HMRC: Basis Period Reform and what it means for you
Are you an un-incorporated business? Have you heard about Basis Period Reform?
Are you eligible for a £252 saving on your tax bill?
With the tax year ending on 5 April, March is a good month to check whether sharing unused tax allowances with your partner could save you some money.
HM Revenue and Customs (HMRC) say that March is the most popular month for Marriage Allowance applications. Almost 70,000 couples applied in March last year. As there is also the option to backdate their claim for the previous 4 tax years, eligible couples who have not previously claimed could receive a lump sum payment of more than £1,000.
Marriage allowance allows individuals to transfer up to 10% of their tax-free Personal Allowance to their husband, wife, or civil partner. For the 2023/24 tax year, this means a maximum amount of £252 could be available to those who qualify.
In order to benefit, either you or your partner must have an annual income of less than the Personal Allowance, which is currently £12,570. And the higher earning partner’s income must be between £12,571 and £50,270. If you live in Scotland, the higher earning partner’s income must be between £12,571 and £43,662.
If you need any help working out whether you are eligible or in applying for the allowance, please do not hesitate to contact us!
Financial handbook for independent training providers released
David Withey, Chief Executive of the Education and Skills Funding Agency (ESFA) has written to independent training providers in receipt of direct funding from the Department for Education (DfE) or ESFA. The letter announces the publishing of a financial handbook for independent training providers.
The financial handbook describes a mix of requirements, best practice and discretionary elements that are tiered depending on the organisation’s level of funding.
It covers many aspects of financial management and governance. For many independent training providers, these procedures will already be part of their good financial management. However, there may be some new requirements that need to be adjusted for, such as those involving internal review and audit.
The financial handbook comes into effect on 1 August 2024, which allows a few months to make any needed adjustments. Certain parts of the handbook will be phased in over a longer 2-to-3 year timescale.
If you need any help reviewing or implementing financial systems, please get in touch with us. We would be very happy to help you!
Director of care home investment scheme fraud banned
Robin Forster, the director of two companies involved in operating an unauthorised care home investment scheme has been banned from being a company director for 14 years.
A total of £57 million had been taken from investors and put at risk in the unauthorised scheme. Based in the north-east of England, Qualia Care Properties Ltd and Qualia Care Developments Ltd offered investors the opportunity to invest in care homes. Investors bought a long-term lease on a care home room. The care home was run by a third company, Qualia Care Ltd, who sublet the room back to the other 2 companies.
Investors were promised returns of between 8-10% of the purchase price. However, the Financial Conduct Authority (FCA) successfully argued in court that the scheme was unlawful and amounted to an unauthorised collective investment scheme. The court also agreed that Mr Forster had made false and misleading statements to investors since the promised returns were never likely to be achievable or the scheme itself sustainable.
The FCA is currently seeking to recover the £57 million lost by investors.
To compound matters, during the four days leading up to the two companies going administration, Mr Forster arranged for more than £2 million to be transferred out of the companies into a connected company. This was despite the fact that monies were owed to creditors.
Both factors – running the unauthorised scheme, and depriving creditors of more than £2 million – contributed to the 14-year ban.
News like this serves as a good reminder that as far as investment returns go, if it sounds too good to be true, it probably is!
Making Tax Digital: New policy paper published
A new policy paper has been released by HM Revenue and Customs (HMRC) on Making Tax Digital for Income Tax Self Assessment for sole traders and landlords.
The new tax information and impact note supersedes the previous one and incorporates the changes in scope and timelines announced in December 2022, and other policy amendments and improvements made in the Autumn Statement 2023.
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) revolves around requiring businesses and landlords to keep digital records and update HMRC each quarter using compatible software.
The policy paper outlines that MTD for ITSA will be introduced for sole traders and landlords in two phases:
- For those with qualifying income over £50,000, from April 2026.
- For those with qualifying income over £30,000, from April 2027.
The government plans to introduce MTD for ITSA for partnerships at a future time.
The government feel that MTD for ITSA will reduce tax errors, but if the introduction of MTD for ITSA affects you then it may mean making adjustments to the way you currently handle your accounting records. It may also mean keeping more up-to-date with bookkeeping because of the requirement to submit quarterly returns.
As your business advisers, we will be in touch with you well in advance of any changes coming into force. We will be happy to help you with advice on accounting systems or any training that you might need.
Customer service at HM Revenue and Customs reaches new low
According to MPs, phone line waiting times for HM Revenue and Customs (HMRC) continue to worsen. A committee found that nearly two-thirds of callers had to wait more than 10 minutes to speak to an adviser.
The Public Accounts Committee’s report says that in the year to April 2023, the average wait for a call to HMRC to be answered was 16 minutes and 24 seconds. This compares to 12 minutes and 22 seconds the year before.
63% of callers waited more than 10 minutes, increasing from 46% the previous year. This proportion has increased each year since 2018-19.
HMRC’s hold music holds the dubious honour of being among the most streamed!
The issue shows no sign of an easy resolution. HMRC is focusing its attention on digital services such as its app and online services to deal with enquiries.
HMRC have said they received more than three million calls on resetting online passwords, getting tax codes, and checking National Insurance numbers, many of which could have been handled using their digital services instead of calling.
The take home seems to be that if you need to call HMRC, it may be best to do so from an easy chair with a coffee in hand!
Cyber security: Evolving tactics from Russian state-linked cyber actors
The UK’s National Cyber Security Centre have highlighted the evolving tactics of Russian state-linked cyber actors.
NCSC has noted that malicious cyber actors linked to Russia’s Foreign Intelligence Service (SVR) have expanded their targeting from governmental, think tank, healthcare and energy organisations to include aviation, education, law enforcement, local and state councils, government financial departments and military organisations.
Traditionally, SVR actors have exploited software vulnerabilities to access information held by organisations in these sectors. However, because of the increasing move to cloud-based infrastructure, these traditional approaches are now less effective.
Therefore, NCSC report that tactics have evolved to try and gain access to these cloud-based systems. But since access to cloud-based systems is far more reliant on gaining initial access to the cloud provider, a good baseline of cyber security fundamentals can help to prevent successful attacks.
- Use of multi-factor authentication, or 2-step verification, and strong unique passwords are good ways to mitigate and defend against this type of malicious cyber activity.
- Making sure that user and system accounts are disabled when employees leave is also key, as dormant or inactive accounts are often involved in a successful cyber attack.
