Author Archive: Muhammad Zia

Expansion of the Trust Register – What you need to know

Since 6 October 2020, new rules were introduced which extend the scope of the trust register meaning that more trusts will need to register with HM Revenue & Customs (HMRC).

The trust register was introduced five years ago to make the beneficial ownership of assets held in trust more transparent.

While many trusts have had to sign up using the TRS already, the remit of the trust register is expanding to include a greater number, and type, of trusts than ever before.

What changes are being made to the Trust Register?

Since October 2020, the requirement to register using the TRS will apply not only to trusts with a tax liability but to all trusts.

This includes trusts set up many years ago, which may have been forgotten about or left dormant, but which remain extant.

The deadline for registration of non-taxable trusts has already been extended from 10 March 2022 to 1 September 2022, so time is running out!

Will your trust need to register?

If you operate a trust the answer is likely to be yes. Under the changes, only a limited number of exemptions exist.

Some other less common types of express trusts that are set up for particular purposes are also excluded from registration unless they are liable for tax.

Be aware that this change to the rules means that for the first time some offshore trusts will also need to be registered.

How do I register using the Trust Registration Service?

To comply with the registration requirements, trustees will need to input details of the settlor, trustees and beneficiaries into an online portal.

At a minimum, trustees will need to confirm annually that there have been no changes and notify via the TRS of any changes within 90 days.

Some trusts may have already completed a 41G form containing some of this information. However, HMRC has confirmed that this did not collect sufficient evidence to meet the requirements under the new rules.

Therefore, those trusts which registered separately with HMRC, must register and resubmit information via the TRS.

HMRC strongly recommends that trustees familiarise themselves with the TRS system and obtain the information required to register in advance of the deadline in September.

Need help with trust registration? Speak to our team at Rotherham Taylor Accountants.

What happens if a rental property is part of an estate?

Whilst there are straightforward probate cases, there are some complex issues that may arise which can be difficult for people to navigate.

As one of only a few accountancy firms in the UK that are licensed by the Institute of Chartered Accountants in England and Wales (ICAEW) to provide probate services, we are well-equipped at dealing with such cases.

One example of this is when the person who passed away owned rental properties.

When rental properties are involved, not only should the value of the properties be added to the estate, but the renters themselves must be considered.

How can we help?

In one of our previous cases, the estate included a rental property in London. Aside from coordinating valuations for the property to be included in the estate, we were also tasked with communicating with the tenant.

We coordinated with the tenant in relation to viewings and moving forward with the sale of the property, whilst giving notice for their leaving date.

Additionally, as part of our obligations, we diverted the tenant’s rent payments to a designated bank account, which we set up specifically for this client. We had control of this account and paid all the associated property expenses from this account.

There were also a lot of administrative duties that arose including; speaking to utility providers to organise readings, making sure all the bills are paid on time, and ensuring the legal obligations are fulfilled by liaising with solicitors.

After we completed all of the above and the property had sold, it was time to collect and distribute the funds to the relevant beneficiaries.

For one person to handle, this can be very overwhelming, which is why we are on hand to help.

Do you require support relating to probate? Contact our experts today.

How hard-pressed SMEs can obtain business support

Small businesses are the lifeblood of the UK economy, but with rapid inflation and other economic headwinds making trade difficult, they can struggle to access support.

There is a wide range of important tax reliefs available to SMEs, which could provide some much-needed financial assistance.

These include:

Employment Allowance claims

This scheme allows eligible businesses to reduce their National Insurance contributions (NICs) bills by claiming up to £5,000 each year of their NIC bill. This is available to employers if their Class 1 National Insurance liabilities were less than £100,000 in the previous tax year.

Super-deduction and Annual Investment Allowance

Businesses can cut their tax bill through the super deduction by up to 25p for every £1 they invest in qualifying equipment, which can include machinery, computers, most commercial vehicles and office furniture.

The temporary £1 million limit for the Annual Investment Allowance (AIA) has also been extended to the end of March‌‌‌ 2023.

The AIA allows businesses to spend up to £1 million on qualifying business equipment, and deduct in-year its full cost before calculating their taxable profits.

Business rates savings

Any tax cut is welcome, which is why the retail, hospitality and leisure sectors, should take advantage of the 50 per cent business rates cut.

The Government says this is worth £1.7 billion for up to 400,000 eligible properties.

The business rates multiplier has also been frozen for another year. This is used to calculate business rates and usually rises with inflation each year, but for the coming year has been held at 49.9p and 51.2p, depending on the type of business.

There is further relief through green technologies, where there will be no business rates from April this year and eligible heat networks will also receive 100 per cent relief.

Big discounts on digital technology

Eligible businesses can receive a 50 per cent discount on buying new software worth up to £5,000 with the Government’s Help to Grow: Digital initiative, which also offers free impartial advice and guidance on the best technology to choose.

Its sister scheme, Help to Grow: Management, is 90 per cent funded by the Government and uses UK business schools and one-to-one mentoring to deliver business expertise on everything from leadership and financial management to marketing and digital adoption.

Claimants for both schemes must:

  • Be based in the UK;
  • Have actively traded for at least a year; and
  • Have between five and 249 staff members.

Fuel duty savings for businesses

The Government has cut fuel duty on petrol and diesel by five pence per litre for 12 months.

The Government says that this represents a saving of £200 for the average van driver and £1,500 for the average haulier.

However, the reality is that many of these savings have been absorbed by fuel retailers who have continued pushing up the price at the pumps.

As a result, Boris Johnson has reportedly asked transport officials to draw up plans to target petrol stations that choose not to pass on the 5p fuel duty cut to customers.

According to reports in The Telegraph, Transport Secretary Grant Shapps has suggested a “pump watch” name-and-shame scheme, with Downing Street officials confirming that they “are considering mechanisms available to expose those companies that aren’t passing on tax benefits to consumers.”

Link: Five ways SMEs can get financial support for their business

Be prepared for changes to VAT penalties and VAT interest charges

Changes to charges and penalties applied to late submission of VAT returns will kick in from January next year.

For the VAT period starting on or after 1 January 2023, new penalties will replace the default surcharge for returns submitted or paid late.

Any VAT returns received late will also be subject to late submission penalty points and financial penalties.

What happens if I submit my VAT return late?

A new points-based system is set to be introduced for late submission penalties. For each late return, you will receive one penalty point.

Once a penalty threshold is reached, you will receive a £200 penalty and a further £200 penalty for each subsequent late submission.

The late submission penalty points threshold will vary according to your submission frequency.

How am I affected if I pay late?

Up to 15 days overdue – No penalty charge if you pay in full or agree to a payment plan on or between days one and 15.

Charge at 16 and 30 days overdue – The first penalty charge will be at two per cent on what you owe on day 15, if you pay in full, or agree to a payment plan on or between days 16 and 30.

Overdue by 31 days or more – On top of what you owe on day 15, there will be a further two per cent added to what you owe on day 30. In addition, you will incur a second penalty at a daily rate of four per cent per year for the duration of the outstanding balance.

HM Revenue & Customs (HMRC) is giving people some breathing space to familiarise themselves with the new arrangement and will not be charging a first late payment penalty for the first year from 1 January 2023 until 31 December 2023, if you pay in full within 30 days of your payment due date.

How much interest will I pay on late payments?

From next January, HMRC will charge interest on late payments from the day your payment is overdue until it is paid off in full.

The rate is the Bank of England base rate plus an additional 2.5 per cent.

More detailed guidance on VAT penalties is set to be published in December.

Link: Prepare for upcoming changes to VAT penalties and VAT interest charges

Penalties for misuse of Coronavirus Job Retention Scheme

New legislation allows HM Revenue & Customs (HMRC) to recover Coronavirus Job Retention Scheme (CJRS) grants that have been overclaimed.

Those who fall foul of the legislation could face interest charges, financial penalties and even be named and shamed.

If a business overclaimed a CJRS grant and has not repaid it, it needs to inform the tax authority within 90 days.

The new legislation allows looking for incorrect claims, but the authority says by paying back anything owed, any tax liability can be avoided.

However, firms may be penalised if they did not notify HMRC within the notification period that they were chargeable to income tax on an overclaimed CJRS grant.

If a penalty is applied, there are factors taken into consideration which include:

  • When the CJRS grants were received;
  • When it became repayable; or
  • When it became chargeable to tax because circumstances changed.

The authority can then charge a penalty of up to 100 per cent of the amount the business was not entitled to receive.

If the business was aware it was not entitled to a grant and did not disclose that within the notification period, the law says that the failure was deliberate and concealed and substantial penalties could apply.

When determining the amount involved, HMRC will make a tax assessment of the amount the business was not entitled to and have yet to repay.

Penalties and interest payments

The outstanding amount identified by the assessment must be paid within 30 days or any late charge will incur interest.

A further penalty may also apply if the bill has not been settled by 31 days after the due date.

What happens with a partnership?

If a partnership receives an overclaimed CJRS grant that it does not repay, HMRC may assess any of the partners for income tax who will be jointly and severally liable for the amount assessed.

What happens with insolvent businesses?

If a company is insolvent and HMRC cannot recover the tax it owes, company officers can become personally liable to pay the tax charged on their company’s overclaimed CJRS grants.

Naming and shaming defaulters

HMRC says that if a deliberate penalty is imposed it may publish details of the defaulter.

Link: Penalties for not telling HMRC about Coronavirus Job Retention Scheme grant overpayments

Managing costs to offset spiralling inflation – Our top tips for cutting your bills

A leading business organisation has highlighted the problems faced by industry after new figures show a steep rise in business costs.

According to figures from the Office for National Statistics (ONS), producer input price inflation stands at a record-high 18.6 per cent, and the consumer prices index at nine per cent and could go higher.

It says the disparity between the two figures shows how businesses are having to absorb rising costs rather than pass them on to the consumer.

How could Government help businesses manage costs?  

The FSB says that although the Government cannot control the wholesale price of oil and gas, it can go further to help small firms with property costs – increasing the ceiling for small business rates relief and extending the energy support issued via the council tax system to the rates system.

In addition, a sick pay rebate for the smallest businesses would give them a measure of breathing space.

However, what can businesses do for themselves now?

Make better use of space

Maximise office space by checking whether you are stocking too many supplies or making optimum use of office furniture. You may also be able to renegotiate your lease or find cheaper premises.

With advances in communication technology, you could also explore the possibility of running your business from home or on the road.

Review your suppliers

Make sure you are getting the best value for money, particularly in areas like communication with mobile phone deals and the cost of broadband and consider cloud-based software for general bookkeeping and data management.

Go for ‘nearly new’ equipment

Sometimes, it may not be possible to invest in the latest piece of equipment and so it may be worth considering refurbished or remanufactured supplies.

Properly refurbished computer equipment can result in big savings as can equipment like copiers, without sacrificing too much performance.

Many refurbishment companies even offer warranties on the goods they sell. However, you should be aware that the purchase of refurbished or recycled goods could affect your ability to claim certain reliefs, such as Capital Allowances.

Make better use of your accountant

While accountants can manage your books and compliance tasks, they can also provide strategic advice and identify areas where savings can be made.

Link: Input price growth hits record-high