News & Updates

Happy New Year and welcome to our first monthly newswire of 2021.
We hope you enjoy reading this newsletter and find it useful.

NEW YEAR RESOLUTIONS TO SAVE TAX

At this time of year we think about New Year’s resolutions. It is also a good time to start planning your tax affairs before the end of the tax year on 5th April.

An obvious tax planning point would be to maximise your ISA allowances for the 2020/21 tax year (currently £20,000 each).

You might also want to consider increasing your pension savings before 5 April 2021 as the unused annual pension allowance is lost after three years.

For those looking to do some inheritance tax planning, it would be a good time to review (or make) your Will.

PENSION PLANNING

For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and by their employer.

Note that the unused allowance for a particular tax year may be carried forward for three years and can be added to the relief for the current, but then lapses if unused.
Hence the unused pension allowance for 2017/18 will lapse on 5 April 2021 if unused.

Note that there are rumours that pension tax relief may be restricted in the next Budget. Under the current rules, the net after tax cost of saving £4,000 in a personal pension for a higher rate taxpayer is £3,000. HMRC then add a further £1,000 to your contribution and there is a further £1,000 relief when your tax liability is calculated, thus the value of your pension pot would be £5,000, for a net cost of £3,000. Remember that pension fund investments can go down as well as up, but a 40% fall would be unlikely.

NEW VAT RULES FOR CONSTRUCTION SECTOR START ON 1 MARCH 2021

New VAT rules are finally due to come into effect this March which will impact on accounting for VAT for transactions in the construction sector. These new rules, which were originally scheduled to start back in October 2019, have already been delayed twice as there was a lack of awareness of the changes in the industry.

The new “reverse charge” system of VAT accounting will affect sub- contractors supplying their services to main contractors in the construction sector.
Under the 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 new reverse charge system, the sub-contractor will not show VAT on their invoice to the main contractor and will not account for output VAT.
This is intended to ensure that VAT is correctly accounted for on supplies by sub-contractors, some of whom were allegedly not paying over the VAT charged to HMRC.
The new reverse charge will apply to a wide range of services in the building trade, primarily those activities covered by the construction industry (CIS) payment rules. Note that normal VAT invoices will continue to be issued to domestic customers.
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 when it starts. If you are a sub-contractor using the VAT flat rate scheme, it may be beneficial to leave that scheme as you may be entitled to a VAT refund on your expenses from 1 March 2021.

£1 MILLION ANNUAL INVESTMENT ALLOWANCES EXTENDED

The Chancellor recently announced that the temporary increase in the Annual Investment Allowance (AIA) for expenditure on plant and machinery has been extended to 31 December 2021.

The tax relief was originally scheduled to revert to just £200,000 from 1 January 2021, but that will now be delayed by twelve months.

Remember that there is currently an additional 100% tax relief for the cost of buying a new car for the business where the CO2 emissions of the car are no more than 50g per kilometre. That threshold reduces to 0g from April 2021.

ADVISORY FUEL RATE FOR COMPANY CARS

These are the suggested reimbursement rates for employees’ private mileage using their company car from 1 December 2020. Where there has been a change the previous rate is shown in brackets.

Engine Size	Petrol	Diesel	LPG
1400cc or less	10p		7p
1600cc or less		8p
1401cc to 2000cc	11p (12p)		8p
1601cc to 2000cc		10p
Over 2000cc	17p	12p	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.

TIME TO REVIEW YOUR WILL?

Top of the to do list for many individuals is to make or update their will. Many think this is something to leave until later in life but it is important to get things in place once property is acquired or when children come along.
In the absence of a will there are statutory rules which dictate how your assets are distributed on death. Those statutory intestacy rules may not be tax efficient and you might to want to make specific provision in your Will for your unmarried partner or for the guardianship of your children.

ADVISORY FUEL RATE FOR COMPANY CARS

These are the suggested reimbursement rates for employees’ private mileage using their company car from 1 December 2020. Where there has been a change the previous rate is shown in brackets.

Engine Size	Petrol	Diesel	LPG
1400cc or less	10p		7p
1600cc or less		8p
1401cc to 2000cc	11p (12p)		8p
1601cc to 2000cc		10p
Over 2000cc	17p	12p	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.

TIME TO REVIEW YOUR WILL?

Top of the to do list for many individuals is to make or update their will. Many think this is something to leave until later in life but it is important to get things in place once property is acquired or when children come along.

In the absence of a will there are statutory rules which dictate how your assets are distributed on death. Those statutory intestacy rules may not be tax efficient and you might to want to make specific provision in your Will for your unmarried partner or for the guardianship of your children.

PASSING ON THE FAMILY HOME

One recent change that should be taken into consideration when drafting your Will is the additional Inheritance Tax (IHT) nil rate band for passing on the family home to direct descendants on death. We can work with your solicitor to make sure your Will is tax efficient.

Now that the additional relief is fully phased in it provides an extra £175,000 on top of to the normal £325,000 nil rate band. Where the allowance is unused on the death of the first spouse, the unused allowance is available on the death of the surviving spouse, potentially allowing a married couple (or civil partners) to potentially pass on assets of up to £1 million without paying IHT.

This additional relief is, however, restricted if your assets exceed £2 million. The rules are fairly complicated but we can review your personal circumstances to ensure that you take advantage of all the relief that you are entitled to.

This relief is even available when you downsize to a smaller property.
For example, if a married couple currently live In a large house worth £500,000 downsize to a flat worth £300,000, they could give away some of the proceeds during their lifetime and yet still benefit from inheritance tax relief based on the higher valued property.

They could even sell up completely and move into a rental property or a care home and still get the inheritance tax relief!

DIARY OF MAIN TAX EVENTS

JANUARY/ FEBRUARY 2021

Date	What’s Due
1/01	Corporation tax payment for year to 31/3/20 (unless quarterly instalments apply)
19/01	PAYE & NIC deductions, and CIS return and tax, for month to 5/01/21 (due 22/01 if you pay electronically)
31/01	Deadline for Self-Assessment tax return for 2019/20 if filed online. Also the due date for 2019/20 balancing payment and 50% payment on account of 2020/21 tax. Note that if this liability is no more than £30,000 you can agree with HMRC to spread over 12 months
1/02	Corporation tax payment for year to 30/4/20 (unless quarterly instalments apply)
19/02	PAYE & NIC deductions, and CIS return and tax, for month to 5/02/21 (due 22/02 if you pay electronically)

Content accurate as at 17th December 2020

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

New year, new strategy

How to build your 2021 business strategy in the face of uncertainty.

We live in uncertain times and planning for the future is challenging. Rather than paying attention to what you can’t do, focus on what you can do. For example, when restaurants couldn’t serve customers indoors, they transitioned to delivery, take-away and outdoor dining. Regardless of the type of business that you manage, this is the mindset to develop and use for your 2021 business strategy.

Your “can-do” business strategy should start with a list of what is possible. Perhaps you can transition to doing business online, research new markets, or utilise the shift to video conferencing to create a new and more personal experience for your customers while they are in the comfort of their home. Once you have considered what you can do, you can then create some strategic objectives for the year ahead.

Consider how you can shift your business strategy to one that is more customer centric. The best businesses are those that deliver added value to their customers. For example, you could provide new payment options to customers in order to encourage them to make a purchasing decision. Your customers will be more focused on cash flow due to the prevailing economic uncertainty, so offering structured payment plans, 12 months interest free credit and so on, could make your firm more attractive than your competitors.

If you are considering launching new products or services in 2021, you may need to extend the timeline. The world is not back to normal (whatever the “new normal” will be) and supply chains are struggling with issues related to transportation, production backlogs, availability of materials, etc. As such, it would be prudent to allow some extra lead time in your plan for any new product or service launch.

With an uncertain operating environment anticipated to continue for some time yet, it makes sense to have a backup plan. As you develop your strategy, take some time to consider what potential contingencies you can put in place in order to be ready to move in a different direction, should you run into some headwinds. If you are unsure where to start, it can be helpful to research some of the tactics that worked for other businesses, even those that may be operating in a completely different sector. You can then apply the best bits of those tactics to your own strategic plan.

As you develop your 2021 business strategy, you will most likely identify some actions that you can undertake with certainty, which will help you to manage some of the risks that are inherent in operating in uncertain economic times. Perhaps you can bolster your firm’s cash reserves, reduce fixed costs, or negotiate better terms with suppliers. By proactively focusing on delivering against these actions, you will keep moving your business forward, which will help to make your firm more resilient in the medium to long term.

Employee wellbeing in 2021

The pandemic has encouraged most businesses to focus on the wellbeing of their team.

2020 has been a challenging year for all of us. As most businesses were forced to shift to remote working, the importance of employee wellbeing moved towards the top of the agenda. Firms around the world were grappling with the challenge of how to keep their team motivated, healthy and productive. So what does employee wellbeing look like in 2021?

A business is nothing without its people. Therefore, focusing on employee wellbeing is a good strategy for building a strong and resilient business. The huge shift to virtual working in 2020 means that more and more people will be working remotely than ever before. As such, it makes sense to invest in weekly or monthly wellbeing events for your team. These don’t have to be expensive and could consist of team mindfulness classes, a book club, or a team baking competition over video conference.

Throughout 2020 many firms reported that employees struggled to separate work life from home life as they were literally working from the kitchen table. Many employees struggled to switch off from work and ended up exhausted. Investing in time management and prioritisation training for your team can help them to improve their work/life balance.

Encourage your team to adopt healthier working practices. A sedentary lifestyle is a major health risk. Businesses can do their bit by encouraging people to have standing meetings, take part in monthly fitness challenges or even use a standing desk rather than a sitting desk. Businesses are also focusing on personal development. Employees want to progress in order to have meaningful careers. The best businesses encourage their people to learn and grow which in turn, helps employees to feel valued – so they stay rather than go to a competitor.

Negotiating a new office lease

In the current uncertain economic climate, signing up to a new office lease can be a tricky business.

One thing is certain at the moment and that is uncertainty. How much office space will you need in 3 to 5 years time? Well, that depends on whether people will want to work remotely or not. Do you need a desk for everyone or say, 50% of your team?

The current uncertain trading environment presents an opportunity for tenants to negotiate more favourable terms with their landlords. For example, the rent rate may only make sense if a certain number of people can be accommodated in particular premises. However, the current social distancing regulations may mean that there is room for less workstations or offices in the premises. This might give the tenant an opportunity to negotiate a lower rent on a staff headcount basis. Large landlords who are sufficiently capitalised to absorb the reduced cash flow may be willing to agree to slightly lower rents in order to get a tenant in place. The current market may also give businesses an opportunity to incorporate more favourable clauses into a lease agreement.

One of the key clauses to incorporate into your lease is a break clause. A break clause gives you the right to end the lease early by giving the landlord an agreed period of notice. This gives you some flexibility to terminate the lease if economic factors or personal circumstances impact your requirement for the premises in the future.

Another useful element to include is a sub-letting clause. This allows you to pass on some of the premises to another lessee if you don’t need all the space right now.

If your business becomes smaller in the future, you may want to be able to sub-let some of the premises in order to generate additional income that you can use to off-set against your lease payments.

Trying to secure a commercial lease with beneficial terms can be a challenging and complicated process. Getting legal advice from an experienced lawyer is a very good idea and it could save you money in the long term – for example if you need to terminate the lease early.

Managing tension in remote teams

Remote working is quite new to most people – so it is inevitable that there may be friction between people from time to time.

Remote working presents its own unique set of challenges, such as miscommunication, which can lead to friction between team members. These issues tend to be avoidable when physical face to face communication is possible but things can easily be misconstrued when said in an email.

When managing a remote team, it’s important to look out for recency bias – the tendency to place more importance on things that have been seen more recently. Some people are better than others at overcoming this bias and keeping themselves front of mind with their colleagues. Managers need to think about the whole team rather than those that they may have spoken with more recently.

In remote teams there is always the danger that quieter, more introverted team members could feel that they are “out of sight and out of mind”. Managers need to ensure that everyone, regardless of their location or timezone, has a sense of belonging and of being “in the loop” on day to day matters.

When choosing who gets to work on a new project or opportunity, managers must think about their whole team and tap into the full pool of talent, regardless of how visible they are in the organisation.

Most firms have had to change quickly in order to adapt to remote working. The culture and in-person relationships from the office tended to carry over to remote teams, at least initially.

However, over a period of a few months, that social capital tends to run out. As teams adapt to working in remote environments, managers need to be deliberate and intentional about establishing team culture.

Culture and the feeling of being part of a team will not establish itself so it is down to the manager to drive this. Regular communication is key and managers can drive this through setting up weekly team meetings as well as structured monthly one-to-one meetings for team members. These regular meetings also give team members an opportunity to discuss any challenges or difficulties that they are facing. This can help to reduce tension between team members as any difficulties are discussed and actions to resolve the issues can be agreed in order to nip any problems in the bud.

Welcome to our monthly newswire. As usual please contact us if you wish to discuss any matters in this newsletter further. Best wishes for the festive season and 2021!

Content prepared / accurate as at 25 November 2020

CLAIM YOUR “FURLOUGH” GRANT BY 14TH

We now have further details of the operation of the extension of CJRS “furlough” that will apply from 1 November 2020 through to the end of March 2021. The government support will initially be at the rate of 80% of an employee’s reference pay for hours they are furloughed, subject to a maximum of £2,500 a month.

Claims must be made by the 14th of the following month although they can be made up to 14 days in advance. Another key difference from the previous versions of CJRS is that there is no requirement that the employee was on the payroll at 19 March 2020 or has been previously furloughed. They do however need to be on the payroll and subject to an RTI submission prior to midnight on 30 October 2020.

REFERENCE PAY

An employee’s reference pay will depend upon whether or not they were on the payroll and subject to an RTI submission for 2019/20 on or before 19 March 2020. Where that is the case their reference pay will be that used under previous furlough claims. Where the employee has joined since that date or not subject to an RTI submission prior to 19 March the reference pay will generally be that for the last pay period ending before 30 October.

There are exceptions to these rules and complications for those working variable hours and with variable rates of pay.

We can of course assist you with your claims, or alternatively prepare them on your behalf.

NEW PENALTIES FOR OVERCLAIMED CJRS, SEISS AND “EAT OUT TO HELP OUT” GRANTS

HMRC have announced that they will be imposing penalties of up to 100% of the amounts overclaimed on businesses so make sure that your claims are correct.

The penalties depend on whether or not the overclaim is the result of a deliberate error and whether or not the disclosure was prompted by HMRC. The penalty may be reduced where the taxpayer assists HMRC in correcting the error.

Many overclaims may be the result of careless errors or a misinterpretation of the rules which have changed many times in the last 9 months so we hope that HMRC will apply the rules with a light touch and focus on those that have abused these schemes.

We understand that HMRC are writing to 4,000 catering establishments that they suspect may have overclaimed under the “Eat out to help out” scheme that ran in August. Traders are being asked to check their claims and respond within 60 days or face an HMRC compliance check.

MAKE A CLAIM IF YOU ARE WORKING FROM HOME

With more of us working from home there is good news from HMRC that employees can now make a claim for tax relief to cover some of their costs while they are working from home.

The previous rule for employees was that there had to be a home working arrangement with their employer under which they were required to work from home on a regular basis to be paid £6 a week tax free (£4 a week up to 5 April 2020). This rule has now been relaxed as a result of COVID-19 so that such arrangements are not currently required and employees can also claim tax relief directly from HMRC where their employer does not make the payments.

£312 a year tax free is equivalent to £538 gross for a higher rate taxpayer. The payments are tax deductible for the employer and not liable to national insurance contributions.

Where the employer does not make the payments to the employee there is a new claims portal on the HMRC website so that the employee who is working from home can claim to deduct £312 from their employment income. That would generate a £124.80 tax refund for a higher rate taxpayer or £62.40 if basic rate.

There is a similar tax break for the self employed which provides a deduction from profits of up to £26 a month.

HOW ABOUT A VIRTUAL CHRISTMAS PARTY?

HMRC are not the Grinch after all. They have recently announced that employers may arrange a “virtual” Christmas party this year and there will be no taxable benefit for employees provided that all staff are invited and the cost per head does not exceed the normal £150 limit.

Maybe keep it to a modest affair and let’s have a big bash when the Coronavirus pandemic is over as we are allowed more than one event a year within the £150 limit.

PLUS CHRISTMAS GIFTS OF UP TO £50 TO EMPLOYEES

Remember that certain gifts to staff at Christmas are also tax free if structured correctly. Employers are allowed to provide their directors and employees with certain “trivial” benefits in kind tax free.

This exemption applies to small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers.

There are of course a number of conditions that need to be satisfied to qualify for the exemption.

Conditions for the exemption to apply

• the cost of providing the benefit does not exceed £50
• the benefit is not cash or a cash voucher
• the employee is not entitled to the benefit as part of any contractual obligation such as a salary sacrifice scheme
• the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)

GIFTS TO CHARITY

Where possible taxpayers should “Gift Aid” any payments to charity to provide additional benefit to the charity. Higher rate taxpayers obtain additional tax relief on the grossed up amount donated.

For example, where an individual makes a £20 cash donation to charity the charity is able to reclaim a further £5 from HMRC making a gross gift of £25. Where the individual is a 40% higher rate taxpayer he or she is able to claim a further £5 tax relief under self-assessment, reducing the net cost of their donation to £15.

Note that the donor is required to make a declaration that they are a UK taxpayer and those that have not suffered sufficient UK tax to support the Gift Aid amount will taxed on the shortfall.

Remember that Gift Aid does not just apply to gifts of cash. Many charity shops will now sell donated items on your behalf and are able to treat the sale proceeds as Gift Aided donations. It is also possible to gift quoted securities and land and buildings to charity and claim Gift Aid on the market value of those assets.

DIARY OF MAIN TAX EVENTS

DECEMBER 2020 / JANUARY 2021

Date	What’s Due
1/12/20	Corporation tax for year to 28/02/2020 unless quarterly instalments apply
19/12/20	PAYE & NIC deductions, and CIS return and tax, for month to 5/12/20 (due 22/12 if you pay electronically)
30/12/20	Deadline for filing 2019/20 tax return online in order to request that HMRC collect outstanding tax via the 2021/22 PAYE code
1/1/21	Corporation tax for year to 31/03/2020 unless quarterly instalments apply
19/1/21	PAYE & NIC deductions, and CIS return and tax, for month to 5/1/21 (due 22/1 if you pay electronically)
31/1/21	Deadline for filing 2019/20 self-assessment tax return online and paying your outstanding tax for 2019/20 and first payment on account of 2020/21 tax.

Note that if this liability is no more than £30,000 you can agree with HMRC to spread over 12 months

Content prepared / accurate as at 25 November 2020

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

Is your business ready for Brexit?

The UK left the European Union on 31 January 2020. The transition period ends on 31 December 2020.

The Covid-19 pandemic has dominated the news headlines this year but Brexit is still progressing. During the transition period, the UK remains in both the EU customs union and single market. Until the end of the transition period (31 December this year), most things stay pretty much the same. So, what do businesses need to think about in terms of UK-EU trade, supply chains, etc. from 1st January?

Brexit could affect your business in a number of ways. For example, businesses that import or export goods between the UK and the EU will need to consider what operational changes they will need to make in advance of January 1st. The UK Government has set up a helpful webpage which includes useful guides and checklists https://www.gov.uk/transition

A new customs regime will come into force on 1 January 2021. Hopefully a trade deal can be agreed by then, as the final arrangements are still not clear.

UK businesses that trade with countries outside the European Union will already be familiar with an Economic Operation Registration Identification (EORI) number. From 1 January, British companies will not be able to trade with the EU without an EORI. In the absence of an EORI number, goods could be held up at ports.
In addition, non-compliant businesses won’t be able to take advantage of any special measures such as deferred tariff payments that look set to be introduced to smooth the flow of trade.

Another consideration for businesses is taxation. HMRC offers guidance on its website for the future treatment of payments between UK companies and EU member states. As ever, tax can be a complicated subject and it is often best to invest in some tax advice from an expert.

Finally, businesses that trade with the EU may need to consider any additional regulatory obligations that come about as a result of Brexit. As things currently stand, there are a lot of unanswered questions as we still don’t know if a last-minute trade deal will be agreed between the UK and the EU. Either way, it’s worth keeping an eye on the gov.uk website for any additional guidance or updates.

Are digital banking platforms suitable for businesses?

Digital banking platforms such as Starling Bank or Monzo have risen in popularity, but are they suitable for business use?

Digital banks have built popular apps for personal users to manage their current accounts from their smartphones. The apps allow users to easily manage their money, make payments and track their transactional activity. The digital banking model has proven popular and now Monzo, Starling, and others offer business accounts. Opening a business account with a traditional bank can be a long-winded process involving branch appointments, submitting paperwork, etc
The apps used by digital banks can save you a lot of time as users can apply online at any time and get a quick decision, rather than waiting weeks as is often the case with high street banks.

The Monzo Business Lite account is free and an upgraded Business Pro version costs £5 per month. Starling Bank also offers a free business banking service as well as a more feature-rich business account costing £7 per month. Both Monzo Business and Starling Bank Business accounts offer free UK transfers, free ATM withdrawals, fee-free spending abroad, cash and cheque deposits and 24/7 customer support.

The paid-for ‘Pro’ version of both Monzo and Starling’s business accounts add features such as VAT management, spending alerts, and integration with accounting systems which are helpful features for business users. Physical cards are issued to users and they are full debit cards. IBAN transfers are possible on both Starling Bank and Monzo Business accounts. Receiving transfers from abroad is free unless a payment is sent in a currency other than GBP, which results in foreign exchange charges. For businesses that regularly deal in Euros as well as GBP, there are Euro Account add-ons available to users.

Monzo and Starling are regulated by the Financial Conduct Authority (FCA). This means that up to £85,000 of your money is protected by the Financial Services Compensation Scheme if the bank were to become insolvent. Businesses must be UK registered companies or sole traders.

Both Monzo and Starling have limits on the amount of cash that users can deposit in their business accounts.

These business accounts are generally aimed at small businesses and sole traders so they may not offer the features that a medium to large size business might require.

New ways of working

Lockdown has forced businesses to rethink their office space requirements and how staff will work, in the long term.

Prior to the Coronavirus pandemic, most businesses had enough desks or workstations for each and every employee. The remote working revolution that has come about as a result of Covid-19 has forced businesses to rethink their premises strategy. Firms are now asking themselves whether they need desks for everyone and whether they really need so much (expensive) office space.

Throughout the last 20 years or so, offices have evolved. Workspaces have become more open plan. Not everyone is a fan of this – some people find that open plan working involves too many distractions. However, others, conversely, find the added interaction with colleagues in an open plan office inspires innovation and fosters collaboration.

Open plan offices, hot desking, and other modern premises strategies were generally designed around assumptions on the number of staff, number of desks required, and so forth. However, the work from home revolution has suggested that businesses don’t need desks, workstations, or offices for all staff.

Another consideration is new attitudes to virus transmission and social distancing. People no longer want to sit close to others.
Many firms have already responded by launching permanent work from home policies. Some firms want people to work from home for one or two days per week, while others only want to see their employees in the office one or twice a month.

Many people will celebrate this new development. No more commute, a comfortable working environment at home and a better work-life balance. That is fine for those who want to live in the countryside and who have a spare room to convert into an office or study. However, it may not work as well for those who live in small apartments, who cannot afford the luxury of a dedicated home-office.

Businesses may benefit from reduced premises costs and staff may benefit from reduced travel time and commuting costs so it can be a win-win scenario for those with a suitable remote working setup.

All of this points to the end of being expected to attend the office every day. It could mean the end of hot desking, open plan working, and the distraction of others. However, businesses need to think carefully about how to train and develop their people remotely. This will involve an investment in terms of time, effort, technology and money.

There is an opportunity for businesses to reduce premises costs but a shift in thinking will be required in order to make this effective. It seems likely that the best businesses will invest some of the savings back into their people and they are the firms that will most likely succeed in the longer term. Change is upon us and it’s time to adapt accordingly

Having difficult conversations remotely

Nobody likes having a difficult conversation with an employee but it’s even more challenging on screen

In the current environment, many businesses are still working remotely.
As we move towards the end of the year, managers will be preparing to have end-of-year review conversations with employees.

It’s challenging enough having a review meeting with an employee over a video conference or on the phone but it’s even trickier when you need to have a difficult conversation with an under-performing team member. When a face-to-face conversation is not possible, the next best option is to arrange a video call.

Treat it like an in-person meeting
Whilst meeting with an employee on a video conference isn’t the same as meeting in person, the key point is to engage in two-way communication. Make eye contact, ask questions and give the other person time to really engage in the conversation. Prepare any paperwork ahead of time and have it ready to send by email, for e-signature (if required).

Consider the place and time
If you’re working with employees across time zones, set up a call that is appropriate for everyone’s schedule. Ensure that you leave sufficient time to answer any follow-up questions at the end.

Consider if others need to join
If you are having a disciplinary conversation, it is often a good idea to have another manager join the video conference. At the beginning of the call, you should explain why there is another person in the meeting, then go through the agenda for the call. Having a witness on a disciplinary video conference can be beneficial for all involved as it ensures transparency in the interaction.

Final points
Ensure you follow up after the video conference call and include a summary of key points and next steps, if any. It may also be useful to set up another call, in a few days’ time, in case the employee has any questions, once they have had a chance to reflect on the meeting.

Clients who export goods from Great Britain (England, Wales and Scotland) to EU countries, may need to register for VAT in that destination country from 1 January 2021. There are special rules for businesses based in Northern Ireland.

Similarly, businesses based outside of the UK that sell into the UK may need to register for VAT in the UK from 1 January 2021.

Currently (until midnight: EU time, on 31 December 2020) UK businesses can use VAT concessions for call-off stock that apply to EU suppliers. But from 1 January 2021, the UK will no longer be treated as a member of the EU as the transition period will have come to an end.

Example

A business in Wales manufactures cosmetics and send stocks to warehouses throughout Europe. Those stocks are held by the Welsh supplier until the local VAT registered retail businesses need the product. At that point the stock is called off, a sales invoice is raised, and the VAT registered customer accounts for the VAT due on the product on his own VAT return.

From 1 January 2021 import VAT and duties will have to be paid on the cosmetics when they arrive in the EU. The Welsh manufacturer must register for VAT in the country they export to, complete VAT returns and charge domestic VAT on future sales. The fact that the goods will be sold to known VAT registered customers is no longer relevant.

These VAT changes will happen whether or not there is a “trade deal” with the EU, but that deal will determine what level of customs duties and tariffs will apply to goods being shipped into other EU countries.

Written by the Tax Advice Network

Although around 11,000 taxpayers were taken out of the loan charge by the changes to the law recommended by the Morse report (see our newsletter 9 January 2020), thousands of people are still liable to pay the charge.

Those taxpayers were given until 30 September 2020 to submit their 2018/19 tax return, and to apply to spread the taxation of the disguised remuneration loan over three tax years: 2018/19 to 2020/21.

The spreading election is optional, but in many cases it can reduce the rate and amount of tax due on the outstanding loan, as one third of the loan is treated as income in each tax year instead of the full amount being taxed in 2018/19.

If you have not made this spreading election, but it would be favourable to do so, you can make a late election using the online form, and HMRC will automatically accept it. This policy has been set out in a new Statement of Practice (1/2020).

However, paying the loan charge does not make the problem go away. If there is an open enquiry or assessment for the taxpayer covering a year when they had the loan, those enquiries need to be settled as well. The taxpayer will get a credit for any tax they have paid under the loan charge, but the tax enquiry will look at the tax due in that historical year, not the tax as calculated by spreading the charge.

HMRC will be looking closely at 2018/19 returns, to check compliance with the loan charge where it thinks there has been non-compliance or partial compliance. It may well also open enquiries into tax returns for 2019/20 and 2020/21, if a taxpayer elects to spread the loan charge, and there are risks that suggest the returns are not correct.

The Low Incomes Tax Reform Group (LITRG) have a good summary of what to do about the loan charge.

Written by the Tax Advice Network