Tax Newsletter Oct 2019

Welcome to this month's issue of the Clarkson Cleaver & Bowes Ltd newsletter. 

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Newsletter October 2019


 

What is the Annual Investment Allowance?

The Annual Investment Allowance (AIA) is a generous tax relief that was first introduced in 2008. The AIA allows for the total amount of qualifying expenditure on plant, machinery, commercial vehicles and other qualifying equipment to be deducted from your profits before tax.

 

The AIA can be claimed by an individual, partnership or company carrying on a trade, profession or vocation, a UK non-residential property business or a furnished holiday let. Only partnerships or trusts with a mixture of individuals and companies in the business structure are unable to qualify for AIA.

 

The AIA was permanently set at £200,000 for all qualifying expenditure on or after 1 January 2016. However, this limit has been temporarily increased to £1 million for a 2-year period from 1 January 2019 to 31 December 2020. This increased limit is a generous allowance and should cover the annual spend of most small and medium sized businesses. 

 

The AIA does not apply to purchases of cars.

 

If you are thinking of incurring large items of capital expenditure for your business over the coming months, you should ensure that any purchase is properly timed to take full advantage of the temporary increase in the AIA limit.

 


 

Brexit and VAT Mini One Stop Shop

HMRC has confirmed that after Brexit, you will not be able to use the UK’s VAT Mini One Stop Shop (MOSS) to declare and pay VAT. The final return period for the UK’s VAT MOSS system will be the period ending 31 December 2019. However, on this final return you should only include sales made before Brexit.

 

HMRC has confirmed that after Brexit, you will be able to use the UK’s VAT MOSS system to:

 

  • submit your final return by 20 January 2020
  • amend your final return until 14 February 2020
  • update your registration details until 14 February 2020
  • view previous returns

 

If you want to continue to use MOSS for sales you make after the UK leaves the EU, you will need to register for MOSS in any EU Member State. Alternatively, you will need to register for VAT in each EU member state where you sell digital services to consumers. The digital services threshold of €10,000 (£8,818) will no longer apply.

 

The place of supply rules on the sale of business to consumer (B2C) digital services is determined by the location of the customer who receives the service rather than the location of the supplier. The MOSS scheme is an electronic system that allows businesses to register in only one EU member state and submit a single VAT return and payment each quarter for all their cross-border supplies of digital services.

 

 

 


 

Get information about a company

There is a significant amount of information that can be obtained from Companies House. Companies House is responsible for incorporating and dissolving limited companies, examining and storing company information and making company information available to the public.

 

Much of the company information available can be accessed free of charge. This is in line with the Government’s commitment to free data and means that all publicly available digital data held on the UK register of companies is accessible in this way. These records provide access to over 170 million digital records on companies and directors.

 

This includes:

 

  • company information, for example registered address and date of incorporation
  • current and resigned officers
  • document images
  • mortgage charge data
  • previous company names
  • insolvency information

 

There is also a service called WebCHeck. This allows you to view a company's filing history and purchase copies of document images as well as a selection of company reports. You can also elect to monitor a company and receive email alerts of any new documents filed at Companies House. This can be a useful thing to sign up for as this would help you ensure there are no unexpected filings made for your own company.

 

 


 

ICO publishes no-deal Brexit guidance for SMEs

The Information Commissioner’s Office (ICO) has published dedicated guidance to assist small and medium-sized businesses in their preparations for a no-deal Brexit and has urged them to “prepare for all scenarios” to maintain data flows when the UK leaves the EU. The guidance for small and medium-sized businesses is not entirely new as the ICO has, in fact, tailored its previously published no-deal Brexit guidance to be more relevant and accessible to smaller businesses. 

 

At the moment, personal data flow is unrestricted because the UK is a member of the EU. In the event of no deal, EU law will require additional measures to be put in place when personal data is transferred from the EEA to the UK in order to make such data transfers lawful. The ICO’s guidance sets out steps to take to keep personal data flowing, such as using pre-approved contract terms. It says that:

 

  • if you are a UK business that already complies with the GDPR and has no contacts or customers in the EEA, you do not need to do much more to prepare for data protection compliance after Brexit
  • if you are a UK business that receives personal data from contacts in the EEA, you need to take extra steps to ensure that the data can continue to flow after Brexit
  • if you are a UK business with an office, branch or other established presence in the EEA, or if you have customers in the EEA, you will need to comply with both UK and EU data protection regulations after Brexit and you may need to designate a representative in the EEA.

 


 

New checker tool to help businesses prepare for Brexit

The Government has launched a “Get ready for Brexit” public information campaign to help ensure businesses are ready when the UK leaves the EU on (currently) 31 October 2019. As part of the campaign, a new checker tool will help businesses to prepare for Brexit, particularly if they import or export, deal with personal data or employ EU nationals. Users can use the tool to identify quickly what they need to do in order to be prepared for when the UK leaves the EU. The tool requires the user to answer seven questions to get guidance relevant to their business, including information on specific rules and regulations.

 

Click the link here: https://www.gov.uk/get-ready-brexit-check

 

 


 

Immigration rights of EEA citizens in the event of a no-deal Brexit

The Government has now announced the revised transitional arrangements that will apply in the event of a no-deal Brexit to EU, EEA and Swiss citizens and their close family members arriving in the UK after Brexit, replacing those set out in a January 2019 policy paper issued under the previous Prime Minister, Theresa May. The Government’s new policy paper means that law-abiding EU, EEA and Swiss citizens arriving in the UK after a no-deal Brexit and before the end of 2020 will be able to enter, live, work and study as they do now. The new transitional arrangements provide that:

 

  • There will be a transition period from the date of Brexit until 31 December 2020, during which time EU, EEA and Swiss citizens who move to the UK will be able to apply for a three-year temporary immigration status, to be called European Temporary Leave to Remain (Euro TLR). Although applications will be voluntary, EU, EEA and Swiss citizens will need to apply for Euro TLR if they wish to remain in the UK beyond 31 December 2020.
  • Applications made under the new Euro TLR scheme will be free of charge and will be made after arrival in the UK. It will involve a simple online process and identity, security and criminality checks. Successful applicants will be given a digital status, granting them three years’ leave to remain in the UK, running from the date the leave is granted.
  • EU, EEA and Swiss citizens wishing to stay in the UK after their Euro TLR expires will need to make a further application under the UK’s future new points-based immigration system (to be based on skills) which is due to be implemented from January 2021. This is likely to mean that low-skilled workers may need to leave their jobs and the UK when their three years’ Euro TLR expires if they do not meet the requisite criteria to have a right to remain in the UK under the new immigration system.
  • Any EU, EEA and Swiss citizens who move to the UK after Brexit and do not apply for Euro TLR will need to leave the UK by 31 December 2020, unless they have applied for and obtained an immigration status under the new immigration system by that date. Otherwise, they will be here unlawfully and will be liable to enforcement action, detention and removal as an immigration offender.
  • Time spent in the UK with Euro TLR status will count towards settlement.
  • Employers will not be required to distinguish between EU, EEA and Swiss citizens who arrive before and after Brexit until the new immigration system is introduced from January 2021. This means that right to work checks for employers will remain the same until January 2021, so EU, EEA and Swiss citizens can start work by providing a passport or ID card until this date, or they can use their digital status granted under the Euro TLR scheme to prove their right to work via the Home Office’s digital status checking service. Employers will not be required to make retrospective right to work checks of EU, EEA and Swiss citizens who start work before 1 January 2021, but anyone employed after this date will need to show that they have a valid UK immigration status.

 

There will also be some new border controls to make it harder for serious criminals to enter the UK.

 

EU, EEA and Swiss citizens are their family members who are already living in the UK before Brexit still have until at least 31 December 2020 to apply to the EU Settlement Scheme for settled or pre-settled status.

 

Irish citizens’ rights are unaffected by the new arrangements, and they can continue to come to the UK after Brexit to live and work.

 

 


 

Planning a Christmas party?

Now is the time that many businesses are planning a Christmas celebration for staff as well as possibly for partners/spouses, clients and prospective clients.

The cost of a staff party or other annual entertainment is generally allowed as a deduction for tax purposes. If you meet the various criteria outlined below, then there is no requirement to report anything to HMRC or pay tax and National Insurance. There will also be no taxable benefit charged to employees.

  1. An annual Christmas party or other annual event offered to staff generally, is not taxable on those attending provided that the average cost per head of the function does not exceed £150.
  2. The event must be open to all employees. If a business has multiple locations, then a party open to all staff at one of the locations is allowable. You can also have separate parties for separate departments, but employees must be able to attend one of the events.
  3. There can be more than one annual event. If the total cost of these parties is under £150 per head, then there is no chargeable benefit. However, if the total cost per head goes over £150 then whichever functions best utilise the £150 are exempt and the others taxable. Note, the £150 is not an allowance and any costs over £150 per head are taxable on the full cost per head.
  4. It is not necessary to keep a running total by employee but a cost per head per function. All costs including VAT must be considered. This includes the costs of transport to and from the event, food and drink and any accommodation provided.

VAT incurred on Christmas parties for your staff can be recovered subject to the usual rules. If staff partners/spouses or clients are also invited to the event, the input tax has to be apportioned as the VAT applicable to non-staff is not recoverable. However, if non-staff attendees make a contribution to the event, all the VAT can be reclaimed and of course output tax should be accounted for on the amount of the contribution.

It is important to pay attention to the nuanced tax rules to ensure that your party is tax exempt.

 


 

 

Help to Save accounts

The Help to Save scheme can help those on low incomes to boost their savings. The scheme was launched in September 2018, and new figures published by HMRC have revealed that over 132,000 people have signed up, depositing more than £31.4 million into Help to Save accounts. These savers are now eligible for bonuses totalling around £14 million.

Under the scheme, those receiving Working Tax Credit or entitled to Working Tax Credits and in receipt of Child Tax Credits, can save up to £50 a month for two years and receive a 50% Government bonus. The scheme is also open to those who are claiming Universal Credit and had a household or individual income of at least £569.22 for their last monthly assessment period. Payments from Universal Credit are not considered to be part of household income.

Payments under the scheme can be made by standing order on a weekly, fortnightly, or monthly basis and one-off payments by debit card are also possible. Account holders will then be able to continue saving under the scheme for a further 2 years and receive another bonus. This could see those on low incomes receive a bonus of up to £1,200 on maximum savings of £2,400 for 4 years from the date the account is opened. After the 4 years, the Help to Save account will be closed and savers will not be able to reopen or open another Help to Save account. The account balances are expected to be rolled over into successor accounts.

There are no limits on how the money used can be spent, but it is hoped that the money will be saved for urgent costs. Money paid into the account can be withdrawn at any time, but this could affect the size of the bonus payment. The Government is urging anyone else eligible to use the scheme, to look at the benefits as the take-up of the scheme has been far less than expected. It is estimated that some 3.5 million people could use the scheme.

 


 

 

Tax Diary  October / November  2019

 

1 October 2019 - Due date for Corporation Tax due for the year ended 31 December 2018.

19 October 2019 - PAYE and NIC deductions due for month ended 5 October 2019. (If you pay your tax electronically the due date is 22 October 2019.)

19 October 2019 - Filing deadline for the CIS300 monthly return for the month ended 5 October 2019. 

19 October 2019 - CIS tax deducted for the month ended 5 October 2019 is payable by today.

31 October 2019 – Latest date you can file a paper version of your 2018-19 self-assessment tax return.

1 November 2019 - Due date for Corporation Tax due for the year ended 31 January 2019.

19 November 2019 - PAYE and NIC deductions due for month ended 5 November 2019. (If you pay your tax electronically the due date is 22 November 2019.)

19 November 2019 - Filing deadline for the CIS300 monthly return for the month ended 5 November 2019. 

19 November 2019 - CIS tax deducted for the month ended 5 November 2019 is payable by today.


       


DISCLAIMER - PLEASE NOTE: The ideas shared with you in this email are intended to inform rather than advise. Taxpayers circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this newsletter, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.