Accountancy Blog

Calls grow for delay in extending IR35 to the private sector

Extending IR35 to the private sector could introduce “a complex web of new rules and liabilities throughout supply chains”.

Medium and large companies in the private sector are set to be responsible for determining the tax status of contractors from April 2020.

With that date looming, the Association of Chartered Certified Accountants (ACCA) has called for a one-year delay in the expansion of the legislation.

It believes a stay of execution will provide enough time to allow a full appraisal of the proposed rules and consider the best way forward for HMRC.

Off-payroll rules were reformed for contractors in the public sector in April 2017, with the aim of preventing what the Revenue regards as ‘disguised employment’.  More…

Businesses that flout their workplace pension duties face being subjected to random spot-checks by the Pensions Regulator.

Employers that provide details to HMRC are having that data cross-referenced by the watchdog in an attempt to identify non-compliance with auto-enrolment.

The checks are designed to identify businesses that are failing to enrol eligible staff into a workplace pension scheme or that make incorrect, or no, contributions.

All businesses with staff aged between 22 and state pension age, and earning more than £10,000 year, have to be auto-enrolled into a workplace pension.

Those who fail to comply may be the subject of short-notice inspections, which began in May and will continue throughout the summer. More…

Most gifters are ‘unclear on inheritance tax rules’

Most people making gifts of money or assets are unaware of inheritance tax rules that might apply to them.

HMRC polled 2,090 people and found that only 25% of those who recently made a gift had a working knowledge of the rules.

Less than half (45%) were aware of the rules or exemptions surrounding inheritance tax when they made their largest gift.

Only 8% of gifters considered inheritance tax rules before making a gift, the research showed.

Inheritance tax will potentially apply on gifts where a donor dies within seven years of making the gift or on a chargeable lifetime transfer into a relevant trust or company.

Within these rules are exemptions, such as gifts to a spouse or civil partner, charity or a political party, while an annual exemption on gifts worth up to £3,000 applies. More…

HMRC error affects payments on account bills for some taxpayers

Some taxpayers may not receive a bill for payments on account this month, and face paying a higher bill in January 2020.

The Association of Taxation Technicians (ATT) is advising individuals affected by an error with HMRC’s systems to set aside money to pay the bill in full.

Most people who complete self-assessment pay their taxes in two instalments every six months, called payments on account.

These advance payments are based on the individual’s tax liability for the previous year, and are paid in January and July, followed by a final balancing payment the following January.

But a system error at HMRC in January 2019 meant some taxpayers’ self-assessment statements did not include their first payment on account. More…

Identifying inefficiencies in a business

Avoiding waste, maximising profit.

Accountants, as a breed, are fans of efficiency. We tend to appreciate optimised systems and abhor waste, whether it’s time, effort or resources being frittered away.

The concept of efficiency as we know it today is a product of the industrial revolution. That’s when engineers and manufacturers became obsessed with squeezing out maximum profit by the smart use of new machinery and the automation of processes.

Without a doubt, the cult of efficiency figurehead was Henry Ford – founder of the Ford Motor Company.

In the run-up to World War I, Ford built a factory that applied every idea of efficiency, most famously, the production line.

This production line had factory workers performing the same task over and over again, at the same workstation.

Another of Ford’s innovations was to restrict customer choice: “Any customer can have a car painted any colour that he wants so long as it is black,” he said in 1909. More…

The tapered annual pension allowance

How it affects high net-worth individuals.

The tapered annual pension allowance for high net-worth individuals was in the headlines again recently.

Concerns were raised that its impact on doctors within the NHS pension scheme is prompting high-earning NHS staff to leave their posts or reduce their hours.

In December 2018, it was reported that the number of members leaving the NHS pension scheme was five times higher than from other public pension funds.

Responding to these reports, Chancellor Philip Hammond dismissed requests to scrap the tapered annual allowance. More…

The scourge of late payments

Outstanding invoices compromise your business’s cashflow.

When you supply goods and services, you expect to be paid, and promptly, but Britain has a deeply embedded culture of late payments. Indeed, for some businesses, delaying payment is an essential part of the business model.

Outstanding payments are problematic for various reasons. First, there’s the basic problem of cashflow within the supplying business – electricity bills, rent and other regular outgoings need to be paid regardless.

Then there’s the time spent chasing late payments and the stress it can cause if the conversation becomes bad-tempered, or when you start to worry that the job might be a write-off.

You might even find yourself incurring lawyers or bailiffs fees, or being forced to sell the debt on to a collection agency at a discount. More…

Tax implications of working from home

Working from home offers all kinds of benefits, from the opportunity to create the perfect environment in which you can be most productive, to the improvements to work-life balance that come with ditching the commute.

There are advantages for businesses, too, assuming they trust their employees to work without direct supervision. For example, if only a portion of your workforce is on site on any given day, you might be able to run a smaller office, saving on rent and operating costs.

According to research undertaken by the TUC, 1 in 20 people worked from home in 2005; by 2018, that figure had leapt to 1 in 16.

For many freelancers and contractors in particular, working from home is both normal and desirable.

For one thing, it’s a way of underlining their separation from those who hire them, and thus helping achieve compliance with IR35. More…

CBI: ‘Unsustainable’ business rates system in need of reform

The business rates system has become “uneconomical” and “unsustainable”, and should be reviewed, the Confederation of British Industry (CBI) has said.

Business rates are a tax on most properties used for business purposes, and are calculated based on an estimate of the property’s open market rental value.

The CBI argues that long gaps between rate revaluations mean business rates are lagging behind economic cycles and rises in property costs.

In some cases, businesses’ tax bills have surged by up to 50% due to property prices increasing in the time between business rates revaluations. More…

Govt. urged to introduce stamp duty tax break for downsizing

The Government is facing calls to announce a stamp duty holiday for homeowners who seek to downsize.

Saga polled 2,000 people over the age of 50 and found that 73% would support a tax break to help them move into a smaller property.

Almost three-quarters (70%) said their motivation for downsizing was because their current home was too big, while 25% want to downsize to reduce the costs of running a home.

A quarter said the current stamp duty land tax rates that apply to all homeowners in England and Northern Ireland, apart from first-time buyers, are preventing over-50s from selling up. More…