Although we don’t currently have the warm weather at home as we had last year, with the majority of us taking staycations, team Harbour Key has been very busy going into the summer break, while encouraging staff to catch up on annual leave. We continue to be working on sales and acquisitions, with businesses which have built up cash reserves over the last 18 months looking to buy businesses with technology or an offering that complements or adds to their existing business.
For those who enjoy sport, we have been spoilt with the football euros, the Lions Tour, the British Open Golf and the Olympics. However, so have HMRC, who have taken an interest in the British Open golfers' worldwide income. Sponsorship deals are highly lucrative for the golfers, but they are also open to attention from HMRC as they are taxable in the UK. An endorsement contract from an equipment supplier is likely to specify that the golfer uses, say, a sponsored club for all the tournaments in which he appears. HMRC argue as a result of using that club when playing in the UK, the golfer is earning endorsement income in the UK. As a result, a proportion of endorsement income will be taxable in the UK. So, some HMRC officers should have had a pleasant visit to the Open.
HMRC has also clawed back almost £464m from players, clubs and agents after a six-year probe into tax in football. In the past year, HMRC recovered £55.6m following investigations into 93 footballers over potential tax avoidance breaches, with 23 agents and nine clubs also under investigation.
MONEY MONEY MONEY
Money laundering underpins and enables most forms of organised crime, allowing crime groups to further their operations and conceal their assets. Money laundering is estimated to cost every household in the UK £255 a year. As the digital economy continues to expand and ongoing developments in fin-tech sends money flying around the world with unprecedented speed and ease, financial institutions, and others (including Harbour Key), have enhanced compliance responsibilities with regards to checks and measures to identify and spot money laundering. All companies and partnerships also have responsibilities to prevent tax evasion. All these regulations and compliance put extra pressure and costs on businesses, find out more HERE
INHERITANCE TAX ("IHT")
A recent statistic shows the importance of inheritance planning. According to data published by HMRC in July, IHT receipts in June were £539m meaning that in the 12 months to June 2021 the Treasury collected £5.698bn - the biggest amount in any 12-month period. The nil rate band (the part of the death estate, which includes gifts in the seven years prior to death, on which IHT is not payable), is being frozen at £325,000 per individual until 2026. The £325,000 limit was introduced a number of years ago and therefore its value is being eroded with inflation and with the recent increases in house prices more individuals are being brought into the IHT regime. If you wish to review your situation and look at planning options, please give us a call.
TAX-FREE CHILDCARE
HMRC has issued a reminder to working parents that Tax-Free Childcare (“TFC”), the scheme the Government phased in between 2017 and 2018, is not just for "traditional" childcare costs, such as regular hours after school during term time. It's also possible to use the account to pay for things like accredited clubs or sports activities over the summer. TFC is available for children aged up to 11 generally and takes the form of a top-up scheme - parents pay into the account and HMRC tops it up with an additional £2 for every £8 deposited, subject to a three-monthly cap of £500. More information can be found HERE.
FINANCE DIRECTOR PENALTIES
Data obtained by Pinsent Masons Solicitors show the number of penalties issued to finance directors at large businesses by HMRC has dropped from 148 to just 20 in a year. This fall is being put down to HMRC having to shift the focus of their investigations away from tax disputes with big businesses to investigating Covid crime. Rules were introduced enabling HMRC to fine a finance director personally for a breach of the tax rules, even if the director didn't know about rules. HMRC see the rules as a way of forcing finance directors to take more personal responsibility for tax compliance.
HS2 Minister Andrew Stephenson hosted an online event in July for small and medium sized businesses in the Southwest to demonstrate how simple it is to register an interest in joining HS2’s supply chain. The event was followed up by the issue of a guide full of useful advice and tips.
The guide can be found HERE.
COVID UPDATE:
- Furlough Scheme - For claims from 1 August 2021 onwards, the Government contribution for furlough pay has reduced. Employees must continue to receive 80% of their minimum furlough pay.
- Self Employed Income Support Scheme (SEISS)– HMRC has announced that applications for the fifth SEISS grant is open for those self-employed individuals who continue to be impacted by the Covid-19 pandemic, Applications can only be made online, The grant can be claimed if your business profit will be impacted by Covid-19 between 1 May 2021 and 30 September 2021. The application process will depend on details of two years of turnover and losses. More details can be found here.
HMRC is automatically correcting tax returns where the total of declared SEISS grants does not match what HMRC thinks the taxpayer has received, but those auto-corrections can be challenged. Remember the SEISS grant is taxable and must be reported on self-assessment returns. (Covid grants are also taxable).
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