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End to COVID-19 adjusted right to work checks

The government has confirmed, in its updated guidance on carrying out right to work checks during the coronavirus pandemic, that the temporary COVID-19 adjusted right to work check process will come to an end on 16 May 2021. This temporary process, in place since 30 March 2020, has allowed right to work checks to be carried out over video calls and for job applicants to send scanned documents or a photo of their documents to employers via email or a mobile app, rather than sending the originals. The cessation of this temporary process means that, from 17 May 2021, employers must revert to undertaking fully compliant right to work checks, i.e. by once again checking either the job applicant’s original documents or their right to work online, in the latter case if they have provided the employer with their share code.

The updated guidance also provides that employers do not need to carry out retrospective physical checks of original documents on those who had a COVID-19 adjusted right to work check between 30 March 2020 and 16 May 2021 inclusive. Employers will maintain a statutory defence against a civil penalty if the check they have undertaken during this period was carried out in the manner set out in the COVID-19 adjusted right to work checks guidance.


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Tax Diary May/June 2021

1 May 2021 – Due date for Corporation Tax due for the year ended 30 July 2020.


19 May 2021 – PAYE and NIC deductions due for the month ended 5 May 2021. (If you pay your tax electronically the due date is 22 May 2021).

19 May 2021 – The filing deadline for the CIS300 monthly return for the month ended 5 May 2021.

19 May 2021 – CIS tax deducted for the month ended 5 May 2021 is payable by today.

31 May 2021 – Ensure all employees have been given their P60s for the 2020-21 tax year.

1 June 2021 – Due date for Corporation Tax due for the year ended 31 August 2020.

19 June 2021 – PAYE and NIC deductions due for the month ended 5 June 2021. (If you pay your tax electronically the due date is 22 June 2021)

19 June 2021 – The filing deadline for the CIS300 monthly return for the month ended 5 June 2021.

19 June 2021 – CIS tax deducted for the month ended 5 June 2021 is payable by today.

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Keeping self-employed tax records

If you are self-employed as a sole trader or as a partner in a business partnership, then you must keep suitable business records as well as separate personal records of your income.

For tax purposes, the business records must be held for at least 5 years from the 31 January submission deadline for the relevant tax year. For example, for the 2019-20 tax year where online filing was due by 31 January 2021, you must keep your records until at least the end of January 2026. In certain situations, such as when a return is submitted late, the records must be held for longer.

If you are self-employed you should also keep a record of:

– all sales and income
– all business expenses
– VAT records if you’re registered for VAT
– PAYE records if you employ people
– records about your personal income
– grant details if you claimed through the Self-Employment Income Support Scheme because of coronavirus
You don’t need to keep the vast majority of your records in their original form. If you prefer, you can keep a copy of most of them in an alternative format, as long as they can be recovered in a readable and uncorrupted format. For example, a scanned PDF document.

If your records are no longer available for any reason, you must try and recreate them letting HMRC know if the figures are estimated or provisional. There are penalties for failing to keep proper records or for keeping inaccurate records.

Sources: HMRC

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The Mortgage Guarantee Scheme

One of the measures announced at the Budget was the introduction of a new Mortgage Guarantee Scheme to help home buyers purchase property. The scheme was officially made available from Monday, 19 April 2021. The new scheme is designed for prospective home buyers who only have a small deposit and are therefore unable to obtain mortgage finance. Under the scheme, lenders will be able to offer new 95% mortgage products.

The scheme is open to first time buyers and home movers across the UK. Home buyers can purchase properties valued at up to £600,000 and both new-build and existing properties are eligible. The scheme will initially run until 31 December 2022. The government has confirmed that the end date for the scheme will be reviewed and may be extended.

The government will provide lenders with the option to purchase a guarantee on the top- slice of the mortgage (over 80%). Lenders will also take a 5% share of net losses above this 80% threshold. This will help to ensure that lenders are not incentivised to originate poor quality loans. Lenders will also need to pay the government a commercial fee for each mortgage in the scheme. The mortgage guarantee will be valid for up to seven years after the mortgage is originated.

There will be a cap on the size of the government’s contingent liability under the scheme of £3.9 billion although this is not expected to impinge on delivery of the scheme. The scheme is similar to a previous Help to Buy: Mortgage Guarantee Scheme that closed to new applicants on 31 December 2016.

The scheme is available from lenders on high streets across the country, with Lloyds, Santander, Barclays, HSBC and NatWest already launching mortgages under the scheme and Virgin Money following next month.

Commenting on the launch of the scheme, the Chancellor of the Exchequer, Rishi Sunak said:

‘Every new homeowner and home mover supports jobs right across the housing sector but saving for a big enough deposit can be hard, especially for first time buyers.

By giving lenders the option of a government guarantee on 95% mortgages, many more products will become available, boosting the sector, creating new jobs and helping people achieve their dream of owning their own home.’

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Recovery Loan Scheme

The new Recovery Loan Scheme was launched on 6 April 2021. The new scheme allows businesses of any size to access loans and other kinds of finance between £25,000 and £10 million. The scheme will remain open until 31 December 2021 (subject to review).

The scheme is intended to provide further support to businesses to help them recover and grow following the disruption of the pandemic and the end of the transition period. The new scheme can be used as an additional loan on top of previous support received from other schemes such as the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme

Under the scheme, the government will provide lenders with a guarantee of 80% on eligible loans provided to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.

The following finance options are available:

– Term loans and overdrafts are available between £25,001 and £10 million per business.
– Invoice finance and asset finance are available between £1,000 and £10 million per business.


Finance terms are for up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years. No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security. 26 lenders have already been accredited for the scheme and more are expected shortly.

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Vaccine for your business

There is a poignant similarity between the effects of COVID on us personally and our businesses.

Thankfully, the possible dire consequences of catching the Coronavirus bug are being countered by a variety of vaccines. Fingers crossed that these will ease the pressure on the NHS and minimise the distress that this dreadful virus has inflicted on us since it reared its head over a year ago.

But what about our businesses? How can we vaccinate businesses that have been adversely affected?

In our experience, firms that have invested time and resources in planning have been more successful at riding out the disruption than firms who have not.

Every business is different. Certain business sectors have been more severely affected than others and organisations who entered 2020 with significant reserves of capital and cash will have had the financial resources to ride out the disruption to their incomes.

It is never too late to sit back and plan for your business. Please call if you need help to consider your options as we start the tentative emergence from lockdown.

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A reminder that not all costs are costs…

Costs are defined as something that has to be paid or spent to acquire something. Costs include the acquisition of:

– An object, say material required to convert into saleable goods.
– A service, for example, sub-contract labor or
– A right, the rates you pay to occupy business premises.
In your accounts, these costs would appear as expenses or costs of sales in your profit and loss account. All of these costs have something in common, their usefulness tends to be restricted to the time at which they were purchased.

But what about costs – say the purchase of a computer – that should have a working life of say five years? This type of expenditure will not appear as a deduction from your profits as an expense, instead, it will appear as a fixed asset on your balance sheet and will be written off – over five years in the case of our computer – by depreciation.

We need a new word to describe this type of expenditure and the one we use is “investment”.

The distinction between a cost and an investment is significant. Generally speaking, a cost has value for a limited time period whereas an investment has the ability to impact current and future trading prospects.

As we emerge from lockdown, do not underestimate the recovery value of an investment for your business. And the government has offered company investors a timely tax incentive to invest.

In his recent budget, Rishi Sunak announced that qualifying investment in equipment would attract a 130% deduction for tax purposes (applies to companies from 1 April 2021 to 31 March 2023). It’s worth considering this distinction. Costs will sustain your current trading performance, but investment expenditure will have the potential to create new opportunities in future years.

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HMRC’s new penalty regime

HMRC’s new points-based penalty regime for late submission and payment will start from 1 April 2022. The changes will apply in the first instance to the submission of VAT returns for VAT return periods beginning on or after 1 April 2022.

The penalty regime will then be extended to Making Tax Digital (MTD) Income Tax Self-Assessment (ITSA) accounting periods beginning on or after 6 April 2023. This will be in tandem with the extension of MTD (from the same date) for taxpayers with business or property income over £10,000 annually. The penalty scheme will be extended to all other ITSA taxpayers for accounting periods beginning on or after 6 April 2024.

Under the new regime, taxpayers will incur a penalty point for each missed submission deadline. At a certain threshold of points, a financial penalty of £200 will be charged and the taxpayer will be notified. The threshold varies depending on the required submission frequency (monthly, quarterly, annual). The penalty points will apply separately to VAT and ITSA. The penalty points will be reset to zero following a period of compliance by the taxpayer. There are also time limits after which a point cannot be levied.

In addition, the new system will see the introduction of two new late payment penalties. The first penalty of 2% of the unpaid tax that remains outstanding 15 days after the due date. The penalty increases to 4% of any tax still outstanding after 30 days. An additional or second penalty at a penalty rate of 4% per annum will accrue on a daily basis after 30 days. This additional penalty will stop accruing when the taxpayer pays the tax that is due.

There will be an appeals mechanism for both the late submission and late payment penalties available through an internal HMRC review process and an appeal to the First-Ti Tax Tribunal.

Sources: HMRC

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One-off £500 payment for working households receiving tax-credits

As part of the March 2021 Budget, the Chancellor announced that the temporary £20 weekly uplift in Universal Credits would continue for a further six months, until the end of September 2021. It was also confirmed that Working Tax Credit claimants would receive equivalent support. It appears that it was operationally difficult for this support to be delivered on a periodic basis and the government therefore decided to deliver this support via a £500, one-off payment.

The one-off payment provides extra support following the end of the 2020-21 tax year. It is though that more than a million households up and down the country will be eligible for the one-off payment if, on 2 March 2021, they were getting either:

Working Tax Credit
Child Tax Credit and were eligible for Working Tax Credit but did not get a payment because their income was too high to get Working Tax Credit payments
There is no requirement to contact HMRC or apply for the payment.

HMRC will make contact by text message or letter during April to confirm if you are eligible.

If you are eligible, you should get your payment direct to your bank account by 23 April 2021. You will not see the payment on the online tax credit service.

The payment is non-taxable and will not affect your benefits. You do not need to declare it as income on your Self-Assessment tax returns or for tax credit claims and renewals.

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Consider signing up to PROOF scheme

One of the services offered by Companies House helps combat fraud and protect your company from unauthorised changes to records. The free service is known as the protected online filing (PROOF) scheme and means that any forms covered by PROOF can only be filed online. Companies House will reject any paper versions of the forms and send them back to the registered office address.

The use of the PROOF scheme prevents the filing of certain paper forms, including:

– changes to your registered office address
– changes to your officers (appointments, resignations or personal details)
– your annual return
This can help combat fraudsters who try to hijack a company by changing the names of company directors and the registered address of the company. Once this has been done, the company becomes vulnerable to further fraud such as banks accounts being opened in the name of the ‘new’ directors. Companies House deals with around 50 to 100 cases of corporate identity theft every month.

An application to join the PROOF scheme should be made online using the Companies House online filing service.

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