DECEMBER 2023
ENTERPRISE BUSINESS &COMMERCIAL NEWSLETTER
albertgoodman.co.uk
WELCOME Welcome to our final Enterprise newsletter of the year. ‘Tis the season to be jolly and ahead of the Christmas break and a time for eating and being merry, our VAT expert looks at the curious case of how different biscuits and cakes, get a different VAT treatment. But don’t let that put you off your festive mince pies, which are zero rated (unless served hot!). Post-Christmas, could 2024 be a good year to make some green changes in your business? The taxation of electric cars is evolving as they become more popular, so our tax team look at the current regime tax incentives on electric chargers and vehicles for business. While electric cars could be a good short-term investment for your business, getting an apprentice could prove a fantastic long-term investment, and one of our former apprentices Ellis has written an article on how apprentices can help grow your business one skill at a time. At the end of another busy year, let me take this opportunity to wish you, your family and your business happy holidays and a prosperous New Year.
Mike Cahill Partner
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CONTENTS 04................................................................................Upcoming Tax Deadlines 05............................ Workplace Pensions for Seasonal and Temporary Staff 06....................................................................................... VAT - It’s a minefield 07 ....................................................................................................HMRC News 08.........................................................................Workplace Charging scheme 09..........................................................What’s new with tax on electric cars? 10......................Apprenticeships: Growing your business, one skill at a time 11 . ...............................................................................Autumn statement 2023 12.............................................................................................. Top tips for Xero 13 . .............................................................................................. Growth shares 14 ........................... Economic Crime and Corporate Transparency Act 2023 ENTERPRISE NE WSLE T TER
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UPCOMING TAX DEADLINES DECEMBER 2023 19th
PAYE/CIS liabilities for month ended 5th December 2023 if paying by cheque. File monthly CIS return.
22nd
PAYE/CIS liabilities for month ended 5th December 2023 if paying electronically.
JANUARY 2024 1st
Payment of corporation tax liabilities for periods ending 31 March 2023 for small and medium sized companies not liable to pay in instalments.
7th
VAT return and payment for November quarter (online).
19th
PAYE/CIS liabilities for month ended 5th January 2024 if paying by cheque. File monthly CIS return.
22nd
PAYE/CIS liabilities for month ended 5th January 2024 if paying electronically.
FEBRUARY 2024 1st
Payment of corporation tax liabilities for periods ending 30 April 2023 for small and medium sized companies not liable to pay in instalments.
7th
VAT return and payment for December quarter (online).
19th
PAYE/CIS liabilities for month ended 5th February 2024 if paying by cheque. File monthly CIS return.
22nd
PAYE/CIS liabilities for month ended 5th February 2024 if paying electronically.
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WORKPLACE PENSIONS FOR SEASONAL AND TEMPORARY STAFF The Pension Regulator has highlighted that some employers who take on temporary or seasonal workers aren’t following the workplace pension rules correctly. So, what should you be doing? Well, you must assess seasonal and other temporary staff for entitlement to join your workplace pension in the same way that you would a permanent employee. This means that they may need to be enrolled if the relevant criteria is met. This could cause problems if they don’t want to join the scheme as they will then have to opt out once they have been notified that you have auto-enrolled them. This takes time and can then trigger a refund being due to them in a future pay period. If they are temporary or seasonal workers, they may no longer be working for you. There is a way to avoid this issue and this is by using auto-enrolment postponement. If you know that the worker will be with you for less than 3 months, you can choose to delay assessing them for your workplace pension scheme. If you apply postponement, there are
certain conditions to be met and you must provide the worker with a written explanation telling them that you are doing this. If this is something that may be relevant to your business and you would like to discuss this further, please contact Andrew Hopper.
Andrew Hopper Workplace Pensions Consultant andrew.hopper@albertgoodman.co.uk
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VAT ...IT’S A MINEFIELD! In the accountancy profession, VAT and chocolate biscuits is a great source of amusement. Yes, I know we’re a sad bunch. However, it might amuse you to know that the current rules state that if a biscuit is wholly or partly covered in chocolate, VAT is due (but note, Jaffa cakes are not biscuits – but that’s a whole other story!) HMRC do, however, generously accept that if the chocolate on a gingerbread man is limited to a couple of dots for eyes the covering is “de minimis” and zero-rating applies. This means that chocolate digestives are standard rated, but bourbon biscuits are zero-rated because the chocolate is sandwiched between two biscuit halves and isn’t on the outside. Now, McVitie’s have launched “Blissfuls” which has a biscuit base, then a layer of chocolate hazelnut, a layer of chocolate and is topped with a McVitie’s logo made of biscuit. The biscuit logo is slightly smaller than the base, so does not cover the whole of the biscuit, and you see about 20% of the chocolate layer. So, is a Blissful standard rated, or zero-rated? HMRC say that because the logo doesn’t cover every bit of chocolate, the biscuit IS “partly covered” in chocolate and thus, standard rated. McVitie’s say that because the chocolate isn’t on the very top of the biscuit, the chocolate can’t be a covering, so zero-rating applies. A Tax Tribunal has just sided with HMRC, but I wouldn’t be surprised if McVitie’s Appeal. And so, the great biscuit debate continues! Whilst this may not be relevant to your business, it demonstrates the complexity of VAT. If you have any queries on any VAT matters, please do get in touch.
Steve Chamberlain VAT Senior Manager steve.chamberlain@albertgoodman.co.uk
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SELF-ASSESSMENT SCAM WARNING HM Revenue & Customs (HMRC) is urging Self-Assessment customers to be on the lookout for scam texts, emails, and phone calls from fraudsters. With a large number of people expected to submit a Self-Assessment tax return for the 2022-23 tax year before the 31 January 2024 deadline, fraudsters will prey on customers by impersonating HMRC. The scams take different approaches. Some offer a tax rebate; others tell customers that they need to update their tax details or threaten immediate arrest for tax evasion. An unexpected contact claiming to be from HMRC should be viewed as suspicious. For clients, please contact us if you receive unexpected contact from HMRC. You can report any suspicious communications to HMRC by: • forwarding suspicious texts claiming to be from HMRC to 60599; • forwarding emails to phishing@hmrc.gov.uk; and • reporting tax scam phone calls to HMRC.
DON’T FORGET - FILING YOUR SELF-ASSESSMENT TAX RETURN If you need to file a Self-Assessment tax return for the 2022 to 2023 tax year, you must do so and pay the tax you owe by the deadline of midnight on Wednesday 31 January 2024. If you haven’t already provided us with your records to complete your Self-Assessment return, please do so as soon as possible!
BASIS PERIOD REFORM In the last edition of Enterprise, we reported on the above. Please see Basis period reform for the full article. HMRC have been promising a system which would enable sole traders and partnerships to obtain information about overlap relief they may be entitled to. This information is needed for working out your taxable profits for 2023/24. After technical problems caused delays, this service is now available. This is an online only service and if you need to access it, you will need your government gateway details. This service is not available for trustees or executors. Instead they will have to contact HMRC by phone, email or letter to obtain the relevant information. E N T E R P R I S E N E W S L E T T E R 07
WORKPLACE CHARGING SCHEME The Workplace Charging Scheme (WCS) is a voucher-based scheme that provides eligible businesses with support towards the upfront costs of the purchase and installation of electric vehicle (EV) charge points. All businesses can use it to help provide charge points for their staff or fleets. Charities and small accommodation businesses can further use it to provide charge points for their guests or visitors. The grant covers up to 75% of the total costs of the purchase and installation of EV charge points (inclusive of VAT), capped at a maximum of: • £350 per socket; or • 40 sockets across all sites per applicant – for instance, if you would like to install them in 40 sites, you will have 1 socket available per site. Closing date: 31 March 2024. See: Workplace Charging Scheme - GOV-UK Find a grant (https://find-government-grants.service.gov.uk)
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WHAT’S NEW WITH TAX ON ELECTRIC CARS? The taxation of electric cars is evolving as they become more popular, and the government has to address issues which arise in practice. Here’s a couple of recent changes:
you car share with a friend who works at a different employer close to your own office, your friend can charge their car at your employer’s facility tax free because you are a passenger in their car.
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Employers now have until 31 March 2025 (previously 2023) to install an electric charging point at an employee’s home and claim capital allowances at 100%.
Please see our website for further details on Electric Cars
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Employees who have company cars can be reimbursed the full cost of charging their vehicle at a service station or at home as well as at a workplace. This covers both private and business travel.
Did you know that you can charge a car at your workplace tax free even if you are just a passenger? If your employer allows it of course! For example, if
Andrew Law Senior Tax Manager andrew.law@albertgoodman.co.uk ENTERPRISE NE WSLE T TER
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APPRENTICESHIPS: GROWING YOUR BUSINESS, ONE SKILL AT A TIME Once upon a time, apprenticeships were just for the likes of carpenters, electricians and plumbers. Nowadays, the choice of courses is far-reaching and covers a wide variety of industries, qualification levels and business opportunities. Have you ever considered an apprenticeship to help achieve your staffing goals? Perhaps you are looking to recruit fresh talent or upskill your existing staff. This article will outline some of the key points to consider and why investing in an apprentice could be the right move for you and your business. Overview An apprentice can be anyone aged 16 or over and they can be new or existing staff. This means apprenticeships could be a cost-effective solution if you have longstanding employees requesting training. It could help you retain and reward them for their service ‘without breaking the bank’! An apprenticeship must last for at least one year but depending on the qualification level, could last up to five years. As an employer, you must pay the apprentice minimum wage, ensure they work with experienced staff and allow time within their working week to complete apprenticeship portfolio work. How do I organise an apprenticeship? The government are keen to help employers set up apprenticeships and so they have provided lots of guidance and templates to make the process easier. You can see a detailed overview of the process here: https://www.gov.uk/employing-an-apprentice Funding Now the important part – how much is this going to cost your business and what funding can you get to invest in up-and-coming apprentices? Large employers with a payroll of more than £3million must pay an apprenticeship levy. They can get an allowance of £15,000 from this to fund their own apprentices for their training and end point assessments. The government will add 10% of training costs on top of this. For small employers, payment into the levy is not required, but the government will fund 95% of the apprentice’s training (up to a funding band maximum). This is paid directly to the training provider, and you must arrange payment to the provider for the remaining 5%. All funding is managed and assigned through an apprenticeship services account. 10
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How to choose if this is right for your business With everything in life, the advantages must outweigh the cost and the benefits should be weighed up to determine whether this is right for your business. Here are some to consider:
ADVANTAGES Tailored Training: You can design apprenticeship programs to meet your specific needs, ensuring that apprentices learn the skills and knowledge required for your business. This can help long-term business succession as the apprentices can take on higher-level work specific to your organisation, should senior staff retire/leave. Funding support from the government as discussed above up to 95%. Improve recruitment and staff retention by offering training and progression, you may be able to retain or attract better candidates.
DISADVANTAGES Productivity Dip: Initially, apprentices may not be as productive as experienced employees because they are learning on the job. However, this would be the same for any new starter. If you’re upskilling a current employee, this should not be an issue, but productive time may be lost as they are allowed time out for apprenticeship work. Regulatory Compliance: Employers need to comply with specific regulations and guidelines related to apprenticeships. Apprentices were once seen as “cheap labour” and so the government have introduced more requirements to pass the apprenticeship to prevent exploitation. Risk of Apprentices Leaving: There is a risk that apprentices, once trained, may leave the organisation to pursue better opportunities, which can result in a loss of investment. Hopefully the culture you create will prevent this. You must give them the skills so that they can leave but treat them well, so that they’ll stay!
Ellis Hillman Business Services Senior ellis.hillman@albertgoodman.co.uk
AUTUMN STATEMENT AND ECONOMY ROUND UP With headline inflation rates falling, this must be good news. However, with higher interest rates than we have seen for many years and growth within the UK economy slowing we are certainly not out of the woods yet. In his Autumn Statement, delivered on 22 November, Chancellor Jeremy Hunt unveiled the government’s tax and spending plans. He started his speech by saying that there were 110 measures to “Help grow the British economy”. Whilst little can be done to influence government policy and the state of the economy it is important that businesses take action to remain resilient in these challenging times As we move towards the end of another year, it’s important to take stock and review where you are and make plans for the new year. Here are a few suggestions to help you think about your business: •
Review your budgets and set realistic and achievable targets for 2024.
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Review your debtors list and chase up overdue invoices (if appropriate).
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Assign responsibility to one individual for invoicing and collections.
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Put extra effort into making sure your relationships with your better customers are solid.
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Review and flow chart the main processes in your business (e.g. sales processing, order fulfilment, shipping etc) and challenge the need for each step.
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Encourage team members to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about efficiencies and cost reduction).
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Review your staffing needs over the next few months.
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Review your list of products and services and eliminate those that are unprofitable or not core products/services.
The above is just a short list of things that all businesses should be regularly reviewing and considering. If you want to discuss this subject any further and consider the ways that Albert Goodman can support you, please contact me or your usual Albert Goodman contact.
Sharron Quick Senior Manager sharron.quick@albertgoodman.co.uk
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TOP TIPS FOR XERO AUTOMATE THE TEXT IN MANUAL JOURNALS For some clients we regularly post items such as depreciation via a Journal. If like many of us you copy journals and update them for the current period, you may well find changing the dates each time frustrating! However, you can get around this by setting up a repeating journal and telling it to change the date according to the posting date. So - in the example below, I want to post a journal on 30th September with a narrative that reads ‘Depreciation for quarter ending September 2023’ Simply set up a repeating Journal with place holders with [month] to show the month and [year] to show the year. Here is an example:
SHARE AN INVOICE ON YOUR MOBILE
If you like to use the Xero app, you may like to know this top trick – you can share your sales invoices to customers using apps such as WhatsApp. All you need to do is select an approved invoice in your Xero mobile phone app, click on ‘Options’ and then ‘Share’ and choose the app you want to use.
SUPER SEARCH SHORTCUT!
Did you know that from most screens in Xero there is a shortcut key to take you to the search bar – or the little magnifying glass in the top right? Simply press the forward slash ‘/’ button and you will go right there. Additionally, if you are in a report, simply press ctrl+/ and it will show you the shortcuts available on that page. One of my favourites is ‘shift’ + ‘s’ to update the report.
SET THE REPORTING PREFERENCE
You can set some reporting defaults so that every time you run any report it has the same settings. Simply go to Account>Advanced>Reporting Preferences where you can choose the following defaults: • Accounting basis • Display options
This repeating journal will then create draft journals every quarter with the correct date narrative! More help can be found here: Set up a repeating journal – Xero Central
I hope you found the above useful - if you need any help with Xero matters please email the cloud team: xero@albertgoodman.co.uk Becky Rhodes Cloud Accounting
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becky.rhodes@albertgoodman.co.uk
GROWTH SHARES Over recent years we have seen an increased desire for employees to take a stake in their employer company and the government has encouraged this. Employee participation can take many forms and the tax legislation in this area is hedged around with complex anti-avoidance legislation. In this article, we will just look at Growth Shares and how they may be used as one example of an employee share arrangement. THE PROBLEM Whilst many employer companies would be happy to give employee shares to some degree or another, the problem is that such a gift would be subject to income tax based on the market value of the shares. When an employee acquires shares in their employer company, there is an assumption that they are acquired by reason of the employment. That being the case, if the shares are worth more than the employee pays for them, the employee is getting remuneration equal to the difference. Example: suppose John works for Widgets Ltd and is offered shares at £10 per share. As Widgets is a profitable company paying dividends, John is tempted to buy some. The market value of those shares is £25 per share so John will pay income tax on £15 per share when he buys them. HOW GROWTH SHARES WORK Growth shares address the problem of an income tax charge by reducing the value of the shares being given to the employee. This can be organised in several ways, but typically the shares will have a hurdle set at the current value of the shares. This reduces the share value down to a low level and hence reduces the income tax problem. Example: Steve works for Smith & Co Ltd and is regarded as a key person to the success of the company. The company wants to incentivise him to stay with the company so offer to give him Growth Shares. The company shares are currently worth £100 per shares so the hurdle is set at £100 per share. As a result, the current value of the growth shares is reduced to £2 per share. In five years’ time the
company is sold for £500 per share. Steve will only receive £400 per share, i.e. the amount above the hurdle. In this simple example Steve will have paid income tax on £2 per share when they are issued and will have a capital gain of £398 per share on sale. THAT SOUNDS TOO SIMPLE… This article is a little too simple, but space does not permit us to be able to fully discuss the concept of Growth Shares. Suffice to say, that great care is required to ensure that the desired result is achieved. The restricted securities legislation must be considered to ensure the tax treatment is as expected. Also, the terms of the Growth Shares in the context of the company will affect the valuation of the shares so robust valuation advice is normally advisable. In summary: Growth Shares can be a useful tool to incentivise employees to remain with the company and participate in its growth in value in a tax efficient way, particularly where EMI option schemes are not available. If you would like further information or advice on this subject, please contact me or your usual Albert Goodman contact. Andrew Law Senior Tax Manager andrew.law@albertgoodman.co.uk ENTERPRISE NE WSLE T TER
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ECONOMIC CRIME AND CORPORATE TRANSPARENCY ACT 2023 On 26 October 2023, the Economic Crime and Corporate Transparency Bill received Royal Assent, and the Act was published. The purpose of the act is to increase the powers for tackling money laundering, illicit activity and reforming Companies House operations and powers. There is no timetable at present for these changes to be implemented. The Bill was first introduced to the House of Commons back in September 2022 and has evolved since then with the key provisions which have made their way to final stages being: Changes to the financial statement filing requirements for smaller companies
Introducing identity verification for registered company directors, people with significant control and those who file on behalf of companies
• Small entities to file both P&L and directors report at Companies House** • Micro entities to file P&L only at Companies House
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Increased accountability required for audit exemption • Identification of audit exemption being taken and confirmation of eligibility for the exemption where appropriate
Enhancing the protection of personal information provided to Companies House Reforms to prevent abuse of partnerships
Mandating the method of delivery of documents to Companies House
• Enhancement of regulations surrounding limited partnerships
• Increased movement towards electronic methods Request that filings of >1 document be filed together
Additional powers to seize and recover suspected criminal crypto assets
Enhanced Companies House powers for verifying the integrity of information provided • Inconsistent, incomplete or incorrect information will be rejected (and treated as not delivered) 14
Providing Companies House with more enhanced investigation and enforcement powers, and introducing crosschecking of data with other bodies
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The filing of a profit and loss account at Companies House will ensure this information is available on the public register. Filleted abridged accounts will no longer be filed. It was felt that minimal disclosures were concealing fraudulent activity, including money laundering, and the new rules would improve the reliability of information for all. The introduction of a director’s report for small entities is designed to provide explicit verification from directors to aid in the reduction of misuse around minimal disclosures and also reduce the abuse of the dormant accounts’ rules.
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A new corporate offence is also being introduced for large organisations, being the failure to prevent fraud. Defence is possible where appropriate safeguard procedures have been implemented. There is also a new regulation applicable to all corporate entities or partnerships, enabling liability to be the entity for economic crime offences, where a senior manager, acting within the scope of their authority, commits or attempts to commit a “relevant offence”. This latter provision will come in to force on 26 December 2023 whereas all further regulations will be implemented at a date to be appointed by the regulators.
Classification of small and micro entities Entity
Turnover (less than)
Balance sheet (less than)
Employees (or fewer)
Small
£10.2 million
£5.1 million
50
Micro
£632,000
£316,000
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Sophie Parkhouse Partner sophie.parkhouse@albertgoodman.co.uk
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