personal tax account and the business tax account would significantly ease the process for many people. The online tax account, it says, should become the hub for all taxpayer engagement with HMRC.
Other recommendations include improving the functionality of HMRC’s online forms, clearer guidance on how to make a claim, and greater consistency in time limits for claim amendments. There are also recommendations that relate to specific areas, such as employee expenses, gift aid and capital allowances.
OTS tax director Bill Dodwell says: ‘Millions of people make claims and elections every year. However, there are still those who aren’t making claims for all that they are entitled to. Claims for employee expenses are a particular focus, together with claims for higher rate relief for pension contributions and gift aid donations.’Simple ignorance
As tax advisory and consultancy provider RSM points out, tax reliefs exist to encourage particular behaviour and help specific taxpayers. Accessing them should therefore be simple, understandable and efficient for both the taxpayer and HMRC if those objectives are to be met.
‘Sadly, the reality can be very different,’ says Sarah Saunders, a tax manager at RSM. ‘Simple ignorance of the right to claim and the sheer number of possible claims, all with their own rules and time limits, mean that many people do not obtain tax reliefs intended for them.’Public impact
The OTS is not the first organisation to raise this issue. Back in February 2020, the National Audit Office (NAO), which calculated that 1,190 figure for tax reliefs, produced its own report. In The management of tax expenditures, it argues that reliefs (or ‘tax expenditures’ as it likes to call them) make the tax system more complicated and less transparent, and can pose risks to public finances because their costs can rise beyond expectations.
Tax expenditures differ from public spending in that they reduce the amount of tax collected, rather than consume resources after tax has been collected. However, both affect the public purse and can be used to pursue discrete policy objectives.
The report states: ‘At a forecast cost of £155bn in 2018/19, tax expenditures represent an important means by which government pursues economic and social objectives. Evaluations show that their impact is not guaranteed, and many require careful monitoring. We have previously raised concerns about how effectively government is managing tax expenditures.’
But a start has already been made. Saunders says: ‘As if to prove what is possible, the new microsite recently introduced by HMRC enables people working from home due to Covid-19 to claim expenses. The rules have been made simple, and the claim is straightforward and very easy to make.
‘The only problem here was perhaps an initial lack of publicity. During the first 10 days only 54,000 taxpayers claimed. Not impressive given the millions who are likely to be eligible.
P. Smith

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Post brexit - rules for businesses

The UK officially left the EU after the transition period ended on 31 December, and for companies this means doing business with Europe has drastically changed, particularly in terms of exporting and importing, tariffs, and hiring.
So, what do businesses need to do differently now?1. Importing and exporting goods
Firms will need to comply with new customs procedures, otherwise they could face delays, disruption or administrative costs.
Businesses will need an Economic Operators Registration and Identification number (EORI) number that starts with GB to import and export goods into England, Wales or Scotland.
If they move goods to or from Northern Ireland they may need one that starts with XI.
Most businesses that import goods use a transporter or customs agent, the government advised.
If the UK has a trade agreement with the country a firm is importing from, they may be able to pay less duty or no duty on the goods, known as a 'preferential rate'.
Firms may also be able to delay or reduce the amount of duty they pay based on what the goods are from and what they plan to do with them.
If firms are VAT registered, they can claim back any VAT they paid on the goods imported. For this they will need an Import VAT Certificate (C79).
Companies must check to see if the business they are importing from or exporting to need to make a export/import declaration in their country and if they require licences or certificates to send/receive to or from the UK.
There are processes that can make clearing customs quicker and easier to manage if companies export goods regularly, the government has said.
Firms need to find the right commodity code to classify the goods they are exporting. A customs agent or transporter might be able to help with this.
In some cases, exporters might be able to zero rate the goods for VAT. This means they can charge customers VAT at 0%.2. Business travel
As well as the actions all travellers need to take, such as getting travel insurance, there are extra actions for travelling to the EU for business.
Employees may need a visa, work permit or other documentation if they are planning to stay for longer than 90 days in a 180-day period, or if they will be doing any of the following:
• transferring from the UK branch of a company to a branch in a different country (‘intra-corporate transfer’), even for a short period of time
• carrying out contracts to provide a service to a client in another country in which your employer has no presence
• providing services in another country as a self-employed person3. Hiring
If firms are planning to recruit from overseas they will need to register as a licensed visa sponsor, otherwise they can’t legally hire people from outside the UK.
New employees from outside the UK will also need to meet new job, salary and language requirements. Irish citizens and those eligible under the EU Settlement Scheme are not affected.
Firms will also need to look at changes affecting manufactured goods, such as new marking requirements or approvals needed, to ensure they are ready to sell them in the UK and EU.
Yahoo finance

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Self-Assessment deadline

31st January is the self assessment deadline and it is fast approaching. HMRC is resisting calls for an extension to this deadline and easement of late filing penalties this year as many people continue to struggle due to Covid restrictions in place. If you are having difficulty filing or paying then there are few options available:Late filing
Where a return cannot be filed by the deadline the options are:
- File the return with estimates for any missing information. HMRC has confirmed that the practice is acceptable. The use of estimates should be noted in the appropriate box on the return.
- File the return late and appeal against the late filing penalty on the grounds of reasonable excuse. HMRC has confirmed that late filing of a return due to COVID-19 related delays may be grounds for reasonable excuse for late filing.
- Finalising tax credit awards. 31 January is also the date for providing final self-employment figures for tax credit purposes for prior financial year. In July 2020 HMRC automatically renewed many such tax credit claims but HMRC will allow self-employed claimants to provide a final figure where they intended the figure on their auto-renewal notice to be an estimate and can do so even after 31 January 2021.Late payments
The amount due on 31 January 2021 may include:
- Second payment on account for 2019/20, originally due on 31 July 2020 but was deferred.
- Balancing payment for 2019/20.
- First payment on account for 2020/21.Where the taxpayer is unable to pay these amounts due on 31 January 2021, the options available are:
- Consider whether payments on account can be reduced. If the tax liability for 2020/21 is expected to be lower than that for 2019/20 it may be appropriate to reduce the first payment on account for 2020/21 that is due on 31 January 2021.
- Apply online for time to pay. An online process allows those with a Self-Assessment liability of £30,000 or less to apply for time to pay over 12 months.
- Negotiate time to pay. If the amount owed is more than £30,000 or a period longer than 12 months is required, the taxpayer or agent should contact HMRC to negotiate a suitable time
to pay arrangement.Payment of national insurance
Class 2 NIC must be paid by 31 January following the end of the tax year, for that year to qualify for claims to employment and support allowance. Voluntary Class 2 NIC not paid by 31 January need to be paid directly rather than through Self-Assessment. For these reasons it may be appropriate to consider ensuring that the Class 2 NIC are paid by 31 January.

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what is ir35? should I worry?

So, what is this IR35? Simply put, IR35 are rules created to assess whether a contractor is a genuine contractor or a ‘disguised’ employee for tax purposes.
Contractors who work through limited company setup generally have a higher level of tax efficiency. They don’t get employee benefits such as sick pay and holidays etc. but they have more control and flexibility over their work.
HMRC introduced IR35 in 2000 believing some contractors are taking advantage of the tax efficiency of working through a limited company, when in practice the contractor is essentially working as an employee.
The aim of IR35 is to assess whether contractors are employees or not. Being ‘inside IR35’ means HMRC sees you as an employee and you must pay an income tax and National Insurance. You don’t face this if you’re ‘outside IR35.’HMRC says that when determining whether IR35 applies to a contract, “you must work out the employment status of the person providing the services.” HMRC also say that the off-payroll rules apply if the contractor “would be an employee if there was no intermediary” i.e., a limited company.IR35 status depends on some key tests you can use, these tests usually relate to supervision, direction and control. HMRC has an online tool (https://www.gov.uk/guidance/check-employment-status-for-tax) you can use to check whether IR35 applies to a contract.• For public sector contracts – the hirer is responsible for working out whether the contractor falls inside or outside of IR35.
• **For private sector contracts **– the contractor is responsible for working out whether they fall inside or outside of IR35.
IR35 changes from April 2021
The public sector rules will be applied to private sector from April 2021, this was planned to happen in April 2020 but it was delayed.These IR35 changes mean that:
• medium-sized and large businesses will be responsible for working out the contractor’s employment status, not the contractor
• contractors should be given the reasons behind the decision and can dispute the decision if they disagree with it
• small businesses are exempt from the changes – so if the contractor works for a small client, the contractor will still be responsible for working out their employment status
End clients are classed as small businesses if they meet two of the following criteria:
• annual turnover of no more than £10.2 million
• balance sheet total of no more than £5.1 million
• no more than 50 employeesFor a contract to fall outside of IR35, contractors should have freedom over how they complete their work i.e. start/finish time, days of work etc. Other elements of an employment contract that HMRC looks out for include a client overseeing your work excessively, and giving guidance on how to complete it. Plus, if you’re not only providing your services for the agreed job but also working on different tasks as your client requires, the contract is likely to be within IR35.
Also, you should be able to send a substitute to complete the work in order for a contract to fall outside of IR35. This means the contract should clearly state that someone else can provide their services to complete the work.
You should also consider whether you can work for other clients simultaneously. If a contract prohibits that then it points towards you being considered an employee. Another thing HMRC often tries to argue is that if an equipment is provided by the client then you’re an employee.IR35 is a complicated subject, lack of clarity and guidelines over employment status and rights has proven contentious since its introduction. You can find much more information on HMRC website or feel free to get in touch and we will be happy to help.

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NEST Pensions

The National Employment Savings Trust or NEST for short, is a workplace pension scheme set up by the UK government. Instead of setting up their own scheme, employers can use this to meet their obligations of providing a workplace pension. NEST can also be used by Self-employed individuals for an easy and hassle-free way to save for retirement.NEST is a defined contribution scheme which means both employee and employers make contributions to a pot of money which is invested to grow over time. These savings are managed by trustees however the employers can still decide some features like their own contribution levels, limits and how the money is invested. The savings are pooled together with those of other members and invested in a range of assets, organisations and industries. Employees do have some options about the investment approach such as choosing ethical and Sharia law compliant funds, as well as funds that are designed for different stages of life.How much does it cost?
NEST pension is free for employers but employees have to pay a small fee. This includes an annual management charge of 0.3% on total pension pot and 1.8% on contributions to help pay off the Government loan used to setup NEST.What happens when you Retire?
Once you reach the age of 55, you can then access NEST savings. When you retire, you can use the money in your NEST pension pot to take a regular income (or buy an annuity) and you can also choose to take 25% of the pot as a tax-free lump sum. The scheme close when you reach the age of 75 which means you will need to have accessed your pension pot by then (via drawdowns or buying an annuity).How much is contributed?
3% of the salary is the minimum an employee pays into any pension scheme including NEST. You can pay in more but only up to the limits imposed by the employer or by the annual allowance, whichever is lower. NEST pension contributions are deducted after tax is paid so tax can be recovered by pension tax relief.
Employers will pay at least 5% of the net salary into NEST pension pot, making total contributions 8% at minimum. Employer can decide to pay more than 5% minimum contribution.Changing Job?
If the new employer uses NEST, the employee will simply enrol back on to it after signing a form to declare that he/she is already a member.
If the new employer uses a different scheme, the employee can either keep the NEST account or move the pension pot out of it.What happens when you die?
A nominated beneficiary assigned by you (the employee), will be given the pension when you die. The amount will be paid to them tax free if you die before you’re 75 however income tax could be charged if you die after age 75.One more thing to keep in mind is that NEST is different from the state pension. NEST is a low-risk/ low -return workplace pension scheme backed up by the UK government, at the end of the day, money comes from employers and employees paying in to it.

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VAT Reverse Charge

From 1 March 2021 the “domestic VAT reverse charge” must be used for most supplies of building and construction services.Who is affected and how?
The charge applies to standard and reduced-rate VAT services:
> for individuals or businesses who are registered for VAT in the UK
> reported within the Construction Industry Scheme (CIS)If you are a CIS or VAT registered subcontractor invoicing a CIS or VAT contractor for the work you have carried out then you will most likely be affected. As long as you are not providing your service (list of services below) to an ‘end user’ (i.e., public) then it means you can no longer add VAT to your invoice. This applies to both your labour and any materials. You will need to exclude VAT from the invoice you raise but include a line on your invoice which states the goods and services have been provided under the CIS reverse charge scheme.
It is good to keep this in mind that although VAT reverse charge will not cost you anything, it could have an impact on the cashflow as you will not be receiving VAT from your customers but will have to continue paying VAT, for example if you buy any materials.
If you are on flat rate VAT scheme (FRS) and CIS registered, the VAT reverse charge should make you reconsider the FRS option you have chosen as it might be beneficial for your business to join the standard VAT scheme instead. We suggest you speak to your accountant for further information.You must use the reverse charge for the following services:
> Constructing, altering, repairing, extending, demolishing, restoring or dismantling buildings or structures, painting & decoration including internal cleaning during the course of these works.
> Installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure.
> Services which form an integral part of, or are part of the preparation or completion of the services above - including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works.Do not use the charge for the following services:
> Drilling for, or extracting, oil, natural gas & minerals.
> Manufacturing building, engineering components or equipment, materials, plant or machinery, heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems, or delivering any of these to site.
> The professional work of architects or surveyors, or of building, engineering, interior or exterior decoration and landscape consultants.
> Making, installing and repairing art works plus installing and repairing of signboards and advertisements.
> Installing seating, blinds, shutters, security systems, burglar alarms, closed circuit television and public address systems.

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2021 budget

Budgets can be confusing so here is a simple summary of 2021 budget which is easy to understand and will hopefully help.Rates and allowances 2021/22
Income tax rates (non-dividend income)
0% lower rate tax (savings rate only) - Up to 5,000
20% basic rate tax - 12,571 to 50,270
40% higher rate tax - 50,271 to 150,000
45% additional rate tax - Above 150,000
Personal allowance - 12,570Capital gains tax annual exempt amount (after personal allowance)
These are frozen at £12,300 for individuals and £6,150 for trusts.Dividend allowance
The tax-free dividend allowance is unchanged at £2,000.Corporation tax
The corporation tax rate will remain at 19% but from April 2023 the applicable corporation tax rates will be 19% and 25%. Businesses with profits of £50,000 or below will still only have to pay 19% under the small profits rate.Grants – restart
‘Restart Grants’ are available in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businessesEnhanced capital allowances: super deduction
This introduces increased reliefs for expenditure on plant and machinery. For qualifying expenditures incurred from 1 April 2021 up to and including 31 March 2023, companies can claim in the period of investment:
• a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main-rate writing-down allowances
• a first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowancesAnnual investment allowance (AIA)
Companies will be able to claim £1m as AIA for expenditure incurred from 1 January 2019 to 31 December 2021. The announcement was made in November and before the ‘super deduction’.Apprenticeship funding
Apprenticeship incentive payments for employers will increase to £3,000 per new hire until September 2021.VAT
No changes to standard VAT rate (20%), registration (£85k)/deregistration (£83k) thresholds. The thresholds will not change for a further period of two years from 1 April 2022.
The reduced rate of VAT of 5% to the hospitality, holiday accommodation and attractions sector is extended until 30 September 2021. After this date, the VAT rate will be 12.5% to the end of 31 March 2022, before returning to the standard rate of VAT of 20% from 1 April 2022.VAT deferral
Businesses with outstanding VAT from last year may join the VAT deferral new payment scheme to spread their payments. The online service is open until 21 June 2021.Coronavirus Job Retention Scheme (CJRS)
An extended version of the CJRS provides further support for employees until the end of September 2021.Self-Employment Income Support Scheme (SEISS)
A fourth grant will open from late April and will be available until 31 May 2021, and will include those self-employed in the tax year 2019/20, with the SEISS being available for a 5th grant until September 2021 based on turnover.Losses
Trading losses will have more flexibility to carry them back over three years. This applies only for losses incurred by companies for accounting periods ending between 1 April 2020 and 31 March 2022, and for individual for trade losses of tax years 2020/21 and 2021/22.Entrepreneurs’ relief
The lifetime limit on gains eligible for entrepreneurs’ relief is £1m for qualifying disposals.Employment allowance reform
The allowance is £4,000 but continues to be limited to employers with an employer NIC bill below £100,000 in the previous tax year.Statutory sick pay (SSP)
Small and medium-sized employers across the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee. As with other pandemic-related business support schemes, the government will set out steps for closing this scheme in due course.R&D
From 1 April 2021, SMEs applying for R&D tax credits will be eligible to a maximum of £20,000 in repayments per year plus three times the company’s total PAYE and NIC liability.Inheritance tax (IHT)
The nil-rate band remains at £325,000. The residence nil-rate band for deaths in the following tax years are:
• £100,000 in 2017/18 • £125,000 in 2018/19 • £150,000 in 2019/20 • £175,000 in 2020/21 • £175,000 in 2021/22Pensions
The pension lifetime allowance will remain at its current level of £1,073,100 until April 2026.Rates
100% relief for businesses in retail, hospitality and leisure in England continues until June 2021. From July 2021 to March 2022, these business will pay a reduced rate of 33%. Businesses in England closed due to national lockdowns from 5 January 2021 onwards, or between 5 November and 2 December 2020, may be eligible for grants.Interest relief for landlords
Landlords will be able to obtain relief as follows:
Finance cost allowed in full Finance cost allowed at basic rate
Year to 5 April 2020 25% 75%
Year to 5 April 2021 0% 100%Stamp duty land tax (SDLT)
Non-UK residents are to pay 2% surcharge SDLT on residential property purchases from April 2021. The SDLT nil-rate band of £500,000 for residential property purchases in England and Northern Ireland will be extended to June 2021, reducing to £250,000 from July to September and reverting to £125,000 from October 2021.

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Basic tips to reduce your corporation tax bill

It is important to make sure you are not paying more tax than you need to, specially corporation tax for companies which can be a huge bill. There are many ways you can legally reduce your corporation tax bill but the following two are the most common and easier to implement:Allowable expenses:
Companies are allowed to deduct all costs as expense which have been incurred for use by the business. By deducting these costs from your business profit, you effectively reduce the amount you will have to pay in tax.
There is no fixed set of rules explaining what can or cannot be claimed as a business expense, you just have to ensure the service/item was used exclusively for business purposes. Some examples of this include office equipment, machinery, travel costs etc. but can be much more based on the specific industry your business operates in. You can also include salaries, employer NI contributions and other staff costs as expense if your business has employees.Salary for yourself:
It is vital to understand that a company is a separate entity and therefore any profit it makes is not yours. You can however draw some of those profits by paying yourself a salary. We already know the salary and NI contributions company pays are business expenses so you can reduce company’s corporation tax bill by paying yourself.
One thing to remember is that you may have to pay income tax and NI contributions on this salary, if it is above the personal allowance limit. In case it is above the personal allowance limit, it will make sense to keep it below the higher rate tax threshold. Along with salary, owners can also pay themselves dividends which are taxed at a lower rate than income tax but unfortunately dividends cannot be deducted as a business expense.

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Making tax digital (MTD) for Income Tax

Making Tax Digital (MTD) is part of the UK government’s plan to make tax accounting easier for businesses and individuals/sole traders. Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is being postponed for another year so it will not take effect until April 2024 now.
In short, MTD is the digitalisation of submissions and tax data. It requires the use of a software for accounting and removes the need to submit annual tax returns.MTD only affects those who have a personal income above £10,000 across their businesses or properties. If the income is above £10,000, you will be required to use a compatible software for your income tax accounting for the first full accounting period starting on or after 6 April 2024. This income threshold applies to individuals, it could come from one business or multiple entities. If your income is £10,000 or below then you will continue using the existing Self-Assessment system.For each of their businesses, individuals will need to submit quarterly updates (or more frequently if desired), and an end of period statement (EOPS). The quarterly submissions will only be based on the information you provide, so it won’t take into account any adjustments that you make at the year-end for assets or reliefs. EOPS on the other hand is similar to the current process for the SA103 and SA105 schedules. One thing to note is that the EOPS applies to each business you run, rather than the individual, so you may find yourself submitting several.
After the end of the accounting period, you will also need to legally declare that you have provided HMRC with all the information it requested and that you agree with its income tax calculation using the “Final Declaration”. This final declaration applies to individuals, not to individual businesses/properties, so you’ll only submit one each tax year. The final declaration will have a deadline of 31 January each year.While most businesses are required to follow the MTD for Income Tax rules, some can apply to be digitally excluded. This will be allowed if it is either impossible or impractical for them to use technology in the way MTD requires i.e., no access to internet, certain disabilities and religious prohibitions etc.Although for most businesses and individuals this digitalisation of taxes will mean higher administration costs (software subscriptions, accountant fees etc), there will also be some benefits such as improved cashflow as you will have a good idea throughout the year how much tax you owe.

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Capital allowance - "super deduction"

From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim a new temporary allowance – the “Super deduction”. This is aimed to help with the economic recovery following Covid-19 pandemic by encouraging and incentivising more business investments.How much can be claimed?
a 130% super-deduction capital allowance on qualifying plant and machinery investments
a 50% first-year allowance for qualifying special rate assetsThese allowances will be available alongside the ongoing Annual Investment Allowance which currently gives 100% relief for qualifying costs in the tax year of purchase.Who can benefit?
The allowance is only available to companies, not individuals, partnerships or LLPs. The contract for the plant and machinery has to be entered into after the 3rd of March 2021 and expenditure incurred after 1st of April 2021.One thing to consider is that this allowance will not be available for second hand plant and machinery, any cars or equipment acquired through leasing/hire. However, unlike the AIA, there is no limit on the amount of capital investments that can qualify for these deductions, a very attractive opportunity for large organisations with some investments in the pipeline.In short, this super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest, which could end up saving businesses substantial amounts, specially if the qualifying investments are material.Government is hoping this super-deduction will encourage firms to invest in productivity-enhancing plant and machinery assets that will help them grow and help the overall economy, we will have to wait and see.

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