Discover what you need to know about Making Tax Digital

 

Free Making Tax Digital Seminars

DTA

Making Tax Digital (MTD) will significantly affect all businesses. So what is it all about? Why will it make life difficult for most small business owners?

At DEB we are holding FREE weekly seminars to explain what MTD will mean for our clients. Anyone who is in business is very welcome to come to our offices at DEB House in Carlton, Barnsley, to attend one of these seminars. Just telephone 01226 245824 to book a place.

Are you up to speed with MTD

super fast

Has your accountant told you about MTD yet?  Has it been explained to you the significant changes it will bring? If not, then you need to consider just when are they going to get round to doing this.

Some accountants are in denial and hope that MTD will never happen. There are some that will decide that such a monumental change is a change too far for them, and, as a consequence, may seek early retirement. Some accountants are putting a lot of effort into persuading their clients to adopt the software provider of their choice, be this Xero, Quickbooks Online, or Sage One. For many accountants this is the only solution that they have to offer clients for coping with the problems posed to them by MTD. Some are even compelling their clients to accept their adopted software provider, and are turning away those that they cannot persuade to do so.

Providing you with choice

DEBBOOK

At DEB we believe in providing our clients with options so that they can choose the one that best meets their needs. Our award winning software, DEB-Book Pro-Active, is purpose built to enable us to relieve clients of the heavy burden of bookkeeping by enabling us to do it for them cost effectively. This will prove invaluable as more and more businesses need us to help them cope with the introduction of MTD.

DEB-on-Air Launch

debonairDEBONAIR2

We will soon be launching Deb-on-Air, our own online bookkeeping software, which we will provide FREE to our clients. This will provide an additional solution for business owners who would like an easier and cheaper solution than that provided by the major online programs, that will enable them to do their own bookkeeping. We will further help clients by providing them with FREE training and FREE setup.

Leading Online Providers

qbo

For those who want a solution that provides greater functionality, and who are able to cope with the greater demands and complexity involved with commercial online programs, we have been appointed as the QuickBooks Online Platinum Partner for the Barnsley area, and can offer our clients QBO at lower rates than they would get if they acquired it direct from QuickBooks. We can provide the support to help clients get on board with the online software solution of their choice, whether this is QBO or one of the other leading providers.

Providing the Right Solutions

SOLUTIONS

Regardless of the choice that they make, we can help our clients get up and running with the programs they select to deal with MTD.  At DEB we aim to be at the forefront of online accounting, which undoubtedly is going to be the principle way of doing bookkeeping in the future.

Don’t Get Left Behind

DIGITAL TOOLS

It is important that business owners understand what is expected of them, and when the new changes will apply to them. They need to make a decision soon about the solution that they will use for dealing with MTD. They need to implement their solution of choice as soon as possible and well before they are required to do their quarterly reports to H M Revenue & Customs. Now is the best time to start making these changes.  Make a start by coming to one of our seminars. Telephone 01226 245824.

Don’t Leave it Too Late

last minute

Now is the time for you to take action – don’t leave it until it is too late and you are left with less choice.

If you are a DEB client ensure you attend one of our seminars.  If you are not, then seek advice from your own accountants, or you are also welcome to come to one of our seminars.

If you are not local to DEB then no problem. Online software enables us to deal with clients at distance. Give us a call.

Has Making Tax Digital been Cancelled?

The impact of the election

Due to the forthcoming election a lot of the provisions of what would have been part of this year’s Finance Act were dropped. This was part of the usual process whereby the Government and the opposition agree to drop items that would, by their very nature, need debate, in order to pass the significantly reduced Finance Act quickly. In this process all the provisions relating to Making Tax Digital, including the need for businesses to do quarterly reporting direct from digital progams, were dropped. This led many commentators to speculate that at long last the Government have listened to the voice of reason and cancelled these extremely controversial changes.

A short reprieve

Alas if only this were true. The Government has spent a significant amount of time and money on this initiative, and is unlikely to give up on it. The significant haste of its introduction, with some businesses having to implement quarterly reporting in less than a year from now, certainly indicates how urgently they want to introduce these measures. The interruption caused by the election would give the Government an ideal opportunity to rethink the issue, and at least implement a more sensible timescale for its introduction. However, if Theresa May gets the expected landslide in the election, then the fear is that the Treasury will look upon this as business as usual, and all the provisions of Making Tax Digital will re-appear, more or less unchanged, in a Finance Act later in the year, possibly after another Budget.

Greater uncertainty for businesses

Even without the uncertainty introduced by the election, the whole issue of Making Tax Digital is something that a lot of business owners know little about. The fact that the primary legislation to implement the requirements has now been delayed has added another layer of uncertainty. Some of the questions about how it will work are still not clear as these would have been introduced by secondary legislation after the Finance Act was passed. Thus, we are still somewhat still in the dark over some of the issues. Not only this, but those who are trying to create the software to cope with the requirements of MTD still do not have a clear idea of what exactly is going to be needed. There is a great danger therefore of businesses having to start using software in April 2018 that they are unfamiliar with, and which has hardly had time to be tested.

Bringing business owners up to speed

From the end of May onwards, we will be holding free weekly seminars at DEB to inform all our clients, and any other business owners that wish to attend, what is involved with MTD; how it will affect them; how will they can cope with it; and what alternatives they will have available to them. We are also creating new online software called DEB-on-Air to provide our clients with an easier, and less expensive option for doing their bookkeeping, than the existing range of cloud based programs, such as Xero, Quickbooks, and Sage-One. Our aim is to provide clients with choices and alternatives. Whilst we believe most of our clients will opt for DEB-on-Air, we have also become the Platinum Partner with QuickBooks Online for the Barnsley area. In addition, we are also into our fourth year of developing DEB-Book ProActive which enables us to provide cost effective bookkeeping services for our clients. Our innovative approach in creating award winning digital software solutions to help our clients will provide them with lots of alternatives to cope with the forthcoming changes.

Understand what you must do

It is important that all business owners understand what impact Making Tax Digital will have on them. If you are a DEB client we will be contacting you over the coming months to get you onto one of our seminars. If you are not one of our clients but would like to attend one of the seminars, please telephone Lisa on 01226 245824 or email her Lisa@deb-accountants.co.uk to book a place. Make sure you understand what these changes will mean to you. Now is the time to start taking action.

The Spring Budget – Filling in the gaps on quarterly reporting for businesses?

What have they told us already?

On 31st January 2017 the government issued it’s response to the six consultation documents issued in August 2016. Whilst some of the questions were answered some were not. On Wednesday the Chancellor of the Exchequer, Philip Hammond, will issue his first and last Spring Budget. In this, and the publications issued around it, further details may be announced to fill in the gaps on just what businesses have got to do with regard to Making Tax Digital.

The big question unanswered

The main question that remains unanswered is the starting level of turnover above which quarterly reporting becomes mandatory for businesses. In the consultation documents they indicated that this would be a £10,000. Such a low figure has been widely criticised and other suggestions, such as the VAT registration limit has been suggested instead. This is currently £83,000 but this figure is likely to be increased in the Budget. Some have suggested that that this should be as high as twice the VAT limit.

The deciding factors

The Treasury believe that they are losing huge amounts of taxation as a result of the current standard of poor bookkeeping done by business owners. The Government believe that mandatory recording, using digital bookkeeping programs. will help recover the lost millions of taxation. They want the starting level to be as low as £10.000 as they clearly believe that the tax loss is amongst the smaller businesses and landlords. This is also probably the reason why all unincorporated businesses are the first to have to cope with quarterly reporting from April 2018. The ultimate decision is probably a political one, and we wait to see if this is delivered in this week’s budget.

Deb-on-Air – A solution for our clients

Our clients will need to have a means of recording their transactions digitally. Like all accountants, at DEB we are embracing the move to online programs such as Xero, Sage One, and Quickbooks Online. However, smaller businesses will need a cheaper and more simpler alternative. We are targeting the end of April for the launch of DEB-on-Air, our online bookkeeping solution which will be free to all DEB clients. We will introduce the key issues on quarterly reporting to our clients by means of a series of weekly seminars, at which all the options open to them will be considered. For those who cannot cope with the new changes we will be able to take over their bookkeeping using DEB-Book ProActive, the program we have developed aimed at reducing the time taken to do client’s bookkeeping.

Sign up for our Seminars

Our weekly seminars will be freely available to both DEB clients and any other business owners who would like to attend. If you would like to book a place, please use the link below, or telephone us on 01226 245824.

The Introduction of Quarterly Reporting for Businesses

Background to Making Tax Digital

In the March 2015 Budget the Chancellor made the announcement that the Government would create the most digitally advanced taxation system in the world. Little attention was given to this announcement until they issued consultation documents providing more details on 15th August 2016.

Shock to all business owners

It became apparent from the consultation documents that HMRC would make it mandatory for business owners to maintain their bookkeeping in digital format, and make reports to them every quarter directly from their digital software. They indicated that they would release their final decisions about the consultations in November 2016, but this was deferred until January 2017. On the very last day of January they provided a limited response that answered some, but not all, of the questions posed in the consultation document. We still await decisions on some key issues which they say will be released later in the year.

Are you ready for quarterly reporting?

Part of the consultation related to when these new changes would be brought into effect. The original proposal was for unincorporated businesses, including landlords, to start with effect from 5th April 2018. Businesses that are VAT registered would have to report digitally from April 2019, and incorporated businesses would have to start quarterly reporting from April 2020. The announcement in January 2017 confirmed that these proposed starting dates would remain unchanged.

What you need to do!

From the start date of the quarterly reporting, businesses will no longer be able to record their transactions in books or sheets, and, whilst HMRC have conceded that spread sheets can be used, the data from these needs to transferred to a digital program to submit the quarterly data. This will mean that businesses will have to either purchase software from providers such as Sage, Quickbooks or Xero, or alternatively, will have to pay someone else to do the digital bookkeeping and quarterly reporting for them.

Time for action

There is a short period of time before the new requirements become mandatory for businesses. However, the time to take action is now. Business owners need to decide how they are going to cope with these requirements and it is wise that they get used to the new way of doing their bookkeeping so that can be sure that they can do it correctly by the time that it matters. It is not a good idea to leave this to the last minute and have to learn as you go when the actual returns have to be submitted.

How DEB can help

Many business owners will not be able to cope with these new requirements. At DEB we have created award winning software called DEB-Book ProActive to enable us to take on client’s bookkeeping and do it efficiently and cost effectively for them. For those wishing to continue to do their own bookkeeping we are creating software called DEB-on-Air, which we will be releasing free to our clients within a few months. This will enable even those who have to start quarterly reporting in just over a year, adequate time to get used to the software to ensure they record their transactions correctly. We will also provide them with free training on how to use the software.

Keep yourself informed

This if the first of many blogs that we will be publishing to keep business owners informed. Please sign up to our blog on our website to ensure that you receive updates on all new developments as they arise. We are also going to be hosting free seminars on a weekly basis, starting in a few weeks time. In the seminars we will explain the quarterly reporting requirements to our clients and the alternative bookkeeping options that are available to them. Non-clients are welcome to attend by appointment. If you would like to attend a seminar, or speak directly to us on this, or any other matter, please contact us on 01226 245824.

Are you a Micro Entrepreneur?

These days there are any number of ways to raise a little extra money thanks to the internet. These range from selling unwanted gifts or possessions you no longer need on the likes of eBay, renting out your property on a short-stay basis on Airbnb, allowing people to park on your driveway during the day or even renting out your garage or spare room on a self-storage basis.

You may already do one, some or all the things above or likely know somebody who does. If you do have an extra income stream from such activities it is important that you are aware of any potential tax liabilities and comply with them.

In the recent budget the Chancellor, George Osborne, made an announcement of particular relevant to people who do operate as above. He even has a term for you – a “micro-entrepreneur”. The provision Osborne outlined in his 2016 budget is that from next year you “micro-entrepreneurs” are entitled to earn up to £1,000 free of tax from selling on the likes of eBay and up to another £1,000 free of tax via renting out via the likes of Airbnb. Nice of him isn’t it? Handing you an opportunity to bag yourself £1,000 a year and you don’t have to hand any of it over to HMRC.

But that’s the crux of the matter. At what point do you cease to become a “micro-entrepreneur” and cross over in to trading as a business and everything which comes with that?

It’s not as straightforward as you may be thinking. That makes it important to consider things carefully and seek professional advice to keep you on the straight and narrow without any tax surprises later.

To try and put it in simple terms, if you are buying and selling on the internet on a similar basis to dear old Del Boy from Only Fools and Horses then you’re trading as a business. Full tax liabilities on your trading activities. But you already knew that didn’t you?

On the other hand, if you are a “micro-entrepreneur” and say renting out a spare room via Airbnb, the driveway to a poor commuter or selling casually on eBay then that first £1,000 is yours. You do however, have to declare anything over that and pay the appropriate tax on it.

To help you understand if you are “micro-entrepreneur” or a regular trader some factors to bear in mind are that, if you have bought goods with the intention of selling them on at a profit or you sell regularly then that is likely to make you a regular trader as is if you have registered on the likes of eBay as a business user.

On the other hand if you are selling off unwanted personal possessions, unwanted gifts, items you have inherited on an occasional ad hoc basis then that is most likely not going to push you in to trading territory as there is no buying and selling going on.

Even though the budget has presented you with an inviting opportunity to bring a little extra tax free funding in to the family coffers it is important that you establish what your status is if you may be going over the line from “micro-entrepreneur” to full-on business trading.

If in doubt, please contact us for advice.

Is the Traditional Bank Becoming Obsolete?

Banks. We all need them. We all use them. We might not all love them. Those of you reading this of a certain age will remember banks perhaps with misty-eyed fondness. The local branch was at the heart of the community. The branch manager a local celebrity.

Then over the years the march of technology became unstoppable. Banks had to adapt. Do you remember the introduction of ATM machines for example? That was the beginning of the end for cheques.

As technology has continued to advance, the banks make more changes. The rise of online banking and the use of banking apps mean that we can take care of most of our banking needs online without the need to go in to the local branch.

That in turn has led to the closure of many branches up and down the country leaving some towns and villages without any face-to-face banking facilities at all.

Now, whilst technology can be a wonderful thing it can be very hard to keep up with the speed of technological advancement. The banks are no exception to this.

Do you remember the NatWest meltdown a few years ago when their systems went in to a tailspin which took days to set right and inconvenienced personal and business users alike until it was eventually sorted out.

There have been a number of other similar instances since as bank systems crash for one reason or another.

A major cause of these outages is the out of date technology which many banks rely on. Often their systems are old. They cannot cope with modern demands and are prone to failure. When that failure comes, what a hassle, right?

The banking system needs cutting edge, up to date technology to operate efficiently and securely. But that costs money. A fine line for the banks to walk. It would be a huge investment in both time and money for banks to upgrade the old, creaking computer system.

Could this mean the end of the line for the traditional banking institutions? It might just. Why? Because a new breed of bank is starting to emerge which is based on cutting edge technology.

The likes of Atom Bank and Mondo are in their infancy. These new banks on the block are the fresh-faced newbies building themselves “from the ground up” using all the modern tech for the mobile generation.

No branches. All online, all via a smartphone app. They are even talking about a “selfie” for identity verification. How trendy is that?

A wholly online banking experience by smartphone app might not be for everyone. The need for a “bricks and mortar” bank is always going to exist for some people. But with the ever-moving advancements in technology and the new market entrants offering something a little different we suggest that the big names on the financial High Street will need to up their games.

What do you think? Comment on this post to let us know.

Flexible Working Requests. Are You Prepared?

These days the ever increasing advances in technology and considerations around work-life balance mean that it is not always necessary for employees to be at their desks in the office during the working day. There are many opportunities for different, more flexible patters of working including working from home, flexible working hours and job sharing.

Did you know that your employees have certain rights to ask for a more flexible working pattern? And if you receive such a request, do you know how to handle it? Since June 2014, any employee with more than 26 weeks of employment service with you has a right to make a request for flexible working if they wish to. The employee can make a single request once per twelve month period.

To make a request for flexible working the employee must submit it in writing and include:

• The date of the request
• The change they are requesting (for example home working)
• The date they want the change to apply from
• How they see the change requested impacting on the business
• If the request is being made under the Equality Act 2010

As an employer, you must fully consider any such request you receive. This must be done, including any potential appeals, within three months of the date of the request from the employee. It is suggested that you meet with the employee to fully discuss and explore their request to establish the facts and circumstances behind it. Then armed with the facts you will be able to give the request full and complete consideration. Should you grant the flexible working request it will most likely mean a change to the employee’s contract of employment given the new circumstances so bear that in mind.
If you decide to reject the request then you must have a bona-fide business reason for doing so and communicate your decision to the requesting employee.

They may wish to discuss your rejection and the reasons for it so do be prepared for dialogue. Depending on the nature of this it may involve your HR department, a union representative or possibly even formal arbitration. The process has to be completed within three months of the date the flexible working request is received. This period includes, if you reject a request, any time for challenges or appeals from the employee.

A desire for homeworking is becoming a more and more popular reason for employees making flexible working requests. If so you will need a policy on homeworking. Below, we will look at the practicalities of having employees based at their home and associated policy considerations.

Essential Elements for a Working from Home Policy

Working from home is becoming an increasingly popular practice which can have attractions for both employer and employee. This is particularly pertinent as technology makes working from home easier.
This may have business benefits for all such as cost savings on office space, no commuting costs for the employee and perhaps a more motivated and productive employee given a more beneficial work-life balance.

If you do have employees working from home it is suggested that you develop a formal policy to govern this. It is suggested that you involve your HR and legal departments in the policy development. Let’s take a quick look at some of the suggested key points to consider.

Is the post suitable for home working?

Not all jobs and not all people will be suitable for working from home. An obvious example being production line staff if you run a factory. You need them on the production line. On the other hand sales or admin support staff may have duties which do not necessarily require them to be in the office to do their jobs well.

Working from home requires a different mind-set and discipline from the employee. They themselves may not be able to adapt to the different routine. Consider that and discuss it with them before approving working from home. Perhaps initially you could offer it on a trial basis of say one or two days a week gradually building up to full time subject to mutual review and agreement.

Who provides IT and other equipment?

To make a proper home office or working area the employee will need suitable space in their home. Do they have such space – a spare room perhaps and are they prepared to dedicate it as a work space?
Consider any equipment needs. Will you provide their IT, laptop, a separate internet connection and telephone line for business use, IT support, desk, chair and other peripherals or do you expect the employee to provide everything themselves? Will you give them an allowance to purchase anything they may need such as a desk and chair for their home office?

Health and safety considerations

Questions to ask yourself and consider around this will include is the employee’s home suitable for home working, is a risk assessment required, do you need to provide safety items such as a fire extinguisher, will you make a contribution towards extra heating and lighting the employee will use when working from home, are any insurances required for the business equipment and who pays for that, do you need the option to occasionally visit the employee at home to ensure all is well?

Information security

This will be an important consideration for your working from home policy.
If you have employees working at home remotely how will you ensure that confidential company information is secure? This is not limited to internet connections and emails. It also includes paper documents the employee may print out or otherwise be working on, have on USB sticks or simply leave on their desk in their home work space. If the home based employee has their family in the house too how will you ensure that security is maintained and, for example, paperwork isn’t accidentally mixed up with household items and destroyed or seen by visitors? You may require a locked space, all IT to be turned off, secure passwords, a “clear desk” policy at the end of the working day with all paperwork locked away securely.

Performance monitoring

Working from home requires a different discipline for the employee. One of becoming used to working in their home alone and being able to make that adaptation successfully without succumbing to the obvious temptations that may bring. How can you make sure that the home based employee is discharging their duties effectively whilst “out of sight” and without them feeling isolated? Another important consideration for your policy. How will you support them, how often will they be contacted and by what method without making the feel that they are under too much scrutiny? This might include a daily check-in call with their line manager, a video chat, hangout or similar. Perhaps they could be required to still attend the office in person for important team meetings, appraisals and similar so they still feel involved and part of the team.

The items we have looked at here should be food for thought if you are considering working from home as an option for some of your work force. A properly planned and executed working from home policy can have excellent benefits for both you as the employer and your employees.

Homeworking and Health and Safety Considerations for Employers

As an employer you have duty of care to all your employees. This extends to any employees you may have working from home. The health and safety of home based employees will be one of the biggest considerations for you when developing your working from home policy. Roles perhaps more suitable for working from home are the more “traditional” office based activities such as administration, sales or perhaps customer telephone support.

If you have any home based employees then health and safety legislation still applies and it is your responsibility as the employer to conduct a risk assessment with regard to the suitability of the homeworker’s accommodation for them to work in. This will include such considerations as lighting, heating, ventilation, space, layout, desk space, desk suitability, chair suitability, IT equipment, peripherals and anything else just as if the employee was office based.

Other considerations may include:

• Does the employee have, or will you be providing, desk, chair, IT, internet, telephone line, other equipment
• Will you be providing safety equipment such as a fire extinguisher, fire blanket etc.
• Does the employee have a home insurance policy which includes cover for homeworking and third party claims
• Does your employers’ insurance include cover for your equipment being used in an employee’s home

It is suggested that you build health and safety aspects in to your working from home policy and that you must visit the employee’s home to conduct the assessment with them present. Make a record of the assessment and discuss it with the employee. Do not approve home working until any issues arising from the assessment have been fully rectified, checked again and approved. Remember that you as the employer remain responsible for any equipment you supply to them. Thus you may need to build in PAT testing for any electrical equipment. Similarly, the same considerations apply around computer use such for example:

• Is the screen clear and readable, without flicker, free from glare and reflections
• Are brightness and contrast controls adjusted to prevent eyestrain
• Is the keyboard placed in the right position

In other words, is the employee’ home office work space set up optimally with the equipment you have provided are they happy with it and does it meet all requirements. The employee is responsible for making good any issues with their home arising from the health and safety assessment.

You may wish to conduct further periodic health and safety assessments to ensure compliance and remind the employee that they need to notify you immediately should they have any health and safety concerns around their homeworking.

Any accidents or incidents arising from working at home should still be reported and recorded in the usual way. It is suggested that this is included in your working from home policy so the employee is aware of it.

Tips for Converting from an Office Based to a Home Based Employee

Making a successful transition from office based to home based worker requires some getting used to. However it can be done and the benefits of working from home can be considerable. It does require a different mind-set and some discipline on your part.

Here are some hints and tips which may help you, based on my own experience of making that transition. I hope you find them useful should you be either thinking of working from home or are new to it.

Get up at the same time

After years of commuting to the office you will be used to getting up early every day for that grinding trip to work. Now you do not have to go through that. Perhaps your “commute” has now become a short hop along the landing to your new office in the spare bedroom. It will be tempting to stay in bed for an extra hour or so and have a lie-in. My advice is not to do that. Get yourself out of bed at the usual time. Go through your usual pre-commute routine. Have a shower, have breakfast, get dressed and “pretend” you are going to work. Kid yourself in to doing it. Keeping the same routine helped me get in to home working easier.

This meant not only was a trying to fool myself nothing had changed, when I wandered in to my new home office and logged-in I was doing so a good hour earlier than normal. I found that anything which had arrived overnight I could deal with and respond to immediately without the inconvenience of the grinding commute and I still felt fresh.

Sometimes to simulate a commute I would go for a short walk around the block before starting work. A little extra kidology to trick myself and get a spot of exercise at the same time. A few lung-fulls of morning air set me up well for the day in a much more positive frame of mind than a drive to the railway station and then that train ride squashed in with everyone else.

Keep the routine through the day

As a further piece of kidology until I got in to the homeworking routine was to pretend to myself that as far as possible to stick to the usual work day routine. That included giving myself a coffee break, taking a lunch break and still doing what I’d normally do when I’d normally do it. As I adapted to working at home I did find I could make changes and still get my work done. Indeed, I found I could do more in a working day as I no longer had the usual office-based distractions and interruptions. A little tip I offer to give some representation of office background noise rather than work in silence is to have the radio on tuned in to a news or talk channel. I found that helped a lot. Another tip I offer to help keep the routine is to resist the temptation (unless you really want to) of doing more and working longer simply because you are at home and have all-day access to your computer, work ‘phone etc. I made a promise to myself that at the end of the working day my laptop and mobile ‘phone were turned off and I would not go back on at say 8pm for an hour. I wouldn’t do that if in the office so I wouldn’t do it at home just because I could.

At the end of the day

Something I found a help was at the end of my working day I went out for a walk – even just for ten or fifteen minutes. This, I told myself, was to simulate leaving work and coming home so I had a bit of a separation between finishing work for the day and coming “home”.

Working at home is not so different from working in an office. You also need to be aware that you do not have to behave differently towards work, even if you are working on a project independently.
These suggestions and tips above are things I got in to when I first started working from home and then adapted for myself, in consultation with my employer, to make sure I still did my job properly (better even…) with the extra flexibility and freedom I enjoyed through working at home.
You will find what works best for you depending on your own personal circumstances, home life, job responsibilities and employer.

Key Words: Barnsley accountants, accountants in Barnsley, working from home, home working tips for employees

HMRC in Beta Test for Online Complaints System

It is one of life’s great frustrations for tax payers. You have a problem or question about your tax code, PAYE etc. You try to take it up with HMRC. You spend what seems like forever trying to speak to somebody on the telephone and give up because you have lost patience or cannot navigate the impenetrable interactive voice response options. Or you try the old fashioned method and send HMRC a letter. A reply takes longer to arrive (if it ever does) than you walking to the Moon and back.
By now at your wits’ end you want to make a complaint but to do so means another tortuous adventure in HMRC-land even Hercules would decline.

What do you do?

There may be salvation coming your way. HMRC, perhaps finally acting on the “bad rap” they have for customer service, is beta-testing an online complaints system aimed at those poor unfortunates amongst us who have issues with our tax, PAYE and “can’t get no satisfaction” from HMRC about it.

For the moment at least, the online test is for complaints from individual taxpayers – employees and pensioners – who wish to raise their complaint online should that complaint relate to tax deducted from their wage or pension and the service provided (or not) by HMRC.

If you fall in to the above category and wish to register a new complaint then you may try the online service.

The Online complaint form can be found here:

https://www.tax.service.gov.uk/forms/form/make-your-complaint-online/new

You will require a government gateway account. If you already have one, log-in. If you do not, register here:

https://www.tax.service.gov.uk/coafe/government-gateway/register?accountType=individual&continue=%2Fforms%2Fform%2Fmake-your-complaint-online%2Fnew

Perhaps if the beta test proves successful, HMRC will adopt the system more widely.

Should you have an existing complaint on-going with HMRC or wish to make a new complaint about anything other than tax deducted from your wage or pension then you are, at this time, limited to the telephone or letter routes.

General information and contact points for making general complaints to HMRC can be found here:

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/complain-about-hmrc

It is encouraging to see HMRC seeking to become easier to contact and more response to customer service and complaints issues. It has been a long time coming.

Have you been affected by tax issues and currently trying to sort it out with HMRC? Please leave a comment to share your experience. If you use the beta trial of the online complaints form, please leave a comment about that. We would be interested to read about your experiences.

Construction Industry Scheme. Does it Affect You?

Attention all contractors. Are you aware of the Construction Industry Scheme (CIS) and how it affects you? If not, take note!

The CIS includes, with some exceptions, construction work including site preparation, decorating, demolition and refurbishment.

The CIS applies to construction work carried out throughout the UK even including territorial waters up to the twelve mile limit.

If you are a contractor who uses sub-contractors then under the CIS you must deduct money from payments to your sub-contractors and instead pay it to Her Majesty’s Revenue and Customs (HMRC). This takes the form of an advance payment of the sub-contractor’s tax and national insurance contributions.
You must register for the CIS if you are a contractor. This is defined as you pay sub-contractors for construction work or your business doesn’t do construction work but you spend an average of more than £1 million a year on construction in any three year period.

Register as a sub-contractor if you do construction work for a contractor. You do not have to register if you are a sub-contractor however if you do not register it could mean that stoppages by the contractor are at a higher rate.

If you are both a contractor and sub-contractor then register under both categories.

If you are not involved in the construction industry normally you may still fall under the CIS and be a “deemed contractor”. For example if your business is in in the catering industry but for whatever reason you have a significant construction spend perhaps on new premises which goes over the £1 million threshold in any three year period then you will be a “deemed contractor” until such time your construction spend falls below the threshold and you can satisfy HMRC of that.

If you are liable for the CIS then after registration you will be required to keep certain records and make a monthly return to HMRC which includes details of the amounts paid to each of your sub-contractors and any deductions.

Under the CIS, payments from contractors to sub-contractors must reflect the tax status of the sub-contractor. Thus if you are a contractor it is essential that you clarify that tax status with your sub-contractors and if in doubt, HMRC.

Any relevant deductions must be taken and paid to HMRC under the scheme. You must keep and retain accurate records including a statement of deductions to the sub-contractor ready for you to complete your monthly CIS return to HMRC.

Your monthly CIS return must be with HMRC within 14 days of the end of the tax month they are for. You risk penalties if you do not comply with that deadline. Returns can be filed electronically or by post.
Monthly returns must still be made even if you have not paid any sub-contractors during the period of the return.

If you think that you may fall under the CIS but would like some additional help and advice, please contact us to discuss how we could assist you.

Property Landlords – An Unfair Hit on an Easy Target

On 6th April 2016 new rules come into play that will deny higher rate tax relief for any interest and other finance costs against rental income. It has long been established that interest is a cost that all businesses can offset against their income. This however will not be the case for landlords in the future.

To replace the deductibility of interest and related costs, landlords will be able to claim a tax deduction based upon the finance costs multiplied by the basic rate of 20%. This will have the effect in some cases of artificially making basic rate tax payers become higher rate tax payers, which could in turn lead to a loss or claw-back of benefits such as child tax credits and personal allowances, and cause landlords to pay tax on profits that they have not made.

Consider this example. Dave is already a higher rate tax payer through his employment. He also has rental income of £30,000 but pays mortgage interest of £35,000. Thus Dave has a monetary shortfall of £5,000 from his rental business that he must fund out of his other earnings. Surely he should not have to pay tax on his rental earnings, should he? Under the new rules he will. By 2020/21 his rents of £30,000 will incur tax of £12,000 (£30,000 @ 40%) and will get a reduction of only £7000 (£35,000 @ 20%). Despite making a monetary loss of £5,000 he will have to pay tax of £5,000 (£12,000 – £7,000).

Why can the Government get away with this bizarre unfairness? Due to the capping of tax rates during the current term of this Government, the Treasury, which is short of revenue and needing to close the Lending Gap, must be more inventive in it’s ways of raising taxes. Landlords are relatively easy targets. Despite Dave making a loss, he is perceived as a fat cat landlord, taking advantage of the poor working majority. Taxing landlords in this way, not only raises revenue for the Government, but also wins popular support and votes. A win-win for the government.

To make matters worse for landlords, they will also face increasing Stamp Duty on the purchase of buy-to-let properties, and when they come to sell properties they will be required to pay the tax they owe much earlier than all other tax payers. Currently the existing rules deny tax relief for genuine business expenses such as renewals of things such as carpets and white goods. Whilst this anomaly will be partially addressed after 6th April 2016 with the introduction of new rules, these rules are still purposely limited and will leave certain genuine business costs for landlords un-relievable.

At DEB we believe that this attack on landlords is likely to be the thin edge of a wedge with landlords likely to face increasing costs and threats to their businesses in the future. To keep landlords informed about these changes, as part of the DEB Business Wise Forum initiative, we are holding a free seminar on the afternoon of 28th April 2016 at DEB House which is open to both clients and non-clients to attend. Places are limited so please book your place early by contacting Ben Morley on 01226 245824.