October 2022 | DSK Partners LLP

Employing someone step by step

Posted on October 6, 2022 by

There are a multitude of rules and regulations that you must be aware of when you employ staff.

HMRC’s guidance (entitled Employ someone: step by step) sets out some important issues to be aware of when taking on a new employee.

This includes the following:

Check your business is ready to employ staff – check whether you need to hire someone on a full time or part time basis.
Recruit someone. This includes advertising the role and interviewing candidates. You must also check that they have the right to work in the UK and you may also need to apply for a DBS check (formerly known as a CRB check) if you are working in a field that requires one, e.g., with vulnerable people or security.
Check if the new employees need to be enrolled into a workplace pension.
Agree a contract and salary. Send details of the job (including terms and conditions) in writing to your employee. You need to give your employee a written statement of employment if you’re employing someone for more than 1 month.
Tell HMRC about your new employee. You can do this up to 4 weeks before you pay your new staff. This process must also be completed by directors of a limited company who employ themselves to work in the company.

Source: HM Revenue & Customs Tue, 04 Oct 2022 00:00:00 +0100

Statutory interest

Posted on October 6, 2022 by

Taxpayers that are owed VAT repayments by HMRC are entitled to claim statutory interest under certain circumstances. Where this is the case, a claim should be made in writing to HMRC. VATA s78 (11) requires all claims for statutory interest to be made within four years of the end of the applicable period to which it relates.

For example, if a repayment claim is authorised for payment on 31 March 2022. The taxpayer will have until 31 March 2026 to make a claim for statutory interest.

The payment of statutory interest is intended to provide commercial restitution (compensation to the party deprived of the use of the money it is owed) where a taxpayer has overpaid or under claimed VAT as a result of an official error by HMRC.

HMRC’s view is clear that there is no obligation for statutory interest to be paid where an overpayment results from an error by the taxpayer or their accounting systems.

Source: HM Revenue & Customs Tue, 04 Oct 2022 00:00:00 +0100

How the VAT Reverse Charge works

Posted on October 6, 2022 by

The VAT domestic reverse charge accounting mechanism was put in place to help prevent criminal attacks on the UK VAT system by means of sophisticated fraud.

UK businesses receiving certain specified goods and services are liable to account for UK VAT, by way of the domestic reverse charge procedure. Under the domestic reverse charge rules, it is the responsibility of the customer, rather than the supplier, to account to HMRC for VAT on supplies of the specified goods or services. It should be noted that there are exceptions within each category, and it is important to check carefully if the domestic reverse charge is required on a transaction or not.

The specified goods that the reverse charge applies to are:

mobile phones
computer chips
wholesale gas
wholesale electricity

The specified services are:

emission allowances
wholesale telecommunications
renewable energy certificates
construction services

The following example is included in HMRC’s internal manual to help outline how the charge works:

A VAT registered UK distributor of mobile phones sells a number of mobile phones to a VAT registered UK retailer for a VAT-exclusive value of £6,000, an amount that is above the de minimis limit. The distributor does not charge VAT on the supply (£1,200), specifying on its invoice that the reverse charge applies.

The retailer will account for the distributor’s output tax (£1,200) but will also reclaim the amount as input tax, thus producing a nil net effect. The retailer now sells the mobile phones to members of the general public, charging VAT on the supply as normal.

The domestic reverse charge should not be confused with the reverse charge for cross-border services which applies to certain services from abroad.

Source: HM Revenue & Customs Tue, 04 Oct 2022 00:00:00 +0100

Small Business rate relief

Posted on October 6, 2022 by

Business rates are charged on most non-domestic premises, including most commercial properties such as shops, offices, pubs, warehouses and factories. Some properties are eligible for discounts from the local council on their business rates. This is called business rates relief. There are a number of reliefs available including small business rate relief, rural rate relief and charitable rate relief.

In England, small businesses rate relief is available on properties with a rateable value up to £15,000. Small businesses that occupy property with a rateable value of £12,000 or less pay no business rates. There is a tapered rate of relief on properties with a rateable value up to £15,000. Relief is usually only available to businesses with one property but can be extended under certain limited circumstances.

In Scotland, the relief is known as the Small Business Bonus Scheme (SBBS). Business rates relief through the SBBS scheme is available if the combined rateable value of all business premises is £35,000 or less and, the rateable value of individual premises is £18,000 or less.

In Wales, the relief is known as the Welsh Small Business Rates Relief scheme. 100% rate relief is available to eligible businesses premises with a rateable value of up to £6,000 and a tapered relief is available on properties with a rateable value between £6,001 and £12,000.

In Northern Ireland, the Small Business Rate Relief (SBRR) scheme is available. Eligibility for the SBRR is based on the Net Annual Value (NAV) of business premises. There are three levels of SBRR where the reductions in rate relief range from 50% to 20%. No relief is available for properties with a NAV of more than £15,000.

Source: Other Tue, 04 Oct 2022 00:00:00 +0100

Income Tax in Scotland

Posted on October 6, 2022 by

The Scottish rate of income tax (SRIT) is payable on the non-savings and non-dividend income of those defined as Scottish taxpayers.

The definition of a Scottish taxpayer is generally focused on the question of whether the taxpayer has a 'close connection' with Scotland or elsewhere in the UK. The liability to SRIT is not based on nationalist identity, location of work or the source of a person’s income e.g., receiving a salary from a Scottish business.

HMRC’s guidance states that for the vast majority of individuals, the question of whether or not they are a Scottish taxpayer will be a simple one – they will either live in Scotland and thus be a Scottish taxpayer or live elsewhere in the UK and not be a Scottish taxpayer.

If a taxpayer moves to or from Scotland from elsewhere in the UK, then their tax liability for the tax year in question will be based on where they spent the most time in the relevant tax year. Scottish taxpayer status applies for a whole tax year. It is not possible to be a Scottish taxpayer for part of a tax year.

You may also pay Scottish Income Tax if you live in a home in Scotland and also have a home elsewhere in the UK. In this case, you need to identify which is your main home based on published guidance and the facts on the ground. You may also be liable to SRIT if you do not have a home and stay in Scotland regularly, for example you stay offshore or in hotels.

The Scottish rates and bands for 2022-23 are as follows:

Personal allowance – 0%	Up to £12,570
Starter rate – 19%	£12,570 – £14,732
Basic rate – 20%	£14,733 – £25,688
Intermediate rate – 21%	£25,689 – £43,662
Higher rate – 41%	£43,663 – £150,000
Additional rate – 46%	Above £150,000

Source: The Scottish Government Tue, 04 Oct 2022 00:00:00 +0100

Government U-turn on 45p tax rate

Posted on October 5, 2022 by

The Chancellor, Kwasi Kwarteng has announced plans to scrap the proposed removal of the 45p tax rate from April 2023. The proposed removal of the 45p Rate was first announced as part of the Growth Plan measures on 23 September 2022. However, the change sparked a backlash that has sent shockwaves through the financial markets and even saw many members of the Conservative party actively campaigning against the move.

The Prime Minister and the Chancellor initially refused to backdown on the measure but eventually accepted that they were left with little choice but to U-turn on their proposal. The announcement of the U-turn was made earlier this week on the second day of the Conservative Party conference in Birmingham.

A Twitter statement from the Chancellor announcing the move said:

‘It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country. As a result, I’m announcing we are not proceeding with the abolition of the 45p tax rate. We get it, and we have listened. This will allow us to focus on delivering the major parts of our growth package.’

This means that the Additional Rate of Income Tax of 45% that applies to taxpayers with an annual income over £150,000 will remain in the 2023-24 tax year.

Source: HM Treasury Tue, 04 Oct 2022 00:00:00 +0100

Month: October 2022

Employing someone step by step

Statutory interest

How the VAT Reverse Charge works

Small Business rate relief

Income Tax in Scotland

Government U-turn on 45p tax rate

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