Changes to information requirements about people with significant control

In 2016 UK companies and UK limited liability partnerships (LLPs) were required to keep a register of people with significant control (PSC register) and to file relevant information at Companies House.

New rules have now been introduced as part of the UK’s programme implementing the EU Fourth Anti-Money Laundering Directive and tackling money laundering and the financing of terrorist activity. Effectively, businesses are required to help police the system – in this case by supplying information about people with significant control (PSCs).

The new rules potentially affect companies and LLPs. There are also changes for Scottish limited partnerships and certain Scottish general partnerships (collectively referred to as ‘eligible Scottish partnerships’).

Most of these changes come into force from 26 June 2017, with some coming into force from 24 July 2017.

Overview of changes

There are three main areas of change:

  • how companies and LLPs report PSC information to Companies House
  • changes to exemptions
  • bringing some partnerships governed by the law of Scotland into the regime.

There is information on each of these areas of change below.

Changes in reporting

There are new timescales and new forms. Previously, PSC information was updated annually on confirmation statement CS01. Change is now event-driven and must be reported to Companies House whenever it occurs. It can no longer wait until the end of the year.

From now on, companies will need to use forms PSC01 to PSC09. LLPs and eligible Scottish partnerships will use an equivalent range of forms.

When the annual confirmation statement is made, confirmation will be required that PSC information which Companies House already holds is accurate.

There are 14 days to update the PSC register, and another 14 days to send the information to Companies House. That gives 28 days to notify Companies House of changes to the PSC register.

Exemptions

Under the old rules, some companies were exempt from the PSC rules. These were DTR5 companies which are not on a regulated market.

Under the new rules, such companies may have to comply. This could affect Alternative Investment Market companies (AIM) and ISDX (ICAP Securities and Derivatives Exchange) companies.

If the company has traded on an EEA or Schedule 1 specified market, it is still exempt from providing PSC information.

Partnerships governed by Scots law

The new rules apply a modified form of the PSC regime to limited partnerships governed by the law of Scotland and also to qualifying general partnerships governed by the law of Scotland. A qualifying general partnership is a partnership in which all partners are corporate bodies.

These partnerships do not have to keep their own PSC register, but do now have to report PSC information to Companies House. They have to identify their PSCs and return this information to Companies House within 14 days of 24 July 2017.

Any further changes to PSC information must be notified to Companies House within 14 days of the change.

Confirmation that details are still current and accurate will be required annually.

Is further guidance available?

The Department of Business, Energy and Industrial Strategy has updated its guidance on the PSC register. There is draft statutory guidance on what ‘significant influence or control’ means for eligible Scottish partnerships, and guidance for people with significant control.

All the guidance can be obtained from www.gov.uk/government/organisations/companies-house.

How can we help?

This is a complex area, especially if you are coming into the regime for the first time. It can also be a risky area, as failure to comply with the rules could lead to the business, its directors or partners, or identified PSCs committing a criminal offence.

If you would like to discuss these new requirements in more detail, or require assistance with this or other company secretarial requirement please contact us on 0116 2423400

Mike Waterfield

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Are you due a tax refund, or is it a fake HMRC email / phone call?

In the current cyber-world attempted fraud is always increasing and taxpayers need to watch out not only for scam emails and texts but phone calls too.

Phishing emails are designed to steal personal or financial details and may also deliver malicious software.  Some of the most common examples involve HMRC and an email advising a taxpayer about a “tax refund notification”.  It asks the recipient to click on a link, which then requests personal banking details – leading individuals unwittingly to compromise their financial security.  HMRC scam emails often contain the taxman’s logo and official style reference numbers and increasingly appear to be genuine communications.  Scammers often sign off using the name of an actual member of HMRC staff.  These criminals are getting cleverer all the time sending their emails at peak times i.e. January, when it’s the deadline for completing your self-assessment return, and July, being the deadline for your tax credits submission.

Tax payers please take note that HMRC do not make contact by email or phone to advise you of a refund and never give personal information over the phone to someone you do not know.  If you are in any doubt contact your accountant/advisor immediately.

An example of a typical phishing email purporting to be from HMRC is shown below:

HMRC SCam

If you think you may have received something that isn’t legitimate or you’re unsure then please contact us on 0116 2423400

Mark Cunnold, Client Manager 

Thinking of an Upgrade?

If the seemingly endless adverts are to be believed then if you subscribe to online bookkeeping software such as QuickBooks or Xero then your bookkeeping will become effortless, will probably be done in a coffee shop or on the go and will leave your accountant kissing an iPad with glee.

Whilst new software isn’t going to change your life, there is a lot to be said for having access to your records from any laptop/tablet/phone and from anywhere with a decent internet connection.

Online bookkeeping software allows you to send invoices and quotes to potential customers from your phone, enter purchase invoices from the sofa and even have bank transactions feed directly from your bank into the software to reduce the time taken to reconcile your bank.

The software can often be used by multiple users simultaneously, are compatible with Windows, Apple & Android operating systems and have a range of add-ons to allow data to be linked with third party software such as GoCardless or iZettle.

Cloud based software is constantly backed-up and saved by the software provider, and you can grant us direct access so there is no more need for taking and sending over backups. The software is constantly updated too so there’s no need to upgrade every few years.

If you’d like to discuss the packages available for your bookkeeping needs, or if you’re a Sage user and looking to upgrade to one of their subscription based products, please contact us and we can find the best option for you – we might even be able to obtain a lower subscription cost compared to going direct.

 

Matt Smith, Accounts Audit & Tax  

0116 24243400

Tax Calendar

The following Tax Events are due on 19th July 2017:

Business Tax Events

PAYE quarterly payments are due for small employers for the pay periods 6th April 2017 to 5th July 2017.

This deadline is relevant to small employers and contractors only. As a small employer with income tax, national insurance and student loan deductions of less than £1,500 a month you are required to make payment to HMRC of the income tax, national insurance and student loan deductions on a quarterly basis.

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 21st July 2017 unless you are able to arrange a ‘Faster Payment’ to clear on or by Saturday 22nd July. In year interest will be charged if payment is made late. Penalties also apply.

PAYE Student loan and CIS deductions due for the month to 5th July 2017.

This deadline is relevant to employers who have made PAYE deductions from their employees’ salaries and to contractors who have paid subcontractors under the CIS.

Employers are required to make payment to HMRC of the income tax, national insurance and student loan deductions. Contractors are required to make payment to HMRC of the tax deductions made from subcontractors under the CIS.  

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 21st July 2017 unless you are able to arrange a ‘Faster Payment’ to clear on or by Saturday 22nd July. In year interest will be charged if payment is made late. Penalties also apply.

Class 1A NIC due for 2016/17.

This deadline is relevant for employers who have provided their employees with benefits for 2016/17. These benefits should have been reported by the 6th July and the amount of the Class 1A employer only NI liability due calculated on the form P11D(b).

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 21st July 2017 unless you are able to arrange a ‘Faster Payment’ to clear on or by Saturday 22nd July. Interest will be charged if payment is made late. Penalties may also apply. 

We have a Tax Calendar on our website so you never miss a deadline to see future deadlines please visit our calendar  https://www.torrwaterfield.co.uk/resources/tax-calendar 

RESTRICTION ON INTEREST RELIEF ON RESIDENTIAL BUY TO LET PROPERTIES

As many owners of rental properties will be aware, from 6 April 2017 there is a restriction on the tax relief available on mortgage interest on residential Buy to Let (BTL) loans. The restriction, which is being phased in over 4 tax years to 2020/21, will eventually limit tax relief to the basic rate of income tax, currently 20%.

For a 40% tax payer (usually taxable income over £44,000) the staggering of the restriction means that over the next 4 years, tax relief on interest will be reduced by 1/8 each year to 50% of its 2016/17 level by 2020/21. For example, a 40% taxpayer paying £2,000 in BTL mortgage interest each year will currently be entitled to £800 of tax relief; this will reduce by £100 a year to £400 by 2020/21. As income is assessed before interest is deducted, more people will find themselves in the 40% tax bracket.

This, combined with the extra 3% Stamp Duty applying to additional residential homes being purchased, amounts to a significant increase in the tax burden relating to owning residential rental property.

The tax relief restriction does not apply to companies letting residential properties, so we are experiencing an increase in requests by individuals and couples wishing to set up a limited company to acquire properties they would like to buy for rental purposes. However, the increase in Stamp Duty still applies and commercial BTL mortgage rates tend to be higher than personal rates.

In some very restricted circumstances, it is possible to transfer existing rental properties into a limited company, taking advantage of incorporation relief to hold over Capital Gains, and in even more limited cases, to avoid payment of Stamp Duty on such a transfer.

If you would like to know more, please email peter.morris@torrwaterfield.co.uk or call 0116 2423400

Tax investigations: What to do when HMRC comes knocking

Your business could be picked out of a hat for a tax investigation.  However, the Taxman now has extremely sophisticated software and tools to analyse your accounts and tax returns.  These days it is more likely that a business will be quickly and easily targeted for an investigation if it stands out for any of the following reasons:

  • Late filing of tax returns
  • Unpaid tax liabilities
  • Errors or omissions on tax returns
  • Fluctuations in tax returns (a drop in income, or increased costs)
  • You receive a tax refund (common for VAT returns where sales are zero rated)
  • Your income levels do not match the ‘norm’ for your business sector
  • Exceeding turnover thresholds for various tax schemes and not acting accordingly
  • You work in a high risk industry that has been targeted by HMRC
  • Your income levels are not consistent with your standard of living
  • HMRC receives a tip-off

HMRC could investigate your business in relation to its CIS, PAYE, VAT, Corporation tax or Self-Assessment Tax Returns.

Don’t Panic

Whilst HMRC may have found an inconsistency in your tax returns, or highlighted a risk area, there could be any number of legitimate reasons for this.

In most cases we find that providing HMRC with full answers to their questions, and sending them the necessary documents and evidence, will lead to them simply agreeing with your tax calculations and moving on.

What to do

  • Keep high quality accurate records
  • File returns on time
  • Pay your tax on time
  • Seek advice from TorrWaterfield

Contact TorrWaterfield – 0116 2423400

If you do receive a letter from HMRC, contact us straight away.  We can assist you throughout the entire tax investigation. 0116 2423400

We will:

  • Offer help and advice
  • Contact HMRC on your behalf, replying to their correspondence by post, email and telephone
  • Use our premises for meetings with HMRC
  • Appeal against HMRC’s decisions if necessary
  • Keep you updated throughout the whole process

Fee Protection

Many investigations are concluded after one letter, meeting or phone call.  But some can be on-going for months or years.

We encourage all of our clients to take out our fee protection.  ThStuart Caney April 2012is typically costs £190 per year.  We can then recover our cost from a third party, rather than charge you for our services. 

Stuart Caney, Accounts & Tax 

If like many of our clients you wish to benefit from this please contact Hollie Crown now for a personalised quote.

Construction Industry – Subcontractor verification changes from 6 April 2017

Construction Industry – subcontractor verification’s

HMRC have confirmed in the latest Employer Bulletin that changes will be made to the verification of subcontractors in the construction Industry Scheme (CIS) from 6 April 2017.

From 6 April 2017, contractors must use an approved method of electronic communication to verify their subcontractors. So from 6 April 2017 HMRC will no longer accept any telephone calls to verify subcontractors and from then contractors must verify subcontractors using:

  • the free HMRC CIS online service, or
  • commercial CIS software.

This change is one of a series made to CIS to increase HMRC efficiency and accuracy, and to reduce administration. HMRC are also reminding contractors that they have also introduced additional features of the online system including the ability to amend returns online, and the addition of an online message/alert service.

Please contact us for help with CIS issues. 0116 2423400

Are you a parent? What are your childcare choices?

In our Winter 2016 newsletter we led with an article about the new Tax-Free Childcare scheme that was expected to be launched in early 2017.

HM Revenue and Customs have today launched the Childcare Choices website which can be reached from the related article:

https://www.gov.uk/government/news/uk-families-will-soon-see-bills-cut-as-date-announced-for-the-launch-of-tax-free-childcare

The article also gives details of the availability of up to 30 hours of free childcare for 3 to 4 year olds from September this year.

We understand that parents can pre-register from Wednesday, with the new scheme launching at the end of April.

If you require any further information or advice then please contact us 0116 2423400 

Neil Fordintro-desktop-full

Spring Budget 2017

I am sure that you have seen the headlines in the papers this morning about the Budget and for a detailed analysis please see the report on our website:

www.torrwaterfield.co.uk/news/budget-report.

The items that have caught my attention and I think are relevant to most people are as follows:

National Insurance for the self-employed

At present, if self-employed, you pay class 2 National Insurance of £145.60 for a complete year, and class 4 at 9% based on your level of profits.  The Government do not think that this is fair as employees pay National Insurance at 12%.  To level this position, class 2 National Insurance will be abolished from 06/04/2018 and the class 4 element will increase to 10% from that date, and to 11% from 06/04/2019, thus bringing the self-employed more in line with the employed.

Dividend changes again …

From 06/04/2016 broadly the first £5,000 of dividend income is taxed at 0 % (Dividend Allowance).  This will continue until 05/04/2018.  However, from 06/04/2018 the Dividend Allowance will reduce to £2,000.  This will mainly affect the family company shareholder and increase their tax liability as follows:

Basic rate taxpayer – additional tax of £225

Higher rate taxpayer – additional tax of £975

Additional rate taxpayer – additional tax of £1,143

Individual Savings Accounts (ISAs)

 The overall limit is increasing from £15,240 to £20,000 on 06/04/2017.

Property and trading income allowances

Although this was mentioned last year it comes into play on 06/04/2017. It is as it says, so if you have property or trading income of £1,000 or less you will no longer need to declare this or pay tax on it.  This could cover small amounts of rent from Air ‘bnb’ activities or trading on ebay. 

New Childcare provisions

 If you are taking out new childcare provisions from 06/04/2017 then, instead of opting for a salary sacrifice scheme and receiving vouchers, for every 80 pence that you contribute the Government will contribute 20 pence. The maximum the Government will contribute will generally be £2,000.

Making Tax Digital

This will be introduced on 06/04/2018 for businesses, the self-employed and landlords who have profits chargeable to Income Tax and pay Class 4 National insurance Contributions where their turnover is in excess of the VAT Threshold, which will be £85,000 from 01/04/2017.

As this is a very new area please contact us for further information.

Salary Sacrifice

 From 06/04/2017 this is changing, but it is still beneficial for both the employer and employee to sacrifice salary in respect of employer provided pensions, childcare vouchers, workplace nurseries and cycle to work schemes. 

Construction Industry

The government are launching a consultation on 20 March 2017 to look at various areas, including the qualifying criteria for Gross Payment Status and options to combat VAT supply chain fraud in supplies of labour.

In addition to the above, certain other changes come into force on 06/04/2017 that have been mentioned in earlier Budgets namely:

Restrictions on residential property interest

Landlords will no longer be able to deduct all of their finance costs from their property income.

Inheritance Tax residence nil rate band

There will be an additional nil rate band for deaths on or after 06/04/2017 where an interest in a main residence passes to direct descendants.

As mentioned above I have only mentioned the areas that I believe will be most relevant to the majority of our clients but other areas can be found on our website.

Please contact us if you have a specific query. 0116 24243400

Julia Harrison, Tax ManagerJulia Harrison April 2012

Time for new change

As you may or may not be aware The Royal Mint has revealed that a new issue of the £1 coin is to take place and is set to be released on 28th March 2017.

So why change?

Approximately 1 in 30 £1 coins are counterfeit – this in itself is a fairly high amount.

However, when you put this ratio into the estimated amount of £1 coins in circulation it is staggering.

As of March 2014, The Royal Mint estimated that there were 1,553,000,000 £1 coins in circulation of which 3.04% were counterfeit – meaning that there is around £47,211,200 of counterfeit £1 coins in circulation. The new coin should be considerably more difficult to attempt to fake due to a number of new features.

What are the features?

12-sides – New distinctive shape – making it instantly recognisable.

Bimetallic – it is made of two metals. The outer ring is gold coloured (nickel-brass) and the inner ring is silver coloured (nickel-plated alloy).

Latent image – it has an image like a hologram that changes from a ‘£’ symbol to the number ‘1’ when the coin is seen from different angles.

Micro-lettering – it has very small lettering on the lower inside rim on both sides of the coin. One pound on the obverse “heads” side and the year of production on the reverse “tails” side, for example 2016 or 2017.

Milled edges – it has grooves on alternate sides.

Hidden high security feature – a high security feature has been in built into the coin to protect it from counterfeiting in the future.

When will this happen?

The new coins will be introduced on 28th March 2017 leading to a co-circulation period where both old and new coins will be accepted. On 16th October 2017 a demonetisation period will begin where the old £1 coins are under no obligation to be accepted and should not be redistributed – they can however be deposited into most high street banks.

How can it affect my Business?

If you have a cash handling business then you need to ensure all machines that accept pound coins are compatible with the new design and if not, then your machinery supplier needs to be contacted as a matter of urgency. Once October 2017 comes around you have the right to refuse the old style one pound coins as this is the beginning of the demonetisation period. As mentioned above, once this time comes, do not worry, as the old style pound coins can be deposited into most high street banks for a significant period of time.

The pound won’t be round for much longer…

If you would like to discuss this more please contact us 0116 2423400

Brook Lucas, Accounts & Tax 

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