File your tax return by 28 February

The normal deadline for filing the 2019/20 tax return is 31 January 2021. However, HMRC announced in a press release issued on 25 January 2021 that they would not issue a late filing penalty as long as the 2019/20 tax return is filed online by 28 February 2021. However, any tax due by 31 January 2021 must still be paid on time.

Extended deadline

Jim Harra, Chief Executive of HMRC, confirmed that taxpayers will not receive a penalty for the late filing of their 2019/20 tax return, as long as the return is received online by 28 February 2021. HMRC have previously resisted attempts to extend the deadline due to the pressures imposed by the COVID-19 pandemic. The change of heart came late in the day as HMRC accepted that it had become increasingly clear that people were struggling to meet the 31 January deadline. The extension will provide taxpayers with breathing space to complete their returns.

Normally, a penalty of £100 is issued automatically if the return is filed after midnight on 31 January.

No change to tax payment deadline

Despite the relaxation to the filing deadline, any tax due by 31 January 2021 must still be paid by this date. This will include any remaining tax due for 2019/20, including the July 2020 payment on account where this was delayed, and also the first payment on account for 2020/21. Interest will run from 1 February 2021 on any tax paid late

Taxpayers struggling to pay their tax in full and on time can set up a Time to Pay arrangement and pay what they owe in instalments. You can do this online if the tax that you owe is £30,000 or less. However, you will need to file your return before you can set up an instalment plan.

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Speak to us if you need help filing your 2019/20 tax return or setting up a Time to Pay arrangement.

January 27, 2021

Furloughing staff unable to work due to school closures

The Coronavirus Job Retention Scheme (CJRS) provides grant support to enable employers to continue to pay staff who are fully or flexibly furloughed. The scheme can be used for staff who have been furloughed because they have caring responsibilities.

School closures

On 4 January 2021, the Prime Minister, Boris Johnson, announced that England would enter its third national lockdown the following day. Unlike the last lockdown, schools are also closed, other than for the children of key workers and for vulnerable children. This places a caring responsibility on parents, who need to look after their children and undertake home schooling.

If you have employees who need to care for and home school their children and who are unable to work as a result, you are able to furlough them and claim a grant under the CJRS. Likewise, where an employee needs to work fewer hours in order to fulfil their parental responsibilities while schools are closed, you can flexibly furlough the employee and use the CJRS to claim a grant for the employee’s usual hours that they do not work.

Eligible caring responsibilities

In their guidance on the CJRS, the Government have confirmed that an employee can be furloughed if their caring responsibilities mean that the employee is unable to work (including being unable to work from home) or can only work reduced hours. The guidance cites caring for children who are at home as a result of school or childcare facilities closing as an example of caring responsibilities that might arise as a result of COVID-19.

Claiming the grant

You can claim a grant of 80% of the employee’s usual wages for their unworked hours, to a maximum of £2,500 a month. Claims must be made for each calendar month by the 14^th of the following month (or the next working day if this falls on the weekend).

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If your employees are struggling to juggle childcare and their job, talk to us about the option of furloughing or flexibly furloughing them and claiming a grant through the CJRS.

January 20, 2021

New COVID-19 grants for closed businesses

England went into the third national lockdown on 5 January 2021. To help business affected, the Chancellor unveiled a £4.6 billion package to help businesses forced to close. The grants are in addition to the monthly support payments previously announced.

Cash grant for closed businesses

If your business is in a sector such as non-essential retail, leisure or hospitality, and you have been forced to close as a result of the latest lockdown, you may be eligible for a one-off cash grant. The grant is available to businesses with business premises that are required to close and which cannot operate remotely. The amount of the grant depends on the rateable value of the property. Businesses with more than one property will receive a grant for each closed property.

If the rateable value of your business premises is £15,000 or less, you will receive a cash grant of £4,000. This increases to £6,000 if your business premises have a rateable value of between £15,000 and £51,000. If your business premises have a rateable value of more than £51,000, you will receive the maximum grant of £9,000.

On-going support payments

In addition to the one-off cash grant, you may also be entitled to on-going support from your local council. You will qualify if your business is based in England and you occupy premises on which you pay business rates, your business has been forced to close as a result of national restrictions and you are unable to provide your usual in-person customer service from your premises. This may include you if your business is in the retail, leisure, tourism or hospitality sectors, or if you provide sports facilities or personal care. You may also qualify if, for example, you run a restaurant and move to providing takeaways instead.

You will not be eligible for the on-going support payments if you can continue to operate remotely, or if you chose to close voluntarily.

Separate support measures are available for businesses in Scotland, Wales and Northern Ireland.

The amount of support that you will receive depends on the rateable value of your business premises.

If your business property has a rateable value of £15,000 or less, you may be entitled to a cash grant of £2,001 for each 42-day period for which qualifying restrictions apply. The grant is increased to £3,000 for each 42-day restriction period if your property has a rateable value of more than £15,000 but less than £51.000, and to £4,500 for the same 42-day period if your rateable value is more than £51,000.

Applications for the grant should be made to your local authority.

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January 13, 2021

Domestic VAT reverse charge for building and construction services

The domestic VAT reverse charge for building and construction services finally comes into effect on 1 March 2021. The start date was originally 1 October 2019, but it was postponed by one year until 1 October 2020 to allow those affected more time to prepare. The start date was further delayed – until 1 March 2021 — as a result of the COVID-19 pandemic.

Detailed guidance on the charge can be found on the Gov.uk website.

Nature of the charge

Under the domestic VAT reverse charge, the customer receiving the service must pay the associated VAT to HMRC rather than paying it to the supplier. The charge will be relevant to you if you are an individual or a business that is registered for VAT in the UK, and you supply or receive specified services that are reported under the Construction Industry Scheme (CIS). If you are a customer, you will pay the supplier the amount net of VAT and pay the VAT to HMRC. If you are a supplier, you will receive payment net of VAT and will no longer need to pay the VAT to HMRC.

Services within the scope of the charge

The following services fall within the scope of the charge:

constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services;
constructing, altering, repairing, extending or demolishing any works forming, or planned to form, part of the land, including walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for the purpose of land draining, coast protection or defence;
installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building;
internal clearing of buildings and structures which is carried out in the course of their construction, alteration, repair, extension or restoration; and
services that form an integral part of, or are part of, the preparation or completion of the services described above, including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works.

Exclusions

The domestic VAT reverse charge does not apply to:

drilling for, or extracting, oil or natural gas;
extracting minerals (using underground or service working), and tunnelling, boring or the construction of underground works for this purposes;
manufacturing building or engineering components or equipment, materials, plant or machinery, or delivering any of these to site;
manufacturing components for heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems, and delivering any of these to site;
the professional work of architects or surveyors, or of building engineering, interior or exterior decoration or landscaping consultants;
making, installing and repairing art works, such as sculptures and other items that are purely artistic, signwriting, and erecting, installing and repairing signboards and advertisements;
installing seating, blinds and shutters; and
installing security systems, including burglar alarms, closed circuit television and public address systems.

Preparing for the charge

If you are an individual or business that falls within the scope of the charge, you will need to ensure that you are ready to apply it from 1 March 2021. In preparation, you will need to check that your accounting systems and software can cope with the reverse VAT charge, and upgrade them if necessary. You should also ensure that any staff who deal with VAT understand the changes and what they need to do to comply.

It is also prudent to assess how the charge will impact on your cash flow, particular if you supply services that fall within the scope of the charge as you will no longer receive the associated VAT.

Completing the VAT return

If you are a supplier, you must not enter any output tax on any sales that fall within the domestic VAT reverse charge on building and construction services on your VAT return. Instead, you only need to enter the net sales value.

If you are a customer purchasing services within the scope of the charge, you must account for the associated VAT to HMRC by including it as output tax on your VAT return. You should not enter the net value of the purchase as a net sale. You can reclaim the input tax on your reverse charge purchases in accordance with normal VAT rules.