Category: COVID-19

New enhanced loss relief rules may result in extra tax refunds:

In the March Budget it was announced that the normal one year carry back for trading losses would be extended to three years. This means that many businesses that have made losses during the COVID-19 pandemic may be able to obtain a repayment of tax paid in that three-year period. This enhanced carry back applies to unincorporated businesses as well as limited companies and the details are set out in the latest Finance Bill.

For corporation tax purposes the loss-making accounting period must end between 1 April 2020 and 31 March 2022 to qualify for the three year carry back. For unincorporated businesses, the trading loss must be incurred in 2020/21 or 2021/22.

For example, if Albion Ltd incurred trading losses of £200,000 in year ended 31 December 2020 having made profits of £50,000 in year ended 31 December 2019 it would normally only be possible to relieve £50,000 of the losses.

The new temporary carry back rules would permit losses to be set against trading profits made in the years ended 31 December 2018 and then 31 December 2017 as well. If profits in those years were £150,000 or more then the company would be entitled to a £38,000 corporation tax refund (19% of £200,000).

Do you need more guidance on tax refunds? We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

Deferral of VAT payments due to Coronavirus:

If you deferred VAT payments due between 20 March and 30 June 2020 and still have payments to make, you can:

• pay the deferred VAT in full, on or before 31 March 2021
• join the VAT deferral new payment scheme – the online service is open between 23 February and 21 June 2021
• contact HMRC on Telephone: 0800 024 1222 by 30 June if you need extra help to pay

You may be charged interest or a penalty if you do not:

• pay the deferred VAT in full by 31 March 2021
• opt into the new payment scheme by 21 June 2021
• agree extra help to pay with HMRC by 30 June 2021

You can follow the link here to pay your VAT bill

If you want to join the new scheme

The VAT deferral new payment scheme will be open from 23 February up to and including 21 June 2021.

If you’re on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you’ll be invited to join the new payment scheme later in March 2021.

The new scheme lets you:

• pay your deferred VAT in equal instalments, interest free
• choose the number of instalments, from 2 to 11 (depending on when you join)

To use the online service, you must:

• join the scheme yourself, your agent cannot do this for you
• still have deferred VAT to pay
• be up to date with your VAT returns
• join by 21 June 2021
• pay the first instalment when you join
• pay your instalments by Direct Debit (if want to use the scheme but cannot pay by Direct Debit, there’s an alternative entry route for you)

If you join the scheme, you can still have a Time to Pay arrangement for other HMRC debts and outstanding tax.

Instalment options available to you

The month you decide to join the scheme will determine the maximum number of instalments that are available to you. If you join the scheme in March, you’ll be able to pay your deferred VAT in 11 instalments or fewer.

The table below sets out the monthly joining deadlines (to allow for Direct Debit processing) and the corresponding number of maximum instalments (including the first payment):

You can find out more on the GOV.UK website here

Do you need more guidance on the defferal of VAT payments? Have you been affected by the Coronavirus? We offer a wide range of services which are unique to your business and are here for you. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

Have you thought about a virtual Christmas party for your business? This year, all face to face meetings and events have been replaced by virtual meetings and events, and we have seen huge levels of creativity to achieve successful delivery. HMRC has now confirmed, where all normal conditions are met, virtual events can be included when considering the £150 exemption.

HMRC have updated their manuals to include virtual events within the annual party exemption when assessing Benefits In Kind.

Tax and staff parties

A staff party or an annual function qualify as a tax-free benefit for your employees providing that you meet the following conditions:

• It must be a recurring annual event, not a one-off.
• The total cost must not exceed £150 per head, per year.
• £150 includes VAT together with any extra costs such as transport and accommodation.
• The £150 is a limit and not an allowance: if the cost is £151, the whole benefit is taxable.
• The event must be primarily for entertaining staff.
• The event must be open to all staff (in that location, if you have several branches or departments).
• The event is not just to be for directors unless all your staff are directors.
• The cost of the whole event is an allowable expense for your business.
• You can claim back input VAT but this may be restricted where you are also entertaining customers.

An employer may spend up to £150 per head (inclusive of VAT) per year, in providing annual functions and events to entertain its staff.

Provided the £150 limit is not exceeded, there can be any number of parties, for instance, three parties at a cost of £50 each at various times of the year.

Virtual parties

HMRC has updated their guidance to include virtual annual functions within this exemption, which includes a virtual Christmas party. Virtual parties cannot have all employees in a single location so would ordinarily fail to qualify. HMRC’s revised guidance allows these events to qualify, provided that all of the other criteria are met.

A virtual party is defined as:

• An annual function provided virtually using IT.

An example of this:

• A company holds it’s annual function virtually using IT.
• All employees are invited.
• A hamper of food and drink is provided to each employee to enjoy during the party.
• The total cost is £100 per head.

The cost is less than the £150 per head maximum and so the function is tax-exempt.

Trivial benefits

Since April 2016, as part of a package of simplification measures, a new definition of what would constitute as a trivial benefit was added to ITEPA 2003. Prior to this time guidance existed that was open to misinterpretation and challenge.

The statutory exemption lays out certain criteria that must be met in order to be counted as a trivial benefit which ensure that:

• The benefit is not cash or a cash voucher
• The cost to provide does not exceed £50
• The benefit is not provided as a contractual entitlement
• The benefit is not provided in return for a normal service (or services) expected by the employee – eg hitting a pre-set performance target

Common examples seen include a gift of flowers on a birthday, a turkey at Christmas, or a modest layette on the birth of a child. More than one trivial benefit can be provided during the year; however, where the employer is a close company and the trivial benefits are given to a director, office holder or members of their families or households, an annual limit of £300 exists.

We would love to hear from you about your ideas for a virtual Christmas Party. We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.