A new tax relief scheme was released by the government in July 2014 which aims to encourage taxpayers to invest and support social enterprises and other socially driven organisations.
It is hoped that this will provide a new source of finance for charitable organisations. Details of this new relief were published in the Finance Bill 2014, and the tax relief is available on qualifying investments made after April 2014. Providing all conditions are met, the taxpayer can effectively deduct 30% of the cost of their investment from their income tax bill; there is also the option to defer the tax on realised capital gains by reinstating the proceeds via a SITR. Furthermore the future disposal of the SITR investment will be free from capital gains tax.
A new accounting standard shall soon come into force that fundamentally changes the financial reporting for many UK companies. Although these changes may affect companies in general, there are a number of key changes that will affect companies with ownership of properties.
Unless, as it currently stands, but this may well be changing further, you are preparing your accounts in accordance with the FRSSE (Financial Reporting Standard for Smaller Entities) or applying the IFRS international accounting standards, then your company’s financial statements will need to be prepared in accordance with a new accounting standard, FRS 102, which takes effect from periods beginning on or after 1 January 2015.
On transition to this new standard, your company will be required to restate its comparative results to amounts as if it had applied the new accounting standard in previous years. Careful planning and identification of the main changes is therefore required now as you cannot wait until 2015 to deal with the points.
Employers with fewer than 50 employees will face automated in-year penalties for late real-time PAYE returns from 6 March next year.
Those who employ 50 or more people will face penalties from 6 October 2014.
HM Revenue and Customs (HMRC) will send electronic messages to all employers shortly to let them know when the penalties will apply to them, based on the number of employees shown in the department’s records.
Where employers believe they have a reasonable excuse for sending a return late, they will be able to appeal using HMRC’s new, online appeals process for automated penalties. This should speed up the appeal process for businesses and HMRC.
In the run up to March 2015, HMRC will examine other ways to encourage employers to comply with the rules, in addition to financial penalties.
HMRC have published information for employers on what to do when they receive a reminder through PAYE Online because their payroll submission or payment is made late.
There are three types of messages that an employer could receive: late filing notice; non-filing notice; and late payment notice.
When a late filing notice is received in respect of a Full Payment Submission (FPS) and if an employer has a valid reason for sending their FPS after any of the payment dates, they should let HMRC know why in the ‘Late reporting reason’ field in their payroll software. A list of late reporting reasons and when to report is available here.
The manufacturing sector is calling on government to move towards ‘demand-led education’ to help the sector bridge the current skills gap.
Businesses contributing to a ‘Manifesto for Manufacturing’ report compiled by the Manufacturing Group at MHA, the national association of independent accountants, say that secondary and tertiary education needs to be re-focused away from ‘abstract academic targets’ towards skills needed by employers.
The recommendations in the report, which will be sent to politicians of every political persuasion ahead of the 2015 election, are designed to put the case for increasing the support given to the manufacturing and engineering sector by whichever party forms the next government.
Typically, workers in the UK are legally entitled to 5.6 weeks paid holiday per year and up until now, holiday pay has been calculated on basic salary alone. However, the Court of Justice of the European Court has recently ruled for workers whose remuneration includes commission, this must now be factored into their holiday pay. The reasoning for this is because the purpose of annual leave is to maintain the health and safety of employees and consequently, there should be no financial impediment to discourage them from taking their full annual leave entitlement.
The obvious question is how is it possible to calculate commission earned during a period not worked? The Court’s response to this is that an average must be taken from a representative period. Whether an accurate representative period is deemed to be the last 12 weeks of employment or the last 12 months is now with the court of appeal so is still to be forthcoming.
There have been a number of reported issues around the £2,000 Employment allowance and the processing of this via payroll software providers which is resulting in underpayments to HMRC.
The employment allowance given is £2,000 for the year, however in some instances payroll software is allocating more than the £2,000 allowance and allocating it differently to the information submitted to HMRC, this error could be made at the time of inputting the data.
This is has resulted in underpayments to HMRC. You may only be alerted to this when a letter is received from HMRC noting the underpayment and adding interest.
In order to check and rectify any potential errors we would suggest that anyone using payroll software providers check their P32’s to HMRC online.
If there is an error you should contact your software provider and they should be able to rectify the problem.
In the March 2014 budget, the Chancellor announced the extension of the Creative Industry Tax Reliefs to theatre productions. There has followed a period of public consultation and whilst we wait for specific guidance to be issued in the near future by HMRC, the theatre tax relief will be available from the Autumn of 2014.
Theatre companies engaged in the production of theatre and liable to corporation tax will be entitled to claim the new theatre tax reliefs where 25% or more of the qualifying core expenditure relates to expenditure in the European Economic Area. The theatre company will need to be responsible for actually producing the content of the production, and therefore it will be important to determine whether the theatre production is produced by the hosting theatre or the touring production company.
In recent years HMRC has been evaluating the way in which it conducts compliance checks. This has resulted in a more focused approach to collecting revenue partly driven by a desire to raise cash for the budget deficit and partly by diverting more staff to the task. The Affluent Unit, which looks after the affairs of taxpayers worth £1m and above, has seen a 50% increase in headcount.
This has resulted in an extra £9 billion being raised over the last three years. In 2012-13 the number of tax compliance checks being carried out increased from 119,000 to over 237,000 – in just one year.
There are two simple ways to reduce the likelihood of an enquiry: