FINGERS CROSSED IT LOOKS LIKE SUMMER HAS ARRIVED!
At Harbour Key, May was a tough month, with two colleagues going down with Covid, and couple of others whose immediate family members became infected. All have recovered and were not seriously ill but it impacted our work and work patterns. On a positive note, Megan popped into the office to introduce the team to her new baby girl, Harper.
Like most clients, whether business or personal, we at Harbour Key are experiencing cost increases from our suppliers. As well as being a people driven business, which is the heart of our business, we are committed to investing in our people and paying our colleagues a fair wage. In addition, like all professional services firms, additional regulatory burden is being placed on the business, which results in additional time and third-party costs in looking after our clients. We have therefore had to take the decision, to increase our fees. All clients will have been contacted about the increase personally, however if you missed the notification and need to discuss, please do not hesitate to contact the office.
CRYPTOCURRENCY TAXATION
The last few years has seen an increase in the number of clients investing and holding cryptoassets, and recent research has shown that this reflects a trend that has not showed any signs of slowing, despite the cryptocurrency market being significantly down on its all-time high. However, it is clear that many do not understand the taxation of this asset type, HMRC first publishing their Cryptoasset Guidance Manual in March 2021. HMRC understand the tax evasion risks with these assets, using their powers in 2019 requiring information from trading platforms about their users and transactions details, resulting in a nudge letter campaign in 2021. More information can be found on our blog HERE.
Whilst engagement in cryptocurrency trading is still growing, understanding of record keeping requirements and UK tax reporting obligations for this type of asset is not always understood.
Read our article on the taxation of cryptocurrency/assets
EMPLOYER REPORTING
We flagged last month that May and June are the main months for filing employer returns before the 6th July deadline, for employee benefits (form P11D), and employment related securities/option scheme reporting. Employment related securities ("ERS”) being the one that catch most clients out, which tend to get picked up when the business sells, and the buyer’s advisors’ flag there has been ERS activity and a reporting failure. HMRC will issue automatic fines for failure to file, as well as materially incorrect returns. More details can be HERE.
CHANGES TO PATENT & TRADEMARK APPLICATIONS
The Intellectual Property Office (IPO) has announced that the process of applying for a patent is set to change significantly over the next 12 months. The changes will start in September 2023 when the first new ‘One IPO’ service will launch a new patents search service. In addition, a new patents pilot will also start. This is expected to be followed in Spring 2024 with the launch of the new One IPO patents service for all patents customers. This will include a new digital patents applications service; a new customer accounts service and the first APIs will be made available – allowing providers of IP software to link their products directly to the IPO’s new systems.
HMRC ACTIVITY
HMRC is back on to chasing landlords! Airbnb has been forced to share users' income details with HMRC, as part of targeted crackdown on holiday let owners who fail to declare income. It is understood Airbnb has shared data on users' earnings dating back to 2017-18. The information will help HMRC identify who is making money from letting their properties without declaring it. Airbnb operators who haven't disclosed their income are being encouraged to do so voluntarily through HMRC's Let Property Campaign, which would reduce the amount of any penalty.
The launch of a landlord database outlined in the Renters Reform Bill will also give HMRC unparalleled access to information to launch tax investigations. The Renters (Reform) Bill introduced into Parliament last month, proposes a private rented sector database with details of landlords and their properties let under residential tenancies. The Bill does not clearly set out that HMRC will get full access to all information submitted as part of the registration process, unlike for the equivalent provisions for the Register of Overseas Entities. However, it is reasonable to assume that the tax authority will make use of the publicly accessible data for compliance activities. HMRC will combine any new data from the landlord database with information it can already access such as Land Registry records, the Register of Overseas Entities owning UK property and the data in HMRC’s own Connect database.
PROPOSED LIMITATION TO EMPLOYMENT NON-COMPETE CLAUSES
Last month, the Government announced plans to change the way non-compete restrictive covenants operate post-termination. In short, they want to reduce an employer’s ability to protect their businesses. A restrictive covenant is typically an obligation which prohibits employees from competing with their ex-employer. For example, a non-compete clause such as not working for the ex-employer’s main rivals for a period of 12 months after leaving the company. The Government have announced they intend to reduce the current maximum period of 12 months to 3 months for non-compete restrictive covenants. However, they have made it clear that employers will still be able to restrict competition during paid garden leave or notice periods. Ex-employees will also still be restricted from dealing with clients (non-solicitation and non-dealing) for the maximum period of 12 months as the Government has no current plans to change these, together with confidentiality clauses. It may therefore be worth speaking with an employment solicitor regarding reviewing your contracts of employment, considering the proposed changes.
DATES FOR YOUR DIARY
- 05 July- Last day for agreeing the operation of a PAYE Settlement Agreement (PSA) for the previous tax year with HMRC.
- 06 July - Deadline for submitting forms 42, Forms EMI 40 and other relevant forms to HMRC to report share-related benefits provided to employees in the previous tax year. Return can only be submitted via HMRC’s online system.
- 06 July - Last day for giving any relevant employees their copy of form P11D for the previous tax year.
