Self assessment – no penalties until 28th February 2021

Dear all

As per usual we are on target for completing all the SA returns by 31st January. However, there is no doubt that this year has been more challenging than most, with Covid, furlough and now the old favourite of bad weather all trying to conspire against us.

This afternoon the government have relented to pressure and have declared that no penalties will be raised on returns submitted by no later than 28th February 2021. Whilst this is potentially good news (though somewhat ironic given our near completion, it does not exonerate the non payment of taxation. So we will continue as previous and will complete all the returns as usual.

Please find the link below:

https://www.gov.uk/government/news/no-self-assessment-late-filing-penalty-for-those-who-file-online-by-28-february

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The plan for winter

It has been some while since we have seen the need for a post, but with Chancellor Sunaks statement today that has changed and we attach the same to this post. The fear is that this is all starting to feel like a long hard winter (and we are still in September).

https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan

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Chancellors statement – 8th July 2020

Please find the statement in full below:

https://www.gov.uk/government/speeches/a-plan-for-jobs-speech

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Round Robin – 16th June 2020

Dear all

Apologies. A bit like red buses today.

We have been asked by a number of clients, “I’m self-employed but haven’t had a letter, concerning the grant, what should I do?”

My advice had been to wait as when announced the letters were said to be going out in June. They actually started appearing in mid-May and so now people are understandably wondering if they have ‘missed the bus’.

Fear not, instead go online and google ‘self employed claim’. Hopefully that will direct you to the address below and you can then make the claim yourself, or at least ascertain if you are eligible. Rest assured, if you are one of our clients your affairs will be up to date, so if there are any problems contact us again. You have paid your taxes so you are quite eligible as far as I can see.

 

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

We are getting all staff back to work so there will be someone here who can help.

Secondly, for those of you who insure through AXA or AVIVA, there may be some light as to the Business Interruption policies that failed to pay out under the Disease clause. Apparently, the goal posts have been slightly moved and there may now be respite under the Government Action part of the policy. Much to my amazement we have such a policy which initially declined any liability, but now have sent us a claim form. This may not be unique to AXA or AVIVA, but to date they are my experience.

And lastly, I am glad to see that the government has found time to issue a ‘space rocket challenge’.

https://www.gov.uk/government/news/space-rocket-challenges-for-the-engineers-of-tomorrow

My vote would be to load up the entire cabinet and shadow cabinet in said rocket, launch it and see how far they can go……………

 

 

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R&D Claims – 26th May 2020

Dear all

Nothing to do with Covid 19 thankfully, I attach a case history concerning the application of R&D Claims, a favourite ‘ambulance chasing’ sector of the accounting industry. The message from the case is clear…..be careful and obtain evidence in support of your claim.

What accountants need to know from the AHK Recruitment R&D tax tribunal case

HMRC recently reported on the outcome of a first-tier tax tribunal case investigation into an R&D tax claim.

What happened during the investigation

In this case, AHK Recruitment Limited worked with Optimal Compliance to compile an R&D claim for an internal software project. HMRC opened an enquiry to understand how the project qualified as R&D in line with the legislation. After months and months of delays following HMRC requests for evidence Optimal, on behalf of AHK, could not produce sufficient evidence around the projects and critically could not produce a competent professional at AHK to provide evidence. Whilst CVs were submitted, HMRC could not speak to them directly. The HMRC enquiry also highlighted that whilst subcontractors costs formed part of the claim there was no evidence of what they were doing and how it aligned to any potential R&D project.

What can we learn from this case?

  1. HMRC are reasonable with R&D enquiries
    • HMRC gave the company extra time and guidance to help them evidence what their R&D was.
    • If you give HMRC the run around it will put you in a difficult position. It is essential to engage with HMRC when asked –  companies or advisors should build a line of communication with HMRC that is both timely and accurate.
  2. Don’t underestimate the role of a competent professional
    As much as an accountant or R&D advisor should drive out the eligible R&D expenditure with their clients, the company should always be in a position to present the competent professionals to HMRC. This is one reason why GovGrant spends time with our clients (ideally meeting face to face). When we make a claim we always consider how any competent professional will respond to HMRC in the event of an enquiry. It is increasingly common for accountants to be involved with R&D claims, what this case underlines is that it is not just about the numbers and that the technical assessments need real thought and challenge.
  3. The baseline is essential to establish the validity of a claim
    This means evidencing what solutions were available, why they didn’t work and showing that enough work had been done to explore a solution before embarking on a project. To demonstrate R&D has taken place there needs to be an advance in the field which raises the overall knowledge above baseline. Advisors should take this point as a must – it also aligns to the current thinking in the HMRC tax credit consultation with calls for evidence of IP management at the start and throughout the R&D process.
  4. Evidence in any R&D claim should be a legal requirement
    There is no actual requirement for technical evidence to be submitted with an R&D claim and it may only be required in an enquiry situation. This leaves the door open to poor practice and accountants need to be comfortable that where their client is using a third party R&D advisor, their client has chosen an appropriate partner with the right level of expertise.
  5. Third-party costs need to be documented
    The costs associated with any claim, particularly from third parties, need to have solid and accurate documentation which details the specifics of what was done or delivered.

What it means for R&D advisors

The R&D market is a competitive one with new players on an almost daily basis. As most advisors charge on a contingent basis, sadly there are some poor behaviours that make this market feel more PPI than professional services. This case underlines the reality – R&D is complex and needs due skill and attention from a professional. We at GovGrant believe in the specialist nature of R&D work – in the methodology of a claim, the compliance to legislation and the technical evidence needed.

This judgement should not scare clients who are making an R&D claim or deter accountants from raising the potential, quite the opposite. This is a vital source of government investment in innovation – but it needs to be treated as such – an investment, not free cash for anyone who asks.

There should be no room in this industry for cowboys and poor practice as agents have a role to play in protecting the integrity of the scheme and that the government investment is well place. Providers who offer headline solutions of compiling R&D claims in ‘minutes, not hours’ need serious scrutiny. Can you get enough evidence in minutes and will those providers be there to support you in an HMRC enquiry? Most certainly not.

There is obviously a need in some cases to streamline processes and make the process reflective of the benefit that is received – but not at the price of potential abuse. DIY software platforms have a role to play but accountants and advisors should be under no illusion that it replaces in depth consultancy when it is needed.

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20th May- reminders

Just a polite reminder:

  • Furlough claims for the May payroll to be completed.
  • ‘Bounce Back’ loans to be claimed for those that wish to.
  • Self employed claims. The letters to those qualifying are now being issued (originally planned for June). If you are self-employed and you haven’t had a letter by say 1st June, then do please let us know.
  • I should say that we have yet to complete a CBIL loan, which is a pretty poor show on behalf of the banks.

As to Harris and Clarke, then life carries on as normal. The usual tax return letters are being sent out (albeit later than usual) and do let us have your books and records as usual. We have maintained a skeleton staff throughout the ordeal and now are slowly bringing back staff to our full complement, subject to soap, hand sanitizer and usual good humour. I would like to say the end is in sight, but instead will quote Churchill after El Alamein, ‘This is not the end, or the beginning of the end, but it may be the end of the beginning’. We shall see.

And lastly, for all you Eel fans out there you will no doubt be pleased that the Government have seen fit that young elvers have reached the Great Ouse.https://www.gov.uk/government/news/eels-have-arrived-at-the-great-ouse. It would appear that at least the stoat and eel populations have thrived during the lock down period.

 

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Update 12th May 2020

Dear all

I will not send Round Robins unless there is something worth saying. Two things please:

  • Individuals attitude to borrowing money varies, but quite frankly the ‘Bounce Back’ loan should be keenly pursued in my opinion. 12 month interest free, followed by 5 years at 2.5%. Why would you not do that? No arrangement fees! Apply through your individual banks portal. It is not difficult and the money comes through quickly. Just don’t spend it!
  • Furlough. The scheme has been extended to October, but with ‘changes’ in August. I don’t wholly understand the thinking here. In my view the furlough is the best way to get people back to work as lack of money generally concentrates the mind. The extension must be indicative that the safety concerns are not yet over.

Thankfully we are not in charge of this process and the reaction to it. It is a wholly invidious role as everyone has an opinion, usually laced with a good dose of hindsight. I just hope Miriam Margolyes has plenty of self isolation time to reflect upon her nastiness.

As always, any queries please shout

 

 

 

 

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28th April 2020 – ‘Bounce back’ loans

Dear all

Please find details of the new initiative, the ‘bounce back’ loan. I presume this is necessary because the banks have made a hash of the original CBIL’s initiative.

https://www.gov.uk/government/news/small-businesses-boosted-by-bounce-back-loans

This initiative should be actively pursued, once the application period opens on 4th May.

 

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27th April 2020 – Furlough scheme – Approved legislation

Dear all

Please find the approved legislation concerning the scheme.

200414_CJRS_DIRECTION_-_33_FINAL_Signed[13229]

 

 

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23rd April – St.George’s day and Furlough applications

Dear all

Firstly, Happy St.George’s day. Currently there would appear to be an obvious dragon that could be usefully slain and any assistance would be appreciated. (No, not Matt Hancock).

Secondly. We have now completed a few Furlough scheme applications and the consensus appears to be that they are reasonably straightforward for monthly paid staff, but once any level of detail is delved into, the process becomes the more difficult; average wages, employment allowance, directors etc etc.

There is also the practical problem of obtaining / remembering gateway passwords, where the payroll package automatically submits the RTI information.

So, the advice has to be to be careful. Once this is all over and St.George has done his job, the HMRC audit department will be all over the claims like a rash. (They already have the payroll figures don’t forget). Currently, there is no legislation, or case precedent to refer to as such so, above all, keep all your workings and be able to justify what you are doing.

We certainly do not have a monopoly of wisdom in this matter, but if you want to discuss or garner a second opinion please do make contact.

 

 

 

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