HR Expert: Annual leave During the School Summer Holiday

Q- My client has received a number of overlapping requests for annual leave during the school summer holidays and wants to know how to handle them.

A- With most schools closing for a period of around 6 weeks during the summer holidays this can cause a number of issues for your client, especially when it comes to staff wanting time off to care for their children.

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Tax Question of the Week: Loan Charge Reporting

Q- My client has arranged for their company to process the ‘loan charge’ in relation to all of their outstanding loans from an EFRBS scheme, as well as paid the company the tax and employee NIC (to avoid the benefit in kind). Does this mean everything is resolved now, concerning the tax and reporting liabilities for the EFRBS?

A- The client still has a number of obligations remaining. I have outlined these below, alongside the potential penalties.

Reporting outstanding disguised remuneration loans to HMRC

Details of all the outstanding loans must be reported to HMRC before 1 October 2019 using their online service. This applies irrespective of how the loan charge has/has not been processed. Read More

VAT Question of the Week: Domestic Reverse Charges

Q- I have recently been reading up about the domestic reverse charge for construction services which comes in in October 2019, including the helpful VQOTW (14 June 2019), but this has got me wondering whether there are any other reverse charges in the UK I should be aware of, and why they are increasingly being used by HMRC?

A- Reverse charges in the UK fall into two categories; those designed to simplify VAT compliance/reporting, and those designed to protect the revenue.

The reverse charge most businesses will be familiar with is the one applied to cross border services. This is a measure implemented across the EU as a simplification measure, saving businesses providing services to business customers who do not belong in their own EU Member State from having to VAT register in every country in which they have customers. Read More

HR Expert: Deducting money from waiters salaries

Q- My client has a policy which lets them deduct money from waiters’ salaries if customers they are serving run out on the bill, however they have heard suggestions that this may be unlawful – is it?

A- Your client’s concerns likely stem from the fact that popular restaurant chain Wahaca recently found themselves in the public eye over suggestions they would deduct money from a waiter’s salary following a ‘dine and dash’ situation. Whilst Wahaca ultimately declared they would only exercise this contractual right in extreme circumstances, your client should note that doing so would not necessarily be unlawful.

Your client would be free to deduct money from a waiter’s salary in this situation, providing they have the individual’s prior written consent. For this reason, most employers include mention of this within their contracts of employment or employee handbooks. This practice is especially common in the service industry and as long as employees have agreed to this then your client may go ahead and deduct the cost of an unpaid meal from the responsible waiter’s salary. Read More

Tax Question of the week: P11D’s & Payrolling Benefits

Q- With the 2018/19 P11D deadline looming, should I be considering payrolling benefits in future?  What is the advantage? What do I need to do and when?

A- If you’re an employer you need to submit an end-of-year report to HMRC for each employee you’ve provided with benefits which have not been included in wages. Use form P11D to send the report to HMRC for employees and directors. Read More

Tax Question of the Week: Date of Separation for CGT

Q- Jack and Jill started living apart in November 2018 but there was then no contemplation of a divorce. In May 2019 they discussed their situation and at that point in time decided to get divorced. They agreed to get divorced in January 2020.

In June 2019 they agreed a plan to transfer assets between themselves before 6 April 2020 as part of the divorce settlement. The proposed transfers include a large property with a market value of £1 million which originally cost £200,000 many years ago and which Jack will acquire from Jill. She is concerned about the CGT implications.

The property being disposed of by Jill shows a gain of £800,000 based on market value. Jill is seeking to rely on a transfer of assets between spouses who are living together is treated as taking place for such consideration as will give neither a gain nor a loss to the transferor by virtue of s 58 TCGA 1992. Read More

VAT Question of the Week: distant Selling in the EU

Q- My client is a small retailer specialising in bespoke leather goods, and all sales to date have been within the UK. In order to expand her customer base, she is launching a website and planning to sell through Amazon. Are there any VAT consequences she needs to consider?

A- In order to establish the VAT treatment of her sales, she will need to consider where her goods are dispatched to the customer from (the place of supply), their final destination and, in the EU, whether the sale is to a VAT registered business customer.

The place of supply of goods is where the goods are located at the time of supply, and where this is the UK, the following apply:

Sales to UK customers are subject to standard rate VAT; Read More

VAT Question of the Week: What is Hotel Billback Arrangement

Q) My client is a travel agent working for the corporate sector, booking hotels for staff; mainly sales reps travelling around the UK. Although she has booked the hotel in the name of the company, naming the guest, and the guest obviously knows the hotel details, the hotel invoices her. Because she then invoices on to the business in her own name, does this mean she has to use the Tour Operators’ Margin Scheme (TOMS)?

A) A travel agent acting as principal, or as an undisclosed agent receiving and issuing invoices for the accommodation in their own name, would normally have to use TOMS. This would mean the agent not being able to recover input tax on the hotel, and the VAT being accounted for by them on the margin. The VAT on the hotel, within the price charged on by the agent, would then be sticking tax for the business customer. Read More

What is tax investigation insurance?

Tax investigation insurance protects your business from the costs of a tax investigation.

It is one of many means by which small business owners, contractors, freelancers and landlords should be considering to maintain financial stability. However, it is also an additional expenditure that you will need to assimilate into your overall cash flow. So you need to make sure the outlay will be worth it.

HMRC can select your company tax records for investigation at random. They may also make a decision based on a suspicious tax return.

Even if all your records are in order, the investigative process can be complex, last up to 16 months and cost as much as £5,000 in fees.

Depending on your provider, tax investigation insurance will cover these fees and give you access to beneficial support services, such as:

  • Tax advice helpline
  • Representation from former tax inspectors in HMRC communications
  • IR35 legislation support
  • Corporation/Income Tax full and aspect enquiry protection
  • PAYE/VAT representation

These services could prove invaluable in keeping your business stable in the event of an unexpected tax inspection.

Why keeping accurate financial records is key

Calling on a specialist accountant can’t stop you being selected at random, but having accurate financial records will help to expedite the process.

Use advanced accountancy software in tandem with your accountant to give HMRC everything they need to conclude the investigation quickly. That way, you can get back to focusing on your core operations.

Tax Question of the Week: Entrepreneurs Relief for New Incorporations

Q- I understand that Entrepreneurs Relief is now given for new incorporations so that, on incorporation, an existing sole trader would immediately meet the qualifying conditions even though they would not have owned shares in a qualifying company for a sufficient period. Is this correct?

A- To qualify for Entrepreneurs Relief on the disposal of shares in an unquoted trading company, the conditions required are that throughout a period of two years (for disposals on or after 6th April 2019):

  1. The company is the individual’s “personal company” (as defined by s169S TCGA 1992), and
  2. The individual must have been an officer or employee of the company.

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