Author Archive: Muhammad Zia

Updated requirements for submitting Corporation Tax CT600 Return

With the winding up of the Coronavirus Job Retention Scheme (CJRS) or furlough, at the end of September, it is vitally important that all employers are up to date with their Corporation Tax Form CT600, particularly over grants received from the scheme.

HM Revenue & Customs (HMRC)  is looking to close any loopholes and ‘claw back’ any overpayments, such as claims for an employee who left the business while the scheme was in operation.

HMRC amended their CT600 guidance at the start of September to clarify how these entries should be presented, so businesses should seek immediate guidance from their accountants.

From April 2021, companies were required to disclose details of their CJRS claims and make a formal declaration in relation to the CJRS income received as part of its CT600 return.

As with the rest of the Corporation Tax CT600 Return, the director signing off the CT600 return must ensure that the information is correct and reported in the format that HMRC require.

The company should provide accurate information on the following for the CT600 return:

CJRS payments received in the period

  • This is the amount received in the period covered by the CT600 return (and not the amount accrued).
  • Do not deduct overpayments already assessed by HMRC, or amounts disclosed or repaid to HMRC.
  • Do not deduct amounts repaid voluntarily.
  • Add back any overpayments of amounts received in earlier periods that have been offset against payments received in this period.

The CJRS payment that the company was entitled to

  • This is the total amount of CJRS payments received in the period that the company was entitled to claim.
  • If the company was entitled to an amount at the time of the claim but was not entitled to retain this amount by the end of the period (for example if it was not used for the required purpose), then it should not be included in this amount.
  • Include any amounts entitled to but repaid voluntarily.

CJRS overpayments already disclosed or repaid, including:

  • Amounts already assessed by HMRC, whether paid or unpaid.
  • Amounts voluntarily disclosed to HMRC as CJRS overpayments, whether paid or unpaid.
  • Overpayments offset against subsequent CJRS payments received in later accounting periods.
  • Do not include amounts received and entitled to but repaid voluntarily.

If an overpayment is due to be repaid to HMRC, this will be added to the company’s Corporation Tax liability reported on the CT600 return.

There are also new requirements in relation to the ‘Eat Out to Help Out’ Scheme.

For more information on amending your Corporation Tax CT600 Return please contact our expert team.

Visas and work permits: what are the rules for artists touring in Europe after Brexit?

More than half of EU Member States have agreed to offer UK musicians and performers visa and work permit-free travel, it has been confirmed.

The Department for Digital, Culture, Media & Sport (DCMS) said the agreement will give UK artists the confidence to continue performing in Europe.

Here’s everything you need to know.

What is the agreement?

Following the end of the transition period, 20 EU member states have agreed to continue offering UK artists visa and work permit-free travel (usually up to three months).

This will enable musicians, performers, and other creative professionals to tour abroad easily without facing legal barriers.

Who do the rules apply to?

The rules apply to touring performers (such as soloists, groups, orchestras, dancers, actors, comedians, magicians, circus artists and singers) and support staff (such as sound engineers, technicians, directors, choreographers, producers, and agents).

Which countries are offering visa and work permit-free travel?

Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Poland, Romania, Slovakia, Slovenia, and Sweden.

Which countries are not offering visa and work permit-free travel?

Spain, Croatia, Greece, Portugal, Bulgaria, Malta and Cyprus.

The Government said it is “actively engaging” with these countries and calling on them to align their arrangements with the UK’s rules.

Are there any other requirements?

Durations and requirements vary from Member State to Member State. The Government has created a checklist to help touring artists navigate Europe, Switzerland, Norway, Iceland or Liechtenstein.

Get advice today

For help and advice with related matters, please get in touch with our team today.

I have been sent a nudge letter by HMRC – What should I do next?

Thousands of taxpayers across the UK have received ‘nudge letters’ from HM Revenue & Customs (HMRC) encouraging them to declare unpaid tax.

The reasons for being targeted vary but the impact of being contacted by HMRC can cause a lot of stress, leaving many taxpayers unsure about what they should do.

Who is HMRC targeting with nudge letters?

HMRC has said there are a number of reasons why they may issue a nudge letter to a taxpayer, but a large number of these communications seem to come from HMRC obtaining information that suggests a taxpayer has overseas income or gains.

They are also concerned that some taxpayers may not have paid the remittance basis charge – a flat rate tax charge on overseas income and gains for particular qualifying individuals living but not domiciled in the UK.

HMRC has said that its letters may not indicate what year income or gains were realised, which means their enquiries could relate to multiple tax years and more than one asset.

This lack of transparency has left many nudge letter recipients bemused.

What should you do if you receive a nudge letter?

The first thing is not to panic. HMRC has said taxpayers may be contacted because of:

  • Discrepancies in the data received from overseas tax authorities;
  • Changes to an individual’s personal circumstances or tax laws; or
  • New information supplied to them that requires clarification.

HMRC typically gives taxpayers 30 days to respond to a letter before it begins to take any action, although in some cases it may ask you to respond sooner.

While it is important to respond quickly, if you cannot provide a suitable answer within this timescale, HMRC may offer an extension if one is requested.

Who can help with HMRC nudge letters?

If you receive a nudge letter from HMRC you should seek help from a tax adviser at the earliest opportunity. They can communicate with HMRC about its requirements, assess the reason for the letter and calculate what tax may be due.

In some cases, taxpayers that have undeclared overseas income and gains may be able to use the Worldwide Disclosure Facility, which could help to reduce penalties and the tax bill.

Link: HMRC sends ‘nudge’ letters to non-doms over unpaid tax

Received a CJRS compliance check? Act now!

The Coronavirus Job Retention Scheme (CJRS) ended in September but many firms could still be subject to a CJRS compliance check in the weeks and months ahead.

HM Revenue & Customs (HMRC) has been sending out letters to employers throughout the year telling them they need to pay back CJRS payments because they claimed too much or are suspected of furlough fraud.

What is a compliance check?

In addition to checking CJRS payments, HMRC could write or phone to say they want to check:

  • Any taxes you pay
  • Accounts and tax calculations you have submitted
  • Your Self-Assessment tax return
  • Your company tax and VAT returns
  • PAYE records and returns, if you employ people.

These compliance checks can even be sent at random where there is no suspicion of illegal or inappropriate activity.

How does HMRC determine CJRS fraud?

HMRC classes furlough fraud as:

  • Not paying employees the full amount they are entitled to
  • Employers claiming furlough payments for workers who are still working for them
  • Claiming payments for non-existent employees
  • Not telling staff they are furloughed, who only find out when they receive their wages
  • Backdated claims that include periods in which the employee was working.

What if my business was not entitled to payments?

HMRC can claw back any money paid out which the employer was not entitled to via a 100 per cent income tax charge whether the claim was made innocently or deliberately. This includes overpayments of a CJRS grant due to errors.

The compliance check will request details of staff members and how much money they received while furloughed. HMRC will typically give a short timescale to provide this information – usually around 30 days.

HMRC will write to tell you the results of the check. You will then be:

  • Told no additional tax is due;
  • Repaid if you’ve paid too much tax – you may also get interest on the amount you’re owed; or
  • Asked to pay additional tax within 30 days if you owe more ­– you’ll normally have to pay interest from the date the tax was due.

You may also have to pay a penalty. When issuing fines HMRC will look at:

  • The reasons why you underpaid or overclaimed the tax
  • Whether you told HMRC as soon as you could
  • How helpful you’ve been during the check.

If you have problems paying, you should tell HMRC immediately, as it may be possible to arrange a time to pay arrangement.

If I am penalised, how much will I pay?

The penalty percentage will fall within a range and depends on the type of behaviour and whether the disclosure was unprompted or prompted. They fall broadly into three categories:

  • Deliberate
  • Non-deliberate
  • Deliberate and concealed or treated as deliberate and concealed

Each carries a different penalty, which can be seen here.

If you do get a letter or phone call about a CJRS compliance check then you should seek immediate assistance from an accountant.

Link: Flood of HMRC fraud enquiries expected as furlough finishes

MTD for Income Tax delayed – What it means for you

Unincorporated businesses have heaved a sigh of relief after the Government delayed the date for the implementation of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) by one year to 2024.

Hit hard by the pandemic, it will give these businesses, including the self-employed and landlords, an extra 12 months breathing space to prepare for the changes.

What are the changes?

The self-employed and landlords with a gross income from their business or property of more than £10,000 per annum will need to follow the MTD for ITSA rules from 6 April 2024.

It will not be necessary for general partnerships to join MTD for ITSA until the tax year beginning 6 April 2025, while the date other types of partnerships will be required to join is yet to be confirmed.

The Government introduced a more favourable system of penalties for the late filing and late payment of tax for ITSA in March 2021.

This penalty scheme is for those who are required to comply with MTD for ITSA and will now also come into force in the tax year beginning April 2024 for the self-employed and landlords, and April 2025 for all other ITSA taxpayers.

There will be the chance to explore the benefits and challenges of MTD early if you are an eligible business or landlord, via the Government’s pilot scheme.

This is already underway and will be increasingly expanded during the 2022/23 tax year, preparing for a greater scale of testing in the 2023/24 tax year.

How can you prepare for these changes?

It’s vital that businesses use the correct software to meet the new requirements, such as HMRC approved cloud accounting software or a set of compatible software programs that can connect to HMRC systems via its Application Programming Interface (API).

The software must be able to:

  • Keep records in a digital form
  • Preserve digital records in a digital form
  • Create a VAT or tax return from the digital records held in functional compatible software and provide HMRC with this information digitally
  • Provide HMRC with VAT and tax data on a voluntary basis
  • Receive information from HMRC via the API platform that the business has complied.

Will you be ready?

MTD is the first step in HMRC’s shift towards an innovative, digital tax service, supporting businesses through their journey in the ever-evolving modern world.

Although the initiative has been postponed by a year, taxpayers must be fully prepared, as they could face fines or penalties if they do not abide by these changes.

It is important that they implement suitable software, such as an HMRC-approved cloud accounting solution, and migrate their information across to the new systems in advance of the new deadline.

This may require additional training and changes to existing accounting processes and procedures.

Link: Businesses get more time to prepare for digital tax changes