Accountancy Blog

Regulator slams poor standards of charity accounts audits

Most auditors and independent examiners in England and Wales failed to identify failings in charity accounts in 2017/18.

The claim comes from the Charity Commission, which scrutinised 296 charity accounts with various annual incomes.

The Commission found that accounts reviewed by auditors met its benchmark more regularly than independent examiners.

How its benchmark is applied depends on a charity’s size and legal form, with closer scrutiny applied to accruals accounts.

Up to 15 criteria apply, nine of which are compulsory for all charity accounts under review. The other six only apply to the scrutiny of charities with accruals accounts. More…

Self-employed owe £1.6bn to HMRC in late tax payments for 2017/18

New figures show self-assessment taxpayers owe HMRC more than £1.6 billion in late payments on 2017/18 tax bills.

The deadline for 2017/18 submissions came and went on 31 January 2019, with more than 11.5 million taxpayers beating the midnight cut-off – a new high.

Despite a record number of tax returns submitted early this year, not all taxpayers have paid their liabilities to the Revenue.

The £1.6bn currently estimated to be owed for 2017/18 is expected to surpass the final total of £1.83bn paid late in 2016/17.

That would continue a trend – the amount of tax owed by those who missed the payment deadline has increased every year for the last three years. More…

Small employers risk losing the employment allowance in 2020

Plans to remove the employment allowance for large employers from April 2020 could impact on smaller firms.

This allowance provides employers with a reduction to their national insurance contributions (NICs) bill of up to £3,000.

Employers that claim the allowance can carry it forward from one tax year to the next, but that will stop from April 2020.

From that point, employers will only be eligible for the allowance if their total secondary class 1 NICs liability for the previous year is less than £100,000, while the allowance has also been reclassified as state aid.

Smaller employers may face issues due to the maximum amount of de minimis state aid they can receive in any three-year period. More…

Making Tax Digital – Most VAT-registered businesses are signed up for Making Tax Digital

Almost three quarters (74%) of VAT-registered firms signed up for Making Tax Digital (MTD) before the second stagger deadline last month.

HMRC’s figures showed that over 230,000 mandated businesses joined the scheme before the 7 September 2019 deadline.

Most (94%) signed-up businesses submitted VAT returns before both the first and second stagger deadlines.

Around 80,000 firms missed the stagger-two deadline, and HMRC will write to those to remind them of their obligations. More…

Property investment – good idea?

With low interest rates, property remains attractive.

As the global financial crisis began to bite in 2008, central banks in several nations took action, attempting to shock the world economy back to life by slashing base interest rates.

The idea behind this kind of stimulus is to make saving less attractive, hopefully prompting people to spend instead – to buy that new car, extend the loft or, indeed, to purchase a completely new home.

In the UK, the Bank of England reduced interest rates to 2% in late 2008 and to 0.5% in early 2009, where they sat until 2016 when they dipped yet further, to an astonishing 0.25%.

A decade on from the recession, they’ve yet to recover in any meaningful way, sitting today at a meagre 0.75% – a far cry from 14.88% of 30 years ago this month. More…

IR35 in the private sector

Key considerations for contractors before April 2020.

Large and medium-sized organisations have just six months left to prepare for changes to off-payroll working rules, which are due to extend to the private sector next spring. 

From 6 April 2020, firms that engage private-sector contractors will be responsible for deciding if the rules should apply and deducting income tax and national insurance.

At present, contractors who operate through their own personal service company (PSC) have these responsibilities, but the extension of the off-payroll working rules will soon make it the responsibility of the organisation engaging them. More…

Javid ‘to broaden the apprenticeship levy into a wider skills levy’

Further tweaks to the apprenticeship levy look certain to be made in the autumn, when new chancellor Savid Javid is expected to deliver his first Budget.

In his final Budget speech in October 2018, former chancellor Philip Hammond halved the amount small firms taking on apprentices had to pay from 10% to 5%.

But Javid revealed his intention “to broaden the apprenticeship levy into a wider skills levy” when writing in the Financial Times shortly after his appointment.

“This would give employers the flexibility they need to train their workforce, while ensuring they continue to back apprenticeships”, Hammond’s successor said.

The levy was introduced in April 2017 and requires employers with annual pay bills of more than £3 million to allocate a sum equal to 0.5% of their wage bill. More…

Retailers unite in call for business rates solution

Some of the UK’s biggest retailers have come together to demand action is taken to revamp the business rates system.

Business leaders from more than 50 companies wrote to chancellor Sajid Javid to ask for four changes.

These include reforming transitional relief, which limits how much a bill can change following revalution.

The letter also called for a freeze in the business rate multiplier, the introduction of a new improvement relief, and for the Valuation Office Agency to be adequately funded.

It said that these four recommendations “could be undertaken quickly, would reduce regional disparities, remove barriers to the proper working of market forces, incentivise economic investment, and cut away at bureaucracy”. More…

Treasury to review tapered annual allowance as dispute rumbles on

The Treasury has announced it will review the tapered annual allowance for pensions, following calls to abolish it.

The amount of pension contributions that can be made tax-free in 2019/20 stands at £40,000 in most cases, but this is restricted for higher earners by the tapered annual allowance.

The taper applies to people with a taxable adjusted income of more than £150,000 and a threshold income over £110,000.

For every £2 of income an individual has over £150,000, their annual allowance is reduced by £1, down to £10,000. More…

Update to post of 2nd August – Reverse charge VAT for builders delayed for 12 months

A major change to the way VAT is collected in the building and construction industry has been delayed until 1 October 2020.  

The domestic reverse charge VAT for construction services was due to take effect from 1 October 2019.

It will put the onus on the customer receiving a service to pay the VAT element to HMRC, instead of paying the supplier.

The measure will apply to VAT-registered individuals or firms in the UK, who supply specific services under the construction industry scheme.

The domestic reverse charge aims to combat missing trader fraud in the construction sector.

Campaigners had expressed concerns that up to 150,000 businesses in the sector were not ready for the changes to be implemented next month. More…