Author Archives: Peggy Nightingale

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The VAT Deferral Scheme

The Government’s VAT Deferral Scheme which has enabled businesses with VAT liabilities incurred between 20th  March and 30th June 2020 to make these payments later, is about to close.

If you still have outstanding VAT liabilities from the first period of lockdown last year, and wish to pay over a  period of time, you must join the scheme by 21June otherwise, you will have to pay in full by 30 June or face a 5% penalty.

If you have not already done so, our advice is for you to sign up to the scheme and make the first instalment payment.

If for whatever reason, you have been unable to sign up to the online service for deferring a VAT payment, you should ring the HMRC coronavirus helpline on 0800 0241222 to join the scheme by telephone.

If after making arrangements, you are still unable to pay these liabilities then please contact HMRC on 0300 200 3835.

We appreciate that there are issues in relation to contacting HMRC at the present time. In our own case, when trying to sign up online, we have been told that we are not eligible as we do not owe any deferred VAT. We know that we do as we have other communications confirming this.

We have put in an appeal to HMRC but are not confident that they have the means of responding before the deadline later this month.

Therefore, if you have any issues relating to deferred VAT, please act now.

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SEISS Grant 5

A fifth (and as far as we know final) SEISS grant covering the period May 2021 to September 2021 will be available from late July for those sole traders or members of partnerships whose businesses continue to be impacted by coronavirus.

This grant will differ to the previous four claims as the amount will be determined by how much your turnover has been reduced in the year April 2020 to April 2021.

If your turnover has fallen by at least 30%, you will receive 80% of your average trading profits for 3 months, capped at £7,500.  For those whose turnover has fallen by less than 30%, you will receive 30% of your average trading profits for 3 months, capped at £2,850.

More information on the claim will be provided at the end of June by HMRC but we would recommend that if you believe that you are eligible for this claim, that you should start compiling details relating to your turnover for the year ended 5 April 2021 now.

Please remember to be eligible to the 5th SEISS grant you will need to meet all of the following criteria:

  • carried on a trade in 2019-20;
  • submitted your tax return for 2019-20 on or before 2 March 2021;
  • carried on a trade in 2020-21;
  • currently trading but are impacted by reduced demand due to coronavirus; or
  • have been trading but are temporarily unable to do so due to coronavirus; and
  • you are not excluded from the SEISS. An individual is excluded from the SEISS where their trading profits for 2019-20 exceeded £50,000 or were less than their non-trading income. However, where the person is excluded on the basis of 2019-20, HMRC will consider their returns for earlier years (going back to 2016-17 where relevant).

If you are in any doubt as to what is required then please do not hesitate to contact us but please note that we will not be able to advise until HRMC announce the exact details later this month.

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Martlet Goes Gold!

We are pleased to advise that we have now been upgraded from Silver status to Gold status by our software provider Xero, the main accounting software we recommend to our clients.

We would like to thank all our clients who have subscribed to Xero for helping to achieve this status which gives us a premium advisor directory listing on Xero’s website.

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Further info on HMRC performance

Further to our bulletin last week to provide some further points about the poor performance levels of HMRC and how it affects us in trying to deal with your affairs.

In March, there was a mass data breach where thousands of accountants received Late Filing Penalty Notices intended for clients of other accountants.

Our priority access line as tax agents was withdrawn by HMRC which means that we have to wait up to 40 minutes to an hour when we need HMRC’s assistance but very often the calls are cut completely before they are answered.

There are some significant issues with VAT at the moment as well. In the past year, we have ourselves received a late filing penalty for not paying VAT when we were allowed to defer the payment. HMRC eventually apologised.

We are now trying to arrange paying for deferred VAT by Direct Debit and have separate communications from VAT showing how much we owe and another saying we owe nothing at all. Amounts we have paid are not correctly recorded on HMRC’s own ledger.

It begs the question as to the state of the public finances if even basic transactions are not recorded properly and different information about the same transaction is recorded in different places.

The moral of the tale is, if you receive information from HMRC, please do not necessarily regard it as being accurate. Please contact us and we will do our best, within the constraints outlined above, to solve the problem.

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Good news – Corporation tax loss relief improved

As a result of the pandemic, companies incurring losses for tax purposes for accounting periods ending between 1 April 2020 and 31 March 2022 can now carry back these losses for up to three years rather than one year.

HMRC have advised that claims below £200,000 may be made outside of a corporation tax return via letter. Claims greater than £200,000 need to be made via the appropriate corporation tax return.

For all those clients that have losses, we will be making sure that your position is optimised and welcome this extension to the loss relief carry back period.

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SEISS Grant 4

HMRC opened their portal for the self employed to claim their fourth grant at the end of the April 2021.  Some sole traders who were ineligible for the previous three grant payments can now make a claim if they started their self-employment after 6 April 2019. There is still no relief of course for people who operate through limited companies.

If you have not yet claimed,  this is a reminder that you must apply by the 01 June 2021.

HMRC Guidance states to be eligible for the fourth grant you must be a self-employed individual or a member of a partnership. You cannot claim the grant if you trade through a limited company or a trust.

You must have traded in both tax years:

  • 2019 to 2020 and submitted your tax return on or before 2 March 2021
  • 2020 to 2021

You must either:

  • be currently trading but are impacted by reduced demand due to coronavirus
  • have been trading but are temporarily unable to do so due to coronavirus

You must also declare that you:

  • intend to continue to trade
  • reasonably believe there will be a significant reduction in your trading profits

If you require any assistance with a grant application then please do not hesitate to contact us.

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We’ve got your back!

No one can deny that 2020 has brought everybody huge challenges on many fronts. However, the service provided by the Tax Authorities and also the  major banks is so woeful that it is not acceptable for them to continue to hide behind the coronavirus crisis.

As a result, so many members of our professional body, the Institute of Chartered Accountants in England and Wales have  reported numerous service issues and delays, the Institute has now made representations to the Tax Authorities to advise amongst other matters that taxpayers have been waiting up to three months just for a reference number to be issued for self-employment registrations, five months for VAT registrations to be completed, six months for Research & Development Relief Claims to be processed and more than six months for Corporation Tax losses to be actioned.

We have several cases ourselves where we have appealed against incorrectly issued Corporation Tax Penalty Notices which are taking up to five months to be dealt with. In the meantime, HMRC are instructing bailiffs to collect the penalties which were not due on the first place.

Whilst appreciating the pressure on HMRC’s resources and its achievement in delivering support in many cases, the ICAEW has pressed for an improvement of service standards.

We hope that HMRC will listen to these representations but in the meantime we would urge all clients to expect continued delays with all dealings with HMRC and to exercise as much patience as possible when waiting for matters to be dealt with. We are doing what we can to bring these matters to the attention of the authorities.

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Coronavirus Job Retention Scheme (furlough scheme)

The Coronavirus Job Retention Scheme (furlough scheme) has been extended until 30 September 2021 and the level of grant available to employers under the scheme will stay the same until 30 June 2021.

1. Changes to the level of grant from 1 July 2021

From 1 July 2021, the level of grant will be reduced and you will be asked to contribute towards the cost of your furloughed employees’ wages. To be eligible for the grant you must continue to pay your furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough.

The table below shows the level of government contribution available in the coming months, the required employer contribution and the amount that the employee receives per month where the employee is furloughed 100% of the time.

Wage caps are proportional to the hours not worked.

Government contribution: wages for hours not worked80% up to £2,50080% up to £2,50070% up to £2,187.5060% up to £1,87560% up to £1,875
Employer contribution: employer National Insurance contributions and pension contributionsYesYesYesYesYes
Employer contribution wages for hours not workedNoNo10% up to £312.5020% up to £62520% up to £625
For hours not worked employee receives80% up to £2,500 per month80% up to £2,500 per month80% up to £2,500 per month80% up to £2,500 per month80% up to £2,500 per month

You can continue to choose to top up your employees’ wages above the 80% total and £2,500 cap for the hours not worked at your own expense.

In other words, if you have started the long furlough from July onwards, the employer is going to have to meet some of the costs as the amount paid by the government will reduce.

If you have any queries about how you might be affected or how the scheme will operate from 1 July onwards, please do not hesitate to contact us.

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Data Protection Registration

Many businesses do not realise that they have a legal obligation to register under the Data Protection Regulations with the Information Commissioner’s Office if they hold or process any personal information electronically.

Basically, this means that if you hold any addresses of customers or suppliers or personnel on your computers.

The ICO has been undertaking a campaign to contact virtually every company listed at Companies House who is not already registered with them to raise awareness and to try and get fees paid.

We have received hundreds of letters here at Martlet House for companies, many of which are dormant, or do not hold data, but if you receive such a letter, you do need to contact the ICO as soon as possible as they are now sending out reminders.

Also, if you do not hold personal information on computers, if you use CCTV for crime prevention reasons, that is also enough to require a data protection registration.

If you are found to be in breach of these regulations, the fines can be HUGE!

If you require any further information about the requirements, please do not hesitate to contact us.

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What is the outlook for SMEs? Practical Guidance for SMEs looking to Futureproof their business

12 months on and we are still feeling the effects of the pandemic and will for some time.

In March, immediately after the Chancellors latest budget, we asked SMEs across the UK to share their outlook for the next 12 months. The findings make for interesting reading – including:

  • 46% of businesses with less than £250k turnover are expecting reduced income over the next 12 months.
  • 67% of businesses with more than £5M turnover are projecting increased income.
  • Looking after existing clients, finding new clients and growth are the 3 biggest priorities for SMEs.

These findings, somewhat unsurprisingly, suggests that larger businesses are more insulated from the negative effects of the pandemic. Smaller firms, with less resources and less of a ‘safety net’, are feeling the effects more severely.

It is encouraging to see that 64% of businesses have reviewed their cashflow – a vital step to take at all times but even more so in these turbulent times.

A concern is the low number of businesses that are undertaking customer surveys. Keeping close to your customers has never been more important.

You can see a full copy of the tracker polls results together with our observations take in our SME Outlook Tracker Report by clicking on the link below.

We have also produced a handy one-sided leaflet to highlight some of the key steps that SMEs can take to futureproof their business. This is available to download below as well.

The landscape is ever changing. As ever, we are here to support you. If you would like to have a chat about the future and the steps you can take to futureproof your business as well as the practical steps you can take to support your business, please do get in touch.

Contact Us

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

Tel.: +44 (0) 1903 600555
Fax.: +44 (0) 1903 600828