HMRC are urging businesses to look out for the use of mini-umbrella companies (MUCs) to pay contractors supplying their labour via agencies and other intermediaries. Businesses need to be aware of the financial and reputational risks of such entities in their labour supply chain and carry out due diligence to minimise those risks.
You may have heard a BBC File on Four radio programme that highlighted the abuse of the £4,000 employment allowance by 48,000 companies set up to take advantage of the allowance to save employers national insurance. Such structures are also being used to avoid VAT and are currently being marketed as a means of side-stepping the “off payroll” working rules.
HMRC have identified criminals creating a series of MUCs that appear unconnected and claiming the NIC employment allowance of £4,000 for each company. The company is then struck off after about 18 months allowing the criminals to potentially avoid paying thousands of pounds of employers’ NICs.
The risks to end user organisation include becoming liable for unpaid taxes and national insurance contributions including the overclaimed employment allowance.
The business may also be denied the right to claim input tax if the trader should have known their transactions were connected with VAT fraud.
They may also be penalised for criminal offences relating to national minimum wage and national living wage. The business may also face fines for failure to prevent the criminal facilitation of tax evasion.
Please contact us if you would like us to assist you in carrying out due diligence into your labour supply chain to minimise these risks.
Another consequence of the lockdown periods is that employees may have driven fewer private miles in their company cars, particularly where they have not been driving to the office.
If they are to avoid being taxed on the provision of private fuel they need to fully reimburse their employer for the cost of private fuel by 6 July 2021 for the 2020/21 tax year.
Note that the CO2 emissions percentage for the car is multiplied by the £24,500 notional list price used to calculate the benefit. For example, a director driving a Mercedes Benz E200 saloon company car (CO2 emissions 169g per km) would be assessed on 37% = £9065 for 2020/21. If they are a higher rate taxpayer then that means £3,626 tax. That would be an awful lot of private fuel!
In addition to the tax payable by the director on the provision of private fuel there would be £1251 Class 1A national insurance contributions payable by the employer.
Note that the private fuel benefit is an all or nothing benefit. There must be full reimbursement by 6 July to eliminate the benefit. The simplest method would be to multiply private miles by the HMRC advisory fuel rate for the vehicle -see next page.
Welcome to our round up of the latest business and Covid-19 news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!
Last week the UK saw the milestone of three quarters of UK adults receiving the first dose of vaccine and over half of the population having both dosses.
The four nation recovery summit took place on Thursday on how to emerge from the Covid pandemic and topics discussed were working together, presentations on the United Kingdom’s COVID-19 context and an assessment of the COVID impact on the economy and public services. Following the meeting there were expressions from leaders to continue with these in the future. We will see how the four nations summit progresses over the next few months.
The government are committed to encouraging more and more people to drive electric cars and have reduced or eliminated the income tax benefits of providing electric company cars or charging points for employees. Since 6 April 2019 there has been no taxable benefit for employees where they use an electric charging point at their place of work, provided the facility is available to all staff. But what are the VAT implications of the supply of electricity and what if public charging points are used?
HMRC have issued Revenue and Customs Brief 7 (2021) which explains HMRC’s policy concerning the VAT treatment of charging of electric vehicles when using charging points situated in various public places.
The brief clarifies that supplies of electric vehicle charging through charging points in public places are charged at the standard rate of VAT. It also explains when input tax can be recovered for charging electric vehicles for business purposes.
The HMRC brief confirms that input tax can be recovered on electricity used to fuel a car intended for business use where:
The charging takes place at the business premises of the VAT-registered business
The charging is at the home of a sole proprietor
VAT cannot be recovered where the charging is at the home of an employee as the supply is then not made to the company.
Where employees charge an employer’s electric vehicle (for both business and private use) at the employer’s premises the employee needs to keep a record of their business and private mileage so that the employer can work out the amounts of business use and private use for the vehicle.
It is hoped that a simpler system can be found such as a scale charge similar to that used for the supply of fuel for private use.
HMRC have amended the VAT road fuel scale charges with effect from 1 May 2021. Businesses must use the new scales from the start of the next prescribed accounting period beginning on or after 1 May 2021.
The valuation rate tables:
set out the new scale charges (a VAT inclusive amount)
Where the CO2 emission figure is not a multiple of 5, the figure is rounded down to the next multiple of 5 to determine the level of the charge.
For a bi-fuel vehicle which has two CO2 emissions figures, the lower of the 2 figures should be used. For cars which are too old to have a CO2 emissions figure, you should identify the CO2 band based on engine size. If its cylinder capacity is:
1,400cc or less: use CO2 band 140
1,401cc to 2,000cc: use CO2 band 175
2,001cc or above: use band 225 or more
Using the table
You need to choose the correct road fuel charge based on the CO2 emission and the length of your VAT accounting period (either 1 month, 3 months or 12 months).
You will need to apportion the fuel scale charge if you change car during the accounting period and, at the end of the period, you do not own or have not been allocated the car.
You need to work out how much of the accounting period you used each car for, and record this as a percentage of the accounting period. You must apply this percentage to each road fuel scale charge to get a total figure.
Self-Employment Income Support Scheme (SEISS) update
SEISS fourth grant
Claims for the fourth grant have now closed. The last date for making a claim was 1 June 2021.
SEISS fifth grant
A fifth grant covering May 2021 to September 2021 will be open to claims from late July 2021.
The grant is taxable and will be paid out in a single instalment. Guidance for claiming the grant will be available by the end of June 2021.
To be eligible for the grant you must be a self-employed individual or a member of a partnership.
You must have traded in the tax years:
2019 to 2020 and submitted your tax return on or before 2 March 2021
2020 to 2021
You must either:
be currently trading but are impacted by reduced demand due to coronavirus
have been trading but are temporarily unable to do so due to coronavirus
To work out your eligibility for the fifth grant, HMRC will first look at your 2019 to 2020 Self-Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
If you’re not eligible based on your 2019 to 2020 tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020.
You must declare that:
you intend to continue to trade
you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus from May 2021 to September 2021
You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.
How the fifth grant works
The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021. HMRC provide more information and support by the end of June 2021 to help you work out how your turnover was affected.
The amount of the grant
Turnover reduction How much you will get Maximum grant
30% or more 80% of 3 months’ average trading profits £7,500
less than 30% 30% of 3 months’ average trading profits £2,850
When can you claim the grant?
The online claims service for the fifth grant will be available from late July 2021.
If you are eligible based on your tax returns, HMRC will contact you in mid-July 2021 to give you a date that you can make your claim from.
The VAT deferral new payment scheme is open for all businesses who deferred paying VAT due between 20 March and 30 June 2020 and were unable to pay in full by 31 March 2021.
If you apply to spread your payments between 20 May and 21 June you can pay in eight instalments.
21 June is the deadline for you to join this scheme.
You may be charged a 5% penalty and/or interest if you do not sign up to the VAT deferral scheme by the deadline of 21 June, or pay in full by 30 June, or get in touch with HMRC to make an alternative arrangement to pay by 30 June 2021.
Coming to the UK for seasonal agricultural work on English farms
Advice for seasonal agricultural workers coming to England to pick fruit and vegetables on farms, and their employers, has been updated with new guidance on travelling from a country or territory listed as red, amber or green.
P11d forms reporting benefits in kind provided to employees and directors need to be submitted to HMRC by 6 July. Where a company car is “unavailable” for private use for 30 or more consecutive days the benefit is proportionately reduced.
During the various lockdown periods many employees and directors have not been using their company cars and it may have been sitting on their driveway. Unfortunately, that does not count as being unavailable.
HMRC have confirmed that they would continue to regard the car as available to the employee unless the keys or fobs are returned to the employer or to a third party such as the leasing or disposal company as instructed by the employer.
Note that where the employee is provided with a motor car with zero CO2 emissions there is no taxable benefit in kind for 2020/21 although the charge increases to 1% of original list price for 2021/22.
This month we await news whether from 21 June all legal limits on social contact will be removed, although the government has warned that outbreaks of the Indian variant could disrupt further easing, and “make it more difficult to move to step four in June”.
The cost of Covid-19
The ONS has published its latest paper on how the relationship between UK public sector monthly income and expenditure leads to changes in deficit and debt for the financial year ending 31 March 2021. The figures are subject to adjustment but show the stark reality of the effect of Covid-19 on the UK economy and the extent of government support
Public sector net borrowing (excluding public sector banks) in the financial year ending (FYE) March 2021 is estimated to have been £303.1 billion, £246.1 billion more than in the year to March 2020 and the highest nominal public sector borrowing in any financial year since records began in 1947.
Expressed as a ratio of gross domestic product (GDP), public sector net borrowing (excluding public sector banks) in the FYE March 2021 was 14.5%, the highest such ratio since the end of World War Two, when in FYE March 1946 it was 15.2%.
Public sector net borrowing (excluding public sector banks) in the FYE March 2021 is estimated to have been £24.3 billion less than the £327.4 billion expected by the Office for Budget Responsibility in their Economic and Fiscal outlook – March 2021 on a like for like basis.
Central government tax receipts are estimated to have been £523.6 billion in the FYE March 2021 (on a national accounts basis), £34.2 billion lower than in the FYE March 2020, with notable falls in taxes on production such as Value Added Tax (VAT), Business Rates and Fuel Duty.
We saw in the last budget the steps the government is taking to support the recovery with new incentives for business investment and help for businesses to attract the capital, ideas and talent to grow. Once economic recovery is durably underway, the recent budget stated that the public finances must be returned to a sustainable path and sets out the size of the challenge and steps to deliver more sustainable public finances. So in March we saw Chancellor Rishi Sunak freeze income tax thresholds and announce an increase in Corporation tax rates from 2023.
The government has chosen a fine line between raising taxes to start paying down the massive government borrowings but at the same time stimulate economic recovery and save jobs.
Most businesses will be focussing short term on their recovery and in the medium term on being resilient, improving profitability and growing turnover. If taxes do rise to fund government spending, we recommend all businesses should map out a range of scenarios with “what if” analysis to understand their available future strategies for success. For example, here is a smaller business’s “what if” scenario planning results:
Please talk to us about scenario planning – we have the tools to help you prepare for the future and set realistic and achievable targets.
Are you trading with the EU?
If your business moves goods between the UK and countries in the EU, they will need to follow new customs and tax rules.
Their business will be affected by the new rules if they:
buy goods from an EU seller and bring them into the UK
send goods they’ve sold to a buyer in an EU country
have not exchanged money, but need to move equipment they use for their business, between the UK and the EU.
You can now apply for the SME Brexit Support Fund. Smaller businesses can get up to £2,000 to pay for practical support, including training or professional advice to adjust to new customs, rules of origin and VAT rules when trading with the EU. Applications must be received before 30th June.
You can attend HMRC webinars to help you adjust to the new rules. HMRC webinars explain existing guidance and give you the opportunity to ask general questions. You will also be able to see responses to other peoples’ questions and the guidance HMRC signpost to for extra help and support.
Importing – actions you need to take before making your supplementary declaration
To support those who have delayed their customs import declarations, HMRC explain the actions you need to take before you can make a supplementary declaration and how intermediaries can help you do this. Please register to take part if your clients have imported goods since 1 January 2021 and not yet completed a customs declaration for them.
Trader responsibilities when using an intermediary.
This webinar explains your responsibilities as a trader if you choose to use an intermediary to complete import or export declarations for their business. These are complex and an intermediary can save them a lot of time.
Reimburse private fuel by 6 July to avoid fuel benefit
One consequence of the recent periods of lockdown is that employees may have driven fewer private miles in their company cars, particularly where they have not been driving to the office.
If they are to avoid being taxed on the provision of private fuel, they need to fully reimburse their employer for the cost of private fuel by 6 July 2021 for the 2020/21 tax year. If not, the benefit needs to be reported on the employee’s form P11d for 2020/21.
Note that the CO2 emissions percentage for the car is multiplied by the £24,500 notional list price used to calculate the benefit for 2020/21. For example, a director driving a Mercedes Benz E200 saloon company car (CO2 emissions 169g per km) would be assessed on 37% = £9,065 for 2020/21. If they are a higher rate taxpayer that would mean £3,626 tax. That would be an awful lot of private fuel!
In addition to the tax payable by the director on the provision of private fuel, there would be £1,251 Class 1A national insurance contributions payable by the employer.
Note that the private fuel benefit is an all or nothing benefit. There must be full reimbursement by 6 July 2021 to eliminate the benefit. The simplest method would be to multiply private miles by the HMRC advisory fuel rate for the vehicle which is amended every 3 months.
Advisory fuel rates from 1 June 2021
These are the suggested reimbursement rates for employees’ private mileage using their company car from 1 June 2021. Where there has been a change the previous rate is shown in brackets.
1400cc or less
1600cc or less
1401cc to 2000cc
1601 to 2000cc
Note that for hybrid cars you must use the petrol or diesel rate. You can continue to use the previous rates for up to 1 month from the date the new rates apply.
These HMRC advisory fuel rates may also be used to calculate input VAT that may be claimed by the employer where an employee uses their own car for business journeys. The tax free reimbursement amount continues to be 45p per mile (plus 5p per passenger) so for a 1800 cc diesel car 11p of the 45p is deemed to be diesel and 20/120 of that amount, 1.83 pence per mile, may be reclaimed by the employer provided there are petrol station receipts to cover the amounts claimed.
COVID-19 GOVERNMENT SUPPORT NEWS
Below is our weekly roundup of changes to government support information generally and for businesses, employers and the self-employed.
Coronavirus Job Retention Scheme (CJRS) templates
HMRC has issued a template with the details of the employees you are claiming for (on or after 27 May 2021).
If you are claiming for 16 to 99 employees on or after 27 May 2021, you will need to upload a file containing the following information for each employee:
National Insurance number (or payroll reference number if you do not have this)
payroll reference number (sometimes called a pay identify or staff number)
furlough start and end date (using the format DD/MM/YYYY)
full amount claimed (pounds and pence)
normal hours (using decimals, for example 7.5)
actual hours worked (using decimals)
furloughed hours (using decimals)
if they have returned from statutory leave and you then put them on furlough
Your template may be rejected if you do not give the information in the right format. If your template is rejected, you will see a message on the screen and your claim will not be processed.
You will need to make sure that you:
provide only the employee information requested here – you might be asked again, or your template may be rejected
submit one line per employee for the whole period
do not break up the calculation into multiple periods within the claim
do not split data by contract type (for example, those paid weekly and monthly should be claimed for together)
do not provide more or less columns than needed
upload your file as an.xlsx, using the template on this page when you claim
If we submit your claim we will contact you beforehand to gather the right information. Please talk to us if you need assistance if you submit your claims.
A new section to the guidance has been added by HMRC called ‘How to correct overclaims in your next claim’. On the webpage below you can find out how to pay all or some of your grant back if you have overclaimed, or if you do not need the grant and want to make a voluntary repayment.
If you have claimed too much through the CJRS, or you would like to make a voluntary repayment because you do not want or need the grant to pay your employees’ wages, tax and National Insurance and pension contributions, you can either:
correct it in your next claim (your new claim will be reduced, and you will need to keep a record of the adjustment for 6 years)
get a payment reference number and pay HMRC back within 30 days (only if you are not correcting it in your next claim)
Private providers of coronavirus (COVID-19) testing
The lists of and information about private providers who have self-declared that they meet the government’s minimum standards for the type of commercial COVID-19 testing service they offer, has been updated for new providers.
How tests and testing kits for coronavirus (COVID-19) work
The different types of tests and testing kits for COVID-19, and the specifications for manufacturers, has been updated. A section on testing for international travel has been added to the document ‘for patients, the public and professional users: a guide to COVID-19 tests and testing kits’.
The Trade Credit Reinsurance Scheme allows eligible insurers to apply for a reinsurance agreement that covers domestic and overseas trade. The scheme was extended by 6 months to 30 June 2021 and approved under relevant state aid rules.
These are the participating insurers:
American International Group UK Limited
Coface UK Branch
Credendo – short-term non-EU risks
Euler Hermes UK, a branch of Euler Hermes SA (NV)
Markel International Insurance Company Limited
Nexus Trade Credit
QBE UK Limited and QBE Europe SA/NV
Zurich Insurance plc
The scheme is available until 30 June 2021, backdated to 1 April 2020.
The government has stated that the scheme has benefited over half a million businesses, protecting more than an estimated £575 billion of business turnover through providing around £210 billion in insurance cover in total under the scheme.
The government comments “Given the positive outlook for economic recovery in 2021, the successes of the scheme in maintaining cover in the credit insurance markets, appetite for new business within participating insurers, and the continued successes of the vaccine rollout, now is the right time to begin winding down government support.”
Airport and Ground Operations Support Scheme – financial assistance to the aviation industry
The Notification of the Airport and Ground Operators Support Scheme gives funding to airports and airport ground crews affected by COVID-19.
The aim was to open the scheme in January (2021) and ensure grant payments were made to eligible businesses by the end of the financial year. Grant payments would be made using powers in sections 7 and 8 of the act.
Section 8(8) of the act states that financial assistance for any one project shall not exceed £30 million, except so far as such excess has been authorised by a resolution of the House of Commons. The need to act and ensure that support was provided promptly meant that the government were previously unable to seek such authorisation from the House of Commons.
Section 8(9) of the act provides that the Secretary of State for transport, Mr Robert Courts MP, shall lay a statement concerning the financial assistance before each House of Parliament if they are satisfied that the payment or undertaking to pay financial assistance in excess of £30 million was urgently needed and it would have been impracticable to obtain the approval of the Commons House of Parliament by way of a resolution.
The need to provide support to airports and ground handlers, who play a vital role in the infrastructure of the country, made it impracticable to seek authorisation by way of a resolution, for payments under the scheme in excess of £30 million and I therefore tabling this statement. The details of the spend on the scheme, which opened for applications at the end of January, are:
The government states it remains committed to supporting the sector and has recently announced that the scheme will be renewed for the first 6 months of the financial year 2021/22. Consent for the use of powers in sections 7 and 8 of the act for the renewed scheme will be sought separately.
The Government have announced a one-year exemption from paying employers national insurance contributions (NICs) where military veterans are recruited by civilian employers.
Employers can claim relief if they employ a veteran during the qualifying period. The qualifying period starts on the first day of the veteran’s first civilian job since leaving the regular armed forces and ends 12 months later. For 2021/22 employers will be required to pay the NICs and then claim back the amounts paid at the end of the tax year. From 6 April 2022 a new zero NIC rate will apply.
A 25% rate of corporation tax will apply to all of a company’s profits if they exceed £250,000 from 1 April 2023. The 19% rate will continue to apply where profits are below £50,000. The marginal rate that applies between those limits will be 26.5%.
Those upper and lower limits are divided by the number of “associated companies” in the accounting period. This is not merely companies in the same 51% group but also includes companies under common control, for example where the same individual controls two standalone companies.
So, if Fred controls Bloggs Trading Ltd and also Bloggs Lettings Ltd the limits become £125,000 and £25,000. If Bloggs Trading Ltd has profits of £200,000 in year ended 31 March 2024 then the 25% rate will apply to all of that company’s profits.
In a group situation you may wish to consider restructuring the businesses by the transfer of trades to a single operating company, leaving the other companies dormant as those companies would not normally be counted as associates.
Currently only VAT registered businesses making taxable supplies in excess of the £85,000 VAT registration threshold are mandated to comply with Making Tax Digital (MTD) rules. Those rules require the business to keep digital business records and send VAT returns using MTD-compatible software.
MTD for VAT is now being rolled out to all VAT registered businesses from April 2022 which may cause some traders who are VAT registered but below the threshold to consider deregistering to avoid having to comply with MTD for VAT. If you decide to do so you will need to complete Form VAT7 and account for output VAT on the market value of stock and assets still owned at the date of deregistration. This is where input VAT has been reclaimed on those assets.
There is however a £1,000 de-minimis which means that output VAT does not need to be accounted for where the combined market value of the assets is less than £6,000.
Unfortunately, deregistering for VAT will not necessarily sidestep MTD as the requirement to keep business records digitally will be introduced for income tax from April 2023. From then MTD for income tax will apply to businesses with gross income in excess of £10,000 a year which will include property landlords as well as traders and professionals.
Welcome to our round up of the latest business and Covid-19 news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you through these tough times.
More than 20 million UK adults receive both doses of COVID-19 vaccine
Appointments for a second dose of a vaccine will be brought forward from 12 to 8 weeks for the remaining people in the top 9 priority groups who have yet to receive their second dose. This is to ensure people across the UK have the strongest possible protection from the virus at an earlier opportunity.
Public Health England (PHE) analysis shows for the first time that individuals who receive a single dose of the AstraZeneca vaccine have approximately 80% lower risk of death with COVID-19 compared with unvaccinated individuals.
The report also shows protection against death from the Pfizer-BioNTech vaccine rises from approximately 80% after one dose to 97% after 2 doses.
Separate new PHE analysis also confirms the Pfizer-BioNTec h vaccine is highly effective in reducing the risk of hospitalisation, especially in older ages.
How the Lockdown rules change today
From 17 May government advice is we should continue to work from home if we can and below we summarise the new relaxed lockdown rules:
Gathering limits will be eased. Outdoor gatherings will be limited to 30 people and indoor gatherings will be limited to 6 people or 2 households (each household can include a support bubble, if eligible).
New guidance on meeting friends and family will emphasise personal responsibility rather than government rules. Instead of instructing you to stay 2m apart from anyone you don’t live with, you will be encouraged to exercise caution and consider the guidance on risks associated with COVID-19 and actions you can take to help keep you and your loved ones safe. Remember that the risks of close contact may be greater for some people than others and in some settings and circumstances, there will be specific guidance that you will need to follow even when you are with friends and family.
Indoor entertainment and attractions such as cinemas, theatres, concert halls, bowling alleys, casinos, amusement arcades, museums and children’s indoor play areas will be permitted to open with COVID-secure measures in place.
People will be able to attend indoor and outdoor events, including live performances, sporting events and business events. Attendance at these events will be capped according to venue type, and attendees should follow the COVID-secure measures set out by those venues.
Indoor hospitality venues such as restaurants, pubs, bars and cafes can reopen.
Organised indoor sport will be able to take place for all (this includes gym classes). This must be organised by a business, charity or public body and the organiser must take reasonable measures to reduce the risk of transmission.
All holiday accommodation will be open (including hotels and B&Bs). This can be used by groups of up to 6 or 2 households (each household can include a support bubble, if eligible).
Funeral attendance will no longer be limited to 30 people but will be determined by how many people the COVID-secure venue can safely accommodate with social distancing. Limits at weddings, wakes and other commemorative events will be increased to 30 people. Other significant life events, such as bar/bat mitzvahs and christenings, will also be able to take place with 30 people.
The rules for care home residents visiting out and receiving visitors will change, allowing up to five named visitors (two at any one time), provided visitors test negative for COVID-19.
All higher education students will be able to access in-person teaching.
Support groups and parent and child group gathering limits will increase to 30 people (not including under 5s)
There will no longer be a legal restriction or permitted reason required to travel internationally. There will be a traffic light system for international travel, and you must follow the rules when returning to England depending on whether you return from a red, amber or green list country.
ONS confirms economy growing
The Office for National Statistics (ONS) have published their latest figures on the economy showing that:
Monthly gross domestic product (GDP) grew by 2.1% in March 2021, but remained 5.9% below its level in February 2020, which was the most recent month not affected by the coronavirus (COVID-19) pandemic.
The rise in GDP was led by a month-on-month rise of 1.9% in services in March 2021, but this sector remained 7.2% below its February 2020 level; the monthly rise in services was led by the education sector (contributing 0.54 percentage points of the growth).
Monthly production grew by 1.8% between February 2021 and March 2021 but remained 1.8% below its February 2020 level; the monthly rise in production was led by manufacturing (contributing 1.51 percentage points of the growth).
Monthly manufacturing grew by 2.1% between February 2021 and March 2021 but remained 2.2% below its February 2020 level; the monthly rise was led by manufacturing of machinery and equipment not elsewhere classified.
Monthly construction grew by 5.8% between February 2021 and March 2021, meaning it was 2.4% above its February 2020 level.
We expect these positive figures to continue as we go through the summer, lock down restrictions are eased and if you need any help in planning for growth with your business and the incentives and finance available please call us.
HMRC urge businesses to carry out due diligence into their labour supply chain
HMRC is warning organisations about the use of mini umbrella companies in the labour supply chain and the need to carry out due diligence to protect the organisation from financial and reputational damage.
Without a careful review of their labour supply chain the end user could find themselves liable for tax, national insurance and VAT avoided by entities inserted in the labour supply chain between them as end user and the workers engaged via the umbrella structure. This was highlighted in a recent BBC programme which identified 48,000 umbrella companies set up to exploit the £4,000 employment allowance. These companies were set up to supply workers to the NHS Covid testing programme outsourced to G4S. Similar arrangements continue to be marketed to allegedly sidestep the new “off-payroll” working rules.
If you use agency or temporary workers or are an agency providing workers, you or one of the other parties in the labour supply chain may need to operate PAYE on the workers’ earnings – you should check who needs to do this. HMRC have provided the following advice on due diligence procedures:
HMRC can ask you to account for unpaid tax and National Insurance contributions. For example, if an offshore agency supplies you with workers and they do not account for tax and National Insurance contributions payable through the PAYE system, then you may have to.
To increase compliance with the off-payroll working rules in the private and voluntary sectors, organisations receiving an individual’s services (where the individual works through their own intermediary, most commonly their own limited company) are now responsible for assessing that individual’s employment status and determining whether the rules apply from April 2021. This reform already applies in the public sector where an individual works through their own intermediary.
The off-payroll working reform from April 2021 will also provide HMRC with the power to recover unpaid tax and National Insurance contributions from you, or the agency you contract with in some circumstances – if, for example, a UK-based agency lower down in your labour supply chain fails to account for tax and National Insurance contributions payable through the PAYE system under the off-payroll working rules and there is no realistic prospect of recovering the tax and National Insurance contributions from them. This change will apply to the public, private and voluntary sectors.
Employers’ NICs Relief for employees working in Freeport tax areas
The government have announced a new zero rate of secondary Class 1 National Insurance contributions (NICs) for eligible employers on the earnings of eligible employees working in a Freeport tax site.
In Great Britain (England, Scotland and Wales), this measure will provide those employers with physical premises in a Freeport tax site (Freeport employers) with a zero rate of secondary Class 1 National Insurance contributions on the earnings of new employees who spend 60% or more of their working time within Freeport tax site. This rate can be applied on the earnings of all new hires up to £25,000 per annum from 6 April 2022 for 36 months per employee. Legislation to introduce the relief is included in the National Insurance Contributions Bill 2021.
This measure is in addition to the tax breaks and Customs Duty exemptions announced in the March Budget for businesses operating in these designated areas.
The first 8 Freeports announced in the Budget are located at East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside and Thames.
Below is our weekly roundup of changes to government support information generally and for businesses, employers and the self-employed.
Coronavirus and changing young people’s labour market outcomes in the UK: March 2021
The Office for National Statistics (ONS) have performed an analysis of labour market outcomes for young people (aged 16 to 24 years), how the young people were impacted by the coronavirus (COVID-19) pandemic.
Their findings are unsurprising in many ways and optimistic for the future employment prospects of the younger workforce. The main points are:
Young people’s employment rate saw a large decline in 2020 compared with 2019, while their unemployment and economic inactivity rates increased.
After an initial fall in young people in full-time education in the first few months of the pandemic, the proportion of young people in full-time education increased in the second half of 2020, reaching a new high of 46.8% in Quarter 3 (July to Sept) 2020.
The number of young people employed in the accommodation and food services industry who moved to unemployment or economic inactivity increased by more than 50% in Quarter 2 (April to June) 2020 compared with Quarter 2 2019.
Young people who worked part-time moved from employment to economic inactivity at a faster rate than they moved to unemployment in 2020.
Young people’s labour mobility (job-to-job moves) declined more during the pandemic than for older age groups.
The guidance on what to do if you or someone you employ is contacted by NHS Test and Trace, including self-isolation, sick pay and financial support has been updated following the recent relaxations in lockdown rules.
Self-Employment Income Support Scheme (SEISS) – Help and support if your business is affected by coronavirus
Watch videos and register for the free webinars to learn more about the support available to help you deal with the economic impacts of coronavirus. A catch up webinar for the SEISS – fourth grant has been added. This webinar takes you through the aim of the scheme, who can apply, how much you may be entitled to, how to claim the fourth grant, and what happens after you have claimed.
The government’s new Help to Grow programme is now open for registrations and will launch in June. The programme will help small and medium sized businesses across the UK learn new skills, reach new customers and improve profits.
The Help to Grow Management scheme offers small businesses a 12 week programme delivered by leading business schools across the UK, accredited by the Small Business Charter. The programme will combine a practical curriculum, with 1:1 support from a business mentor, peer-learning sessions and an alumni network. Designed to be manageable alongside full-time work, this programme will support small business leaders to develop their strategic skills with key modules covering financial management, innovation and digital adoption. By the end of the programme participants will develop a tailored business growth plan to lead their business to its full potential.
30,000 places will be available over 3 years. The programme is 90% subsidised by government – participants will be charged £750.
Who is it for?
UK businesses from any sector that have been operating for more than 1 year, with between 5 to 249 employees are eligible. The participant should be a decision maker or member of the senior management team within the business e.g. Chief Executive, Finance Director etc. Charities are not eligible.
The Help to Grow Digital Scheme will enable small businesses to get free impartial advice on how technology can boost their performance through a new online platform. The scheme starts this Autumn.
Eligible businesses will also be able to get a discount of up to 50% on the costs of approved software, worth up to £5,000. Vouchers are initially expected to be available for software that helps businesses:
build customer relationships and increase sales
make the most of selling online
manage their accounts and finances digitally
Who is it for?
All businesses will be able to benefit from free online advice on the platform.
The voucher is expected to be available to UK business that:
employ between 5 and 249 employees and are registered at Companies House
have been trading for more than 12 months
are purchasing the discounted software for the first time
Full details on the businesses and software eligible for the voucher will be published this summer.
This may be useful to help businesses preparing for Making Tax Digital (MTD) for income tax self-assessment and MTD for corporation tax. Please contact us if you would like to discuss digital accounting.
Private providers of coronavirus testing
The Lists of and information about private providers who have self-declared that they meet the government’s minimum standards for the type of commercial COVID-19 testing service they offer have been updated.
New ‘We Offer Testing to our Staff’ scheme launched
A new sticker scheme will allow businesses to easily show they are testing their staff regularly has been launched.
A new scheme for businesses offering workplace testing for staff through NHS Test and Trace has been launched across the UK. It will show customers, employees and the wider public the businesses that are going the extra mile to keep their staff and the public safe.
In addition to workplace testing, business owners and staff should all follow essential behaviours such as ‘Hands, Face, Space, Fresh Air’ and, where applicable, checking customers and visitors in using the NHS COVID-19 app.
Businesses that offer rapid workplace testing to staff, either through on-site testing or workplace test collection, will be able to download posters and stickers to demonstrate their offer for free, regular testing to their employees keeping people safe.
More than 122,000 businesses have signed up for free workplace testing already, using free government-supplied rapid test kits from NHS Test and Trace. All organisations that registered before 12 April and self-declared their involvement are eligible for the scheme.
Participating firms will be able to access digital assets including stickers and posters from Tuesday 11 May and can be accessed by participating firms online via the online ordering platform.
The aim is by prominently displaying the stickers on their websites or on their premises, alongside existing materials which promote checking customers and visitors in, businesses will be able to demonstrate to their customers that the health of staff, customers and their local communities is a key priority.
Right to work checks – Temporary measures ending on 20 June
Advice for employers carrying out right to work checks during the coronavirus pandemic has been updated and replaces previous guidance issued on 20 April 2021.
The temporary COVID-19 adjusted right to work checks will now end on 20 June 2021, and from 21 June 2021 employers will revert to face to face and physical document checks as set out in legislation and guidance.
This is aligned with the easing of lockdown restrictions and social distancing measures, as set out in the roadmaps for all regions of the UK.
Updated advice for employers carrying out right to work checks during the coronavirus (COVID-19) pandemic.
The following temporary changes were made on 30 March 2020 and remain in place until 20 June 2021 (inclusive):
checks can currently be carried out over video calls
job applicants and existing workers can send scanned documents or a photo of documents for checks using email or a mobile app, rather than sending originals
employers should use the Employer Checking Service if a prospective or existing employee cannot provide any of the accepted documents
Checking an individual’s right to work using the temporary COVID-19 adjusted check measures
Up to and including 20 June 2021, if you are carrying out a temporary adjusted check, you must:
ask the worker to submit a scanned copy or a photo of their original documents via email or using a mobile app
arrange a video call with the worker – ask them to hold up the original documents to the camera and check them against the digital copy of the documents record the date you made the check and mark it as “adjusted check undertaken on [insert date] due to COVID-19
You do not need to carry out retrospective checks on those who had a COVID-19 adjusted check between 30 March 2020 and 20 June 2021 (inclusive). This reflects the length of time the adjusted checks have been in place and supports business during this difficult time.
You will maintain a defence against a civil penalty if the check you have undertaken during this period was done in the prescribed manner or as set out in the COVID-19 adjusted checks guidance.
It remains an offence to work illegally in the UK. Any individual identified who is disqualified from working by reason of their immigration status, may be liable to enforcement action.
If the job applicant or existing worker cannot show their documents
You must contact the Home Office Employer Checking Service. If the person has a right to work, the Employer Checking Service will send you a ‘Positive Verification Notice’. This provides you with a statutory excuse for 6 months from the date in the notice.
The aim is to help employers and apprentices start, continue and complete their apprenticeships wherever possible. Some of this guidance can be found on the apprenticeship service help page for employers, providers and assessment organisations, as well as in articles for apprentices.
On-site training and assessment
From 8 March 2021, all apprentices can attend on-site training and assessment. The only exception is apprentices in higher education (HE) who can only return to HE settings if they need practical training and access to specialist equipment and facilities.
From 17 May 2021, all apprentices in HE can return to in-person teaching and learning alongside Step 3 of the roadmap out of lockdown.
Maintaining records of staff, customers and visitors to support NHS Test and Trace – England
Designated venues in certain sectors must have a system in place to request and record contact details of their customers, visitors and staff to help break the chains of transmission of coronavirus. This has been updated in line with step 3 of the roadmap to explain how certain venues should be collecting customer, visitor and staff contact details and displaying an NHS QR code poster.
Claiming financial support under the Test and Trace Support Payment scheme – England
The £500 Test and Trace Support Payment is for people on low incomes who have to self-isolate due to coronavirus (COVID-19). You may be eligible if you are employed or self-employed, cannot work from home, and will lose income as a result. You can only apply if you’ve been told to self-isolate by NHS Test and Trace, notified to self-isolate by the NHS COVID-19 app, or you’re the parent or guardian of a child who has been told to self-isolate.
If you’ve been told to self-isolate by NHS Test and Trace, you’re legally required to do so. If you’ve been notified by the NHS COVID-19 app to self-isolate and you apply for the Test and Trace Support Payment, you will be legally required to self-isolate.
Who can apply
You might be able to get a payment of £500 to support you during self-isolation if you live in England and meet all the following criteria:
you’ve been told to stay at home and self-isolate by NHS Test and Trace or the NHS COVID-19 app, either because you’ve tested positive for COVID-19 or have recently been in close contact with someone who has tested positive
you’ve responded to messages from NHS Test and Trace and have provided any legally required information, such as details of your close recent contacts
you’re employed or self-employed
you’re unable to work from home and will lose income as a result of self-isolating
you’re currently receiving or are the partner of someone in the same household who is receiving, at least one of the following benefits:
Working Tax Credit
income-based Employment and Support Allowance
income-based Jobseeker’s Allowance
If you’re not on one of these benefits, you might still be able to apply for a £500 discretionary payment if all the following apply:
you meet all the other criteria listed above
you’re on a low income
you will face financial hardship as a result of self-isolating
From 17 May, people in England who have had the vaccine will be able to demonstrate their COVID-19 vaccination status for outbound travel using the NHS app or letter. In due course, the app will allow people to show evidence of negative tests as they travel out of the country.
This update replaces previous guidance issued on 20 April 2021.
The temporary COVID-19 adjusted right to rent checks will now end on 20 June 2021, and from 21 June 2021 landlords will revert to face to face and physical document checks as set out in legislation and guidance. This is aligned with the easing of lockdown restrictions and social distancing measures, as set out in the government’s roadmap for England.
The following temporary changes were made on 30 March 2020 and remain in place until 20 June 2021 (inclusive):
checks can currently be carried out over video calls
tenants can send scanned documents or a photo of documents for checks using email or a mobile app, rather than sending originals
landlords should use the Landlord Checking Service if a prospective or existing tenant cannot provide any of the accepted documents