UK Tax News

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.

AirBnB host data shared via the 2019 accounts

Published: 12 Oct 2020

Updated: 30 Oct 2020

Written by Ray Coman

AirBnB UK Ltd have made a statement in their accounts for the year to 31 December 2019 that they will share data about their hosts with HMRC.  It is a known practice that HMRC has the power to obtain tenant details from estate agents.  A great leap of imagination is not required to expect tax enquiries to follow from a simple matching exercise between the taxpayers’ history already available to HMRC and AirBnB host data.  The tax penalty is lower when a disclosure is made voluntarily than when it has been prompted. There is an opportunity for AirBnB hosts to bring their tax affairs up to date without suffering increased penalty.

The sections below address some of the commonly asked queries that are likely to result from this.

Winter Economy Plan

Published: 24 Sep 2020

Updated: 28 Sep 2020

Written by Ray Coman

Rishi Sunak announced a new raft of support measures in the Commons this afternoon.  The package is designed to avert an economic crisis triggered by tougher lockdown restrictions.  A recent spike in Coronavirus cases has resulted in a 10pm curfew effective today.  Social gathering restraints are expected to last six months.  The Winter Economy Plan included mostly extensions to previously announced funding.  The Chancellor also reference future tax rises to pay for the support, however any such announcment would no longer form part of the 2020 Autumn Budget.  The Autumn Budget has been cancelled.

Job Support Scheme

Self-employed income support scheme to be extended

New Payment Scheme

“Time to pay” for 2019/20 tax liability

Pay as you grow

Reduced rate VAT for hospitality sector to be lengthened

Job Support Scheme

The Chancellor announced a Job Support Scheme to replace the existing Coronavirus job retention scheme when it runs out at the end of October.

Jobs supported by the state must be viable.  To prove long-term viability, the employee is required to work a third of their usual hours.  The hours worked must be paid via payroll with income tax, national insurance and occupation pension scheme deductions calculated accordingly on that pay.

For the two thirds of the hours not worked, the government will pay one third.  To clarify, the government will cover one third of 66% or 22%.  The employer will also be required to pay a third of the hours not worked, or 22%. Therefore, the employer will be liable for one third, plus one third of two thirds, or 55%.  The employee will receive 77% of their pay which is 22% from the government and 55% from their employer. 

Reduction in working hours will differ, and the scheme is flexible to cover two thirds of the hours that are not worked.  However, the government element of the support will be capped at £697.92 a month.

The employee will need to be on the payroll on or before 23 September 2020 to be eligible.

An employee can join, leave and, if necessary, re-join the scheme any number of times during the six-month period during which it will run.  Unlike the previous furlough extension, the scheme is available to all UK employers.  The scheme is open to employees even if they have not previously claimed furlough.

A larger business will only be eligible for the scheme if turnover has fallen resulting from Covid19.

The scheme is designed to encourage business to retain staff rather than make people redundant and thereby avert mass unemployment over winter when the current furlough scheme expires.

Employers would still be able to claim the previously announced Job Retention Bonus in addition to the job support scheme.  The Job Retention Bonus is an award of £1,000 for retaining staff.

An employee cannot be made redundant or placed on redundancy notice for any period during which the employer is claiming the Job Support Scheme grant.

Self-employed income support scheme to be extended

As with previous Covid19 support measures, the government aims to be even handed with the self-employed and employed sectors of the economy.  A further self-employment grant will be available to sole traders and partners in an unincorporated business from February 2021 until the end of April 2021.  Businesses previously eligible for the self-employed income support scheme will be eligible for the new scheme. 

It will be a requirement for business to demonstrate that they are actively trading but have experienced reduced demand because of Covid19.  The new grant will cover the period from 1 November to 31 January.  The grant will pay 20% of profits for an average month subject to a cap of £1,875 for the three months.

A second grant will be available to cover the period from 1 February to the 30 April 2021.  Further information about the amount and nature of this grant have not yet been published.

New Payment Scheme

Businesses who had previously deferred VAT payable between March 2020 and June 2020, had to settle the deferred liability in one lump sum by 31 March 2021.  That payment can now be spread over 11 monthly instalments through 2021/22.

“Time to pay” for 2019/20 tax liability

Taxpayers with a liability arising in 2019/20 will have a further 12 months to settle this with HMRC.  The usual payment deadline for tax arising for the year to 5 April 2020 is 31 January 2021.  However, this liability can be paid over 12 months in equal monthly instalments.  Provided the monthly payment plan is kept to there would be no late payment penalty or interest arising on the tax paid later than usual.  The “Time to Pay” arrangement is a matter of negotiation between each taxpayer and HMRC.

Pay as you grow

Applications for the business bounce back loan will remain open until the end of November.  The deadline had previously been set at 4 November 2020.

The loans which are intended to keep businesses cash positive through the era of depressed demand have been dubbed “pay as you grow.”  Terms will be extended from 6 to 10 years, offering a facility for borrowers to cut their monthly repayment by almost one half.

During the term of the loan, it will be possible pause repayments for up to six months.  The loan holiday will be available only once and provided at least six repayments have been made.  It will be possible to enter three interest only payment periods.  Each period would last six months.

The interest element of a loan can be deducted from taxable profits, whereas the repayment element is not tax deductible.  As such, interest-only repayment periods provide both tax and cash benefit.

Reduced rate VAT for hospitality sector to be lengthened

The reduction in VAT rate from 20% to 5% for the hospitality sectors are to be extended to the end of March.  Reduced rate VAT was due to expire on 31 January 2021.