The Government’s flagship Making Tax Digital (MTD) project should be delayed in order to give businesses more time to prepare, the British Chambers of Commerce (BCC) has said.
The calls follow a recent survey carried out among small and medium-sized enterprises (SMEs) which found that 24 per cent of firms had never even heard of MTD, despite the fact that HM Revenue & Customs (HMRC) intends to roll out the project as mandatory for thousands of businesses within less than a year’s time.
Under HMRC’s existing timescales, MTD for VAT will be phased in from April 2019, requiring all VAT-registered businesses to begin storing and managing their accounts information using MTD-friendly software. These businesses will also be expected to send quarterly VAT information to HMRC using this software.
Shortly after the introduction of MTD for VAT, it is thought that HMRC will roll out MTD for other taxes and types of businesses, in its efforts to ‘make it easier’ for them to keep on top of their tax affairs.
But business groups feel differently, and have previously voiced concerns that the transition to MTD reporting will be no easy task for SMEs.
On top of this, a recent survey of 1,100 small businesses carried out by the BCC suggests that almost a quarter of SMEs have no knowledge of MTD whatsoever, while 66 per cent have only a ‘basic understanding’ of what MTD will require of them.
In light of these findings, the BCC is calling on HMRC to delay the project so that businesses have more time to prepare.
Mike Spicer, of the BCC, said: “We are concerned that far too many firms still aren’t clear on what Making Tax Digital is, or what it means for their operations.
“With just months to go before the deadline, these knowledge gaps could make the timeline for change unworkable for many firms,” he warned.
“Ministers must face up to the reality of the pressures facing HMRC and delay the introduction of Making Tax Digital for all businesses for the next financial year.
“This would allow the Revenue to focus its immediate attention on supporting businesses through the Brexit process, which must be a key priority.”
Millions of customers have yet to complete their tax credits renewal a week ahead of the deadline, a report has revealed.
In its latest announcement, HM Revenue & Customs (HMRC) has urged customers to update their tax credits account before 31 July 2018.
Tax credits are state benefits that provide extra money to people responsible for children, disabled workers and other workers on lower incomes.
However, they must be renewed each and every year, as it is a means-tested income.
It advised that taxpayers do so online, as it is the “quickest and easiest way” and avoids waiting in busy telephone queues.
It said more than 59 per cent of customers have renewed online or via the HMRC smart device app.
The tax office also recently launched an Amazon Alexa app which allows taxpayers to ask the virtual assistant about problems they may have with tax credits.
It warned that those experiencing problems with renewing tax credits should seek help immediately, as around 320,000 customers had their payments stopped or altered last year because they missed the deadline to inform HMRC of changes to their circumstances.
This can include changes to working hours, income and childcare costs, it said.
Angela MacDonald, Director General of Customer Services, said: “We’ve improved our services so customers can renew their tax credits at a time that’s convenient to them but the 31 July deadline is fast approaching.
“There is a wealth of support available at all times of the day and night from HMRC via GOV.UK, the app, or Alexa to help customers get their renewal right.
“I urge customers who have yet to renew their tax credits to do so as soon as possible, to avoid their payments being stopped.”
Businesses operating in Britain’s so-called gig economy should be required to take responsibility for the tax affairs of their self-employed workers through a PAYE-style system, the Office of Tax Simplification (OTS) has said.
The calls, which feature in a 20-page report published by the OTS this week, would help to ‘ease the compliance burden’ faced by gig economy workers while simultaneously increasing tax revenue, the OTS says.
Under existing rules, such workers typically carry out various jobs and are paid on a ‘piecemeal’ basis. They are then expected to complete their own self-assessment tax returns.
However, the OTS’ proposals would require the platforms that offer these people work, such as Uber and Deliveroo, to implement a PAYE-style system.
These platforms would then be required to use this system in order to deduct tax from their workers’ earnings and pay this to HM Revenue & Customs (HMRC) on their behalf, the report reveals.
Announcing the proposals, Paul Morton, Tax Director at the OTS, said that the change would “remove the administrative burden” from gig economy workers.
He added that the proposed new rules would also “mean that they should not get an unexpected tax demand at the end of the year.”
According to the OTS’ report, requiring gig economy platforms to pay tax through “an established mechanism such as PAYE” would also go a long way toward reducing the risk of non-compliance.
“For example, tax might be paid to HMRC on a monthly rather than annual basis and tax is collected at minimum cost to the Government,” it said.
The proposals come at a time when the number of people opting to go self-employed in the UK is rapidly growing, having risen to almost five million last year.
It is estimated that some 1.3 million of these workers currently rely solely on gig economy work.
Supermarket Co-op will allow its 63,000 staff to take low-interest loans to be repaid via its payroll system, it has revealed this month.
The retailer said UK workers could save more than £250 million a year in interest rate charges if companies introduce a payroll loan scheme likes its own.
The scheme is being offered by financial lender, Neyber.
According to the report, its loans have a typical rate of 7.9 per cent APR, for which more than half of Co-op workers qualify for.
Workers can then make repayments directly from salaries via the retailer’s payroll system.
Co-op says by providing workers with the ability to repay loans directly, it is able to offer a practical alternative to high cost forms of borrowing, which can adversely impact on the lives of individuals and their families.
Helen Webb, Chief People Officer at the Co-op, said: “We wanted to offer colleagues more practical alternatives to high cost borrowing as we are aware that some colleagues have personal debt issues that can lead to stress and impact on home and working life.
“Because the loans are paid directly from salaries they are almost certainly at a lower interest rate than colleagues would pay on loans from other lenders.”
Its loan scheme adds to a number of other benefits currently offered by the Co-op directly through its payroll system. These include tax benefits when buying a new bike, as well as money off gym memberships.
Ms Webb added: “We know our extensive range of benefits are really appreciated by colleagues and are an important part of the overall package which makes the Co-op a very special place to work. That is why we put so much work into offering a total benefits package that in many cases is better than anything offered by our rivals.”
In recent days, HM Revenue & Customs (HMRC) has published a series of new documents that it claims will provide businesses with “additional clarity” on Making Tax Digital (MTD).
The new documents, which come less than a year before VAT-registered businesses earning more than £85,000 a year will need to be fully MTD-compliant, aim to provide businesses with more information about MTD and what they need to do ahead of April 2019.
HMRC’s new VAT Notice, explains what digital records VAT-registered businesses will need to keep as part of MTD for VAT, as well as what systems and programmes will count as ‘functional compatible software’ for submitting VAT information to HMRC.
Further to this, the Revenue has also published a list of software suppliers that support MTD for VAT which, at current, include the likes of Intuit, Clear Books, Xero and more.
Finally, HMRC has published a stakeholder communications pack which it says will provide “stakeholders with information to support businesses that need to make the transition to digital VAT business record-keeping.”
Alongside the publication of the new documents, the tax authority has warned that MTD for VAT is, quite literally, just around the corner – due to be phased in from 1 April 2019.
“As part of MTD, businesses registered for VAT with a taxable turnover above the VAT registration threshold of £85,000 will need to keep VAT records digitally and file their VAT returns using MTD compatible software [from this date],” it said.
Taxpayers can now ask their virtual assistant for help with their tax deadlines, HM Revenue & Customs (HMRC) has revealed.
In an announcement this week, the tax office said it has developed a customer-focused service through Amazon Alexa – specifically for those seeking help with their tax credit renewals.
Taxpayers with the smart audio device in their homes will be able to ask Alexa to “open HMRC” and get help and information in the case that there is a change of circumstances, payment information or renewal.
It added that no personal information is stored on Alexa and customers cannot directly renew their tax credits using the device.
In 2017, a poll suggested that nine per cent of UK households owned an Amazon Alexa device, with that number set to soar to 40 per cent in 2018.
Commenting on its latest innovation, HMRC said the service will help more than three million customers renew their tax credits by 31 July.
For those without the smart device, customers can still use HMRC’s app on their smart phone to renew tax credits, check their tax credits payments schedule and find out how much they have earned for the year.
Angela MacDonald, HMRC’s Director General for Customer Services, said: “We know our customers have hectic lives – full of interruptions and distractions – which is why HMRC’s online services are available at all times of the day and night.
“As the 31 July deadline for tax credits renewals approaches, customers can feel reassured that they can renew their benefits online or via the HMRCApp at a time that suits them. And if they need to access help and support, Alexa can help customers find out about what to do when they receive a renewal pack, how to change their circumstances, or how to find out about payment information.
“We’ve improved our services so customers can renew their tax credits at a time that’s convenient for them.”
In recent days, reports have emerged suggesting that The Pensions Regulator (TPR) and other watchdogs will be keeping a very close eye on small business that fail to keep up-to-speed with their auto-enrolment obligations.
A report in Money Week suggests that TPR issued a shocking 35,862 enforcement notices in the first three months of 2018 to businesses that were found to be ‘in breach’ of auto-enrolment regulations. This is up from more than 28,000 enforcement notices dished out for similar offences in the final three months of last year.
The figures come shortly after important changes were introduced to minimum auto-enrolment pension contributions, which now require employers to contribute at least two per cent of pay into the pensions of staff enrolled in an auto-enrolment scheme, up from the previous one per cent.
Business that are found to have fallen foul of their auto-enrolment obligations can face dire consequences, ranging from enforcement notices and penalties to being publicly ‘named and shamed’ by HM Revenue & Customs (HMRC).
The same goes for companies that fail to keep on top of changes to the National Minimum Wage (NMW) and National Living Wage (NLW) – both of which also went up slightly in April.
Businesses that need help with their payroll in order to be compliant with auto-enrolment and the NLW should seek specialist advice at the earliest possible opportunity.
Around one million married couples and civil partners are still missing out on a £900 tax break, according to official figures.
HM Revenue & Customs (HMRC) has urged married and civil partners to look into the Marriage Allowance before it’s too late to claim.
The tax break is worth up to £238 per year per household, but due to the start of the new tax year, couples can backdate their allowance and boost their payment by up to £900.
The tax office said the form takes fewer than 10 minutes to complete and eligible couples could receive backdated claims of up to £662 as a lump sum.
Essentially, the Marriage Allowance allows a spouse or civil partner who is a non-taxpayer to transfer £1,190 of their £11,850 tax-free personal allowance to their partner, effectively increasing the taxpaying partner’s personal allowance.
Couples have a maximum of four years to claim their backdated allowance.
Mel Stride MP, the Financial Secretary to the Treasury, said more than 300,000 couples have signed up for the Marriage Allowance since March 2018, but up to a million more have yet to claim.
“It’s great news that so many couples are now benefitting from Marriage Allowance. This is a really important tax relief and reflects the social importance of marriages and civil partnerships,” she said.
“And I’d urge those that haven’t yet managed to claim the money to do so right away – it’s quick and easy to apply. Just search online for Marriage Allowance and go to the GOV.UK site.”
In recent days, the British Chambers of Commerce has called on the Government to delay the introduction of Making Tax Digital (MTD) until 2020/21, amid concerns that too many businesses are unprepared.
Spearheaded by HM Revenue & Customs (HMRC), MTD is an ambitious plan to completely digitise Britain’s tax reporting system – and its due to be rolled out for hundreds of businesses from as soon as next April.
At first, only VAT-registered businesses earning £85,000 or more per annum will be affected. Shortly afterwards, however, it is anticipated that the new system will be introduced as mandatory for other taxes and types of businesses.
Previously, critics have described the project – which will require businesses to migrate all of their accounts information online using ‘MTD-friendly’ software – as the biggest change to tax since the introduction of PAYE.
More recently, worrying research carried out by the BCC has revealed a “widespread lack of awareness” of MTD among businesses – with many firms unsure of what they need to do in order to become MTD-compliant.
According to the BCC’s research, almost a quarter (24 per cent) of small businesses have never even heard of MTD, while a further 66 per cent admit to only understanding ‘some’ details about it.
These figures, which come from a survey of 1,100 small and medium-sized enterprises (SMEs) indicate that Britain’s business community is woefully unprepared for this radical change to the ways in which businesses interact with HMRC, the BCC has said.
Due to this, the project should be delayed in order to provide the tax authority with “the breathing space to engage effectively with businesses, ensure that the necessary software is in place, and raise levels of awareness about the impending changes,” it claims.
Mike Spicer, Director of Economics and Research at the BCC, said: “We are concerned that far too many firms still aren’t clear on what Making Tax Digital is, or what it means for their operations.
“With just months to go before the deadline, these knowledge gaps could make the timeline for change unworkable for many firms,” he warned.
HM Revenue & Customs (HMRC) has reminded parents not to “stress” about the school holidays, as they can claim up £2,000 tax-free childcare to help pay for holidays clubs and activities.
It follows recent research which shows that almost a third of British parents worry about trying to arrange childcare for the holidays.
The tax-free childcare scheme works by topping up your childcare account, either as a lump sum or throughout the year. For every £8 you add, the Government will pay in £2.
This service is available to working parents, including the self-employed, with children aged under 12 (or 17 for disabled children).
Funds saved in the childcare account can be used to pay for some 58,000 registered childcare providers across the UK, including after-school, sports and holiday clubs, as well as nurseries and childminders.
Liz Truss, Chief Secretary to the Treasury, said: “Sorting out childcare over school holidays can feel like another chore for working parents. But the government has financial help available to cut the stress and bills for parents.
“To demonstrate our commitment, in 2019/20 the government will spend around £6 billion on childcare support – a record amount.
“Our message to eligible families across the UK is take a look at the Childcare Choices website and see how you can save on your childcare costs.”