HMRC is phasing in its landmark Making Tax Digital (MTD) regime, which will ultimately require taxpayers to move to a fully digital tax system. Under the new rules, businesses with a taxable turnover above the VAT threshold (currently £85,000) must keep digital records for VAT purposes and provide their VAT return information to HMRC using MTD functional compatible software.
The new rules have effect from 1 April 2019 where a taxpayer has a ‘prescribed accounting period’ which begins on that date, or otherwise from the first day of a taxpayer’s first prescribed accounting period beginning after 1 April 2019. For some VAT-registered businesses with more complex requirements the rules will not have effect until 1 October 2019. Included in the deferred start date category are VAT divisions, VAT groups and businesses using the annual accounting scheme.
The government has confirmed that a light touch approach to penalties will be taken in the first year of implementation. Advising that where businesses are doing their best to comply, no filing or record keeping penalties will be issued as the focus will be on supporting businesses to transition to MTD. The government has confirmed that it will not be mandating MTD for any new taxes in 2020.
Figures published by HMRC show that almost 1.2 million businesses are affected by MTD for VAT.
Financial Secretary to the Treasury, Mel Stride MP, said:
‘In a world where businesses are already banking, paying bills and shopping online, it is important that the tax system moves into the 21st century.’
The forms P11D which report details of benefits and some expenses provided to employees and directors for the year ended 5 April 2019, are due for submission to HMRC by 6 July 2019. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.
Employees pay tax on benefits provided as shown on the P11D, generally via a PAYE coding notice adjustment or through the self assessment system. Some employers ‘payroll’ benefits and in this case the benefits do not need to be reported on forms P11D but employers should advise employees of the amount of benefits payrolled.
In addition, regardless of whether the benefits are being reported via P11D or payrolled the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form. The deadline for payment of the Class 1A NIC is 19th July 2019 (or 22nd for cleared electronic payment).
HMRC has produced an expenses and benefits toolkit. The toolkit consists of a checklist which may be used by advisers or employers to check they are completing the forms correctly.
If you would like any help with the completion of the forms or the calculation of the associated Class 1A NIC please get in touch.
Internet links: HMRC guidance Toolkit
The government has published additional documents containing advice on Brexit for UK small businesses.
According to the government, the information will help business owners to ‘understand how leaving the EU may affect their business’. The advisory documents cover a range of issues, from changes to UK-EU trade following Brexit, to alterations to how businesses send and receive personal data.
Amidst ongoing Brexit uncertainty the government is urging businesses to ‘prepare now’. Businesses that import or export goods to the EU are urged to apply for a UK Economic Operator Registration and Identification (EORI) number if they have not already done so, in order to continue trading with the EU post-Brexit.
Businesses that provide services to or operate in the EU may need to comply with new rules following Brexit. A business could be affected if it has a branch or branches in the EU; it operates in a services sector within the EU; it is planning a merger with an EU company; or if its employees have to travel to EU or European Economic Area (EEA) countries for business.
Meanwhile, businesses that hold intellectual property are warned that they may face changes to their copyright, patents, designs and trademarks following Brexit.
The government is urging small firms to utilise the Exit Tool.
Internet link:EU Exit tool
The government has delayed its planned increase in probate fees indefinitely.
The delay has been attributed to ‘pressure on Parliamentary time‘ caused by Brexit debates and votes.
The increase in fees had been set to take effect from 1 April 2019, but HMRC recently made the decision to postpone the rise. Under government plans, the proposed probate fees are as follows:
|Value of estate (£)
|Up to 50,000 or exempt from requiring a grant of probate
|50,000 – 300,000
|300,000 – 500,000
|500,000 – £1m
|1m – 1.6m
|1.6m – 2m
While the changes are pending, a temporary process is in place for applying for probate, and estates will not incur the higher fees if applications are made before the fee changes take effect.
A spokesperson for HMRC said:
‘Probate registries will accept applications before processing by us as long as they are assured the inheritance tax (IHT) forms from us will be coming shortly.
‘Our processes aren’t changing, it’s just that probate registries will be willing to accept applications before our processing is done when normally it would need to be after.’
Internet link:Gov.uk news
Amidst all the Brexit debates, the Chancellor Philip Hammond presented his second Spring Statement on Wednesday 13 March 2019.
In his speech the Chancellor provided an update on the economy and responded to the Office for Budget Responsibility forecasts. In addition he launched consultations on various aspects of the tax system together with updates on earlier consultations.
In our report we concentrate on the tax consultations that were announced either at Spring Statement or in recent weeks and progress that has been made in the development of legislation from earlier consultations.
We also remind you of tax changes which take effect for 2019/20. The new timing of the Autumn Budget allows the announcement of most new measures well in advance of the tax year in which they are due to take effect.
Our Spring Statement 2019 summary focuses on the issues likely to affect you, your family and your business. To help you decipher what was announced we have included our own comments. If you have any questions please do not hesitate to contact us for advice.