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The coronavirus job retention scheme (CJRS) is constantly evolving, and there are a number of changes which apply for claims periods starting on and after 1 May 2021.

All CJRS claims for periods in May 2021 need to be submitted before midnight on 14 June 2021. Employers who are claiming for 100 or more employees on a single claim have always been able to submit the details of all employees on a spreadsheet template. Now there is a new spreadsheet template to claim for 16 to 99 employers in one go. This will save many smaller employers and tax agents a lot of time.

This new template is also forgiving of missing national insurance numbers. If you don’t have that information, you can use the payroll number instead.

From 1 May 2021 the calculation for variable paid employees who work variable hours has changed, to make it more logical. Now both the calculations of average pay and average hours should align to better reflect the amount the employee would have received while they were working.

For any periods of furlough from 1 May 2021, do not take into account days of statutory leave: SSP or family-related leave when using the averaging calculation for variable hours. You should also disregard the pay relating to those statutory leave days.

Some workers who are not employees can be included in a CJRS claim, for example those treated as deemed employees under the off-payroll working rules. This will apply to many more contractors in the private sector from 6 April 2021.

Where employees have been shielding or have caring responsibilities which mean they are unable to work, they remain eligible to be included in a CJRS claim even though the shielding restrictions have been lifted.

Written by the Tax Advice Network

Welcome to our monthly newswire. We hope you enjoy reading this newsletter and find it useful. Please contact us if you would like to discuss any matters further.

BEWARE MINI-UMBRELLA COMPANY FRAUD

HMRC are urging businesses to look out for the use of mini-umbrella companies (MUCs) to pay contractors supplying their labour via agencies and other intermediaries. Businesses need to be aware of the financial and reputational risks of such entities in their labour supply chain and carry out due diligence to minimise those risks.

You may have heard a BBC File on Four radio programme that highlighted the abuse of the £4,000 employment allowance by 48,000 companies set up to take advantage of the allowance to save employers national insurance. Such structures are also being used to avoid VAT and are currently being marketed as a means of side-stepping the “off payroll” working rules.

HMRC have identified criminals creating a series of MUCs that appear unconnected and claiming the NIC employment allowance of £4,000 for each company. The company is then struck off after about 18 months allowing the criminals to potentially avoid paying thousands of pounds of employers’ NICs.

The risks to end user organisation include becoming liable for unpaid taxes and national insurance contributions including the overclaimed employment allowance.

The business may also be denied the right to claim input tax if the trader should have known their transactions were connected with VAT fraud.

They may also be penalised for criminal offences relating to national minimum wage and national living wage. The business may also face fines for failure to prevent the criminal facilitation of tax evasion.

Please contact us if you would like us to assist you in carrying out due diligence into your labour supply chain to minimise these risks.

CAR BENEFIT REDUCED WHERE UNAVAILABLE

P11d forms reporting benefits in kind provided to employees and directors need to be submitted to HMRC by 6 July. Where a company car is “unavailable” for private use for 30 or more consecutive days the benefit is proportionately reduced.

During the various lockdown periods many employees and directors have not been using their company cars and it may have been sitting on their driveway. Unfortunately, that does not count as being unavailable.

HMRC have confirmed that they would continue to regard the car as available to the employee unless the keys or fobs are returned to the employer or to a third party such as the leasing or disposal company as instructed by the employer.

Note that where the employee is provided with a motor car with zero CO2 emissions there is no taxable benefit in kind for 2020/21 although the charge increases to 1% of original list price for 2021/22.

REIMBURSE PRIVATE FUEL BY 6 JULY TO AVOID FUEL BENEFIT

Another consequence of the lockdown periods is that employees may have driven fewer private miles in their company cars, particularly where they have not been driving to the office.

If they are to avoid being taxed on the provision of private fuel they need to fully reimburse their employer for the cost of private fuel by 6 July 2021 for the 2020/21 tax year.

Note that the CO2 emissions percentage for the car is multiplied by the £24,500 notional list price used to calculate the benefit. For example, a director driving a Mercedes Benz E200 saloon company car (CO2 emissions 169g per km) would be assessed on 37% = £9065 for 2020/21. If they are a higher rate taxpayer then that means £3,626 tax. That would be an awful lot of private fuel!

In addition to the tax payable by the director on the provision of private fuel there would be £1251 Class 1A national insurance contributions payable by the employer.

Note that the private fuel benefit is an all or nothing benefit. There must be full reimbursement by 6 July to eliminate the benefit. The simplest method would be to multiply private miles by the HMRC advisory fuel rate for the vehicle -see next page.

ADVISORY FUEL RATE FOR COMPANY CARS

These are the suggested reimbursement rates for employees’ private mileage using their company car from 1 June 2021.

Where there has been a change the previous rate is shown in brackets.

Engine Size	Petrol	Diesel	LPG
1400cc or less	11p (10p)		8p (7p)
1600cc or less		9p
1401cc to 2000cc	13p (12p)		9p (8p)
1601 to 2000cc		11p
Over 2000cc	19p (18p)	13p (12p)	14p (12p)

Note that for hybrid cars you must use the petrol or diesel rate. You can continue to use the previous rates for up to 1 month from the date the new rates apply.

NOT ALL BENEFITS NEED TO BE REPORTED ON FORM P11D

Despite the coronavirus lockdowns HMRC still expect P11d forms reporting expenses and benefits to be submitted by the normal 6 July deadline.

Remember that reimbursed expenses no longer need to be reported where they are incurred wholly, exclusively and necessarily in the performance of the employee’s duties. Dispensations from reporting are no longer required, although HMRC would expect internal controls to be in place.

Note also that trivial benefits of no more than £50 provided to employees need not be reported. This typically covers gifts to employees at Christmas and on their birthdays.

CHECK THAT YOUR SHARES QUALIFY FOR CGT BUSINESS ASSET DISPOSAL RELIEF

A recent case before the tax tribunal has confirmed that all of a company’s shares are ordinary shares except those that carry a fixed rate of return.

This is crucial as CGT business asset disposal (BAD) relief requires a shareholder to be entitled to at least 5% of a company’s ordinary share capital in addition to being an officer or employee of the company, and for the company to be a trading company or the holding company of a trading group.

These conditions need to be satisfied throughout the 24 months prior to the disposal of the shares. This two-year rule is important if you are considering transferring some of your shares to other family members now that only the first £1 million qualifies for CGT BADR.

There are a number of further conditions that need to be satisfied by the shareholding in addition to the 5% ordinary share capital test. The shareholder must have 5% or more voting control and be entitled to 5% or more of the company’s distributable profits, and of its assets should be company be wound up. Those final two conditions do not need to be satisfied where the shareholder would be entitled to receive at least 5% of the proceeds on the hypothetical sale of the whole company.

DIARY OF MAIN TAX EVENTS JUNE/JULY 2021

Date	What’s Due
01/06	Corporation tax for year to 31/8/20 (unless pay quarterly)
19/06	PAYE & NIC deductions, and CIS return and tax, for month to 5/6/21 (due 22/06 if you pay electronically)
01/07	Corporation tax for year to 30/9/20 (unless pay quarterly)
05/07	Last date for agreeing PAYE settlement agreements for 2020/21 employee benefits
05/07	Deadline for agents and tenants to submit returns of rent paid to non-resident landlords and tax deducted for 2020/21
06/07	Deadline for forms P11D and P11D(b) for 2020/21 tax year. Also, deadline for notifying HMRC of shares and options awarded to employees.
19/07	PAYE & NIC deductions, and CIS return and tax, for month to 5/7/21 (due 22/07 if you pay electronically)
31/07	50% payment on account of 2021/22 tax liability due.

Welcome to our monthly newswire. We hope you enjoy reading this newsletter and find it useful.

Manage your diary with Calendly

Scheduling meetings, calls or video chats can be hugely time consuming. Calendly can make the process more efficient.

Calendly is an app for scheduling appointments, meetings, calls and events. It was created in an effort to eliminate the back and forth emailing that is often needed to set up a meeting or call between a group of busy people.

Calendly is designed around automated scheduling features that take the work out of connecting with others. It works with your calendar in Microsoft Office or Google in order to automate appointment scheduling. It even has some clever features which help to avoid meetings being double booked.

Calendly integrates with popular business software such as Zoom, Salesforce, Slack and Microsoft Office. Calendly enables users to set their availability preferences, and then send out their own personalised invitation link to arrange meetings or appointments. The invitee is presented with a selection of available times and dates based around the user’s availability, and can choose a time slot that works for them.

Calendly includes suggested meeting lengths of 15, 30, and 60 minutes, but users can create an unlimited number of different event types to suit their needs, set buffer time between appointments, and enforce a minimum scheduling notice period to prevent the last-minute booking of meetings.

Calendly can also be configured to send out confirmation emails, event reminders and notifications. For events or webinars, users can also add links to event confirmation pages and so forth.

Calendly offers a free 14-day trial. From there, you can sign up to Premium, Pro or Enterprise packages, depending on the needs of your business. Monthly packages start from around £6 per month (USD $8 – as Calendly is an American company).

Managing Mental Health in the Workplace

Supporting your team through turbulent and stressful times.

After dealing with the effects of the pandemic for over a year, many people are feeling isolated working from home, while others are struggling to manage family responsibilities alongside the demands of their day job. What can businesses do to support their people and help them to manage their mental health?

Start with a plan

Creating a mental health plan for your business can help you to promote wellbeing for your team. A typical plan might include wellbeing tips, tackling causes of work-related stress, a system for recording sickness absences that are related to mental health and training for all staff on stress management.

Promote an open culture

As ever, communication is key. Business owners and managers should strive to create a culture that encourages open dialogue, where people can discuss issues regarding their mental health without stigma or fear of being judged. This is more important now than ever before, as your team could be juggling a range of interconnected issues such as childcare / family care challenges, financial worries or feelings of loneliness due to working remotely for a long period of time.

In addition to encouraging open dialogue, you could carry out an anonymous internal survey where you ask your team to feed back on their personal wellbeing, stress levels and general mental health. You could also use this as an opportunity to gather feedback on the types of wellbeing measures that the team would like to see from the firm.

Spotting problems before they become wider issues

Train the managers in your business to spot problems. Teach them to look out for employees who are showing signs of distress such as regular absenteeism, changes in behaviour or signs of irritable or irrational behaviour. If your team are still working remotely, managers should make contact on a regular basis in order to catch up and “check in” with other team members.

Offer support where possible

Often the best support that your people need is to feel like they have been listened to. Let your team members know that they have the option to have a confidential conversation about mental health, if ever they need to. Managers can then work with the individual to agree a course of action to manage stress and get them back on track.

How to pivot your business strategy

If your business goes through a tough period, it may be time to pivot your strategy.

Necessity is the mother of all invention. Many firms have had to pivot their business strategy due to the current market conditions. In order to pivot your strategy, you will need to start by doing your research, reassessing your current business model and building a new approach from there.

Pivoting your strategy may involve targeting a different customer base, new routes to market or even a new range of products and services. If pivoting your strategy pushes you into a new market, you will likely need to re-evaluate your approach to sales, marketing and day to day business processes.

In the current environment, many bricks and mortar businesses have pivoted their strategy to focus on online services, direct to consumer sales and home delivery models.

Once you have evaluated when and where you need to pivot your strategy, you will need to move quickly in order to shift your business to the new model efficiently. Trust the data and insights that you gathered during the planning stage.

Decisive action will help you to avoid wasting time, effort and money. Communicate your new strategy to your people in order to gain their buy-in. Involve them in some of the planning and decision making in order to build their trust and bring them on the journey.

If you can get your team members to buy into the new strategy and really get behind it, you are much more likely to succeed.

Create goals and objectives for your team that align with the new strategic direction of the firm. Don’t try to fix things that aren’t broken. A pivot in strategy doesn’t mean you need to change everything. For example, if you move your business to a new online-only model, you can probably use some of your current processes and procedures for things like sales or order management.

Once you pivot your strategy, ask your customers and staff for feedback. What has worked well, what could work better and what new ideas should you roll out as part of your new strategy? You can use this feedback to refine your new strategy and adopt further refinements.

Does Social Media Marketing Actually Work?

Social media marketing is incredibly popular but how do you ensure it actually works for your firm?

Time is a finite resource. Social media can be a hugely time-consuming undertaking and if it isn’t employed effectively it can be a waste of time.

In order to determine whether your firm should invest time, effort and budget into social media marketing, you need to take a step back and look at your target customers and their typical buying habits.

Do your customers use Facebook, LinkedIn or Twitter? If not, then why would you focus on marketing your business on these platforms?

Do your research and make a list of the ways your customers engage with firms such as yours – do they engage online, on the phone or in person? Is there an opportunity to engage with them in a more effective way using social media? Could you and your business create a new and innovative marketing strategy by connecting with customers in different markets?

Social media can be an effective marketing tool for businesses but only if you do it right. Start by thinking about the purpose of your social media strategy. Why should your business be on social media, who else in your industry sector uses it effectively and how could you create brand awareness or win new potential customers from social media platforms?

Businesses can use social media to connect with customers online. However, the key to a successful social media strategy is to engage with people, not sell to them. Create value for your potential customers by providing useful content, illustrating how your products or services are useful to your customers and by avoiding the “hard sell.”

Focus on helping your customers to buy, rather than selling to them. Share case studies, information on key market trends and top tips that are relevant to your target market.

Whether social media marketing works for your business will largely be determined by your target customer base. However, it isn’t the only solution out there and you could potentially differentiate your firm by finding other ways to engage with potential customers in a more meaningful or personal way.

On 11 February 2021 we reminded you that VAT payments due in the period: 20 March – 30 June 2020, which were automatically deferred, now need to be paid.

The business could either pay the debt in full by 31 March 2021, or join an automated payment scheme by 21 June 2021. This scheme will require the business to pay the debt in monthly instalments by direct debit, with the final payment made in January 2022.

You can’t arrange a VAT payment plan on behalf of your clients as you won’t have authority to agree to make payments from their business bank accounts. However, the HMRC will allow businesses to arrange a payment plan for the deferred VAT even if they have already entered a time to pay arrangement for other taxes.

If the business does not register to join the payment scheme by 21 June the whole sum deferred from 2020 must be paid in full by 30 June 2021. HMRC may well also impose a 5% late payment penalty and interest if the debt is not paid in full by 30 June.

Written by the Tax Advice Network

HMRC estimates that around 100,000 businesses have an annual turnover that requires them to join the MTD for VAT regime, but they haven’t signed-up yet. These businesses are still submitting VAT returns through the old HMRC portal (online form).

HMRC has the power to impose penalties of £400 for failure to use MTD-compatible software to file the VAT return, when required to do so, but it has preferred to use a nudge-letter approach. However, that is about to change.

Around 800 businesses will shortly receive a HMRC letter that says they will be able to file their VAT return for the period ending in March, April or May, up until 7 July 2021 using the online form, but that portal will be closed to them after that date. From that point on the business will be forced to use MTD compatible software. If the response to this pilot-run is positive HMRC will roll it out to the rest of the 100,000 MTD refuseniks.

Where our clients have not signed up to MTD for VAT, we may be submitting your VAT returns through the old online portal. When doing so we may find the submission is blocked. If we check our Agent Services Account (ASA) the client record it will say the client has signed up to MTD. This is incorrect.

The problem has been caused by HMRC migrating all VAT registered businesses from their legacy VAT mainframe to the integrated Enterprise Tax Management Platform (ETMP). To remove the blockage and allow you to file the VAT return you need to:

• Log into your ASA
• Go to ‘view and change’
• Find the clients who haven’t signed up to MTD and mark them as such

If that procedure doesn’t work you will need to call the HMRC VAT helpline:0300 200 3700.

Written by the Tax Advice Network

SEISS grants are taxed in the tax year they are received, which may not be the same tax year in which the profits they are designed to replace would have been taxed. This can lead to a bunching of taxable income in 2020/21 and a corresponding low taxable income in 2021/22.

Example

Selina is self-employed with an accounting year end of 30 April. Her actual profits are:

• Year to 30 April 2020: £36,000 taxed in 2020/21
• Year to 30 April 2021: £5,000 taxed in 2021/22

She received SEISS grants totalling £16,500 in 2020/21 which are taxable in that year. This means her taxable income before allowances for 2020/21 is £52,500, which pushes her into higher rate tax and potentially make her subject to the high income child benefit charge.

In 2021/22 Selina claimed an SEISS-4 grant of £2400. She will not be eligible for the SEISS-5 grant as her business is now fully open. Her taxable income for 2021/22 will be £7,400, which is covered by her personal allowance, and indeed wastes some of her allowance.

One solution could be to change Selina’s accounting date to lengthen the accounting period so it ends on say 30 June 2020. This longer period will take in some losses realised in the shut-down period in May and June 2020. The next accounting period would then run from 1 July 2020 to 30 June 2021, absorbing more profits after business opened fully again in 2021.

It’s too late to change the accounting period that ended in 2019/20, as HMRC had to be notified of that change by 31 January 2021.

When changing an accounting date, it is important to take into account the level of any other taxable income, any overlap relief available from the commencement of the trade, and the projected profits.

A change in accounting date will also affect when the business will be mandated into MTD ITSA reporting, which will be compulsory for accounting periods starting on or after 6 April 2023.

Our business tax experts are happy to help with these tricky calculations.

Written by the Tax Advice Network