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Reporting travel and subsistence benefits

There is no requirement to report certain routine expenses to HMRC. The types of expenses and benefits covered are referred to as exemptions and have replaced dispensations that can no longer be applied for.

The travel and subsistence benefits that do not need to be reported include reimbursed costs to employees covering business travel. As an alternative to paying the employee back for actual costs incurred, HMRC’s benchmark scale rates or a special bespoke scale rate may be used. Employers only need to apply for an exemption if they want to use a bespoke scale rate which needs to be approved by HMRC.

Employers that reimburse their employees with more than the necessary costs need to take action. The extra amounts should be added to the employee’s other earnings, and PAYE and Class 1 NIC’s will be due.

There is usually no tax relief for private travel between a permanent workplace and an employees’ home. Accounting for any tax due on private travel depends on who arranged the transport and who paid for it. There are a number of exceptions, such as temporary workplaces and where the employee has a travelling appointment.

Employers must also ensure that they have a checking system to ensure that employees make valid expenses claims. This requirement is usually satisfied by asking employees to submit or retain receipts as evidence of a valid expense claim. However, HMRC is clear that employees aren’t allowed to check their own expenses and that someone else within the company must be responsible for ensuring a claim is legitimate.

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Tax Diary September/October 2021

1 September 2021 – Due date for Corporation Tax due for the year ended 30 November 2020.

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

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

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

1 October 2021 – Due date for Corporation Tax due for the year ended 31 December 2020.

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

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

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

31 October 2021 – Latest date, you can file a paper version of your 2021 self-assessment tax return.

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Construction services and reverse charge

New VAT rules for building contractors and sub-contractors came into effect on 1 March 2021. The new rules make the supply of most construction services between construction or building businesses subject to the domestic reverse charge. However, the reverse charge only applies to supplies of specified construction services to other businesses in the construction sector.

HMRC’s guidance states that you must use the reverse charge for the following services:

– constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services
– constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence
– installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure
– internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration
– painting or decorating the inside or the external surfaces of any building or structure
– services which form an integral part of, or are part of the preparation or completion of the services described above – including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, – site restoration, landscaping and the provision of roadways and other access works
This means that for these specified supplies, sub-contractors no longer add VAT to their supplies to most building customers; instead, the contractors are obliged to pay the deemed output VAT on behalf of their registered sub-contractor suppliers. This is known as the Domestic Reverse Charge. On the same VAT return, contractors can claim back the deemed input tax on the supply subject to the usual rules.

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Getting ready for Customs Declaration Service

The Customs Declaration Service (CDS) has been designed to modernise the process for completing customs declarations for businesses that import or export goods from the UK. A phased launch of the service started in August 2018, and more than one million declarations have been made since then. The CDS system is currently used for Northern Ireland and the Rest of World declarations.

HMRC has now confirmed that all businesses will need to declare goods through the CDS from 31 March 2023. This will result in the closure of the Customs Handling of Import and Export Freight (CHIEF) service. The CHIEF system is over 25 years old and has struggled to cope with complex reporting requirements that could not easily or cost-effectively be accommodated within the existing service.

HMRC has confirmed that ahead of the 31 March 2023 complete closure, services on CHIEF will be withdrawn in two stages:

30 September 2022: import declarations close on CHIEF
31 March 2023: export declarations close on CHIEF / National Exports System (NES)
The decision to introduce the CDS was system driven to provide a more secure and stable platform and predated Britain’s vote to leave the EU. Importers and exporters should by now be well aware of the CDS system, and they or their agents should be starting to prepare for the further rollout and eventual replacement of the CHIEF system.

The joint Directors General for Borders and Trade at HMRC said:

‘CDS is a key part of the government’s plans for a world-leading fully digitised border that will help UK businesses to trade and to prosper. This announcement will provide clarity for traders and the border industry. We are committed to making the switch-over as smooth as possible and are working to ensure traders are fully supported with the new processes.’

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The Help to Grow Management scheme

The Help to Grow: Management course is a government-backed programme to help business leaders develop their strategic skills, create jobs and boost their business performance.

The 12-week programme is delivered by over 40 leading business schools across the UK and combines a practical curriculum with 1 to1 business mentor support throughout and includes modules on financial management, strategies for growth and innovation, and approaches to digital adoption.

The government has committed to making 30,000 places available on the course over the next 3 years. The cost of the course is 90% subsidised by the government and costs only £750.

UK businesses from any sector that have been operating for more than one year, with between 5 to 249 employees are eligible to enrol. The participant in the course should be the decision-maker or member of the senior management team within the business. Charities are not eligible as the scheme is designed to support commercial enterprises.

The Business Secretary said:

‘Help to Grow: Management is a fantastic scheme to equip ambitious business leaders with the tools to take their business to the next level, helping create an even more high-productivity, the high-wage economy we build back better from the pandemic.’

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SEISS – more red tape

Government support to the self-employed through the Self-Employment Income Support Scheme (SEISS) is due to end on 30 September 2021. A fifth and final grant covering the period May 2021 to September 2021 will be opened to claims from late July for those who have suffered a significant reduction in trading profits. To qualify for the grant, average trading profits must be £50,000 or less and non-trading income cannot exceed 50% of total income.

The grant will see those whose turnover has fallen by 30% or more continuing to receive the full 80% grant (capped at £7,500) whilst those whose turnover has fallen by less than 30% will receive a 30% grant (capped at £2,850). This is a change from the previous SEISS grants where there was only one grant available to qualifying applicants.

HMRC is in the process of contacting eligible taxpayers to notify them of their personal claim date. Taxpayers will be able to make claims from this date up until the claims service closes on 30 September 2021.

Most taxpayers claiming the fifth SEISS grant will be required to provide turnover figures to make a claim. The turnover figures will be used to compare the ‘pandemic year’ with a ‘reference period’.

Newly self-employed people, who had previously been excluded from claims because they commenced their trade during the 2019-20 tax year, are eligible to claim the fifth SEISS grants if their tax return for 2019-20 was filed by midnight 2 March 2021. They must also have traded or intended to trade in 2020-21 and intend to continue doing so.

HMRC is also warning taxpayers to be on the lookout for SEISS-related scams and to only respond to correspondence that is verified to be legitimate.

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