Deadline to pay deferred VAT or arrange payment plan “fast approaching”
The deadline to pay deferred VAT or arrange a payment plan is “fast approaching”, the Institute of Chartered Accountants in England and Wales (ICAEW) has warned.
Businesses who deferred VAT in the wake of the coronavirus pandemic must take action before 30 June 2021 or risk penalties.
If your company has outstanding VAT liabilities, here’s what you need to know.
What is the VAT deferral scheme?
VAT-registered businesses could defer VAT payments between 20 March and 30 June to support cash flow during the height of the coronavirus pandemic.
The resulting liability was initially deferred until 31 March 2021, but a further deferral was announced in September 2020 giving businesses until 30 June 2021 to repay.
What are my options?
Businesses have two options. Pay their deferred VAT liability in full by 30 June 2021 or arrange a payment plan by the same date.
The new online VAT Deferral New Payment Scheme, which launched in February, enables businesses to spread out their liabilities over eight to 10 monthly interest-free instalments, depending on when they apply.
To get started, simply click this link and have your VAT registration number and Government Gateway ID handy.
What is the penalty for non-compliance?
Businesses could be fined up to five per cent of their total VAT liability if they do not register or pay in full by 30 June 2020, HM Revenue & Customs (HMRC) has confirmed.
Get expert advice today
For help and advice with related matters, please get in touch with our expert accounting and finance team today.
Bounce Back Loan Scheme fraud rising
The Bounce Back Loan Scheme (BBLS) which has been described as a ‘giant bonfire’ of taxpayers’ money by a senior banker, has seen fraud investigations rise by more than 50 per cent in some areas.
In total, £46 billion has been loaned under the scheme since its inception. However, the Cabinet Office believe that fraud losses across the public sector generally could be between 0.5 and 5 per cent, making a total of up to £2.3 billion on the scheme alone.
In addition, as of January 2021, according to the British Business Bank (BBB), which oversees the scheme, 43,958 loan applications, worth £1.6 billion were blocked by lenders, due to suspicions of fraud.
BBLs fraud investigations by the City of London Police increased by more than 50 per cent in February 2021 compared to the previous month, shows research from RPC, the international law firm.
The number of investigations opened into possible BBLs fraud increased from 17 in January to 26 in February before rising to 28 in March.
BBLs were those offered to small and medium-sized businesses in the UK that were impacted by the Coronavirus pandemic. More than 1.5 million businesses took out a loan before the scheme closed on 31 March 2021. These were 100 per cent state-backed and worth up to £50,000 interest free in the first 12 months.
Due to low levels of controls, designed to enable lenders to fast-track payments to help struggling businesses, there are concerns that abuse of the scheme was widespread.
It has been reported that fraudsters falsified documents to claim loans for non-existent companies, whilst some company directors used money claimed through the scheme to pay for personal items such as luxury cars.
RPC says abuse of the BBLs scheme can carry a heavy prison sentence if defendants are found guilty by a jury. However, with a huge backlog of criminal cases (compounded further by Covid-19), trials for even serious offenders caught today are unlikely to take place until 2023/2024.
Sam Tate, partner and head of white collar crime at RPC says: “The authorities will want to accelerate the pace of investigations. Otherwise, there is a high risk these assets will leave the country.”
“BBLs have been particularly attractive to fraudsters. Despite lenders blocking tens of thousands of applications believed to be fraudulent, many will have slipped through holes in the net, with the cost to the taxpayer estimated to be in the billions of pounds.
“Yet, trials even for serious BBL fraudsters caught today are unlikely to take place until 2023/2024, which is less of a deterrent for on-going fraud.”
UK to roll out independent tariff suspension scheme
Tariffs on some imported goods will be partially or wholly suspended to help UK firms become “more globally competitive”, it has been revealed.
The new scheme, announced this week by the Department for International Trade (DIT), will allow companies to ask for duties to be withdrawn for a set period – effectively lowering overall production costs.
As the UK is no longer a part of the EU, the Government said it now has the power to establish an independent tariff regime and the authority to decide how duties should be applied.
Tariffs could be suspended under previous trading arrangements, but only if agreed upon by all 27 EU Member States.
The guidance confirms that once a suspension has been introduced, all UK importers will be able to benefit from the reduced rate.
The duty suspensions will apply to unlimited quantities of a wide range of goods imported to the UK, but not chargeable duties such as VAT or the anti-dumping duty.
As part of the launch of this scheme, the Government also confirmed that existing duty suspensions rolled over from the EU will be extended beyond 31 December 2021 to “ensure business certainty”.
Commenting on the report, Greg Hands, Minister for Trade Policy, said: “Now we have left the EU we can use suspensions to give UK firms the maximum possible benefit.
“This suspensions scheme will be accessible to importers across the country, and those that are granted will benefit entire sectors.
“They will lower costs and help our superb producers pack even more of a punch when they compete on the global stage.”
For help and advice on related matters, please get in touch with our expert team today.
Six out of 10 firms to employ more staff
Sixty per cent of small businesses (SMEs) are planning to recruit more staff over the coming months as we emerge from lockdown.
Research by the new bank Recognise, found 62 per cent of SMEs said they would be employing more staff as restrictions are lifted and business gets back to normal.
More than a third of SME firms surveyed (37 per cent) said they would be recruiting more full-time staff, while 15 per cent said they would be employing more part-time workers and 18 per cent of respondents said they would be hiring more temporary and seasonal workers.
One downbeat side to the news is that some employers are struggling to hire staff amid an exodus of overseas workers caused by the pandemic and Brexit, industry figures reveal.
According to the Chartered Institute of Personnel and Development (CIPD) and the recruitment firm Adecco there had been a sharp decline in the numbers of EU workers, fuelling the risk of labour shortages.
Separate figures from Adzuna showed rapid growth in hiring, with almost 1m vacancies listed on the jobs website, up 18 per cent on six weeks ago amid a rise in jobs in hotels, restaurants and in the events and leisure sector. But it warned there had been a steep decline in overseas jobseeker interest.
The jobs website, which is tracked by Government officials for early warning signs from the labour market, said the decline was being led in particular by overseas interest in typically lower-paid service-led sectors, while some towns and cities have up to 20 jobs on offer per jobseeker. According to the research, Maidstone in Kent is the hardest place to hire, followed by Manchester, Cambridge and Oxford.
Further research from the Recognise survey found less than one in five of SMEs surveyed (18 per cent) said they would be cutting staff numbers in the coming months, with just eight per cent saying they would be laying off full-time workers and seven per cent saying they would reduce the number of part-time employees. Just under a quarter of smaller firms (24 per cent) Recognise surveyed said they would be keeping employee numbers the same.
While employment plans were consistent across most UK industry sectors, there were some stand-out areas where small and medium sized businesses are clearly gearing up for an increase in trade as restrictions are relaxed over the next two months. Recognise found:
• 72 per cent of SMEs in the financial services and insurance sector said they would be recruiting, with more than half of the roles (53 per cent) in full-time positions
• 65 per cent of all small and medium sized retailers said they would employ more people, with over a third (35 per cent) in full-time roles
The survey also found that only nine per cent of all the SME businesses surveyed still have staff on furlough.
Recognise currently has dedicated relationship managers in London, Midlands, Manchester and Leeds, with more coming on stream soon.
The bank’s research and analysis was carried out in May 2021 amongst a nationally representative sample of 500 senior decision makers in British SMEs by 3Gem.
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What is IR35 and what does it mean for contractors, freelancers and sole traders?
Introduced in April this year, the new off-payroll working rules may significantly change the economic landscape for contractors, freelancers and sole traders.
If you’re concerned about IR35, here’s everything you need to know.
What are the new off-payroll working rules?
A contractor who works like an employee – but is paid through a limited company – should broadly pay the same Income Tax and National Insurance Contributions (NICs) as other employees.
The legislation that governs this practice is known as IR35, or more commonly, the off-payroll working rules.
What’s changed?
As of 06 April 2021, medium and large-sized private sector employers are now responsible for determining whether IR35 rules apply – as well as the liability for any underpaid tax.
It was previously the responsibility of the contractor to determine their employment status.
Who do the new rules apply to?
You may be affected by these rules if you are:
- a worker who provides their services through their intermediary
- a client who receives services from a worker through their intermediary
- an agency providing workers’ services through their intermediary.
What is the impact of IR35 on workers?
It is estimated that around 500,000 contractors will be impacted by the legislation.
If an employer has determined that IR35 rules apply, Income Tax and employee National Insurance contributions must be deducted from your fees and paid to HMRC, but you won’t be awarded holiday pay or statutory leave.
This could potentially reduce take-home pay by as much as 25 per cent. You can, however, dispute the determination given if you disagree with it.
More information on disputes and determination can be found here.
How do I know if my client (the employer) is affected by the legislation?
The employer is responsible for determining your employment status – but only if they are affected by the rules.
While all public sector authorities are responsible for deciding if the rules apply, the legislation does not apply to private sector employers who do not meet at least two of the following:
- a turnover of £10.2 million or more;
- a balance sheet total of £5.1 million or more; or
- 50 employees or more.
If a worker provides services to a client who is not required to apply IR35, the worker’s intermediary will remain responsible for deciding the worker’s employment status and if the rules apply.
Get expert help today
For help and advice with related matters, please get in touch with our expert team today.
Furlough fraud warning after arrests
Employers have been warned that businesses abusing the furlough scheme will face action from fraud investigators.
It comes after two people have been arrested by H M Revenue & Customs (HMRC) officials over a suspected £3.4m Coronavirus Job Retention Scheme (CJRS) fraud.
In March, the Government announced it would invest £100m in a Taxpayer Protection Taskforce to combat fraud linked to Covid-19 support measures.
The man, 35, and woman, 36, from Bradford, were also interviewed in relation to a suspected multi-million-pound tax fraud, officials said.
More than £6m held in bank accounts controlled by the pair has been frozen by HMRC.
Both were held on suspicion of cheating the public revenue, VAT evasion and money laundering. They have since been released under investigation.
The Coronavirus Job Retention Scheme (CJRS), commonly called the furlough scheme, was launched in March 2020, at the start of the coronavirus crisis, to minimise unemployment.
Furlough defines those who break the rules laid out under the CJRS in place since March 2020. The scheme was designed to help millions of people, but there are certain rules Britons will need to adhere to, such as not working for their company when on the scheme.
However, HMRC has now confirmed two people have been arrested on suspicion of breaking the rules.
The furlough scheme currently covers up to 80 per cent of an employee’s salary for the hours they cannot work, up to a maximum of £2,500 per month.
Janet Alexander, director of the HMRC’s Taxpayer Protection Taskforce, said most employers had used the scheme responsibly.
However, she said: “We will not hesitate to act on reports of abuse of the scheme or any HMRC-administered Covid-19 support packages.”
More than £61bn has been claimed through the CJRS, supporting 1.3 million employers and 11.5 million furloughed jobs.
Last year, a think tank warned that fraudsters could steal billions of pounds by targeting the Government’s Covid-19 financial rescue schemes.
The Policy Exchange think tank report said measures were rushed through to save people and businesses from economic ruin but were vulnerable to scams.
The Government said at the time it was using every tool to prevent and detect fraud, and would pursue those who commit it.
Former Home Secretaries Lord Blunkett and Sajid Javid backed the report.
Fraud and error could cost the Government between £1.3bn and £7.9bn, the report from the centre-right organisation said.
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