ADVISORY FUEL & ELECTRIC RATES – 1 SEPTEMBER 2019

The Advisory Fuel Rates (AFR) as of 1 September,

Engine size                                         Petrol – amount per mile                             LPG – amount per mile

1400cc or less                                      12 pence                                                         8 pence

1401cc to 2000cc                                 14 pence                                                        10 pence

Over 2000cc                                          21 pence                                                        14 pence

Engine size                                         Diesel – amount per mile

1600cc or less                                      10 pence

1601cc to 2000cc                                 11 pence

Over 2000cc                                         14 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

The Advisory Electric Rate (AER) which was introduced in September for 100% electric cars will remain the same at 4p per mile.  Electricity is not a fuel for car fuel benefit purposes.

The AFR and AER are deemed to be tax and National Insurance free.

Both rates can be applied for fuel per mile,

• to reimburse employees for business travel in their company cars.
• when you require employees to repay the cost of fuel used for private travel.

If your employee does not repay the private fuel used during the tax year then you will need to,

• report on their P11D
• pay Class 1A National Insurance on the value of the fuel benefit

If you travel as a result of running your business (other than home to work) and

• are unsure on what you can claim
• are considering your options regarding the company purchasing a vehicle
• want to understand the rules around company car benefits in kind
• or anything else associated with business travel

Please contact us so that we can ensure the advice you are given is specific to your circumstances on 0113 2864486

Source: HMRC

There has been a 14% increase, year on year, of HMRC penalties for late self-assessment tax filing. 2015/16 291,000 taxpayers were penalised for late payments, increasing to 331,000 in the following year.  They have already issued 233,000 fines since the 31^st January 2019 deadline for the self-assessment tax year 2017/18.

“The pool of people at risk of being fined for late payment is now bigger than ever as self-employment continues to grow,” said Tim Woodgates, associate and tax specialist at Moore Stephens. “UK taxpayers are feeling the pinch. As a result, some do not have the money to pay the tax bill on time, even though they want to.”

Late filing penalties can be a mixture of fixed rate and tax geared penalties with interest charged on both unpaid tax and unpaid penalties, if both apply.

Late filing

• Miss filing deadline – £100
• 3 months late – Daily charge of £10 per day up to max £900 + £100 per above
• 6 months late – 5% of tax outstanding at that date or £300, whichever greater + penalties above
• 12 months late – 5% of tax outstanding at that date or £300 if greater, unless the taxpayer is held to be deliberately withholding information that would enable HMRC to assess the tax due

Late Payment

• 30 days late – 5% of tax due
• 6 months late – a further 5% of tax outstanding at that date
• 12 months late – an additional 5% of tax outstanding at that date

HMRC may accept “reasonable excuses” to waive late filing penalties.  “Reasonable excuse” being defines at “normally something unexpected or outside your control that stopped you meeting a tax obligation” such as:

• The recent death of a partner
• An unexpected hospital stay
• Computer failures
• Service issues with the tax authority’s on- line services
• A fire which prevented the completing of a tax return or postal delays

Each case is assessed on an individual basis.

If you need help with your Self Assessment then please call us on 0113 2864486 so we can help.

Source: Accountancy Age & Which

One in five sole traders doesn’t make their first anniversary, and six in ten have failed by their 5^th year, according to a recent study by the Institute of Fiscal Studies (IFS) and funded by the Office for National Statistics.

Between 2014 and 2015 650,000 sole traders started up but 580,000 closed during that same period, giving a net gain of 70,000.

Jonathan Cribb, senior research economist at IFS said “The growth in self-employment is an important and substantial change in the labour market.  We show for the first time how misleading it is to discuss the self-employed as a fixed group – there is a huge churn in the self-employed population with hundreds and thousands of people trying a business venture and failing quickly each year.”

Between 2011 and 2015 2.4 million people were operating as sole traders each year, but 6 million tried self-employment over the same period. This indicates that, whilst the number of sole traders remains fairly consistent, the people within the group change each year.

Business owners have been the fastest growing sector of the UK workforce. A third of the growth has come from foreign-born sole traders since 2007.

Helen Miller, deputy director of the IFS, said sole-trader business owners are at a disadvantage when it comes to business tax “Behind the staggering growth in business ownership………..lies a hefty tax penalty on employment relative to self-employment.  Preferential tax rates for business owners is a “one size fits all” approach and that fails to provide the support that some need whilst giving unjustifiable tax breaks and incentives to others.  Low and falling incomes among the self-employed and low levels of investment among small business more broadly should lead us to question why we are incentivising people to quit employment and start their own business.”

Source : Accounting Age

SmartScan is a new and unique smart automation system to assist QuickBooks’ customers file their VAT return accurately.  It automatically checks your VAT figures and scans your return for common errors, duplicates and anomalies, thereby reducing the monotonous audit checks that are sometimes needed.  You can view the SmartScan dashboard before submitting your VAT return to be confident that it will catch any mistakes made.

It scans all transactions in the current VAT period for anything out of the ordinary.  It then provides a summary dashboard of items allowing you to:

• Make sure everything is accounted for
• Review any unexpected items
• Take a closer look at what is included in your return

You and/or your accountant can amend as necessary.

It is provided free within every QuickBooks Online UK subscription and runs automatically in the background with the dashboard accessed instantly.

SmartScan automates the most important checks that accountants and auditors check for at tax time.  The process will assist with potential errors that may go unchecked and allows you to fix them quickly, so you are confident that your return is correct.

SmartScane does run with the assumption that when inputting transactions, that the VAT codes are correct at the time of entry.

If you wish to know about QuickBooks and SmartScan and how it can help your business then give us a call on 0113 286 4486.

Source: QuickBooks

A recent survey has found that 34% of women do not have a private pension plan compared to 17% for men.

Of those women, 41% have no intention of investing in a pension compared to 34% for men.  17% of women said they wouldn’t invest in a pension until at least 40 years of age and 9% not until they were 50!  The survey revealed that 65% will only have the state pension at retirement age with 34% stating they will be falling back on other savings.  There were 21% that said that they would be reliant on their partner’s pensions, savings and investments and 17% will have to keep working later in life.

How People without a Private Pension Plan intend to pay for their Retirement

One in three people (35%) over the last 12 months have stopped paying into a pension scheme.  The reasons for this are,

• 28% could not afford the payments any longer
• 20% would rather use the money for other things
• 14% would prefer to use the money to move onto the property ladder

All this comes at a time when auto enrolment has been in place for a minimum of just over 16 months, dependent on employer size (by PAYE scheme size) and the Government increasing auto enrolment contributions to a minimum of 8% from April 2019, with the employee paying 5% of this.

Adrian Lowcock, head of personal investing at Willis Owen, said it is understandable that people are “opting to focus on their financial needs today, such as getting on the property ladder, as opposed to financing their needs in retirement when they stop work…….it’s alarming to see so many people without pension plans, or who have stopped paying into them…….However, it’s never too late to own your financial future and start saving into a pension scheme.”

The survey was undertaken by Willis Own, an online investment service provider, and they questioned 1,070 UK adults.

Source: FTAdviser

In the Budget of 2018, the government planned to cap R&D tax credits.  There were fears that this would hinder legitimate start-ups and small businesses from receiving such benefits.  However, a recent consultation may have put forward a possible solution.

The R&D tax credit is very popular providing £3.5bn of relief in 2016/17 increasing from £350m in 2010.  HMRC stated that this increase also resulted in fraudulent claims to the tune of £300m by “artificial corporate structures.”  The government solution to this was announcing that a cap would be introduced in April 2020.

The cap is stated to be “the amount that a loss-making company can receive in R&D tax credits were to be capped at three times it’s total PAYE and National Insurance contribution liability.”  Many quickly stated that start-ups are lossmakers, having low or nil salary costs as they rely on subcontractors and/or many directors taking no remuneration when starting up a business initially.  The result of this would be that these new businesses could not claim R&D tax credit as “if you pay nil PAYE or NICs liability, then obviously three times nil is nil.”

Though HMRC need to reduce fraudulent claims it needs to ensure that genuine research businesses are not penalised in the Finance Bill 2019-2020.

The consultation document around this does state that it is aware of this situation and does wish “to keep any impact on them to a minimum and committed to consult on the cap before it is implemented.”  HMRC have put forward a compromise in the consultation that there would be a minimum level they would pay up to before the cap applies.  What the latter is though has not been officially stated and even when announced there are fears that some businesses will be unfairly caught out.

If you need help with any R&D claims, then please contact us on 0113 286 4486

Source: Accounting Web

In March 2018 we wrote about e-mail phishing scams that were on the rounds supposedly from HMRC (http://bit.ly/BWPhishingScam).  This is something that is still ongoing with HMRC recently blocking a widespread fraud technique where calls appeared to be from genuine tax department centre numbers.

Automated phone calls have been received sounding very similar to the PPI spam calls, “Hello, this is a message for the customer or authorised representative of reference number……, please call HMRC back on 0300 XXX XXXX.”  Upon checking the number, to be cautious, then they are seem to be linked to HMRC.

There has been a staggering increase in the number of such incidents been reported to HMRC in the past year.  In 2016/17, 407 incidents were reported increasing to 104,774 in 2018/19.  Through working with network providers, they have blocked more than 1,050 fraudulent phone numbers.  The result was that in April nearly all such spoof calls were eliminated, reducing fraud reports by 25% compared to March.

HMRC have advised that they will only ever call in connection with outstanding debts where the taxpayer is already aware, having received a letter first or having reported such liabilities on the self-assessment return.  In addition, they have changed their procedures so that card details no longer need to be read to an operator over the phone.

If you are unsure of any communication received from HMRC, phone call/e-mail then send details to phishing@hmrc.gsi.gov.uk and wait a their response and guidance or contact your Accountant.

Source: Accounting Web

The Advisory Fuel Rates (AFR) as of 1 June,

Engine size                                         Petrol – amount per mile                             LPG – amount per mile

1400cc or less                                     12 pence                                                         8 pence

1401cc to 2000cc                                15 pence                                                         9 pence

Over 2000cc                                        22 pence                                                        14 pence

Engine size                                         Diesel – amount per mile

1600cc or less                                     10 pence

1601cc to 2000cc                                12 pence

Over 2000cc                                        14 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

The Advisory Electric Rate (AER) which was introduced in September for 100% electric cars will remain the same at 4p per mile.  Electricity is not a fuel for car fuel benefit purposes.

The AFR and AER are deemed to be tax and National Insurance free.

Both rates can be applied for fuel per mile,

• to reimburse employees for business travel in their company cars.
• when you require employees to repay the cost of fuel used for private travel.

If your employee does not repay the private fuel used during the tax year then you will need to,

• report on their P11D
• pay Class 1A National Insurance on the value of the fuel benefit

If you travel as a result of running your business (other than home to work) and

• are unsure on what you can claim
• are considering your options regarding the company purchasing a vehicle
• want to understand the rules around company car benefits in kind
• or anything else associated with business travel

Please contact us so that we can ensure the advice you are given is specific to your circumstances on 0113 2864486

Open Banking is a Government initiative which is looking at the need to improve competition in retail banking and financial services.  The intention is to make it easier for companies to offer different and innovative services at the same time as ensuring that consumers have both more choice and control over their own money and financial information.

It is a new secure way for consumers, including small businesses to enable the sharing of financial information electronically, securely and only when permission is given.  The aim being to offer quicker speed, security and smart solutions.  Plus making it easier to share information with companies.

• You decide who has access to your banking data with permissions granted and withdrawn at any time if you wish.
• Sharing data with third parties will result in a smarter service including automated accounting and access to more customised lending or budgeting options.
• When Open Banking goes live it will be more secure as there will be no need to enter online banking credentials on third party websites. You will securely grant permission (every 3 months) to third parties to share data directly from your bank.

The aim being to revolutionise the way we move, manage and make more of our money.

Initially, Open Banking will enable consumers to compare current accounts and other banking services together with providing information about ATMs and branches.  Open Banking technology and standards will enable the development of new on-line and mobile applications so enabling small businesses to share their banking information securely with banks, building societies and other regulated companies.

Source: Open Banking

IR35 came into force in April 2000 and was introduced to tackle the issue of “disguised employment.”  This is where some contractors (and their hirers) would try to take advantage of the tax efficiency of working through a limited company.  This resulted in the hirer not needing to pay employers’ National Insurance for the contractor.  However, in practice the contractor is essentially an employee and the necessary taxes and employee benefits should be paid.

IR35 assesses whether the contractor is ‘for all intent and purposes’ an employee when they are hired for a contract.  If they are, they are “inside IR35” and employer’s National Insurance needs to be paid for them plus other employee benefits applied.  If they are “outside IR35” no contributions or benefits are required.

Public sector and private sector contracts have differing rules,

• Public sector contracts – the hirer has the responsibility of working out whether the contractor falls inside or outside of IR35. If they are “inside IR35” then the hirer, agency or other third party who pays the contractor needs to deduct tax and NICs and duly report this to HMRC.
• Private sector contracts – the contractor themselves are responsible for working out whether they fall inside or outside of IR35. If they are “inside IR35” then they need to pay the tax and NICs due.

However, from April 2020, the private sector contracts are set for changes as announced in the Autumn Budget of 2018, with a promised consultation in early 2019.  The latter is still being awaited.

Given that no consultation has been provided yet then many are guessing that the IR35 changes in the private sector will be like that of the public sector.

Thereby meaning, the hirer will be responsible for deciding the IR35 status of the contractor.  Recruitment agencies and end-clients are concerned about this for a couple of reasons.  If the changes are to give them the responsibility then,

• Assess an “outside IR35” incorrectly and it will make them liable for any unpaid taxes and penalties
• An “inside IR35” brings extra costs through the taxes to be paid and the extra work this involves.

If you are a contractor working in such a scenario then it is recommended that you check with the agency and/or client how they will be assessing your IR35 status.  Business and contractors need to begin preparing for the changes.

If you require any assistance on this matter, then please call us on 0113 286 4486.

Sources: Contractor UK & Simply Business