Recent Changes at HMRC – Are You Affected?
HMRC employs the equivalent of 56,000 full time workers and is responsible for income tax, corporation tax, capital taxes, National Insurance contributions and the climate change levy… to name but a few. While it is therefore understandable that the Government department changes its priorities and regulations, often it leave individuals and business frustrated. One advantage of using an accountancy and business advice firm like Adams Moore is that we can alert you when your personal or business affairs are affected, present the options and help modify processes or complete paperwork accordingly.
We have created a round-up of the most recent changes your business may not be aware of. Should you require any assistance on these HRMC updates, please get in touch and arrange a free consultation about your needs.
Brexit Forces Prioritisation Reshuffle
HMRC’s priorities have been influenced by Brexit, and on 30 April the Chief Executive, Jon Thomson, outlined the findings of a work programme review to a Public Accounts Committee. The reprioritisation has resulted in some parts of the Making Tax Digital (MTD) initiative being delayed; the deferrals may be troublesome for some, but savings for the department likely make financial sense while HMRC deals with the challenge of leaving the EU – and as accountants, we support intelligent financial decisions!
Single Digital Accounts
An ultimate aim of HRMC, creating single digital accounts for businesses, now has a decelerated programme, but it will apparently not impact the delivery of MTD. The prioritisation shake-up has meant the convergence of business taxes from the current range of IT systems onto a single system will now happen at a gentler pace. This will therefore slow the creation of the single account for all business customers and it was announced no further MTD for Business changes will be directed for implementation before 2020.
MTD Services for Individuals
Most individuals should not need to deal with any changes in the near future as no additional requirements will be made on people, unless HMRC deems it will result in a reduction in phone or post contact, or ‘significant savings’. Along with this news, work on the simple assessment and real-time tax code changes is being frozen for the time being. Other delays concerning individuals are PAYE Settlement Agreements, Inheritance Tax payments and Tax Advantaged Venture Capital Schemes applications.
Making Tax Digital for VAT
The mandatory MTD for VAT, due to be introduced from April 2019 is one element that has not changed, but we thought it important to highlight. Small companies that are not currently VAT registered, but are continually growing, may not be aware of the turnover threshold of £85,000 which is the point when businesses must register for VAT. Forecasting is key so that payments can be planned and saved for. While we’ll return to digital VAT a little later in the year in more depth, businesses must be prepared to keep digital records (for VAT purposes only) and provide VAT returns through the MTD software from next April, and a pilot system is now live for simple returns.
Rewarding Green-thinking Employees – Have Your Say
In the autumn of last year, the budget summarised the implementation of a new tax exemption; for the benefit of electricity provided at a place of work, by the employer, to charge a car or van. Currently companies who offer charging points for electric or hybrid vehicles must tax individuals for the usage of this gainful facility, in the same way as a company car would be taxed. The technical consultation that closes on 5 July 2018 seeks comments on the provision of workplace charging facilities, which vehicles the exemption covers and the qualifying conditions of the exemption. It is expected legislation will be included in the Finance Bill later this year and its effect will be made retrospective to 6 April 2018.
VAT Scale Charges Change from May
It happens every year for businesses using the VAT scale charge, and 2018 is no different – the road fuel scale charges have been updated, and you can find them here. The scale is used to calculate the amount of VAT that is payable to HMRC on road fuel, without having to split mileage between business and private use; this method adds a fixed amount to account for the private usage, based on CO2 emissions, and therefore must be for each car, not a fleet of vehicles and vans are not eligible. Companies should apply the new scale from the first new accounting period after 1 May, but what are the alternatives?
If the private mileage is very low the scale may not be cost effective and instead the exact business mileage can be used within accounts. Otherwise, a mileage allowance can be paid by the business and VAT can be reclaimed on this, or in the event of business mileage being very low and private mileage is high, a business can choose not to reclaim VAT on fuel costs. Contact us if you would like to discuss the most beneficial option for your company’s cars and financials.
Deadline for P11D Form On 6 July 2018
Benefits and some expenses provided to employees and directors for the financial year ending 5 April 2018 must be reported using the form P11D, through self-assessment or via a PAYE coding notice adjustment, and the deadline for filing the 2017/18 P11D is 6 July 2018. Additionally, if the benefits are being reported via P11D or payroll the company employing the person must pay Class 1A National Insurance Contributions (13.8%) on the majority of the benefits. The P11D(b) form calculates the liability and this payment, which is due for 2017/18 on 19 July.
The deadlines are on the horizon and ensuring the details are gathered and reported correctly may take time. If you require any assistance with this process, calculations or the form completion please get in touch.