Tax & Business Update February 2022
Welcome to another tax and business update February 2022. There is a lot of information in this one, including the Government’s scheme to give discounts on accounting software; the requirement for companies to include COVID-19 grants in their tax returns; and the reopening of the portal for sick pay claims. We also update you with the latest on claiming tax rebates and the impact of the national insurance increase. With guidance on HMRC scams and a digital UK currency.
COVID-19 support grants paid to companies must be included on company tax returns
HMRC has warned that businesses must declare any coronavirus (COVID-19) support grants or payments on their company tax returns and stated that the grants and payments are taxable.
The deadline for filing company tax returns is 12 months after the end of the accounting period.
The deadline to pay corporation tax will depend on any taxable profits and when the end of the accounting period occurs. It is generally nine months after the end of the accounting period unless profits exceed £1.5 million.
Grants to be included as taxable income include:
• Coronavirus Statutory Sick Pay Rebate
• Coronavirus Business Support Grants (also known as local authority grants or business rate grants)
• Coronavirus Job Retention Scheme (CJRS) grant
• Eat Out to Help Out payment.
If a company received any of these payments, they will need to do both of the following on their CT600 tax return:
• include it as income when calculating their taxable profits in line with the relevant accounting standards
• report it separately on their company tax return using the CJRS and Eat Out to Help Out boxes.
Myrtle Lloyd, HMRC's Director General for Customer Services, said:
'We want to make sure companies are getting their tax returns right, first time, including any COVID-19 support payment declarations. Support and guidance is available on GOV.UK.'
Internet links: HMRC press release GOV.UK
Government scheme gives discounts of up to £5,000 on accounting software
The government's Help to Grow: Digital scheme – designed to support smaller businesses in adopting digital technologies – is now open for applications. To be eligible you need to employ between 5 and 249 people.
Under the scheme, eligible businesses can now receive discounts of up to £5,000 off the retail price of approved digital accounting and CRM software from leading technology suppliers.
Businesses can also access practical, specialised support and advice on how to choose the right digital technologies to boost their growth and productivity.
Currently three accounting software providers are signed up to the scheme – Sage, Intuit and E-crunch. The next phase of the programme will see the scheme extended to e-commerce software.
Business Secretary Kwasi Kwarteng said:
'I want UK businesses to be primed and ready to seize all the opportunities on the horizon as we build back better from the pandemic.
'Adopting technology means higher performance, and the Help to Grow: Digital scheme is future-proofing our small businesses and putting the UK at the forefront of the worldwide digital revolution.'
Internet link: Help to Grow website
Claims portal reopens for Statutory Sick Pay Rebate Scheme
HMRC has reopened a claims portal for small employers to again claim refunds for coronavirus (COVID-19)-related sick pay.
The reopening follows the announcement of the reintroduction of the Statutory Sick Pay Rebate Scheme (SSPRS) from 21 December 2021 for employers with fewer than 250 employees by the government.
The maximum claim per employee is two weeks at the statutory sick pay (SSP) rate of £96.35 per week (£192.70 in total). The employer's claim is also capped at the number of employees in its PAYE scheme on 30 November 2021.
The claims portal reopened on 19 January 2022 and employers can check the eligibility of their claims on GOV.UK.
HM Treasury and HMRC have not announced an end date for the SSPRS. However, the legislation states that a claim may not be made after the end of 24 March 2022.
The Institute of Chartered Accountants in England and Wales (ICAEW) said:
'There is an inevitable time lag between absence periods and having the information to make a claim (particularly when claims are made by agents). Therefore, there will hopefully be a realistic window between the end date for the SSPRS and the date that the claims portal will close.'
Internet link: GOV.UK
Consumer group urges taxpayers to avoid using refund firms to claim tax rebates
Consumer group Which? has urged taxpayers to avoid using so-called 'refund firms' to claim tax rebates.
Which? stated that people are losing hundreds of pounds by using third-party companies to claim tax rebates rather than going directly to HMRC.
Research carried out by the group found that one in five people had been either contacted directly by a tax refund company via email, phone, letter or text message or found one online.
Two in five of those contacted by a tax refund company said they used it in order to claim a tax rebate. Such companies often charge fees anywhere between 25% to 48% of the rebate an individual receives. Extra admin fees and VAT are often added on top, according to Which?.
HMRC told Which?:
‘We don’t accredit or in any way approve agents and take firm action against any not complying with the law. We encourage customers to come to us to make their marriage allowance claim.
‘It takes only a few minutes to complete the online application and eligible claims receive 100% of their entitlement. It is important that people thinking of using a tax agent are clear in advance about fees and are satisfied they’ll get the service they sign up for.’
Internet link: Which? website
National insurance rise 'set to squeeze budgets', warns CBI
The Confederation of British Industry (CBI) has warned the government that the planned rise in national insurance will squeeze budgets and affect economic growth.
The rise will see employers, employees and the self-employed pay 1.25p more in the pound from April 2022. From April 2023, the extra tax will be collected as part of the new Health and Social Care Levy.
Prime Minister Boris Johnson and Chancellor Rishi Sunak recently confirmed the rise, stating that it 'must go ahead'.
The CBI said that the rise risks 'curtailing growth at a critical moment in the recovery' from the coronavirus (COVID-19) pandemic.
A spokesperson for the CBI said:
'If the government goes ahead as planned, then it is incumbent on them to use the March Budget to bring forward more ambitious plans to raise the longer-term growth potential of the economy.'
Internet link: BBC News website
No 'convincing case' for digital UK currency, says House of Lords committee
Creating an official digital currency in the UK could pose significant risks to the financial stability of banks, a House of Lords committee has warned.
The Lords Economic Affairs Committee said introducing a Central Banking Digital Currency (CBDC) 'would have far-reaching consequences for households, businesses and the monetary system'.
The committee made its conclusions after hearing testimony from witnesses, including the Bank of England's Governor, Andrew Bailey; his deputy Sir John Cunliffe; Economic Secretary to the Treasury, John Glen; and senior Treasury official Charles Roxburgh.
Lord Forsyth of Drumlean, Chair of the House of Lords Economic Affairs Committee, said:
'These risks include state surveillance of people's spending choices, financial instability as people convert bank deposits to CBDC during periods of economic stress, an increase in central bank power without sufficient scrutiny, and the creation of a centralised point of failure that would be a target for hostile nation-state or criminal actors.'
Internet link: Parliament website
Scam HMRC call reports drop by 97%
Reports of scam HMRC phone calls have fallen by 97% over the last 12 months, according to the latest figures from the tax authority.
According to HMRC, reports of scammers impersonating HMRC in phone calls peaked at 79,477 in March 2021 and fell to just 2,491 in December 2021.
The fall in scam call reports to HMRC has also been seen elsewhere with a 92% drop in phishing email reports and a 97% drop in scam text reports over the last year.
This signals that the public is more aware of cyber criminals and the methods they use to trick people.
Mike Fell, HMRC's Head of Cyber Security Operations, said:
'We work incredibly hard to protect the public from these criminals who ruin lives by stealing from people. It's great news that fewer people are receiving and reporting these attempted frauds, but it is still important they continue to report suspicious contact to us.
'We will continue to do everything we can to protect the public from these cynical attempts to impersonate HMRC to steal from people.'
Internet link: HMRC press release
BCC calls for 'urgent action' to improve UK-EU trade
The British Chambers of Commerce (BCC) has called for urgent action to help improve trade with the EU.
A survey carried out by the BCC revealed that 60% of UK exporters reported difficulties trading with the EU. The business group said the number of lorries waiting to get into the port of Dover 'also offers a vivid illustration of the problems continuing to impact the operation of the trade deal between the UK and the EU'.
The BCC has outlined a series of recommendations designed to help improve trade between the UK and the EU. The recommendations include supplementary deals to reduce complexity around food exports, exempting smallest firms from having to have multiple country VAT registration for online selling and a more pragmatic approach to be taken to the enforcement of import customs declarations.
William Bain, Head of Trade Policy at the BCC, said:
'No-one is expecting goods to flow as freely across the channel now as they did prior to Brexit. But the way the trade agreement is being interpreted in 27 different EU countries is a major headache for UK business – especially smaller firms without the cash reserves to set up new EU-based arrangements.'
Internet link: BCC press release
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