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So the start of the MTD has come and gone and like a lot of big changes, for example Y2K and RTI; the world is still turning. Essentially in the first wave, all VAT-registered businesses with turnover in excess of £85,000 have had to transition to compliant-software or bridging software to submit their VAT returns.
So far, it has largely gone to plan, but the ‘soft-landing’ in the first twelve months means there will be no interest and penalties accruing, as client and HMRC a-like get their houses in order.
Intuit, owner of QuickBooks, have found that:
- It has helped small businesses in the UK to generate over £815m in productivity gains over a period of six months since its enactment with almost a third of small businesses adopting new digital services or products since becoming MTD compliant, meaning that the ‘digital snowball’ impact has begun;
- Three in five businesses now favour MTD being applied to other forms of tax, with over half believe a wider roll out would save them time and increase productivity; and
- Two in five businesses see MTD as having provided them with a more accurate view of their company’s finances, with a third say switching to MTD compliant processes has not been complicated.
Watch this space however for the next wave. Whilst there is significant uncertainty over when it will happen, it is unlikely to be a question of if. The next three likely to be impacted will be VAT-registered businesses with turnover less than £85,000, Corporation Tax or Income Tax. However, as none of these have been consulted on yet, it is likely they will not take place before 2021 at the earliest. However, in our current political client, anything is possible.
If you want help with your existing cloud-based software to ensure you are getting the most of it, or a demonstration to see if it could help you on your business, get in touch with us today.
Self-Assessment Tax Return Reminder
We’re currently at 90% tax returns filed with HMRC, so we’re on the home straight ahead of the 31st January 2020 deadline. That said, we are still doing everything we can to get these all complete in plenty of time, with no last-minute rush.
If you haven’t provided your records, please do so as a matter of urgency for the period 6th April 2018 to 5th April 2019.
As previously advised, we were going to be introducing a £100+VAT late preparation fee for all records received after 31st October 2019. However, we have decided to delay this. We will only be charging you this additional amount, if we do not receive your records before 31st November 2019, unless there are extenuating reasons behind any delay. We can however no longer guaranteed turnaround timescales but we will endeavor to meet the filing deadline of 31st January 2020.
IR35
There appears to me no movement here, despite much lobbying, so as things stand from 6th April 2020, contractors working through Personal Service Companies for Medium and Large end clients’ will have their IR35 status established by their end clients’, in line with the previous changes in the Public Sector changes. Small end clients’ remain outside the scope of these changes.
We have already seen some big changes in recruitment in this space, with several large companies including Barclays, HSBC, Lloyds and Tesco Bank telling sub-contractors to go on payroll or leave.
If you are impacted by this, we would have expected your end client to have contacted you by now to discuss further. If they have and you would like our support in calculating what is best for you going forward a self-assessment accountant can provide valuable assistance during this critical period so contact us today.
Tax (CGT) from 6 April 2020
If you are looking to sell a residential property in the next year or so, please read further. Essentially from 6th April 2020 onwards, capital gains for individuals will be stripped out of the self-assessment system, with it instead becoming a standalone report, with payment now required within 30 days of completion (rather than 10 to 22 months). You will have to make an assumption up front what rate you will be paying tax at and therefore how much your capital gain will be, then report it on your self-assessment tax return, which can be used to confirm if you paid the right amount of tax. There will be big interest and penalties on individuals who underpay the tax here, so many are going to assume the higher rate of tax and then look to reclaim in their next tax return. If this will impact you or anyone you know contact us today so we can talk this through with you. We will expect there will be some who look to sell in advance of this date to avoid being caught under these changes, although they haven’t been widely reported to date.
Whilst on the subject of buy-to-lets, don’t forget only 25% of the interest on mortgages is deductible for the 2019/20 year end.
VAT changes proposed on the Construction Industry *Delayed*
In line with other similar recent changes, HMRC decided to delay the implementation of the VAT changes for the Construction industry by 12 months, after much pressure from the Federation of Master Builders (FMB), Federation of Small Businesses (FSB) and other business groups.
The Reverse Charges on VAT were due to come into effect from 1st October 2019. However, it has now been delayed until at least 1st October 2020.
This is good news for most in this sector, as it gives them more time to understand the changes and prepare for them, especially with other uncertainties in the marketplace, currently not helping the market conditions currently.
Business Plan?
Abraham Lincoln once said “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” This nicely highlights the importance of planning and a lack of business planning is one of the key reasons why businesses fail.
Every business needs a Business Plan; whether that’s some notes on the back of a napkin, or 300 slide deck, the first step is to have one. The second step is to ensure it is living and breathing and kept up to date as your business evolves.
The way we look at it is if something happened to you today, could you secure an investor or loan without a lot of extra work? If your Business Plan is living and breathing today, the answer would be “yes”.
To make it a “yes”, please get in touch with our team today; whether it be to build one from scratch for you, to build it together, or just review what you already have, we’d love to hear from you.
Will & Powers of Attorney
Do you and your loved ones have Wills and Lasting Powers of Attorneys (Health and Wealth)? If not, speak to us today as we’d be delighted to ensure you have everything in place for whatever there is to come.
Social Media
You may have seen that we are no longer just active on LinkedIn, Facebook and Twitter, we are also starting to build a presence on Instagram and YouTube. So feel free to comment, like or follow us.
Stamp Duty Land Tax (SDLT) for mixed use
For SDLT purposes, any non-residential element can shift the SDLT from a rate of 12% (or even 15%) to the maximum non-residential rate of 5%. Examples can include a shop with a flat above, a farmhouse purchased with farmland and potentially even large houses with a paddock or a sizeable garden. If you made a purchase recently in this space, get in touch with us today to see if you can make a SDLT reclaim.
Brexit and my business
Whichever side of the argument you fall on, the continuing uncertainty caused here is not helping anyone. Will we have a no deal Brexit, a deal, or who knows remain?! Whatever happens there will be some major upheavals in the economy, how we do business and the accounting and tax worlds. If you want to talk further about how the difference scenarios might affect your business, get in touch with us today.
Planning, planning, planning
If you are interested in hearing some innovative solutions to problems such as Overdrawn Directors’ Loan Account, School Fees, high levels of Directors’ Renumerations, Cashback for personal purchases, being owed large amounts from your company get in touch with us today to find out more.
Website
We are in the process of developing our website and there are two things, which we’d love your help with, which could also help raise the profile of your business:
- Testimonials – would you be kind enough to write a line or two about our services? If so, kindly email this through to [email protected] for us to include it on our website and also across Social Media, if of interest to you; and/or
- Case Studies – we are setting up a new section of the website where we will be doing interviews with clients including who they are, what their business does and how we support them. Again, this will not only be on our website, but also across Social Media, if this is of interest to you.
Strategic Partners
We are lucky to work closely with great people across many sectors. These could include for the best of times and for the worst of times: Debt Advisors, Financial Advisors, HR Consultations, Marketing & PR specialists, Mortgage or lending Brokers, Liquidators, Solicitors and Virtual PAs, to name but a few. They may be people you know you need, or are completely unaware that you need, that’s what we are here for and we will matchmake you to the right person, based on your needs and personality. We ensure we have great people waiting in the wings to support you, if and when you need it, along your business journey.
Research & Development (R&D) Tax Credits
These are not only one of the most generous reliefs for SMEs, but they are also still one of the easiest ways to reduce your corporation tax (additional 130% deduction, in addition to the original claimed cost), or claim cash back (at 14.5% where losses are being made) where the business seeks to advance science or technology, or has projects or activities that help resolve scientific or technological uncertainties. Is this you? If so, please get in touch today so we can discuss the potential here on your business. Manufacturing and Marketing are two sectors where the case can be clearly put forward to HMRC, but there are many other sectors where it could apply, where you are creating innovation. For example, in the Construction sector, some examples of innovations which could be used to claim R&D tax credits could include managing challenging ground conditions, building on older structures, ways to meet newer “green” regulations, or doing one-off/bespoke designs.
Festive Promotion
To celebrate the festive period, we are offering a one-hour free book keeping session to all of our clients. This could be to help kick start your use of the software package of your choice, help you set up bank feeds or bank rules to make the process much more efficient going forward, or to train you on how to get the most out of it.
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