8thJun
News article

Deadline looming for new entrants to Coronavirus Job Retention Scheme

HMRC has reminded employers who intend to furlough an employee for the first time that the deadline to do so is approaching fast.

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HMRC has reminded employers who intend to furlough an employee for the first time that the deadline to do so is approaching fast.

The Coronavirus Job Retention Scheme (CJRS) will be closed to new entrants from June 30.

In order for the minimum three-week furlough period to be completed by then, the final date which an employer can furlough an employee for the first time is June 10. Employers will have then have until 31 July to make any claims in respect of the period to June 30.

Chancellor Rishi Sunak recently announced changes to the CJRS that will apply from 1 July until its scheduled closure at the end of October.

The changes mean businesses will be able to bring furloughed employees back on a part-time basis from 1 July. HMRC said it will publish further guidance on these changes on 12 June.

The taxpayer contribution will stay at 80% in August but employers will have to pay national insurance and employer pension contributions. In September, employers will be asked to contribute 10% towards people's wages, which will rise to 20% in October.

HMRC also reminded businesses that they must repay money that has been over-claimed through the CJRS.

Further guidance on the CJRS can be found here.

8thJun
News article

HMRC delays VAT reverse charge on construction services

HMRC has announced a five-month delay to the introduction of the domestic VAT reverse charge for construction services, due to the impact of the coronavirus (COVID-19) pandemic on the sector.

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HMRC has announced a five-month delay to the introduction of the domestic VAT reverse charge for construction services, due to the impact of the coronavirus (COVID-19) pandemic on the sector.

The change will now apply from 1 March 2021 and will overhaul the way VAT is payable on building and construction invoices as part of a move to reduce fraud in the sector. Under the domestic reverse charge, the customer receiving the service will have to pay the VAT owed straight to HMRC instead of paying the supplier, if they report via the Construction Industry Scheme (CIS).

The change was originally scheduled to come into effect from 1 October 2019 but was deferred for 12 months after industry bodies highlighted concerns about the lack of preparation and the impact on businesses. The start date has now been put back from 1 October 2020 to 1 March 2021.

There will also be an amendment to the original legislation. This will make it a requirement that for businesses to be excluded from the reverse charge because they are end users or intermediary suppliers, they must inform their subcontractors, in writing, that they are end users or intermediary suppliers.

HMRC said the additional amendment is designed to make sure both parties are clear in regard to whether the supply is excluded from the reverse charge. It reflects recommended advice published in HMRC guidance and brings certainty for subcontractors as to the correct treatment for their supplies.

HMRC stated that it will continue to focus additional resources on identifying and tackling existing perpetrators of fraud in the construction supply chain. It will also work closely with the sector to raise awareness and provide additional guidance and support to ensure all businesses will be ready for the new implementation date.

5thJun
News article

One in five highly skilled freelancers face business closure to COVID-19

A fifth of highly skilled freelances face having to close their business due to the impact of the coronavirus pandemic, according to research from the University of Edinburgh Business School.

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A fifth of highly skilled freelances face having to close their business due to the impact of the coronavirus pandemic, according to research from the University of Edinburgh Business School.

The study, which surveyed over 1,400 highly skilled freelancers, found that three quarters of them had lost income, with an average drop of 76%. As a result, over two thirds say they now have cashflow problems.

The research found that over 90% of these freelancers could not access the government's Self-Employment Income Support Scheme (SEISS). This is mainly because 73% of the group work through a limited company.

Average stress levels in this group have increased by 80% because of the COVID-19w crisis.

Commenting on the research, Chloé Jepps, Head of Research at the Association of Independent Professionals and the Self-Employed, said: 'The plight of contractors working through limited companies can make for difficult reading because this group has not just been forgotten, but actually abandoned by the government. This research shows just how heavily this is falling on thousands of hard-working freelancers across the UK.

 'The SEISS offers generous help to many self-employed people, but it is clear from this that there are gaping cracks in it through which thousands are falling – particularly limited companies and the newly self-employed. The government must urgently think again about these groups and get them the support they so badly need.'

5thJun
News article

CIOT calls for property sales tax change

The government should consider delaying changes to capital gains tax (CGT) rules in relation to residential property sales to take account of the impact of COVID-19 on the property market, according to the Chartered Institute of Taxation (CIOT).

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The government should consider delaying changes to capital gains tax (CGT) rules in relation to residential property sales to take account of the impact of COVID-19 on the property market, according to the Chartered Institute of Taxation (CIOT).

The measure is included in the current Finance Bill, which began its committee stage in the House of Commons on 4 June.

Private Residence Relief (PRR) enables most owner occupiers to sell their properties without being liable for CGT on any gains made.

Final period exemption means that, under the law currently in place, people do not pay capital gains tax on gains made in the final 18 months of ownership, even if it was not their main residence during that period.

The Finance Bill aims to reduce that period to the final nine months of ownership for most people.

Commenting on the changes, Marc Selby, Chair of CIOT's Property Taxes Committee, said: 'We are concerned that the original assumption of an average time of four and a half months for selling a property is out of touch with the reality of the property market today because of the impact of COVID-19.

'We strongly suggest that the original evidence base needs review and that consideration should be given to delaying the squeeze in the final period exemption until the impact of COVID-19 on the property market is better understood.'

4thJun
News article

Strong economic recovery likely, but not certain

A strong economic recovery following the coronavirus pandemic is likely although many risks and uncertainties remain, according to a report from Oxford Economics.

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A strong economic recovery following the coronavirus pandemic is likely although many risks and uncertainties remain, according to a report from Oxford Economics.

The report, which was commissioned by the ICAEW, predicts that the economy should return to growth in the second half of the year if the lockdown continues to be relaxed over the summer.

It says the unusual nature of this recession could prove to be a silver lining for the recovery. Because GDP has fallen due to a planned, partial economic shutdown, so in theory activity and demand should rebound as restrictions lift.

The fiscal and monetary support from government and the Bank of England since the crisis began should also aid the recovery.

However, the risks remain high as a second wave of infections, an extension to the lockdown, the early withdrawal of government support or the collapse of UK-EU trade talks could all hamper a recovery.

Commenting on the report, Martin Beck, Oxford Economics Lead UK Economist, said: 'Coronavirus and the restrictions on daily life imposed in response are inflicting a once-in-a-century downturn on the economy.

'But the nature of the shock and the massive support put in place by policymakers mean a strong bounce back is achievable. However, with no precedents to draw on, the outlook is clouded by multiple risks.'

4thJun
News article

Cash payments continued to fall in 2019

The use of cash continued to fall in the UK last year as card payments accounted for over half of transactions for the first time ever, according to figures from UK Finance.

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The use of cash continued to fall in the UK last year as card payments accounted for over half of transactions for the first time ever, according to figures from UK Finance.

Cash payments decreased by 15% to 9.3 billion payments, but cash was still the second most frequently used method, representing a quarter of all payments in 2019.

Changing retail trends, including the increasing use of online shopping and the increase in card acceptance by retailers, have been a factor in both the declining use of cash. In addition, consumer preferences are changing in favour of using cards to make payments.

Payments made by card and contactless methods accounted for 51% of all UK payments last year.

Debit cards were the most used payment method in the UK with 17 billion payments, of which seven billion were contactless.

Commenting on the figures, Natalie Ceeney, Independent Chair of the Access to Cash Review, said: 'In 2019 we saw a further decline although many people still depend on it.

'This UK Finance data was taken before the impact of COVID-19, which has accelerated the shift to digital payments and further challenged the viability of the cash infrastructure.

'It's essential that we ensure that everyone is included in our economy, and until digital payments work for everyone, we need to maintain people's ability to access and pay with cash.'

3rdJun
News article

Over £31 billion borrowed through coronavirus schemes

Over £31 billion has been borrowed through the government-backed schemes that are providing business support during the coronavirus (COVID-19) crisis, according to the latest figures from the Treasury.

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Over £31 billion has been borrowed through the government-backed schemes that are providing business support during the coronavirus (COVID-19) crisis, according to the latest figures from the Treasury.

More than 745,000 businesses have now accessed support through either the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) or the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

The BBLS is the most popular scheme, with over £21.3 billion lent through it since it was launched on 4 May. The BBLS allows small businesses adversely affected by the pandemic to apply for up to £50,000, with the government guaranteeing 100% of the advance.

Lenders have provided £8.9 billion to 46,000 businesses through the CBILS, while loans of £1.1 billion have been approved to 191 mid-sized and larger UK businesses through the CLBILS.

Commenting on the figures, Stephen Jones, Chief Executive of UK Finance, said: 'The amount of support available to firms affected by the COVID-19 crisis is unparalleled. Over £31 billion has been approved in government-backed lending schemes so far to almost 750,000 businesses, with a further £19 billion drawn under bank-arranged commercial paper facilities.

'But government-backed loans are not the only support the banking and finance sector has made available. Over the last few months, lenders have put in place a clear plan to support businesses in every region of the country, including through offering extended overdrafts, capital repayment holidays and asset-based finance to businesses that need support.

'It's important to remember that any lending provided under government-backed schemes is a debt not a grant, and so firms should carefully consider their ability to repay before applying.'

3rdJun
News article

Women 'more likely to be on low pay', TUC research suggests

Research carried out by the Trades Union Congress (TUC) has suggested that women are more likely than men to be on low pay.

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Research carried out by the Trades Union Congress (TUC) has suggested that women are more likely than men to be on low pay.

The research showed that of an estimated 9.8 million key workers, almost two thirds are women. There are 2.6 million female key workers earning less than £10 an hour, according to the TUC.

Data published recently by the business group revealed that, at the current rate of progress, it will take until 2067 to achieve pay parity between men and women.

Frances O'Grady, General Secretary of the TUC, said: '50 years after brave women won the legal right to equal pay, coronavirus has confirmed that pay inequality is still rife in Britain today.

'Working women have led the fight against coronavirus, but millions of them are stuck in low paid and insecure jobs. That is not right.

'As we emerge from this crisis, we need a reckoning on how we value and reward women's work. Without proper change it will take decades to close the gender pay gap.'

2ndJun
News article

MPs open inquiry into £155 billion of tax reliefs

The Public Accounts Committee (PAC) has opened an inquiry into the UK's management of £155 billion of tax relief.

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The Public Accounts Committee (PAC) has opened an inquiry into the UK's management of £155 billion of tax relief.

The inquiry follows the February publication of a National Audit Office (NAO) report that identified over 300 such tax interventions, totalling £155 billion per year.

The NAO raised concerns about the effectiveness of management of tax expenditures by the Treasury and HMRC.

It found that there is no formal framework governing the administration or oversight of tax expenditures.

The NAO said that although the Treasury and HMRC have begun steps to increase their oversight of tax expenditures and more actively consider their value for money, these will not be enough on their own to address concerns.

Commenting on the inquiry, John Cullinane, Tax Policy Director at the Chartered Institute of Taxation, said: 'We greatly welcome the PAC taking up this important issue.

'Governance of tax reliefs in the UK is not systematic or proportionate to their value or the risks they carry. There is a mismatch between the significant effort in government and to an extent Parliament that rightly goes into new tax measures, and the relative lack of attention to how effective those measures prove over time. This is particularly the case with tax expenditures.

'Unless HMRC and the Treasury actively monitor the use and impact of tax reliefs, and act promptly to analyse increases in their costs, we cannot assume that these reliefs will be value for money.'

2ndJun
News article

Manufacturers call for coronavirus support

The coronavirus crisis has left many manufacturers on a cliff edge and in need of government intervention, Make UK has warned.

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The coronavirus crisis has left many manufacturers on a cliff edge and in need of government intervention, Make UK has warned.

The industry body says that as COVID-19 is putting a growing number of firms on the brink of collapse as production levels continue to fall.

In response, Make UK is asking the government to step in with direct state support to ensure the short-term survival of firms.

It said support should especially be targeted at the aerospace, car making and steel sectors.

The latest figures show that manufacturing continued to decline in May, although it was recovering from April's record low.

The IHS Markit/CIPS Purchasing Managers' Index (PMI) for the sector gave a reading of 40.7 for May.

This is up from 32.6 a month earlier, when the COVID-19 lockdown brought Britain's economy to an effective standstill.

Stephen Phipson, Make UK's Chief Executive, said: 'We are now in such uncharted territory that what would until recently been thought of as unthinkable is now very much the reality.

'While the support schemes in operation are providing significant support to the economy, there are some sectors and companies who are fundamentally sound businesses and were trading positively before the pandemic.

'Instead, however, they have now been driven to the cliff edge by the nature of this crisis and may not survive without direct government intervention.'