Author Archives: Peggy Nightingale

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Bounce Back Loan Prosecutions

Two directors owning four companies between them have been prosecuted by the Insolvency Service for obtaining Bounce Back loans under false pretences.. The first gentleman opened three companies and took out a Bounce Back loan of £50,000 for each company and then placed them into voluntary liquidation in the autumn of last year.

These liquidations prompted an investigation by the Insolvency Service who found that the director had made cash withdraws from each of the companies’ bank accounts totalling more than £24,000 and then transferred the remainder of the loans to companies controlled by a close friend.

The close friend in question opened a bank account for a new company in June 2020 and immediately took out a £50,000 Bounce Back loan. He used the funds to purchase a Rolex watch, drew more than £8,400 in cash from the company bank account and transferred £12,500 to other parties. The Insolvency Service’s investigation found there was no evidence that the loans had been used for the benefit of the businesses and that the companies in question had in fact never traded.

As a result, the first gentleman has been issued with a 13 year ban and the second with a six year ban which means that either of them cannot directly or indirectly be involved in the formation or management of a company without permission of the Court.

These are extreme cases but give a clear indication that the Government services will look into insolvencies where Bounce Back loans have been taken out.


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A spending budget about helping working people and businesses recover from the pandemic

Chancellor of the Exchequer Rishi Sunak announced his Budget to Parliament on Wednesday 27th October; the wider implications of which are sure to impact upon businesses across the UK.

This Budget seems to be mostly about helping working people and businesses recover from the pandemic, and so has focused on spending. The two main costs for people have been rather skated over: these are the 1.25% increase in NICs (to become the Social Care Levy) and the increase in corporation tax to 25%. The NIC increase will reduce everyone’s pay packets a little, and the increase in corporation tax will make everything that little bit more expensive in a couple of years’ time – the Chancellor may well be hoping that by the time they start to have an effect, people will have forgotten about them coming in.

It doesn’t seem to be a huge amount of a tax increase to claw back the costs of the pandemic, so we may well see more coming along over the next few years.

The Business Rates changes should make things a little better for smaller high street retailers, but the more important issue for them is whether an Online Sales Tax will be introduced to shift some of the Business Rates burden away from the high street. A consultation is due to be published shortly, so it seems unlikely that there will be any tax changes in the next year or two.

Similarly, the Universal Credit changes will make life a lot better for working people on lower incomes. However, people who can’t work, and those not in UC, aren’t going to see any of that benefit and may find things getting tougher.

Otherwise, this Budget is about rationalising things and tidying them up. The changes to alcohol duties make a lot of sense, though I suspect that drinkers of weak beer and low-strength wine will be the winners, and those who like cider, strong beer, and spirits might well find themselves paying a fair bit more – CAMRA may not see eye to eye with the WHO on this one. Similarly with air passenger duty: domestic flights will be cheaper but long-haul flights will get hit, especially with the oil price going up

And that really sums up the Budget for me: some sensible tidying up, but to be frank it’s going to be lockdown, petrol prices, inflation, and the supply chain that will have more impact on people over the next year or so. You’ll need to save a lot of 3p’s off your beer if you have to buy petrol at £1.60 a litre.

If you’d like to speak with one of The Martlet Partnership’s tax advisers about the Budget please call 01903 600 555 or email info@martletpartnership.com.


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Budget Key Points

Here are some initial key points regarding today’s Budget announcement. More to follow.

New announcements with immediate effect:

  • 30-day reporting and payment deadline for CGT on UK residential property extended to 60 days for transactions that complete on/after 27 October 2021 (the deadline is similarly extended where non-residents dispose of other UK land and buildings)
  • High Income Child Benefit Charge is to be brought within the discovery assessment regime; this will apply retrospectively
  • Cross-border group relief for corporation tax to be abolished w.e.f. 27 October 2021
  • Increases to various ‘cultural’ tax reliefs (e.g. for theatres and orchestras) from 27 October 2021

New announcements taking effect later

  • 100% Annual Investment Allowance for qualifying plant and machinery – limit to remain at £1 million until 31 March 2023
  • Residential Property Developer Tax to be introduced from 1 April 2022: 4% of profits above £25m that are derived from UK residential property development
  • Car fuel benefit multiplier for 2022/23 is £25,300
  • Van benefit charge for 2022/23 is £3,600 and the van fuel benefit charge is £688
  • National Insurance Contribution (NIC) thresholds for 2022/23 increase by 3.1%, except the Upper Earnings Limit for Class 1 and Upper Profits Threshold for Class 4, which are both frozen
  • R&D tax relief to be reformed from 2022/23, but no details yet confirmed
  • ISA investment limit unchanged for 2022/23 at £20,000 (£9,000 for Junior ISA)
  • Annual Tax on Enveloped Dwellings (ATED) rates rise by 3.1% from April 2022
  • Reform of basis period rules for unincorporated business and LLPs is to proceed (2023/24 will be the transitional year)
  • Temporary reliefs for Business Rates for small businesses in 2022/23, with longer term reform of the system and reliefs for expenditure to be introduced in April 2023
  • Reform of Air Passenger Duty from April 2023: decreases for domestic flights and increases for ‘ultra-long haul’
  • Consultation for fundamental reform of alcohol duties, including incentives for pubs by reducing the duty on draught alcoholic drinks

Confirmation of matters previously announced

  • National Insurance Contributions (NIC) and dividend tax rates to rise by 1.25% from April 2023 to help fund health and social care (NIC rates will return to current rates for 2023/24, when the separate Health and Social Care Levy is introduced)
  • Structures and Buildings Allowance – changes to Allowance Statement requirements
  • ‘Notification of uncertain tax treatments’ will be introduced for large businesses from 1 April 2022, requiring HMRC to be told if they take a tax position in their returns for VAT, corporation tax or income tax (including PAYE) that is uncertain
  • New late submission and payment penalty regimes to be introduced for VAT (for APs beginning on or after 1 April 2022), MTD ITSA from April 2024 and other ITSA taxpayers from 6 April 2025
  • Changes to the ‘Scheme Pays’ reporting deadline from 6 April 2022, where a taxpayer wishes their pension scheme to meet an Annual Allowance tax charge above £2,000
  • Making Tax Digital for Income Tax Self Assessment (MTD ITSA) to be introduced from 2024/25, with an extra year’s delay for general partnerships.
  • Minimum pensions age to access private pensions increases from 55 to 57 from 6 April 2028


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Income Tax MTD Delayed 12 months

In a statement to MPs, new financial secretary to the Treasury Lucy Frazer has confirmed that the introduction of Making Tax Digital (MTD) for income tax will be postponed by a year

The quarterly digital reporting for landlords and the self employed was due to start in 2023, but it will be pushed back by 12 months, the second delay to the digitisation programme.

‘The government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the last year. In recognition of this and of stakeholder feedback, we will now be introducing MTD for ITSA a year later, in the tax year beginning in April 2024,’ said Frazer in a written statement.

‘General partnerships will not be required to join MTD for ITSA until the tax year beginning in April 2025.

‘The date at which all other types of partnerships will be required to join will be confirmed later.’

This delay will also affect the introduction of the new penalty scheme for late filing and late payment of tax for ITSA. This will now be introduced for those who are mandated for MTD for ITSA in the tax year beginning April 2024, and for all other income tax self assessment customers from April 2025.

Editorial comment – the delay of the implementation of this radical change to the tax system is welcome. It is very clear from our experiences and exchanges with HMRC in recent months that they are struggling to cope even more than ever with just basic data input and dealing with correspondence and enquiries. Attempting to bring in such complicated technological changes would, in the short term, in our view, only make the system even more unfit for purpose.


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Plastic Packaging Tax

The Government has announced a new tax which will come into force in April 2022. It is aimed to encourage the use of recycled rather than new plastic within plastic packaging.

The rate of the tax will be £200 per metric tonne of plastic packaging.

If you have a business that manufactures or imports ten or more tonnes of plastic packaging over a 12 months period, you will need to register for the tax regardless of whether you will have to pay any tax.

Those businesses that manufacture or import plastic packaging should make sure now that you have the information needed to establish how much tax you need to pay or to confirm that you have nothing to pay.

If you are responsible for accounting for the tax as a manufacturer or importer, any invoice you issue to a business customer must show a statement that Plastic Packaging Tax has been paid on the packaging concerned.

This may require in-changes to your invoicing software and accounting procedures although further details of the requirements will not be given until later in the year.

Further information is given on the HMRC website and if you need further information after that, you can contact HMRC by email on indirecttaxdesign.team@hmrc.gov.uk.


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VAT Rate Change

We would like to remind you all that the reduced 5% rate applicable in the leisure and hospitality sector, which was introduced to help businesses struggling with social distancing measures, will come to an end on 30 September.

It will increase to a transitional rate of 12.5% from 1 October 2021 to 31 March 2022.


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Furlough comes to the end

The Furlough scheme, the popular name for the coronavirus Job Retention Scheme will officially come to an end next week.

That is to say that the grant that covers a percentage of staff wages who have been unable to work due to the coronavirus crisis will no longer be available.

Government contributions already fell to 70% of staff salaries in July and the employer making up 10% of the 80% which needed to be paid to staff.

In August and September, those contributions fell further to 60% meaning that employers had to make up the further 20%.

For those businesses who still have staff who are unable to work, this will raise a number of questions in particular whether or not those staff who were receiving furlough payments and who still do not have full time employment, may need to seek advice on redundancy or variation of contract.


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Reminder to all our self-employed clients

We would just like to remind all our self-employed clients or those who are members of partnerships that the deadline to apply for the fifth and final Self-employment Support Scheme grant is 30 September 2021.

The eligibility criteria for this grant are different from the first three grants. We cannot make the claim for you but you may need our help in deciding whether or not you are eligible.

The closure of the scheme is less than a week away so if you think you are eligible and have not yet made a claim, please contact us as soon as possible for further details.

There is also plenty of guidance on HMRC’s own website.


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Tax Investigation Fee Protection Scheme

Many of you will by now have received letters or emails from us relating to the renewal of our annual tax investigation service.

For those of you who have not received any communication directly from us and are interested in the service, would you please contact us as soon as possible because the renewal date is 1 October.

The service means that any fees arising as a result of HMRC enquiries into Income Tax, Corporation Tax, VAT or Payroll matters, will be covered in full.

The scheme now also covers investigations into the Furlough Scheme and Self-employed Income Support Scheme and also Gift Aid cover and Stamp Duty Land Tax matters.

It also gives you free access to a business legal helpline on a 24/7 basis.


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Government Plans for increases in National Insurance

The Government confirmed yesterday that from April 2022, a 1.25% Health and Social Care levy will be introduced.

It is nominally taking the form of a 1.25% increase in National Insurance both for employees (Class 1) and Self-Employed (Class 4) with a similar increase for employers as well.

There will be no further opportunities for saving this levy by using dividends in limited companies as there is also a 1.25% increase in dividend tax rates.

This increase also applies to highest rates possible so that successful companies who reward their directors with dividend income over £150,000 will effectively be paying tax, once corporation tax has been taken into account at 58.85% on that marginal income.

If the planned corporation tax rise to 25% comes in as well, then owner managed businesses in that bracket will then be paying tax at 64.85%. However, there will be undoubtedly other changes between now and the time of full implementation of the increased corporation tax rate and we will keep you posted and continue to optimise your tax planning opportunities.

The rise is ostensibly linked to improving social care so that from October 2023 nobody starting care will pay more than £86,000 in their lifetime and no one with assets less than £20,000 will have to make any contribution from their savings or housing wealth.


Contact Us

The Martlet Partnership LLP
Martlet House
E1 Yeoman Gate
Yeoman Way
Worthing
West Sussex
BN13 3QZ

Tel.: +44 (0) 1903 600555
Fax.: +44 (0) 1903 600828
E-mail: info@martletpartnership.com

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