UK Tax News

VAT deferral due to covid

Published: 13 Dec 2020

Updated: 13 Dec 2020

Written by Ray Coman

In March 2020, the government announced a series of tax and cash saving measures in an attempt to soften the economic blow of covid.  This included a provision that payment of VAT usually due between 20 March 2020 and 30 June 2020 could be deferred until 31 December.  The deadline was subsequently extended to 31 March 2021.

Recap on opt deferral procedure

Many traders chose to pay VAT by direct debit, for its convenience and the comfort of knowing that a VAT payment will not be late.  A Vat deferral did not need to be applied for.  The deferral worked by the trader not paying VAT usually due during the deferral period. For those with a direct debit set up, it would therefore have been necessary to cancel the direct debit.  To ensure that any payments from July 2020 were collected the direct debit had to be reinstated.

HMRC systems were updated such that deferred VAT was not collected when the direct debit was subsequently set up again.  It would be imprudent to suppose that deferred VAT will be collected by direct debit in March 2021.  We therefore advise a payment is made before the deadline.  If there is no VAT to pay by the direct debit collection date, then nothing will be withdrawn by HMRC.

Further deferral

The Winter Economy Plan provided a further extension beyond 31 March 2021.  Traders who opt in, can settle deferred VAT in equal instalments.  No interest or late payment penalty will be charged for those who have opted in to the deferral program.  The trader can choose between 2 and 11 instalments.  The first instalment will be due 31 March 2021 and the final instalment has to be made by 31 March 2022.

To be eligible, the business must be up to date with VAT Returns and VAT payments, except for that normally due between 20 March and 30 June 2020.

It is a requirement to opt in before 31 March 2021 but the system has not yet been made available.  The VAT deferral payment scheme is due to be launched in 2021.

HMRC have stated to traders that if they can pay the deferred VAT that they should pay this by 31 March 2021.  The instalment arrangement is designed for businesses facing cash flow shortages resulting from lockdown.

Tax after Coronavirus

Published: 13 Nov 2020

Updated: 13 Nov 2020

Written by Ray Coman

Coman & Co has published an e-pamphlet which is available through various outlets, but can be downloaded here: Tax_after_Coronavirus.pdf

Xero and QuickBooks certified

Published: 08 Nov 2020

Updated: 08 Nov 2020

Written by Ray Coman

Coman & Co has become a Certified Advisor for both Xero and QuickBooks.  After successful completion of the online examinations, we can add these two useful competencies to the existing skill set of the firm.  Xero and QuickBooks are both market leading and among the top five accountancy software packages in the UK.

While we do not have certification, we are also able to handle most accounts preparation queries related to records held in Sage, Freeagent, Kashflow and other bookkeeping products.

Cloud accounting expertise

Preparing records without accounting software

Accountant access to accounts preparation software

Making Tax Digital

Quarterly reporting in 2023

Forward looking accountancy practice

Cloud accounting expertise

Coman & Co has been QuickBooks certified since 2012, however this certification covered only the Desktop version of the software.  We are now certified for the online product as well.  We have taken this extra measure to provide clients with the assurance that we can deal their accounts and help prepare them for year-end processing.  We have been on-boarding clients using accounts software since we started in business in 2009.

Preparing records without accounting software

Some clients do not wish to use online accounts.  Not a problem.  We do not prescribe the format in which accounting records are delivered to us.  Should a client wish to use excel, or simply relay totals in an email, or send records by post, we can accommodate that preference.

Accountant access to accounts preparation software

Our clients can give us accountant access to their online records.  This helps to review accounts, reducing the amount of communications required in understanding the accounting entries.  Calling on our knowledge we can help guide where an oversight or confusion has arisen in the accounts.

Making Tax Digital

Accountancy software is increasing in use partly resulting from a movement towards cloud technology but also because of Making Tax Digital.  Making Tax Digital currently requires a VAT registered business to report to HMRC using approved third-party software.  With certain exemptions, most VAT registered traders are no longer able to use the free HMRC software for filing VAT Returns.  This has been a requirement since April 2019.

Quarterly reporting in 2023

The government has proposed that from 6 April 2023, sole traders and landlords with income over £10,000 will be required to report profits once every three months using tax compliant software.  In brief overview, the current design is that profits for the three months from 5 April to 5^th July would be reported to HMRC via an accounting software platform no later than 5^th August 2023.  This requirement would continue once every three months thereafter.

Coman & Co will be able to call on our existing competencies, in tax, in practice management and in accounting software expertise, to help guide businesses through this challenging transition.  The Xero and QuickBooks certifications are further step we have taken to ensure we are one step ahead of this kind of shakeup.

We are reviewing with our clients how we can expand our offering to facilitate the proposed overhaul, while staying as keenly priced as ever.

Forward looking accountancy practice

We want to stay up to date with developments in tax but also in accounting.  Our IT system is upgraded regularly.  We adapt our practice to accommodate the changing demands of regulation.  We embrace technological development in our field.

The badges in the footer of the website re-direct to the directory listing for the practice on both Xero and QuickBooks websites.

Furlough and self-employment support runs now to March 2021

Published: 08 Nov 2020

Updated: 19 Dec 2020

Written by Ray Coman

On 5th November, the government announced a further extension to the furlough scheme.  At the start of the month, the government had extended of furlough through the month of November.  However, in this more recent announcement furloughing at 80% of pay will continue right to 31 March 2021.  On 17th December, the furlough was extended again to 30th April 2021.  This means that the government has committed to covering up to 80% of the cost of those hours not worked by an employee due to lockdown.  The grant will be subject to a limit of £2,500 per month.  The government has set 3rd March 2021 as the date for the Spring Budget.

New coronavirus job retention scheme

Increase in Self-Employment Income Support Scheme grant

Economic outlook following lockdown

Extension of Coronavirus Business Loan Scheme

New coronavirus job retention scheme

Flexible furlough arrangements will continue, which means that employees can continue to work when they are able, with the government grant supplementing those hours not worked.  Hours not worked are based on the normal working hours of the employee.

Employers will still be required to make employers national insurance and workplace pension contributions based on earnings.  In this case, earnings includes the coronavirus job retention scheme grant.

A claim for furlough must be made by 14th day of the month following the month to which the furlough relates, so 14 December for November claims.

Any employee who was on payroll on 30 October 2020 will be eligible to join the new grant scheme, and it is not a requirement that the furloughed staff member has previously been on furlough.

Provided an employee was made redundant not before 23 September 2020, it is possible for that employee to be re-employed and placed back on furlough.  This could suit certain employers who could have made redundancies in anticipation of furlough ending on 31 October.

The previously announced Job Support Scheme has been shelved.  Since this was due to run until 31 March 2021, there has not been a clear indication about whether the Job Support Scheme will be re-introduced.

Employees can accrue holiday while furloughed but are unlikely to take holiday.  On the end of furlough, it is possible that an employee would have accrued substantial holiday entitlement.

In a previous announcement, the government revealed a Job Retention Bonus which would be available for employers who brought staff back and kept them employed until 31 January 2021.  The Bonus will not be paid as previously scheduled.  A further announcement about this bonus is awaited.

Increase in Self-Employment Income Support Scheme grant

The Self-Employment Income Support Scheme (SEISS) will also be increased.  In a previous announcement the government pledged to supplement income for the self-employed with a grant equal to 55% of profits.  However, the grant which covers the period from 1 November 2020 to 31 January 2021 will now be 80% of profits.  More specifically, the grant will be based on an average three months of profit for the year to 5 April 2019.  The amount will be paid in a lump sum and subject to a cap of £7,500.  As with the previous two grants, it will only be available to businesses that have been adversely affected by lockdown.

Applications for the grant will open on 30 November 2020 and will require an online declaration by the applicant.  The amount of the grant is automatically calculated by reference to 2018/19 profits record held by HMRC.

A fourth grant covering the three months from 1 February to 30 April 2021 is also scheduled, but details of the amount of the grant and eligibility of applicants have not yet been released.

Economic outlook following lockdown

Evidence of the first lockdown has shown that the affected parts of the economy did not bounce back straight back with the easing of restrictions.  The latest extension is in recognition of that extra support businesses will need through the post-covid recovery phase.  The announcement included further grants for businesses that have been forced to closed and additional backing for loans to help adversely affected business to bounce back.

The current furlough scheme is due to be reviewed by the government in January next year.

Extension of Coronavirus Business Loan Scheme

On 17th December, following Tier 3 lockdowns, business loan scheme will be available until the end of March 2021.

Furlough to be extended a further month

Published: 01 Nov 2020

Updated: 03 Nov 2020

Written by Ray Coman

With the reintroduction of tighter lockdown announced on Saturday, furlough at 80% of wages will be extended for the entire month of November 2020.  This means that the government will subsidise up to 80% of wages for hours not worked, subject to a cap of £2,500 per person.  Employers will have to settle National Insurance and employer pension contributions related to pay.  The furlough effective from 1 November to 30 November will be identical to the support provided for August.

Flexible furlough, which started on 1 July 2020, will also be available.  The scheme enables employers to decide the hours that employees work, with the state providing furlough provision only for those hours that are not worked.  Flexible furlough was also scheduled to end on 31 October.

The employee must have been on the payroll on 30 October to be eligible for the November furlough.  However, it is not a requirement for an employee to have claimed furlough before to be eligible for the new grant.

The Job support scheme was schedule to be introduced yesterday on 1^st November.  However, this will not longer be going ahead as planned, it has been replaced by the Coronavirus Job Retention Scheme Extension.

Mortgage holidays due to end at the end of October have been extended.  No announcements were made to change the self-employed income support scheme grants.