Ketan Umretiya | DSK Partners LLP

Customs controls from 1 January 2022

Posted on January 13, 2022 by Ketan Umretiya

There are special procedures for importing goods into the UK. Following the end of the Brexit transition period on 31 December 2020, the process for importing goods from the EU effectively mirrors the process for all other international destinations.

A number of easements to help ensure a smooth transition for goods coming from the EU after Brexit, ended on 31 December 2021. This means that since 1 January 2022, businesses are no longer able to delay making import customs declarations under the Staged Customs Controls rules that applied during 2021.

The changes that came into force on 1 January 2022 include:

A requirement for full customs import declarations for all goods at the time businesses or their courier/freight forwarder bring them into Great Britain, except if they are non-controlled goods imported from Ireland to Great Britain
customs controls at all ports and other border locations
requirement for a suppliers’ declaration proving the origin of goods (either UK or EU) if they are using the zero tariffs agreed in the UK’s trade deal with the EU
commodity codes, which are used to classify goods for customs declarations, are changing

There are different rules in place for the movement of goods into, out of or through Northern Ireland.

Affected businesses should ensure that they consider as a matter of urgency how they are going to submit customs declarations and pay any duties that are due. Businesses can appoint an intermediary, such as a customs agent, to deal with their declarations or can submit them directly although this can be complex for businesses unused to the process.

There is a ‘Simplified Declarations’ authorisation from HMRC that allows some goods to be released directly to a specified customs procedure without having to provide a full customs declaration at the point of release. However, this needs specific authorisation from HMRC and there are also other requirements that must be met.

Source: HM Revenue & Customs Tue, 11 Jan 2022 00:00:00 +0100

Delay in implementing late payment penalties

Posted on January 13, 2022 by Ketan Umretiya

In tandem with the announcement that no late filing penalties will be issued for 2020-21 Self-Assessment returns submitted by 28 February 2022, HMRC has also confirmed a delay in implementing late payment penalties. This means that taxpayers will not be charged a 5% late payment penalty if they pay their tax or set up a payment plan by midnight on 1 April 2022.

Under the normal rules a 5% late payment penalty would have been charged if tax remained outstanding or a payment plan has not been set up before 3 March 2022. This extension gives taxpayers an extra 4 weeks to sort out their affairs before the 5% late payment penalty is levied.

It is important to note that it is only the 5% penalty that is being waived. Interest will still be applied to any balance that was outstanding from 1 February 2022. The current rate of interest is 2.75%. The only way to stop further interest amassing is to pay any tax due in full.

Further late payment penalties will apply, with no extensions, if tax remains outstanding (and no payment plan has been set up) for more than 6 months after the 31 January filing deadline. From 1 August 2022 you will be charged a penalty of the greater of £300 or 5% of the tax due. If your return remains outstanding one year after the filing deadline, then further penalties will be charged from 1 February 2023.

Source: HM Revenue & Customs Tue, 11 Jan 2022 00:00:00 +0100

HMRC fraud squad net £1bn from criminals

Posted on January 13, 2022 by Ketan Umretiya

HMRC’s Fraud Investigation Service (FIS) was launched in April 2016. The FIS is responsible for HMRC’s civil and criminal investigations into the most serious fraud and wrongdoing. It has been estimated that tax evasion and fraud cost the exchequer up to £10bn per annum.

The formation of the FIS brought together HMRC’s criminal and civil investigators. This partnership allows HMRC’s investigators to unlock the most complex financial crimes. Since the service was established more than £1 billion has been recovered from the proceeds of crime and tax offenders.

The FIS has been proactively pursuing the suspected proceeds of crime using enforcement powers, both criminal and civil, to disrupt the movement of cash and assets.

HMRC has reported that since 2016, more than 1,200 seizures of cash and assets have been made while on operational duty, including gold bars worth £750,000 from a passenger at Manchester Airport and £48,000 found in a freezer drawer, hidden among chicken nuggets at a house in Blackpool.

HMRC’s Director of Fraud Investigation Service, said:

‘To reach this £1 billion milestone in 5 years speaks volumes to the dedication, hard work and skill of FIS to recover the proceeds of crime from those who try to cheat the system.’

Criminal cash can be seized by HMRC officers under the Proceeds of Crime Act 2002. In addition, Account Freezing Orders can be used to freeze balances in bank accounts where it is suspected they contain criminal money.

Source: HM Revenue & Customs Tue, 11 Jan 2022 00:00:00 +0100

Are you registered for Making Tax Digital for VAT?

Posted on January 13, 2022 by Ketan Umretiya

Making Tax Digital (MTD) for VAT is to be extended to cover businesses with a turnover below the VAT threshold from April 2022. The MTD for VAT regime started in April 2019 when businesses with a turnover above the VAT threshold of £85,000 became mandated to keep their records digitally and provide their VAT return information to HMRC using MTD compatible software.

The extension of MTD from April 2022 will apply to all VAT registered businesses with turnover below the VAT threshold of £85,000. This change was first announced in July 2020 and about a third of businesses mandated to sign-up from April 2022 have already voluntarily chosen to use MTD.

If you are affected and have not yet signed up, we would urge you to start the process as soon as possible.

To sign up to MTD for VAT, businesses, or their agent need to:

Visit GOV.UK and choose Making Tax Digital-compatible software. For many businesses, the software they are using should already be compatible with MTD.
Keep digital records starting from 1 April 2022 or the beginning of their VAT period
Sign up and submit their VAT Return through Making Tax Digital

A small number of VAT-registered businesses may be eligible for an exemption from MTD, if it is not reasonable or practicable for them to use digital tools for their tax. If a business has previously been granted an exemption for VAT online filing, this will carry over to MTD VAT requirements.

Source: HM Revenue & Customs Tue, 11 Jan 2022 00:00:00 +0100

New powers for Insolvency Service

Posted on January 6, 2022 by Ketan Umretiya

The Insolvency Service is a government agency that provides services to those affected by financial distress or failure. The Insolvency Service operates as an executive agency of the Department of Business, Energy and Industrial Strategy (BEIS).

The Insolvency Service has been granted new powers to investigate and disqualify company directors who abuse the company dissolution process. This extends investigatory powers to directors of dissolved companies and if misconduct is found, directors can face sanctions including being disqualified as a company director for up to 15 years or, in the most serious of cases, prosecution. The measures have been introduced under a new Act that received Royal Assent on 15 December 2021.

The Act will also mean the Business Secretary is able to apply to the court for an order to require a former director of a dissolved company, who has been disqualified, to pay compensation to creditors who have lost out due to their fraudulent behaviour.

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

Beware online sales scams

Posted on January 6, 2022 by Ketan Umretiya

A new government press release has been issued reminding the public that online sales scams continue to be a major issue. In fact, 2021 saw a record number of cyber-attacks and online scams.

Action Fraud, the national reporting centre for fraud and cyber-crime, has revealed that almost 100,000 people in the UK have fallen victim to online shopping fraud in the past 13 months. This has seen over £60 million being reported lost.

The National Cyber Security Centre (NCSC) is encouraging people to shop online securely by following five actionable steps:

Keeping accounts secure – strong and separate passwords should be used for the most important online accounts, including email, banking or payment accounts (such as PayPal). The NCSC recommends using three random words to create a password. Turning on two-step verification can add an extra layer of protection.
Be aware of emails, text messages or websites that look too good to be true or suspicious – many scammers set up fake messages designed to steal financial and personal information. Members of the public can report suspicious messages to the NCSC via text to 7726 and email to report@phishing.gov.uk.
Choose online retailers carefully – research stores before buying to confirm they are legitimate – check via trustworthy consumer websites. Certain emails or texts regarding "too good to be true" offers may contain links to fake websites. If unsure, don’t use the link.
Use a credit card for online payments if possible – most major credit card providers protect online purchases and are obliged to refund individuals in certain circumstances.
Only provide enough details to complete a purchase – only fill in the mandatory details on a website when shopping online (often marked with an asterisk).

Source: Cabinet Office Tue, 04 Jan 2022 00:00:00 +0100

Points to consider when valuing goodwill

Posted on January 6, 2022 by Ketan Umretiya

Valuing goodwill is a complex process and there are many different methods which can be used and that vary from industry to industry. Goodwill is a way of placing a monetary value on the business's reputation and customer relationships. Or as HMRC say in their guidance, in accounting terms, purchased goodwill is the balancing figure between the purchase price of a business and the net value of the assets acquired.

HMRC’s approach to valuation of goodwill suggests that there should be no expectation of a synergy-based value on an open market value basis unless synergy in a particular market is common place.

HMRC’s manuals state that when valuing the goodwill of a business the valuer should have regard to the following:

the full sale and purchase documentation relating to the transfer of both tangible and intangible assets
succession arrangements
the valuation approach used – e.g., capitalisation of profits, super profits or a trade specific method
the activities of the business and role of the owners within it
the financial statements/accounts (including the detailed trading and profit and loss account) for the 3 years before valuation
any other relevant financial information
appropriate yield and multiples of comparable companies and sectors
the commercial and economic background at valuation date
how the personal goodwill of the owner has been reflected in the valuation
any other relevant factors.

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

Self-certified sick notes

Posted on January 6, 2022 by Ketan Umretiya

The statutory sick pay rules were temporarily amended on 17 December 2021. The amendment allows employees to self-certify for a period of 28 days, in place of the normal 7 days. This measure has been put in place to help free up capacity in the NHS and allow GPs to spend more time focusing on the coronavirus booster rollout as well as other impacts brought on by the latest Omicron fuelled coronavirus wave.

The arrangements will remain in place for all absences that begin on or before 26 January 2022. The arrangements also apply retrospectively for any continuing periods of absence which started between 10 and 17 December 2021. The self-certification period is set to return to seven days for any absences beginning on or after 27 January 2022. GPs will continue to be required to supply medical evidence known as, fit notes, for periods of absence exceeding 28 days.

The current rate of Statutory Sick Pay (SSP) is £96.35 per week for up to 28 weeks. To qualify for SSP, an employee must meet the necessary eligibility requirements. Employers cannot pay less than the SSP but may pay more if they have a sick pay scheme.

Source: HM Government Tue, 04 Jan 2022 00:00:00 +0100

Reminder of Statutory Sick Pay pay-back scheme

Posted on January 6, 2022 by Ketan Umretiya

The Coronavirus Statutory Sick Pay Rebate Scheme for small and medium-sized businesses and employers, enables them to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The online service closed for new claims after 30 September 2021.

However, following the new Omicron wave, the online claims service is to be reintroduced from mid-January. The government announced before the Christmas break that firms will be re-eligible for the scheme from 21 December 2021 and will be able to make claims retrospectively once the claims service is relaunched.

The scheme covers up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19. Employers are eligible for the scheme if their business is UK based, small or medium-sized and employs fewer than 250 employees. Under the scheme, the Government will cover the cost of SSP for Covid-related absences qualifying employers across the UK.

Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online or a ‘shielding note’ / letter from their doctor or health authority advising them to shield because they’re at high risk of severe illness from coronavirus.

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

Will you need to pay-back Child Benefits?

Posted on January 6, 2022 by Ketan Umretiya

The High Income Child Benefit charge applies to taxpayers whose income exceeds £50,000 in a tax year and who are in receipt of child benefit. The charge claws back the financial benefit of receiving child benefit either by reducing or removing the benefit entirely.

If you or your partner have exceeded the £50,000 threshold for the first time during the last tax year (2020-21) then you must act. Where both partners have an income that exceeds £50,000, the charge applies to the partner with the highest income.

Taxpayers who continue to receive child benefit (and earn over the relevant limits) must pay any tax owed for 2020-21 on or before 31 January 2022. The child benefit charge is charged at the rate of 1% of the full child benefit award for each £100 of income between £50,000 and £60,000. For taxpayers with income above £60,000, the amount of the charge will equal the amount of child benefit received.

If the High Income Child Benefit charge applies to you or your partner it is usually worthwhile to claim Child Benefit for your child, as it can help to protect your State Pension and will make sure your child receives a National Insurance number. However, you still have the choice:

to keep receiving child benefit and pay the tax charge or
elect to stop receiving child benefit and not pay the charge.

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

Author: Ketan Umretiya

Customs controls from 1 January 2022

Delay in implementing late payment penalties

HMRC fraud squad net £1bn from criminals

Are you registered for Making Tax Digital for VAT?

New powers for Insolvency Service

Beware online sales scams

Points to consider when valuing goodwill

Self-certified sick notes

Reminder of Statutory Sick Pay pay-back scheme

Will you need to pay-back Child Benefits?

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