News – R&D Claims
HMRC expects to be processing R&D tax credit claims once again
- The tax authority paused all payments on April 28 so it could investigate irregular claims
- By the end of August, HMRC now expects to be processing 80% of the claims within 40 days
HMRC has addressed the delay in R&D tax credit processing times and paused payments in a message to the Chartered Institute of Taxation (CIOT).
HMRC stated that since April, it has faced an increase in fraud within the R&D tax credit relief system and paused all payments on 28 April 2022 so it could investigate irregular claims.
By the end of August, HMRC now expects to be processing 80% of the claims within 40 days.
Since 1 April, HMRC had received over 8,000 R&D claims, which all needed further scrutiny.
Over 1,000 letters have been issued to claimants who have been identified as high-risk, challenging and irregular claims.
HMRC has requested that claimants do not contact the R&D helpline and for agents and companies to instead review their claims via their online accounts.
A spokesperson from HMRC said:
“We recognise that these additional checks may cause delays to legitimate businesses and appreciate their patience as we work through these exceptional circumstances.
“We hope that our recent activity reassures agents that we are committed to tackling abuse of the R&D relief scheme, ahead of the R&D reforms announced previously at Autumn Budget 2021.”
News – Imports
One month left for importers to move to single customs platform
- HMRC is writing to all declarants and traders affected by the change
- Businesses with customs agents should check they are ready to use the Customs Declaration Service
Businesses importing goods only have a matter of weeks left to move across to the UK’s new streamlined customs system.
Import declarations must be submitted through the new Customs Declaration Service from 1 October this year when it takes over from the Customs Handling Import and Export Freight (CHIEF) system for import declarations.
HMRC is writing to all declarants and traders affected by the change to urge them to access the help available now and move to the Customs Declaration Service.
Businesses with customs agents should check they are ready to use the Customs Declaration Service. Those without a customs agent must set themselves up to make their own declarations using software that works with the system.
Julie Etheridge, HMRC’s Director of Programme and Operational Delivery for Borders and Trade said:
There is only a month left until businesses must use Customs Declaration Service for imports. Businesses who are still waiting to move need to start the process now or face possible disruption to their business.
Those concerned about moving across to the Customs Declaration Service should work with a customs agent who is ready to use the system and can make declarations on their behalf.
The Customs Declaration Service was launched in 2018 and import declarations when moving goods into the UK have been made through it since then. The service will replace the 30-year-old CHIEF system, representing a significant upgrade by providing businesses with a more user-friendly, streamlined system which offers greater functionality.
This marks the first step towards the government’s vision of a Single Trade Window, which will have considerable benefits for businesses through reduced form-filling, better data use across government and a smoother experience for users.
To help all businesses and agents prepare for the Customs Declaration Service, declarants are being contacted by phone and email to inform them of steps they need to take. Further information is available on GOV.UK, including a Customs Declaration Service toolkit and checklists, which break down the steps traders need to take. Traders can also register or check they have access to the Customs Declaration Service on GOV.UK and access live customer support services for additional help.
There is more information about using the Customs Declaration Service on GOV.UK.
This article was derived from gov.uk: https://www.gov.uk/government/news/one-month-left-for-importers-to-move-to-single-customs-platform
News – MTD
HMRC confirms MTD penalties from November
- HMRC can charge a penalty of up to £400 for filing a return which is not an electronic submission
- The online VAT return will remain available to those with a digital exclusion exemption
The soft landing penalty waiver for Making Tax Digital for VAT will be removed from November.
HMRC chief executive Jim Harra stated that, from Tuesday, November 1, 2022, businesses will no longer be able to use their existing VAT online account to file their quarterly or monthly VAT returns.
Businesses that file annual VAT returns will still be able to use their VAT online account until May 15, 2023.
By law, VAT-registered businesses must now sign up to Making Tax Digital (MTD) and use MTD-compatible software to keep their VAT records and file their VAT returns. If they don’t sign up for MTD and file their VAT returns through MTD-compatible software, they may have to pay a penalty.
HMRC stressed that penalties will come into force from November for anyone who does not use the MTD for VAT digital reporting system.
HMRC can charge a penalty of up to £400 for filing a return which is not an electronic submission.
ACCA warned that a new points-based penalties regime is proposed for VAT (including MTD) and income tax self assessments. The changes will apply to VAT customers for accounting periods beginning on or after April 1, 2022, and to ITSA customers with business or property income over £10,000 per year (who are required to submit digital quarterly updates through Making Tax Digital (MTD) for ITSA) for accounting periods beginning on or after April 6. 2024.
The new penalty regime works as follows:
- A default is recorded for failure to observe the MTD rules or missing a filing;
- Taxpayers then enter a surcharge period, lasting 12 months, if they fault again. Surcharges are calculated as percentage penalties of the VAT due on the latest return;
- An accumulated points system then applies for further faults if they happen within 12 months (the 12-month surcharge period is reset each time there is a new fault); and
- The points translate into increased percentage surcharges for each accumulated default. They start at 2% and scale up to 15%.
If businesses are already exempt from filing VAT returns online or if they or their business are subject to an insolvency procedure, they are automatically exempt.
News – Pension Saving
Savers should ‘strike a balance’ on pension saving amid cost-of-living crisis
- Those starting at 37 could expect to save £160,319 (£264,298 less)
- While starting at 42 would give £108,860 (£315,758 less), and starting at 47 would give £70,640 (£353,978 less)
Savers have been urged to “strike a balance” on short- and long-term financial commitments amid the cost-of-living crisis, after research from Standard Life found that those starting pension saving at age 22 could have £112,000 more at retirement than those starting at 27.
The analysis showed that someone earning £23,000 per year and paying standard monthly auto-enrolment contributions from the age of 22 would have a total retirement fund of £424,618 by age 68.
In contrast, some waiting until 27 to start contributing to a pension could expect a total pension pot of £312,266, over £112,000 less.
Standard Life also showed that the disparity grew even more the later pension savings started, as those saving at 32 could expect £226,707 at age 68, £197,911 less than starting at 22.
Those starting at 37 could expect to save £160,319 (£264,298 less), while starting at 42 would give £108,860 (£315,758 less), and starting at 47 would give £70,640 (£353,978 less).
The company explained that this disparity is due to the impact of compound interest, explaining that starting a pension earlier in life will allow compound interest to build each year, meaning those who start saving later on will not generally benefit to the same extent.
Standard Life managing director for customer savings and investments, Jenny Holt, commented: “It’s amazing to see how just a five-year delay in saving in your 20s can significantly reduce the pension you retire on by tens of thousands of pounds.”
Holt acknowledged that times may be tough at the moment in the context of the cost-of-living crisis and it may be tempting to think about putting off the long-term financial future and purely focus on the short term.
However, she argued that, if finances permit, it is best for savers to engage with their pension earlier.
“The longer you wait to start the worse off you could be by the time you stop working, so if you’re able to save into a pension your future self is likely to thank you for it,” she continued.
Industry experts have previously raised concerns over the impact of the cost-of-living crisis on pension saving trends, pointing out that while pausing or reducing contributions can have a significant impact for savers, there are other priorities that savers will need to consider in light of rising prices.
Indeed, commenting in response to research from B&CE published today (31 August), the Pensions and Lifetime Savings Association (PLSA) warned that “during a time of fast rising energy and food bills, for most savers there are far more immediate financial concerns than pensions”.
This article was derived from Pensions Age: https://www.pensionsage.com/pa/Savers-urged-to-engage-with-pension-early-despite-cost-of-living-concerns.php
Forecasting underway for potential emergency Budget
Preparatory work is already underway from the Office for Budget Responsibility (OBR) on forecasting for a potential budget, the organisation has confirmed in a letter to the Treasury Select Committee.
As the UK braces itself for an impending recession, the likelihood of a September fiscal event grows by the day.
Unless the incoming Chancellor doesn’t ask, the OBR is ready to independently scrutinise any potential fiscal announcement to tackle the cost of living crisis.
In agreement with the Treasury, the OBR started work on July 29 so it would be ready to publish an economic and fiscal forecast in September.
The OBR usually requires a 10-week window for a multi-stage iterative forecast process to be undertaken, but due to the ‘exceptionally accelerated timetable’ the forecast would be less comprehensive than previous Budgets.
Companies House to launch single sign-in
Companies House is launching a single sign-on service to make it more accessible for its users.
The WebFiling account will help users with extra security features and is the first move towards Companies House creating a single sign-in across all its services.
A launch date for the new service has not been confirmed but Companies House aims for it to be available this autumn.
Users will benefit from multi-factor authentication and will have more control and access to details of who is authorised to perform the filing for the company.
Once users have linked their company to their account, they will not need to enter an authentication code every time accounts and documents are filed online.
Once the new account is launched, company directors and owners will also be able to digitally authorise themselves and other directors to file for any new company as part of the online incorporation process.
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