MAKING TAX DIGITAL FOR BUSINESS DELAYED

The Government has responded to pressure from accountants and other interested parties and announced the delay of Making Tax Digital for Business to 2020 at the earliest.

Quarterly VAT reporting using the new system will be mandatory from 2019.

In a further U-turn, three million small businesses and buy to let landlords below the VAT threshold will now not be required to keep digital accounting records but will be able to move to the new system for keeping tax records at a pace that is right for them.  For such businesses, Making Tax Digital will be voluntary.

Mel Stride, the new Financial Secretary to the Treasury and Paymaster General, announced that the roll out for Making Tax Digital has been amended to ensure businesses have plenty of time to adapt to the changes.  Under the revised timetable:

  • only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records, and initially only for VAT purposes from 2019
  • businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020

As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.

All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes. This deferral will give much more time for businesses, supported by their advisers, to identify for themselves, at their own pace, the benefits of digital record keeping. It will also ensure that many more software products can be developed and tested before the system is mandatory.

THINKING OF WINDING UP YOUR COMPANY?

Up until 6 April last year, the distribution of cash to shareholders on the winding up of a trading company by a liquidator, was usually taxed as a capital gain, potentially taxed at just 10% with the benefit of entrepreneurs’ relief.

However, last year’s Finance Act introduced a targeted anti-avoidance rule that may tax such a distribution as a dividend at income tax rates up to 38.1% under certain circumstances.

HM Revenue and Customs have recently issued guidance in an attempt to clarify when the new anti-avoidance rule would apply.

Broadly the anti-avoidance is intended to catch situations where the old company is wound up and a similar business is carried on by a connected business. Note however, the distribution would only be taxed as a dividend at income tax rates if one of the main purposes of the transaction was to avoid tax. This is a complex area so please contact us to discuss your plans so you do not fall foul of the new anti-avoidance rule.

WORKING IN THE “GIG” ECONOMY

The House of Commons Work and Pensions Committee has recently published a report calling on the Government to close the loopholes that allow “bogus” self-employment practices, which burden the welfare state but reduce the tax contributions needed to sustain it.

This follows the “Matthew Taylor” inquiry which took evidence during February and March 2017 from witnesses including representatives of companies such as Uber, Amazon, Hermes and Deliveroo. Most of the people working for such organisations were not on the payroll and have limited workers rights and are paid for each delivery or “gig”. The Committee recommended a default assumption of “worker” status, rather than “self-employed”, and said that the incoming Government should set out a roadmap for equalising the NICs paid by employees and the self-employed.

Mr Taylor was also asked to produce a report on the status of such workers and suggested that a new category of “dependent contractor” should be established, but the report did not conclude on how such a worker should be taxed.

Sick pay for zero hours contracts?

You have a number of employees who are engaged on ‘zero hours’ contracts, and thus only work as and when required. If they fall sick, will SSP be payable?

To fall within the SSP scheme, the individual must be an employee for the purposes of Class 1 National Insurance Contributions.  There is no room to discuss what an employee is here, but suffice it to say that simply being a ‘worker’ is not sufficient – to a self-employed bricklayer will not qualify, even if required to give personal service.

Earnings

The employee will only qualify if they have average earnings at least equal to the NICs Lower Earnings Limit (£113 per week in 17/18).

Average earnings are calculated over the 8 weeks prior to the initial commencement of the Period of Incapacity for Work (PIW).

Assuming they meet this condition, then the trickier bit is working out how much to pay them.  SSP is paid from the 4th Qualifying Day (the first 3 being Waiting Days), and to this end, it is necessary to decide which are the Qualifying Days (QDs).

Qualifying Days

 If there is an agreement between the employer and employee as to the Qualifying Days then there is no problem, but usually, there won’t be – so here the legislation steps in.  Incidentally, it is not permitted to agree that there are no QDs in a week, or that sick days don’t count or any other such devious arrangement.

Regulation 5(2) of the Statutory Sick Pay (General) Regulations 1982 gives 3 possible alternatives…

(2)          Where an employee and an employer of his have not agreed which day or days in any week are or were qualifying days the qualifying day or days in that week shall be—

(a)    the day or days on which it is agreed between the employer and the employee that the employee is or was required to work (if not incapable) for that employer or, if it is so agreed that there is or was no such day,

(b)    the Wednesday, or, if there is no such agreement between the employer and employee as mentioned in sub-paragraph (a),

(c)     every day, except that or those (if any) on which it is agreed between the employer and the employee that none of that employer’s employees are or were required to work (any agreement that all days are or were such days being ignored).

So, in essence:

(a) will apply where there is a rota or schedule so that it is known in advance which days the employee was due to work; those agreed days will be the days for which SSP is potentially payable

(b) will apply where there is a rota or schedule so that it is known in advance that the employee was not due to work that week at all; there will only be one Qualifying Day in the week, and that day will be Wednesday

(c) will apply if there is no rota or schedule in place; every day will be a Qualifying Day for SSP.

It is, therefore, possible for the QDs to change from week to week.

GCSEs in England have a new 9 to 1 grading scale

If you use GCSEs to assess people applying for jobs in your business, you need to know that a new 9 to 1 grading scale is being introduced over the next few years for the reformed, more challenging GCSEs in England.

From August, the new qualifications will start to be awarded with number grades rather than letters. The new grading scale runs from 9 to 1 instead of A* to G, with 9 the highest grade. A grade 9 will be awarded to fewer students than the current A*.

Not all GCSEs are changing at once – English language, English literature and maths are changing first, with students sitting these exams this summer.

The new scale is intended to recognise more clearly the achievements of high attaining students. Changing from letters to numbers will also allow you to see whether a student has taken a new, more challenging GCSE, or an old GCSE.

Between 2017 and 2019, GCSE exam certificates in England will have a combination of number and letter grades as students sit a mix of new, reformed GCSEs and old GCSEs. By 2020, all GCSEs in England will be reformed and graded 9 to 1. However, A* to G letter grades will continue to remain valid for future employment or study. Most GCSEs taken by students at schools in Wales and Northern Ireland will continue to be graded A* to G.

A new GCSE grade 4 is broadly equivalent to a low/medium grade C, the standard for a level 2 qualification. If grade C is your current entry requirement, it would be reasonable to ask for a grade 4 under the new system, unless you have made a deliberate decision to raise the entry bar.

The Department for Education recognises grade 4 and above as a ‘standard pass’; this is the minimum level that students in England need to reach in English and maths, otherwise they will need to continue to study these subjects as part of their post- 16 education. A GCSE pass at new grade 4 is therefore a credible achievement and should be viewed as such for work or further study opportunities. To continue to raise standards in schools, the Department for Education recognises a grade 5 and above as a ‘strong pass’ and will be using this in its headline measures of school performance; a benchmark comparable with the strongest performing education systems.

More information is available on the Ofqual website https://www.gov.uk/government/news/new-gcse-9-to-1-grades-coming-soon

VENTING YOUR FRUSTRATIONS IN THE OFFICE

Most people experience frustrations at work from time to time. Whether it is due to constant pressure, last-minute demands or irritating colleagues, at some stage, most of us reach a point where we want to vent our frustrations in the office.

Frustrations happen, and venting is an easy way to blow off steam. However, just because it happens doesn’t mean it’s ok. Constantly venting can spread negativity and bring your colleagues down. It can also be disruptive and annoying to the rest of your team.

Minimise the impact

Before you decide to vent your frustration, pause and take a moment to think about how you would like others to think of you at work. Do you want to be seen as a competent, intelligent leader? Unless you want to be known as someone negative who complains a lot, it’s probably best not to vent in the open office. If you really do need to talk to someone about the challenges you are currently facing, perhaps find a quiet room where you can close the door and discuss your issues with a trusted colleague or friend in the office.

Balance the positive and the negative

It is very easy to point out the things that are wrong. There is always something negative to focus on, no matter where you work. However, it is important to force yourself to notice the positive things too. If you challenge yourself to be a bit more observant, you will notice plenty of positive things happening around the office.

Write it down

Write down the things that are frustrating you so that you can better understand the problem. This can also help you to anticipate the issues that trigger your stress so that you can address them in future, before they become bigger problems. Writing things down can also help you to de-stress as the act of doing so is effectively venting your frustration (silently). This can also help you to arrange your thoughts and may even result in you coming up with a solution to the issue.

Invest time coming up with solutions

You can vent about things as much as you like but nothing will change unless you come up with some solutions. Try to spend some time thinking about how to solve the problem itself rather than focusing on the frustration caused by the symptoms of the problem.

MAKE THE MOST OF DEAD TIME

We have all been there before – stuck in a city with time to kill between meetings. Some of us head off for the nearest coffee shop at this time while others might make a few calls or go for a stroll in order to think about the next meeting. Perhaps there is a better way to make the most of this dead time.

Focus on a project

Long waits in the airport or sitting on a long-haul flight can be used as the ideal time to focus on a special project. It may or may not be related to the reason for your corporate trip. Perhaps it is a good time to go through the notes of a presentation or the final details of a big project. You should bear in mind that there may be some difficulties getting online (particularly on planes) so you should download the files you need in advance of boarding in order to work offline.

Plan an activity

The line between work and private life is becoming increasingly blurred. As a result, one notable trend in corporate travel is business-leisure travel. In other words, business travellers try to make the most of the time between professional appointments on a corporate trip to get to know their destination or stay a few days longer to sightsee.

Make progress with your work

Periods of dead time between journeys can be used to make progress with work. For instance, you can catch up on email or read through some documents. If you are on a business trip for a few days, it can be a good time to do your expenses, check into your return flight and so forth.

Relax

Business trips tend to be a bit stressful. Therefore, it is extremely important to make sure you get some downtime on your own. A good set of headphones can be your best friend when it comes to getting some rest on a plane. Audio books can also be a good way to relax and can even provide some inspiration for your work. Perhaps watching a bit of Netflix or Amazon Prime on your tablet can help to take your mind off work. If you are sporty, it can be good to hit the gym or go for a run (which is also a great way to see a city if you are visiting on business).