This month, there are a few different news items which are of interest to small business owners. Take a look below.
Grant from local authorities (Local Restrictions Support Grant)
If you own a business with rateable premises on which you pay business rates, you may be eligible for a grant from your local authority if you have been required to close due to the lockdown. How much you get depends on the rateable value of the property. From 5 January 2021 the grant ranges from between £2,001 to £4,500 for each 42 days of closure.
Job Retention Scheme (Furlough Scheme)
It is expected that the Government will carry out a further review of the furlough scheme over the next few week, as to whether this scheme will close on 30 April 2021 or continue, either in its current form or with revised terms. Remember you may be able to claim if you are employed, or are a director of your own company, and are not currently working due to the pandemic. To be eligible you must have made a salary declaration and submitted an RTI between 20 March 2020 and 30 October 2020.
Tax Investigations – what can you do to reduce your risk?
You may be interested to know that only 7% of tax investigations arise due to random checks. The majority are triggered by an event, or series of events, that makes HMRC question if something is wrong. Given that full blown investigations can be very costly in both time and expense, what can you do to reduce your risk?
Firstly, be on time with your returns. Consistent lateness is an easy thing for HMRC to track and can raise doubts over the organisation and reliability of data. Secondly, ensure the return is accurate and complete. Remember that with increased digital reporting HMRC now receives more information from third parties, so if you have missed some bank interest off your return HMRC may question why and raise an aspect query. Although such a query should be easy to resolve, it is possible that HMRC may think you have other hidden income and then there is the risk of it leading to a full investigation. Lastly, use the additional/information pages on the return to disclose anything unusual, such as a big change in income or expenses, to avoid a trigger due to being outside HMRC parameter checks.
Do all landlords need to complete a tax return?
If you have taxable profits from rental property you must notify HMRC by 5 October following the tax year these arose. However, are you required to complete a self-assessment return to report it?
This depends on the level of rental income. If the income is £10,000 or more then you will be required to complete a tax return. If it is between £2,500 and £10,000 then HMRC are likely to ask you to complete one – you should discuss this with them. If it is below £2,500 you have the option to ask HMRC to deal with the profits by adjusting your PAYE code.
However, note that if HMRC has issued you a tax return to complete then you must complete it even if there is no tax to pay. Alternatively get in touch with them to agree that no submission is required.
Brexit and VAT
The UK exit from the EU has given rise to a number of changes regarding VAT. The UK is no longer bound by EU rules to maintain the minimum rate at 15%, and therefore it has the option to continue with the reduced rate for the hospitality sector if it chooses. The VAT rate on this sector was reduced to 5% from 15 July 2020 but this is currently due to end on 31 March 2021.
From 1 January 2021 the export of goods or supply of services from the UK to the EU no longer need to be reported on an EC sales list. Intrastat reports will still be required for goods imported from the EU if over £1.5m. Intrastat reports for exports to the EU are no longer required.
If you need further guidance on any of the above, our accounting team is always happy to help.