Moore Accountancy Update

WE LOVE SEPTEMBER IN THE OFFICE....

Everyone is back from holidays, our work in board is full and we can really crack on with helping our clients.

Current issues still remain around

Making Tax Digital for VAT,
whether any of our rental landlord clients should be selling their buy-to-lets before next April
helping clients become more digital using cloud software such as Xero, QBO and Sage
how our contractor clients may be affected by IR35 in the private sector, and
considering how Brexit will affect our clients and local businesses.

We can help you with lots of these issues (but not Brexit we're afraid!), so please get in touch with the Moore Accountancy team if you need help.

If you have missed any of our previous newsletters, then our website has a backlog of them here.

OFF-PAYROLL WORKING RULES (IR35) GOING AHEAD

The draft Finance Bill clauses issued for consultation on 11/07/19 include legislation to extend the “off-payroll” working rules to the private sector from 6 April 2020. These changes will have significant implications for workers providing their services through personal service companies and also the end user organisations that engage such workers.

End users will be required to determine whether the worker would have been an employee if directly engaged and hence the new rules apply to the services provided by the worker via their personal service company (PSC). This will be a significant additional administrative burden on the large and medium-sized businesses who will be required to operate the new rules. The current CEST (Check Employment Status for Tax) online tool would be improved before the proposed start date.

“SMALL” EMPLOYERS EXCEPTED
“Small” businesses will be outside of the new obligations and services supplied to such organisations will continue to be dealt with under the current IR35 rules, with the worker and their PSC self-assessing whether the rules apply to that particular engagement.

The draft Finance Bill confirms that the definition of “small” is linked to the Companies Act 2006 definition, where 2 out of 3 conditions are met:
•   Annual turnover of £10.2 million or less
•   Balance Sheet total of £5.1 million or less
•   50 employees or less

There will be an obligation to pass details of the status determination (SDS) down the labour supply chain. The liability for tax and national insurance will be the responsibility of the entity, paying the PSC. However, if HMRC are unable to collect the tax from that entity, the liability will pass up the labour supply chain, thus encouraging those entities further up the supply chain to carry out due diligence.

Please contact us if you would like to discuss how the proposed changes are likely to impact on your business.

NEW VAT RULES FOR THE CONSTRUCTION SECTOR

Under new rules due to come in on 01/10/19 builders, sub- contractors and other trades associated with the construction industry will have to start using a new method of accounting for VAT.

Under the new rules, supplies of standard or reduced-rated building services between VAT-registered businesses in the supply chain will not be invoiced in the normal way. Under the reverse charge, a main contractor would account for the VAT on the services of any sub-contractor and the supplier does not invoice for VAT. The customer (main contractor) would then account for VAT on the net value of the supplier’s invoice and at the same time deduct that VAT from the payment to the sub-contractor.

This is intended to ensure that VAT is correctly accounted for on supplies by sub-contractors.
The new reverse charge will apply to a wide range of services in the building trade, primarily those activities covered by the construction industry (CIS) payment rules. Note that normal VAT invoices will continue to be issued to domestic customers.

Please contact us if you are likely to be affected by these changes and we can work with you to ensure you are ready for the new system.

COMPANY VAT PENALTY CAN BE A LIABILITY OF AN “OFFICER”

A recent case before the tax tribunal saw the liability for a late VAT registration penalty being passed on to a manager of the company.
HMRC have the power to impose a penalty on an individual where
(1) there is a penalty payable by the company for a deliberate failure
(2) the individual on whom HMRC seek to impose liability is an “officer” of the company; and
(3) the deliberate failure is attributable to that officer.

All directors should be aware of their responsibilities.

TAX FREE BENEFIT PARTIES

Your business may have an annual Christmas party for staff, but the tax rules also allow staff parties at other times of the year which are a tax-free benefit if certain conditions are satisfied.

The exemption applies to an annual party (for example, a Christmas party), or similar annual function (for example, a summer barbecue), provided for employees and is available to all employees or available to all employees at that location, where the employer has more than one location.

If the employer provides two or more annual parties or functions, no tax charge arises in respect of the party, or parties, for which cost(s) per head do not exceed £150 in aggregate.

For each function the cost per head should be calculated. The cost per head of subsequent functions should be added. If the total cost per head goes over £150 then whichever functions best utilise the £150 are exempt, the other is taxable. Remember, it is not a case of the first £150 being tax free, it is the event which falls within the £150 band.

This month is a good time to start looking at ideas or venues for your annual party as many places start getting booked up.

MAKE SCHOOL HOLIDAYS EASIER WITH TAX-FREE CHILDCARE

With the start of the new term, parents will need to consider school holiday cover.

For those that do not have childcare vouchers, the alternate is the Tax-Free Childcare scheme which is available to working parents with children from 0-11 years.

Eligible parents can get up to £2,000 per child, per year to spend on qualifying childcare (effectively a 25% top up).

Note that Tax-Free Childcare isn’t just for everyday childcare costs, such as childminders and nurseries, parents can also use it to pay towards the cost of:

•   after school clubs
•   summer camps
•   school holiday activities

SELF ASSESSMENT TAX RETURNS

Due to the summer holidays we are currently working on a 6-10 week backlog for client self assessment returns.
We always suggest however that if your records are ready that you send them over to us so that they can be logged on our planner and that we are aware they are ready to be worked on.
If you have already sent us your information you should hear from us over the next few weeks.

KEY DATES

07/09/19 - Final submission of VAT return under MTDfVAT for quarter ending 31/07/19

19/09/19 - PAYE & NIC deductions for month ended 05/09/19 (August payroll)

30/09/19 - Corporation tax due for year to 31/12/18

07/10/19 - Final submission of VAT return under MTDfVAT for quarter ending 31/08/19

19/10/19 - PAYE & NIC deductions for month ended 05/10/19 (September payroll)

31/10/19 - Corporation tax due for year to 31/01/19

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Moore Accountancy · 1 Northway · Altrincham · Cheshire, WA14 1NN · United Kingdom