If your next VAT return is for period 05/20, you need to get the direct debit re-instated as soon as possible.

If your next VAT return is for period 05/20, you need to get the direct debit re-instated as soon as possible.  If you don’t do this you must remember to pay electronically by 7 July 2020.

 

All good things must come to an end

Back in March, as part of the Covid-19 measures, HMRC automatically deferred all VAT payments due for the period 20 March 2020 to 30 June 2020. This meaning, there was no requirement to pay your VAT bill until 31 March 2021.

This deferral period covered the following:

(a) Quarterly and monthly VAT returns’ payments for the periods ending in February, March and April

(b) Payments on account due between 20 March 2020 and 30 June 2020

(c) Annual accounting advance payments due between 20 March 2020 and 30 June 2020

‘All good things must come to an end’ said ‘no-one ever’ when talking about getting an automatic extension to paying your VAT payment to HMRC.  HMRC are now encouraging all businesses to re-instate their direct debits in plenty of time then HMRC can collect the next payment when it is due. HMRC has assured that their payment collection software will not attempt to collect the VAT due from the deferral period.

If your next VAT return is for period 05/20, you need to get the direct debit re-instated as soon as possible. If you don’t do this you must remember to pay electronically by 7 July 2020.

If you find that you’re unable to pay the VAT due at the end of your next VAT period and need additional time to pay, please contact HMRC before the payment is due to arrange a time to pay. HMRC have a dedicated helpline for this – 0300 200 3835. If you do call, please quote ‘V1’.

Business as usual

As businesses begin to trade again, the effects of being closed could lead to possible cash flow issues. There are a some things that you could do to help with this from a VAT perspective:

(a) If you have had a drop in turnover, it may be that you are eligible to use the flat rate scheme to account for VAT. For more information on this please read – https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses

(b) If you are a repayment trader, you should consider changing to monthly VAT returns. In addition to this, if your VAT return requires HMRC authorisation, managing the process efficiently will avoid unnecessary delays. HMRC aim to complete such checks as quickly as possible

(c) If the business is obliged to make payments on account, can these be reduced or even removed entirely if the revised forecast trading position is significantly different to the prior year?

(d) If you have customer debts older than 6 months, make a bad debt relief claim

For businesses whose customers take 30/60/90 to make payment, you can –

*   Switch to cash accounting if your turnover is below £1.35million. This will enable you to account for VAT on a cash basis rather than an accruals business.

*   Issue requests for payment initially instead of issuing VAT invoices. Follow this up by issuing VAT invoices when the customer pays in full. This would prevent paying over output tax to HMRC before your invoices are paid by your customers.

Other important points

During the whole Covid-19 hysteria, there has been some other changes in relation to VAT, some are temporary, and some are here for good. Either way, they need to be considered –

– The implementation of the domestic reverse charge for the construction industry has been postponed until 1 March 2021

– Until 31 July 2020, PPE can be imported free of duty and VAT. Applications must be made to HMRC for a relief certificate prior to the goods being imported. Depending on how the pandemic progresses, there is the possibility of this deadline being extended

– With immediate effect, HMRC reduced import VAT and duty to nil on the importation of items used to help find a treatment/cure for Covid-19 such as animals for scientific research and substances for biological and chemical research

– For any option to tax made during the period 15 February 2020 to 30 June 2020, you have 90 days to notify the option

– With effect from 1 May 2020, e-publications are now subject to VAT at 0%

– There has been issues with the C79’s for March. Some businesses were not issued with a C79 for March, or the C79 was issued containing the February 2020 data. HMRC advises businesses to use the most recent C79 that they have received

– For solicitors and conveyancers, HMRC have announced that with effect from 1 December 2020, you will no longer be able to treat postal property search fees charged to your clients as ‘disbursements’. VAT will be chargeable at 20% on the recharge of such costs

It’s been a hectic couple of months for all businesses. Over the next couple of weeks almost all businesses will be open again with trade hopefully returning to normal over the coming weeks.

 

If you are affected by any of the above or you have any questions or concerns, please speak to your usual Huddart contact or email us via hello@jeffreyahuddart.co.uk

 

Understanding more about Time to Pay (TTP) and HMRC

Understanding more about TTP

In the recent spring Budget, the Chancellor of the Exchequer Rishi Sunak said Britain will rise to the challenge of COVID-19, adding that: “HMRC will scale up the Time To Pay service to allow businesses and self-employed to defer tax payments.”

Known as a Time to Pay (TTP) arrangement, it is designed to help businesses that are fundamentally viable but experiencing temporary cash flow problems.

If HMRC believes that your company is nearing insolvency, they may act quickly to recover their money, so we must stress that a Time to Pay arrangement is only for those businesses that are fundamentally profitable.

Our advice is to always be proactive with HMRC – don’t wait to be contacted by them because your tax payment was late.  The existence of Time to Pay arrangements indicates an understanding by HMRC that problems will arise, and a willingness to help under certain circumstances, but the responsibility remains with you to initiate contact.

A TTP arrangement is a method of spreading your tax payments over a longer period of time than would otherwise be available.  It is used for arrears of corporation tax, VAT and PAYE, but can also be used if you are anticipating problems with an upcoming payment or payments, and it may help you to avoid a late payment penalty.

HMRC will want to satisfy themselves that you are not trying to deliberately avoid meeting your tax liabilities.  When weighing up the risk of allowing extra time to pay, they also consider the industry in which you operate, and its previous history of repayment as a whole.

If a TTP arrangement is agreed, it is imperative that you meet these payments in full and on time, otherwise your problems could significantly increase.  HMRC could immediately cancel the arrangement if you default, calling in the total debt and applying a range of penalties.

 

If a TTP is agreed, interest will probably be charged on the amount to be paid, but penalties may be lifted if you have made contact with HMRC quickly, and acted responsibly to redress your situation.

Applying for a Time to Pay arrangement

Once you have put together a strong case in favour of being granted extra time to pay, you need to phone HMRC, or seek the help of a professional accountant who will negotiate on your behalf.

But what constitutes a ‘strong’ case?  This means presenting a realistic proposal in terms of what you can afford to pay, backed up by evidence in the form of:

(a) Sales and cash flow forecasts for the following six months or more

(b) A plan of how you will cut costs to free up extra cash

(c) Generally conveying your determination to ensure repayments are met.

It is worth remembering that HMRC will want the TTP arrangement to be over the shortest time, with the highest repayments possible, in order to recoup their money quickly.  You must be careful, however, to offer only what you can afford, and be certain that your company can meet its obligations as set out in the plan before it is agreed.

Dealing with HMRC can be problematic unless you understand how they operate, which is why many of our clients ask us to discuss and negotiate on their behalf.

Get in touch via email:  hello@jeffreyahuddart.co.uk

By Phone:  0161 703 8353

Our offices are open Monday to Friday 9am – 3pm.

 

Starting a new job in the midst of a pandemic – here’s what it’s like

My decision to change jobs

After much deliberation and thought, and after almost 21 years with the same company, I decided to hand in my notice (3 months) and start afresh somewhere else.

I decided to join another firm of accountants local to my home as the commute into central Manchester was one of the main factors of handing in my notice. I was extremely excited as well as apprehensive and scared.

The shock of Covid-19

During my 3 months notice, with literally two weeks to go, the country went into lockdown because of Covid 19!

I had to work from home which was not a problem to me as I was used to doing this but the thought of leaving my safe, secure job and then maybe not having a new job to go to was the most frightening experience of my life.

I have always worked and been extremely independent. In fact, I was 12 years old when I started my first job and have never been out of work since, whether it be school and another job, college and another job or having two jobs literally!

My new job

To my delight and relief, I was still offered the job at the new accountancy practice. Phew!  Now to prove my worth working from home and building up the trust of my new bosses and colleagues.

My first day was in the office for a ‘one to one’ welcome meeting – social distancing of course – which was very strange in itself but it all went extremely well.

Starting a new job can be overwhelming after making such a huge leap but dealing with it during a pandemic and lockdown is a different ball game altogether. You are totally isolated from your new colleagues and have not got the comfort of asking a question across the table – no matter how big or small that question may be.

Learning new software with a different computer/laptop was also challenging but with my experience and knowledge I overcame my worries and fears. Fortunately, I have had the advantage of familiarising myself with all my new tools and not having the pressures of rushing which has been a tremendous help to me. Whilst it has been challenging at times, my new colleagues have been great at asking if I need help.

I was a little worried about how I would fit in at the office and having to present myself under these circumstances which was daunting but the one saving grace has been the weekly zoom meetings that we have.

 

The whole of the team are all very approachable and friendly and I feel like I have been part of the team for years. I really enjoy these meetings and try to get involved as much as I can so I can be part of the discussions and decision making.

Lockdown

I think anyone starting a new job during lockdown misses the buzz that is there for the first couple of days when you are new – the new routine, the chats, the lunches. It’s the small rituals we miss out on now.

However, this is something happening to so many people as a result of a global pandemic and if it means that I miss out on certain aspects of in-person training in order to keep myself and others safe, then that’s a choice I’m more than happy to make.

Being on lockdown, means that I cannot meet my new clients but again, because of my experience over the years, have contacted them via email or phone, introduced myself and had a long chat with them. I am really missing face to face contact with everyone at the office and being able to discuss any new ideas I have, discussing my role and proving my worth to the practice but that will hopefully come in time.

On the flip side of the coin, it has also been a very pleasant experience. Starting a new job, after such a long time in the previous one, is both challenging and stressful, but I have been able to ease myself into my new routine – as I am used to working both remotely and independently, so this was fairly easy for me to get on with.   My new employers have been very encouraging and patient and sympathised with me over my new role and any potential hurdles that I may or may not have had to overcome.

I think out of the first seven weeks at Huddarts I have only felt low and flat probably twice – not because of the work or the company, but because of the situation and circumstances that I find myself in.

It’s amazing what a pizza can do …

A poignant moment of my time at Huddarts was when Tom and Charles sent an email to each and every member of the team and said that we could order a large pizza for each of us and our family from the local Italian restaurant.

A small gesture – but meant the world to me.   Really boosted morale and felt a lot of appreciation from both directors.  I really do not feel under any pressure at all. My new employers encourage me to talk about any problems or concerns I may have. Something I have not experienced before!

Diane Mills

 

Open – Business as a New Normal

While our office has been open during lockdown with one member of staff in each day Monday to Friday, I’m pleased to say that we now have more staff operating from the office while others continue to work remotely or do a bit of both.

Office Hours

Our office hours remain Monday – Friday 9am to 3pm.

Visiting the office

If you are calling to drop of paperwork or sign a form please phone in advance and let us know.  The front door is locked for the moment so when you arrive (having phoned in advance) please knock and one of our staff will come and meet you at the door with social distancing rules applying.

We are doing all we can to maintain a safe system of work with only clients using the front door and staff coming into the office via our back entrance. We limit the number of staff in the office at any time and have an Upstairs Downstairs social distancing rule for their work stations.

We still prefer client appointments to be conducted by phone, facetime or Zoom meetings.  We believe this is the best for all concerned during this time.

Our office phone number is: 0161 703 8353

You can email us on: hello@jeffreyahuddart.co.uk

We are open for business.  However, as the caption says ‘Business as a New Normal’.

Tom Bathgate MBA.

Flexible Furlough from 1 July under revised CJRS

29 May: Changes to the Coronavirus Job Retention Scheme (CJRS) will apply a month earlier than expected. From 1 July the scheme will allow part-time working, but staff must have been furloughed by 10 June to be eligible.

The Chancellor has announced the government’s plans to change the CJRS which will now be re-engineered to support businesses sending staff back to work. Employers will be able to put staff on part-time furlough, claiming the CJRS grant for a portion of their salary.

Critically, employers will only be able to claim going forward if they have previously claimed under the pre-1 July scheme.

Note too that as there is a three-week minimum furlough requirement under the current rules, it follows that any new period of furlough leave must have started by 10 June 2020 to be complete when the current scheme ends on 30 June and so ensure the employee remains eligible from 1 July.

“The job furlough scheme has been vital for the protection of businesses and jobs, but it is right that it should evolve to match government’s phased approach to re-opening the economy,” said Michael Izza, ICAEW’s Chief Executive, following the announcement.  “In that spirit, allowing employees to return to work part-time from 1 July is a sensible move, and in principle it is fair that employers should be prepared to take some of the financial burden off the tax-payer as businesses start up again.
“However, we would like to see a higher level of support retained for sectors which will still be barred from doing business, such as hospitality and leisure. Otherwise there is a real risk for these companies that a sudden increase in staff costs, without the ability to generate revenue, will cause a wave of avoidable redundancies and closures.”

The proposed changes also introduce a new limit to the number of staff who can be included on a claim.

This will be based on the maximum staff ever included in any single pre 1 July claim. The Chancellor also confirmed that from 1 August the CJRS grant will no longer cover the cost of employers’ National Insurance nor pension contributions with employers expected to cover the costs.

Anita Monteith of ICAEW’s Tax Faculty, said: “Employers will need to take great care not to be caught out by the cut-off date for furloughing additional employees and for making claims.”

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What is changing?

For July the grant will be available on the same basis as now (the lesser of 80% of pay and £2,500). The intention is that the government will reduce its contribution over the remaining months of the scheme – August to October – with a corresponding increase in the employer contribution.

– August – the CJRS will continue to pay 80% of wages
– September – the CJRS will pay 70% of wages while employers will take on the other 10%
– October – the CJRS will pay 60% of wages while employers will take on the other 20%

Throughout the duration of the furlough scheme it is important to remember that the employee will continue to receive their salary entitlement in full, as set out by the terms of their employment contract. The CJRS is a grant paid to the employer, and it is this grant which is now being scaled back, the calculation being based on the salary paid for any period while the employee is being furloughed.

The revised scheme has many of the same features as the current scheme which runs between 1 March and 30 June 2020, but there will be some significant changes intended to encourage those previously furloughed back to work. In summary, these are:

– Employees who were previously furloughed will be able to return to work on a flexible part-time basis.

– For those staff who are furloughed part-time, employers will be required to pay for the cost of the time staff are working. A grant will be available for the cost of their furloughed hours.

Employees must have been furloughed under the current scheme (CJRS V1) for them to be eligible for a furlough grant under the revised scheme (CJRS V2). So, in practice, only employees who have been included in a furlough grant claim made before 1 July 2020 can be furloughed under CJRS V2.

The rules for CJRS V1 covered only the period 1 March 2020 to 30 June 2020, para 12, The Coronavirus Act 2020 Functions of her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction.
This means the furlough scheme is closed to new entrants after 30 June 2020.

The Tax Faculty urges employers and agents who have yet to submit claims under the scheme, to do so now as a matter of urgency.

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Further points to note about CJRS V2

a. A new minimum reporting period of one week will apply from 1 August 2020. More frequent claims will not be accepted, but the reporting period can be longer.

b. From 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward. This is necessary to reflect the forthcoming changes to the scheme.

c. The grant will be based on the same premise as now, so the employee must be paid the lesser of 80% of reference salary and £2,500 per month. The government contribution to the 80% of reference salary is being reduced as the scheme progresses.

d. From 1 August onwards, the scheme will no longer cover the cost of employers’ National Insurance nor pension contributions applicable to the grant.

e. The new calculation will apply from 1 July to factor in the cost of hours worked to hours furloughed ratio.

f. Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period. Further details will be included in future guidance.

g. Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.

h. For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts

i. There will be a new maximum limit to the number of staff who can be included on a claim. This will be based on the maximum staff ever included in a single claim under CJRS V1.

j. CJRS V2 will end on 31 October 2020.

A new factsheet giving further details on the changes to CJRS and SEISS is available from gov.uk 

HMRC is hoping to publish detailed guidance on CJRS V2 on 12 June 2020.