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You will recall the debacle over submitting the 2016/17 SA tax returns; due to the large number of exclusions from online filing many tax returns had to be submitted on paper, (see our newsletters 27 July, 31 August, and 2 November 2017). It thus comes as no surprise that HMRC has still failed to process many of those paper returns.

If you need to make a second payment on account for 2017/18 by 31 July 2018, you should have received a statement from HMRC. But where your 2016/17 tax return has not been processed that statement will be incorrect, as it won’t reflect the reported liability for 2016/17, or in some cases the first payment on account paid by 31 January 2018 for 2017/18. The taxpayer’s online personal tax account will also show an incorrect position.

We advise you to pay the on account amount which we calculated when completing your tax return, and we will explain why this figure differs from the official HMRC statement.

We can also complain directly to HMRC about the number of clients who have been affected by delay in processing the tax returns which has led to incorrect tax computations. The best way to do this is through the Agent Forum, although only members of accounting professional bodies are permitted to join this forum at present.

Written by the Tax Advice Network

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

 

Productivity = Success

 

Most business owners, managers and senior executives are juggling day to day responsibilities, growing the business and various projects. With so much to do, improving your productivity is key if you want to succeed. Here are a few top tips to help you to improve your productivity.

 

Stop multi-tasking

In today’s always-on environment, many of us have fallen into the trap of multi-tasking and trying to do too much. Instead, try to focus on doing individual tasks properly. Create a priority list each day and focus on getting each item on that list ticked off. That way you can focus on processing the task at hand.

 

Delegate

The very best business leaders are masters of delegation. Build a team of effective people around you and delegate as much as you can. Empower them to take on projects and avoid micro managing. Delegation is the key to productivity

 

Learn to say no

Taking on too much at once will reduce your productivity and increase your stress levels. Say no to things that are not important.

 

Just because you are invited to a meeting doesn’t mean it should be a priority. Focus on the things that really matter to you and your firm and say yes to them. Everything else is just a distraction.

Cut out the noise

With email, instant messaging, social media and phone calls, we are all distracted by constant noise. Schedule specific time for checking your various email and messaging inboxes and refrain from checking your messages outside of these specific times.

 

A day of no meetings

Scheduling a “no-meeting day” every week can have a positive impact on your productivity. Every manager needs uninterrupted blocks of time to deal with projects, reporting and whatever else is on the “to do” list.

 

Leave work at a reasonable hour

The most productive managers make it home at a reasonable time. Successful leaders don’t work long hours every day in an attempt to tick more items off their to-do list. Instead, they think through their priorities, schedule time for each, then it’s time to go home.

 

Talent Development

 

Regardless of the type of business that you run, you will have talented people in your team who you will want to develop and grow into future managers. So how do you go about creating the next generation of managers in your business?

 

It starts with leadership

The managers and leaders in a firm are responsible for developing the capabilities of their employees, nurturing their careers and managing the performance of individuals and teams. Most managers would acknowledge the importance of training and developing their people, but few dedicate enough time to it. The management team should consider that an effective way to attract and retain talent is to create an environment where talented people can develop.

 

Time

Time is a finite commodity and urgent tasks tend to devour it. Managers who aren’t disciplined in time management and prioritisation may neglect investing time in developing their people simply because they have failed to move talent development to the top of their to-do list. Talent development should be a strategic priority for your business and every member of your management team should have talent development objectives in their business plan.

 

Build a culture of learning and development

The management team should reinforce the value of learning. They should encourage the creation of sustainable processes to support the development of employees. The business should be prepared to celebrate the successes of employees.

 

Real world learning

Problems faced by the business can be leveraged as opportunities for real world learning and development. Team members can be encouraged to take on new challenges which allow them to develop their skills. Mistakes should be viewed as further learning opportunities and this should be communicated across the business.

 

Building your personal brand

Your personal brand is what people say about you when you are not in the room. So how do you go about creating an effective personal brand?

 

Don’t make the mistake of thinking your personal brand is all about you. It’s not. Your personal brand is not about your work experience or your personal accomplishments. Your personal brand should be about other people, specifically what you can do for other people.

 

Focus on your professional development. Knowing your strengths and future areas of focus puts you in the driver’s seat in your own career, helping you understand what the next steps are that you must take and what goals to set for your development and overall success.

 

Think about your target market and research their values and beliefs. Perhaps your target audience is your board of directors or maybe your industry peers.

 

Ask your target audience questions in order to understand what makes them tick, what they value and what is of interest to them. Now consider your skill-set and identify the gap in your target market that allows you to align your skills with the values of your target audience.

 

Build your elevator pitch. You want to tell your audience about what you do, about what makes you different and exciting. Create a short message that sums up what you’re about in a way which connects with your audience. Keep it simple and memorable.

 

Define your values. Authenticity is the cornerstone of personal branding. Your authenticity is what allows your audience to build trust with you, to engage with you, to tell others about you.

Being authentic is about having stated values and being true to them.

 

Your values might be focused on accountability or driving innovation. Alternatively, they might be focused on corporate social responsibility, diversity or environmental awareness.

 

Keep your values at the heart of everything you do, as you interact with people, network on social media or when dealing with clients. Wherever and whenever you engage, ensure you do so in a way that is aligned with your values. Over time, you will build your personal brand.

 

Digital Marketing Strategy

Over the last 10 years or so, marketing has moved more towards digital, thanks to the prevalence of fast wifi connections, smartphones, social media and data analysis. In today’s hyper-connected world every business should have a digital marketing strategy.

 

Most businesses tend to utilise digital marketing channels, however many businesses don’t have an actual digital marketing strategy. Building an effective digital marketing strategy involves gaining insights from data in order to make informed marketing decisions. The end goal is to understand your customer’s digital experience in order to maximise new business / sales opportunities for your firm.

 

A digital marketing strategy doesn’t have to be overly complicated. Depending on the size of your firm and the budget that you have available, your digital marketing strategy could be as simple as leveraging social media channels and having an effective website.

 

Data analysis forms a key part of your digital marketing strategy. You can use free tools such as Google Analytics in order to understand the profile, location and number of visitors to your website and social media pages. You can gain insights from your data – such as “on average, it takes 150 views of your social media posts to generate 1 new business enquiry.” Using this example, lets say that your target is to generate 10 new business enquiries per week. That means that you need to achieve at least 1500 views per week in order to generate the required number of enquiries. Setting this type of objective forms the basis of your digital marketing strategy.

 

In order to create a truly effective digital marketing strategy, you need to understand your potential customers.  Start by creating a profile of your target customers. Look at the demographic data – age, location, gender, etc. Then dig a bit deeper and identify the problems that you and your business can try to solve for these potential customers.

 

Don’t forget to identify the profile of the people who influence your customers. These will be the influencers that your digital marketing strategy should target, in addition to your potential customers and existing client base.

 

Finally, choose the media that is most likely to be used by your target customers. For example, if your customers are business people, perhaps LinkedIn is a more effective social media tool for reaching your target audience than Facebook or Instagram.

 

 

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

 

NEW VAT RULES FOR BUILDING TRADE IN 2019

 

Under new rules due to come in on 1 October 2019 builders, sub- contractors and other trades associated with the construction industry will have to start using a new method of accounting for VAT.

The measure is designed to combat VAT fraud in the construction sector labour supply chain which HMRC argue presents a significant tax loss. HMRC has now published draft legislation to introduce the Reverse Charge for Construction Services.

Under the proposed new rules, supplies of standard or reduced-rated building services between VAT-registered businesses in the supply chain will not be invoiced in the normal way. Under the reverse charge a main contractor would account for the VAT on the services of any sub-contractor and the supplier does not invoice for VAT. The customer (main contractor) would then account for VAT on the net value of the supplier’s invoice and at the same time deducts that VAT – leaving a nil net tax position. This is intended to ensure that VAT is correctly accounted for on supplies by sub-contractors.

CONSTRUCTION WORK AFFECTED

The reverse charge will apply to a wide range of services in the building trade, including construction, alteration, repairs, demolition, installation of heat, light, water and power systems, drainage, painting and decorating, erection of scaffolding, civil engineering works and associated site clearance, excavation, and foundation works. The definitions have been lifted directly from the CIS legislation.

EXCLUDED WORKS

Professional services of architects or surveyors, or of consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape are not covered by the new rules. The draft legislation sets out other work to which the reverse charge does not apply.

It is hoped that the legislation and guidance will be finalized by October 2018 to allow businesses at least 12 months in which to make the necessary changes to systems. Please contact us if you are likely to be affected by these changes and we can work with you to ensure you are ready for the new system.

NOTIFY HMRC OF EBT AND SIMILAR LOANS BY 30 SEPTEMBER 

HMRC have published revised guidance on settling tax liabilities in relation to the use of disguised remuneration schemes involving Employee Benefit Trusts (EBTs) and similar arrangements.

In order to settle on preferential terms before the outstanding loan charge arises on 5 April 2019, taxpayers must register with HMRC and provide all of the required information by 30 September 2018.

WHAT IS THE 2019 LOAN CHARGE?

This is a tax charge on any outstanding loans that exist as a result of a disguised remuneration tax avoidance scheme. It applies to any loans that were taken out under a disguised remuneration scheme since 6 April1999.

The most common schemes were Employee Funded Retirement Benefit Schemes (EFRBS) and Employee Benefit Trusts (EBT). When used for tax avoidance, both involved the diversion of employment income to a trust; the trust would then ‘loan’ the employment income to the individual (meaning no PAYE/National Insurance tax was paid) who sought to benefit from the Scheme.

It is the responsibility of the employer/company to pay the 2019 Loan Charge under PAYE legislation. The employer is then expected to pass this cost on to the individual. Whilst the initial liability falls to the employer, it can be passed to the individual beneficiary of the scheme by HMRC if unpaid.

By contacting HMRC to settle your tax affairs now, you can obtain certainty of what you owe and if required, arrange a payment plan.

SHORT-TERM BUSINESS VISITORS

HMRC are consulting on ways to simplify the tax treatment of short-term business visitors from the foreign branch of a UK company, to ensure the UK is an attractive location for business headquarters.

The consultation considers potential changes to the PAYE arrangements under which UK employers need not operate PAYE for employees of their overseas subsidiaries on short stays in the UK. This treatment does not currently apply to visits to the UK by employees from overseas branches of UK companies

The consultation proposes two broad options:

• Extending the UK workday rule from 30 to 60 days.
• Introducing a new tax exemption for short-term visitors from overseas branches.

TRUST TAXATION

 

We are still awaiting the promised consultation on the taxation of trusts announced in the Autumn 2017 Budget. However, in the meantime HMRC have updated their guidance on how different types of trust income are taxed, what management expenses and reliefs can be deducted, and understanding the tax pool.

 

Please contact us if you are considering setting up a trust or wish to discuss estate planning more generally.

 

ADVISORY FUEL RATE FOR COMPANY CARS

 

These are the suggested reimbursement rates for employees’ private mileage using their company car from 1 June 2018.

 

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

 

Engine Size	Petrol	Diesel	LPG
1400cc or less	11p		7p
1600cc or less		10p (9p)
1401cc to 2000cc	14p		9p (8p)
1601 to 2000cc		11p
Over 2000cc	22p	13p	14p (13p)

 

Note that for hybrid cars use the equivalent petrol or diesel scale charge. However, it may be more beneficial to compute the actual cost.

 

You can continue to use the previous rates for up to 1 month from the date the new rates apply.

DIARY OF MAIN TAX EVENTS

JULY/ AUGUST 2018

 

Date	What’s Due
1/07	Corporation tax for year to 30/9/17 (unless pay quarterly)
5/07	Deadline for agents and tenants to submit returns of rent paid to non-resident landlords and tax deducted for 2017/18
06/07	Deadline for forms P11D and P11D(b) for 2017/18 tax year
19/07	PAYE & NIC deductions, and CIS return and tax, for month to 5/7/18 (due 22/07 if you pay electronically)
31/7	50% payment on account of 2018/19 tax liability due
1/08	Corporation tax for year to 31/10/17 (unless pay quarterly)
19/08	PAYE & NIC deductions, and CIS return and tax, for month to 5/8/18 (due 22/08 if you pay electronically)

 

Making tax digital (MTD) for business is going ahead, but HMRC is not advertising its progress, so what’s happening and where can you find out more?

The first thing to understand is the MTD project has been designed on a tax by tax basis, so the MTD pilot for income tax is quite separate to the MTD pilot for VAT. This distinction between the taxes is expected to continue, so that businesses will have to make separate MTD returns for each tax they need to report to HMRC. It is possible that sophisticated accounting software will make these various tax returns appear to be part of one seamless process, but don’t hold your breath.

Income tax pilot

The income tax pilot is currently accepting sole traders who have income from just one business. Individuals landlords can also apply to join this pilot, if their let properties are located only in the UK. Landlords of furnished holiday lettings are not yet accepted on to the pilot. Landlords who have other non-rental income can take part in the MTD pilot, but they will have to submit a SA tax return as well to report their other income for the year.

As an agent we can sign-up clients for the pilot, but we and/or you must be using MTD-compatible software. There are just four software suppliers who have products approved for this pilot, one of which (Rhino) doesn’t provide agent access. ICAEW has been told that there are around 20 software providers working with HMRC on products suitable for MTD for income tax, so more products may be added to the approved list shortly. There is no start date for compulsory filing of MTD income tax reports, it will not be earlier than April 2020, but may be some time later.

VAT pilot

The MTD for VAT pilot started on 11 April 2018, but it is only open to businesses who have been specifically invited to take part, and HMRC is restricting access to the simplest of businesses. HMRC say they will open the VAT pilot to public beta testing later this summer, and at that stage a list of software providers will be published.

Apparently over 130 software companies are working with HMRC on products suitable for MTD for VAT. This includes some products which will act as a front-end to spreadsheets (aka bridging software) to submit the spreadsheet data via an API to HMRC. The official advice is to speak to your software provider about the timetable for release of MTD-compliant products.

Webinars

HMRC has released three different MTD webinars which are available to listen to from its help and support for MTD page, but they are not very informative. More useful information may be gained from the CIOT or ICAEW webinars on the topic.

 

Written by the Tax Advice Network

The deadline for submitting the annual returns for employee share schemes is 6 July 2018. Almost every year there is some sort of technical problem with the ERS online service, which must be used to submit the annual returns, but this year we haven’t seen any problems reported – yet.

Before the annual return can be submitted, the scheme must be registered with HMRC. For schemes which commenced in 2017/18 the registration must be in place by 6 July 2018. Only the employer can register the share scheme as this must be done through the employer’s PAYE for employers account. We can’t use our agent’s access to the PAYE reporting system to register the scheme. Once the scheme is registered we can submit the annual return on behalf of our client.

According to the latest employment related security bulletin (May 2018), it will not be possible to make a late registration after 6 July 2018 for any of these types of share scheme: CSOP, SIP and SAYE. If the new share scheme is not registered by 6 July 2018 the tax advantages of those schemes fall away. However, the ERS bulletin for September 2017 says that employers can contact the HMRC Employee Shares and Securities Unit confirming they are registering a tax advantaged scheme late and provide the scheme registration date.

New EMI share schemes do not have to be registered by 6 July, as there is a separate requirement for the company notify HMRC within 92 days of the first EMI option being granted. However, an annual return is needed for every EMI scheme, and as for other tax advantaged share schemes. If nothing has happened during the year, a nil return must be submitted.

In our newsletter on 12 April 2018 we warned you about the end of EU state aid approval for EMI share schemes with effect from 7 April 2018. This problem has now been resolved as the European Commission has agreed to prolong the EU state aid approval for the EMI scheme. Any EMI options granted on or after 7 April 2018 should qualify for tax relief as the original state aid approval is deemed to continue without a break.

Written by the Tax Advice Network

There are various circumstances in which a client may want or need to cancel their VAT registration.

A client who is VAT registered because they make taxable supplies in the UK must cancel their registration if any of the following occur:

• they stop making taxable supplied;
• they sell their business (although the VAT registration number can be transferred to the new owner);
• their legal status changes;
• they are a member of a VAT group which disbands;
• they join a VAT group; or
• they join the agricultural flat rate scheme.

A client can also ask for voluntary de-registration if:

• they are able to satisfy HMRC that their taxable turnover in the next 12 months will not exceed the de-registration limit (currently £83,000);
• they close down part of the business and are able to satisfy HMRC that the taxable turnover from the remaining business will not exceed the de-registration threshold;
• their turnover exceeds the registration limit but their supplies are wholly or mainly zero-rated; however, they can only de-register voluntarily if their input tax normally exceeds their output tax (although in these circumstances it is arguably better to remain registered to enable the client to recover the excess input VAT).

Where a client needs or wants to cancel their VAT registration, and is eligible to do so, this can be done online or by post by completing VAT form 7. However, when cancelling a registration, it may be necessary to account for VAT on stocks and assets. Where de-registration is compulsory, it will take effect from the date of the trigger event necessitating the cancellation of the VAT registration. Where de-registration is voluntary, this can be effective from the date that HMRC receive the application, or such later date as is agreed with HMRC.

Clients must continue to charge and account for VAT until HMRC confirm that the registration has been cancelled.

With last year’s changes to the flat rate percentage for limited cost businesses and the advent of MTD for VAT, clients may wish to assess whether it is beneficial to remain VAT registered if they do not need to be.

Written by the Tax Advice Network