UK Tax & Business News – November 2021
This month we report on several newsworthy items in the world of business & UK taxation including Homeworking, ‘Going Green’ local grants to SMEs, and the latest HMRC investigatory actions to increase the UK tax take.
Working from home remains popular with both employers and employees throughout the ongoing pandemic. The Chartered Institute of Personnel & Development has produced research statistics that show that 40% of employers expect around 50% of their workforce will still want to work from home even if the Covid cases do reduce to a manageable level for us and our NHS.
There are also the cases where employees want to work from home for part of their working week. In view of this, now is the time for employers to consider formalising their employees’ homeworking policies by preparing a Homeworking Agreement to ensure that there is a safe and official arrangement in place.
The flipside of homeworking is that a recent survey by the Lloyd’s Register found that 70% of the employees surveyed said that homeworking had placed them under increased stress from working longer hours, feeling a lack of support and heightened anxiety.
Homeworking doesn’t suit everyone, and some employees will require ongoing support from their employers and fellow employees to avoid mental health issues. Such employer support can be as simple as implementing regular online team meetings involving the homeworker to keep them in the loop.
Your HR consultant will be able to assist you in the above-mentioned employee homeworking needs. However, if you are a SME employer without access to HR professionals please contact us at HaesCooper as we can recommend a HR consultant who will be able to support all your employees’ homeworking requirements during these Covid times and beyond!
Going-Green help for local businesses
Having previously reported on local authority grants to SMEs who want to become greener, The Low Carbon Across the South and East (LoCASE) of England grants to SMEs has now been expanded to include SMEs that operate their businesses within West Sussex.
The LoCASE grants were already available for SMEs operating within East Sussex, but now West Sussex SMEs can apply for LoCASE grants to help them fund a variety of business growth green projects such as renewable energy initiatives, energy efficient and storage products.
The other type of LoCASE Energy Efficient grants is also now available to West Sussex SMEs helping them to pay for projects that will make their businesses energy efficient such as installing renewable energy systems, LED lighting and upgrades to machinery or heating to reduce their business’s carbon footprint.
Child Trust Funds
If you have a child that was born between 1 September 2002 to 2 January 2011 inclusive, then the Government should have set up a tax-free Child Trust Fund (CTF) for them. The government initially paid £250 into all accounts, with an additional £250 (so £500 in total) paid to the accounts of those babies whose parents were in receipt of certain means-tested benefits. Parents were given a voucher to open a CTF, but if they did not do so within 12 months HMRC opened an account on the child’s behalf. From 2011 the CTF was replaced by the Junior ISA.
The parents were able to invest up to £9,000 per year (year starts with your child’s birthday) into your child’s CTF with any income arising from the CTF savings being tax-free. The CTF matures and the money available to be paid to your child when your child becomes 18 years of age.
We mention this as these CTF accounts are now maturing and many are remaining unclaimed. It is well worth you check which bank holds your child’s CTF money. You can do this online if you have a HMRC personal tax account or if you do not have this account you can contact HMRC requesting your child’s CTF information. HMRC say that they should reply within 3 weeks. For a summary of what to do please follow this HMRC link.
HMRC remains active in investigatory actions
Despite many complaints that HMRC’s so called customer support services leave a lot to be desired, the HMRC investigation machinery remains well oiled and running at a fast pace. The latest areas concerning the HMRC investigation machinery are highlighted below.
- Covid Grant Schemes – HMRC are seeking out those taxpayers that have overclaimed either fraudulently or negligently under the various Government Covid support grants such as under the furloughed scheme, the Covid Job Retention Scheme (CJRS) or the Self-Employed Income Support Scheme (SEISS).
It is reported that HMRC is making some 30,000 checks shifting its stance from compliance support to enforcement. It is reported that the HMRC’s target is to recoup £7bn of fraudulent claims or claims made in error solely from the CJRS!
Many businesses who have made claims under the CJRS will therefore be receiving a letter from HMRC asking them to enter a Contractual Disclosure Facility (CDF) under Code of Practice 9.
This CDF letter lets the taxpayer business know that they are suspected by HMRC of making a deliberate fraudulent CJRS claim with an offer of protection from criminal prosecution so long as they agree to disclose all tax errors over the last 20 years (yes 20 years!) and repay to HMRC the amount owed. A draconian attitude from HMRC but these CJRS claimants would have already had opportunities to check their CJRS claims namely when completing and filing to HMRC their Company Tax Return and on receipt of the ‘nudge letter’ that HMRC would have already sent to the CJRS claimant following the CJRS claim.
If your business receives a CDF from HMRC then it should be referred to your professional adviser and replied to within the HMRC 60 days deadline. You have been warned!
- Offshore underdeclared income – Taxpayers are now being contacted by HMRC where the taxpayer has disclosed to HMRC offshore income under the Worldwide Disclosure Facility being offshore income previously not declared to HMRC. HMRC are making contact to ask why the offshore income was not declared to HMRC and to establish any mitigating factors for the non-disclosure.
After receiving the above information HMRC will then issue a letter setting out the penalty to be charged for the non-disclosed offshore income. This is to enable the taxpayer to present any further information to HMRC as to why the penalty should not be charged or reduced in amount. If agreement is not reached with HMRC, within 30 days of the HMRC letter, HMRC will issue the formal Penalty Notice. The taxpayer has the right to appeal the Penalty Notice to the Courts in the usual way.
- Cryptocurrency-HMRC are issuing ‘nudge letters’ – As we have previously reported, HMRC are stepping up their use of so called ‘nudge letters’ that is where HMRC have some information that taxable income/gains have not been fully reported to them.
The latest topic for the HMRC nudge letter is for those persons who have been dealing in cryptoassets such as cryptocurrencies. The HMRC nudge letters are to let you know that HMRC have obtained information from a cryptocurrency UK exchange/dealer that you have bought cryptocurrency.
The HMRC nudge letter does not mean that you have underdeclared taxable income/gains as you would have needed to sell the cryptocurrency at a gain for a requirement to make declaration to HMRC. However, if have sold cryptocurrency in the tax year to 05/04/2021 you have until 31/01/2022 to file your Tax Return with the cryptocurrency sale details shown or to file an amended 2020/2021 Tax Return and/or if applicable an amended 2019/2020 Tax Return.
If you have not registered for Self-Assessment and you do have a 2020/2021 (or for an earlier tax year) taxable gain from dealings in cryptocurrency then there will be a HMRC penalty for a late registration. So best sort it out with HMRC sooner rather than later!
- Holiday Lets – It has been recently reported that Airbnb has agreed to share hosts’ income information with HMRC as part of its recent tax settlement with HMRC. HMRC already have the powers to obtain holiday let income information from other third parties such as holiday booking agents.
So if you have a holiday let make sure you are fully disclosing to HMRC the net profit from your holiday let income or expect HMRC to be knocking on your door!
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