Self-employment Income Support Scheme (SEISS) :
2016-17, 2017-18 and 2018-19.
The scheme will be open to those where the majority of their income comes from self-employment and who have profits of less than £50,000.
The scheme will be open for an initial three months with people able to make their first claim by the beginning of June.
With the recent government announcements regarding COVID-19, we understand that you require the latest information in order to see what help you may be entitled to. The government pages are being updated regularly as such we recommend keeping up to date with the news.
· Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months, and can include workers who were in employment on 28 February.
· Businesses are able to apply for a Coronavirus business interruption loan.
· The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
· Income Tax payments due 31 July 2020 under the Self-Assessment system will be deferred to 31 January 2021, automatically without any applications needed. There will be no penalties or interest for late payment in this period.
· For those in financial difficulty due to the virus, mortgage lenders will offer a three-month mortgage holiday
· Cash grants of up to £10,000 have been allowed for small businesses depending on rateable values (The grant for companies with a rateable value of less than £15,000 has been increased to £10k). You will need to claim this through the local authority.
· HMRC’s Time to Pay service has been expanded. This includes a new helpline 0800 0159 559 so that businesses and those who are self-employed can arrange to defer tax payments.
· IR35 tax changes delayed by one year due to coronavirus
We understand that this is an ever-changing situation, and we will endeavour to keep you up to date on the latest announcements.
The latest government guidance can be found by accessing the GOV.UK https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
Many clients use Sage 50 Accounts it has been around for a long time and has added a lot of features over the years, which may not be familiar to many users.
Sage comes with a very large number of reports and it can often be difficult to locate the one you need. To make this easier, each report on the list now has a star next to it which can be selected to add the report to your favourites. Favourite reports appear in a separate category and can also be selected from the main menu bar.
Monthly profit and loss breakdown
This is a less well known but very useful report which produces a full monthly profit and loss account for the current year, with each month in a separate column. It can be found within Financial Reports > Management analysis > Standard budgeting > Profit and Loss (Monthly Breakdown). Every figure in this report can be drilled down to the individual transaction level.
Beware that reversing journals may be necessary here to make monthly stock adjustments (see next point).
It is possible to set up journal entries to automatically reverse at a specific date – e.g., to post month end stock adjustments or accruals which are reversed on the first day of the next month.
In order to do this you need to enable reversing journals (under Settings > Company Preferences > Parameters > tick “Enable reversing journals”.
Once done, when entering journals there will now be a tickbox underneath to make the reversing entry, along with the date at which the reversing entry will be posted. When you post the original journal, the reversing journal is immediately posted along with it.
Also part of the journal entry screen is the facility to recall commonly used journals – e.g., for posting monthly wages, depreciation, bank charges etc.
After entering a journal, click “Memorise” to add it to the list of these journals, or “Recall” to bring in an already memorised journal from this list. The journal can be edited before being posted, so this is particularly useful where the posting is the same but the amounts might vary from month to month, such as with wages journals.
In a similar way to recalling journals, sales invoices raised through Sage can be copied to be used as a template for creating a new invoice to speed up the process. This can be done from the invoice list within Customers – simply select the invoice to copy and select Duplicate from below the list. All details of the new invoice can be customised.
Similarly from the invoice list you can quickly raise a credit against an invoice by selecting the invoice and selecting Credit from below the list.
Preventing back posting
In the normal course of events there is nothing to prevent the back posting of transactions into prior periods (either years or management accounts reporting periods), which can be problematic.
Sage allows you to prevent this – go to Settings > Lock Date and select a specific date before which posting is to be prohibited. Note that this can be any date, not just the year end, so it may be useful in managing monthly closedowns, etc.
If you wish to prevent specific Sage users from overriding this control, their Sage logon must have “Lock Dates” access disabled.
How to Close Your Limited Company
We sometimes hear from clients who want to cease trading and request to close their limited company . Where the limited company does not have any debts, other than money owed to company directors, it is fairly straight forward to close the limited company.
The dissolution method known as “voluntary strike off” can be followed and the directors simply need to follow the Companies House prescribed process. The company directors will need to complete and sign form DS01 which can be downloaded here.
Once complete the form must be posted to Companies House at the address provided and a cheque for £10 will need to be enclosed. This is an admin fee levied by Companies House for the strike off of a limited company.
You must ensure that you have taken the following steps prior to applying for voluntary strike off:
1) The company has ceased trading and has not traded in the last three months;
2) You have informed HMRC as they will expect a final set of accounts and for any tax to be settled – although if you do close your limited company before submitting your final corporation tax return it is likely that HMRC will not ask for payment as the company has been dissolved;
3) All creditors must be informed prior to your application for voluntary strike off.
Finally, don’t forget to close your business bank account before the company is struck off. If you don’t the bank account will be frozen and any remaining balance will be lost to the Crown.
HMRC was given new powers from 1st September 2013 to request information from UK’s merchant acquirers – the companies that process card payment transactions.
This will enable HMRC to data-mine information on all credit and debit card payments made over the last four years.
It would seem likely that HMRC will use their Connect software to make connections within the data obtained that will forward investigations into taxpayers’ affairs.
The age of cloud based systems has come upon us. But what is a cloud based accounting system and how can it help you?
What is a Cloud Based Accounting System?
These are online accounting systems, not desktop accounting systems like Excel, SAGE or Quickbooks. They offer a simple accrual (or cash) based accounting system where you can raise sales invoices, post purchase invoices and perform bank reconciliations (either by utilising an automatic bank feed or importing your bank statements as a CSV file). These systems also offer a range of simple financial reporting functions and can be used to prepare your VAT returns.
These systems are ideal for small or start up businesses to work with their accountants but what are the advantages and drawbacks?
1. Cloud accounting software is hosted on remote servers (where your business software and data is stored on servers at a remote location).
Therefore there is:-
- No need to install software
- No need to upgrade software
- No need for backups
The cloud based provider will do this automatically for you saving you on costs such as installation and upgrades.
2. It allows both the accountant and client to view and share the same information at the same time. This will mean that you can easily post your payments and receipts without utilising spreadsheets and we can immediately access the data to provide a monthly bookkeeping service, prepare management figures and year end accounts.
3. These systems can be accessed remotely (anywhere and anytime) through the internet including laptops, desktops, phones and tablets etc.
1. The main risk with cloud computing is that your data is stored with a 3rd party. Therefore, you must ensure that the cloud provider is reliable and that your data is stored within a suitable jurisdiction.
2. Cloud based systems are dependant on your broadband provider so you must ensure that you have a fast and reliable internet connection.
There are a number of cloud based accounting systems currently on the market including XERO, KashFlow, SAGE One and QuickBooks Online.
If you are thinking about transferring to a cloud based accounting system please speak to us and we can help you decide if it is right for you and your business. Please also see our Topical Tips 163 and 185 for further information.
HMRC is launching seven new investigation task forces. Who’s being targeted this time?
After launching nearly 40 task forces in the last two years HMRC hasn’t yet run out of steam and the latest batch are aimed at different industries as far apart as the Isles of Scilly and Scotland. The new task forces are aimed at the:
Other forces. In the early days we heard through the grapevine that some of HMRC’s task force officers weren’t well informed about the industry sectors they were investigating. That’s less likely to be the case now, plus they are increasingly getting other forces involved, like the police and the Home Office. The latter will check that you’re keeping the right paperwork for any foreign workers you employ
Make the right first move. It’s easy for HMRC to say you have nothing to fear if you aren’t unfairly avoiding tax, but in our experience if it’s looking for trouble it might find it even where there isn’t any. Therefore, if you’re contacted by an HMRC task force we recommend speaking to your tax advisor immediately.
The list below sets out the main reasons why your client would need to fill in a tax return:
They were self-employed for any part of the tax year.
Partner in a business partnership
They were a partner in a business partnership for any part of the tax year.
They were a company director (unless this was a non-profit organisation and they didn’t receive payments or benefits).
Savings and investment income
They received £10,000 or more in the tax year.
They received £2,500 or more in the tax year.
Income from Property
They received income from property during the tax year of £10,000 or more (before deducting allowable expenses) or £2,500 or more (after deducting allowable expenses).
Foreign income that is liable to UK tax:
They received any foreign income that’s liable to UK tax.
Employment and wish to claim expenses or professional subscriptions
They were employed or a director. They have expenses or professional subscriptions of £2,500 or more to claim
They received income from all sources in the tax year of £100,000 or more.
Bankruptcy / Sequestration / Individual Voluntary Arrangement
They may need to fill in a tax return for the year in which they were declared bankrupt, sequestrated or entered into a voluntary arrangement.
High Income Child Benefit Charge
If your client’s income is more than £50,000 and your client or their partner received Child Benefit, they may need to fill in a tax return.
HM Revenue and Customs (HMRC) recently introduced a campaign for taxpayers to bring their tax affairs up to date under Self Assessment.
This is aimed at individuals who have been issued with a tax return for any tax years up to 5 April 2012 but who have not yet submitted the return to HMRC.
Individuals who have outstanding tax returns and who do not take advantage of this campaign may face a penalty charge of 100% of the outstanding income tax and National Insurance Contributions (NIC) (200% for overseas matters for the 2012 tax year).
If you would like to join this campaign, you must notify HMRC and submit all outstanding tax returns up to 5 April 2012 by 15 October 2013. In addition, any outstanding income tax and NIC must be paid by 15 October 2013. It may be possible to arrange a payment plan with HMRC’s My Tax Return Catch Up team.
Taxpayers cannot take part in this campaign if HMRC has opened an investigation, enquiry or compliance check into their tax affairs. Also, only taxpayers currently registered for Self Assessment can take advantage of this campaign.
Employers please note that the National Minimum Wage rates are increasing from 1 October 2013. They will be:
Licenced Accountant in Brighton