Archive for October, 2020

New rules for debt letters

Thursday, October 15th, 2020

The letters borrowers receive from their lenders when they are seriously behind on repayments will be easier to understand and less intimidating as a result of new rules proposed by the Treasury last week.

The aim is to reduce stress and anxiety that borrowers may experience if they are unable to keep up with repayments and have concerns that they will face legal action.

Unbelievably, default notices designed to give people who are falling behind on their debts fair warning before lenders take further action, have not been updated in nearly 40 years.

Research from the Money and Mental Health Policy Institute and debt charities has shown that large amounts of capitalised text and legal terms can make the information contained in the letter hard to understand, which has the unintended consequence of confusing and distressing people. This has a negative impact on people’s mental health as well as their ability to effectively manage their debt.

To counter this apparently contradictory result changes are afoot.

As part of the government’s effort to support people in problem debt, it will legislate to change the language and presentation of information in debt letters. The new rules will make debt letters less threatening by restricting the amount of information that must be made prominent and requiring lenders to use bold or underlined text rather than capital letters. Lenders will also now be able to replace legal terms with more widely understood words and letters will clearly signpost people to the best sources of free debt advice.

These new rules are the latest in a wide package of support put in place to help people struggling with their finances, especially through coronavirus. This includes £38 million of extra funding to debt advice providers this year and working with lenders and financial regulators to give people access to payment holidays on their mortgages and a range of consumer credit including credit cards, personal loans, motor finance and payday loans.

The government has also given the Financial Conduct Authority strong powers to protect consumers who borrow money, including cracking down on payday lenders, capping the cost of rent-to-own, and acting on overdraft fees.

The new rules will be delivered through secondary legislation and are expected to come into force in December 2020. All lenders will then be required to make the changes within six months.

Extension of the Job Support Scheme

Tuesday, October 13th, 2020

This extended support will be available to businesses across the UK that are required to close their premises due to coronavirus restrictions.

Businesses required to close as a result of specific workplace outbreaks by local public health authorities are not eligible to claim under this extended JSS scheme.

To make a claim, employers must have a UK bank account and be registered with a UK PAYE scheme on or before 23 September 2020.

Employers will only be able to use the scheme for employees who cannot work (paid or unpaid) for that employer.

Any payments received from government will be taxable.

What are the additional benefits offered?

  • Government will pay two-thirds of employees’ monthly salaries up to a maximum £2,100 per month, per employee.
  • Employers will not be required to contribute to wages and will only have to pay any National Insurance and pension costs.
  • This expanded JSS will be available for six months from 1 November 2020.
  • The scheme will only apply to businesses required to close due to coronavirus restrictions. It will include premises restricted to delivery or collection only services from their premises.
  • To claim, employees must be off work for a minimum seven consecutive days.

 

 

 

When will the additional JSS payment be made?

As with the wider JSS scheme, claims for November will be processed in December via an online portal. Subsequent months’ claims will thus be paid one month in arrears.

HMRC will require to see evidence to check your claims

As with other government grants, HMRC will check claims and demand repayments of any claims made incorrectly or fraudulently. In particular, employers should agree and notify claims in writing with affected employees.

HMRC may ask to see these written agreements.

HMRC have also indicated that they will be publishing the names of employers that have claimed under the scheme.

 

Cash Grants for business required to close in England

Cash grants to businesses required to close in England are also being increased. These cash grants are to support business owners with fixed costs; those costs payable even if the business is closed.

Grants will be linked to rateable values of business premises and will paid every two weeks. This should provide extra financial support to businesses across the hospitality sector that are required to close due to COVID restrictions.

  • Smaller businesses with rateable values at or below £15,000 will be able to claim £1,300 per month.
  • Medium-sized businesses with a rateable value between £15,000 and £51,000 will be able to claim £2,000 per month, and
  • Larger businesses will be able to claim £3,000 per month.

 

The devolved administrations in Scotland, Wales and Northern Ireland will be receiving additional financial support to offer similar measures in the devolved areas, should they choose to do so.

Have you over-claimed for COVID related support grants?

Thursday, October 8th, 2020

Readers who may have inadvertently over-claimed grants, the furlough scheme for example, should remedy the situation before HMRC start pro-actively investigating claims.

The Finance Act 2020, contains an amnesty for notifying HMRC of any errors or overclaims within 90 days of the later of:

  • any tax charge being payable due to the overclaim and
  • the date of Royal Assent of the Act.

As such, the earliest date this amnesty will expire will be 20 October 2020.

Businesses that have made claims – predominantly the furlough scheme – should check claims made and correct any errors within the time limits of this amnesty For example, issues that may have created over-claims are:

  • not being aware that remote staff are working, e.g. work-related emails being generated or line managers asking furloughed staff to carry out some work,
  • technical or computational issues – innocent errors such as where there is misunderstanding of the methods of certain calculations will not be targeted,
  • delays in making payment to staff for the wages due from the furlough grants,
  • deliberate fraudulent behaviour.

This amnesty will be the only chance employers have to remedy their position without any penalties being charged.

Penalties for those who fail to notify HMRC within the ‘amnesty’ period but knowingly received the CJRS grant or overclaimed the grant even though they were not entitled to claim it due to any changes in their circumstances will be based on ‘deliberate and concealed’ behaviour. This could potentially make the client liable to a penalty of 100%.

HMRC will also expect to see documentary evidence of furlough arrangements made with staff and other justifications for making claims. These would include an outline of why businesses consider their firm was or continues to be adversely affected by the coronavirus disruption.

 

New measures to sort late payers

Tuesday, October 6th, 2020

New proposals have been outlined by government to ensure small businesses in the UK are paid on time. Currently £23.4 billion worth of late invoices are owed to small firms across Britain, impacting on businesses’ cash flow and ultimate survival.

The proposals, as part of a new consultation launched 1 October 2020, look to give new powers to the Small Business Commissioner including:

  • the power to order companies to pay their partners, either as a lump sum or agreed payment plan, when a complaint against them for late payment has been investigated and upheld. Companies which do not do so could face further penalties, including fines. This will give a clear incentive for companies to pay their partners on time.
  • the power to compel companies to share information during an investigation by the SBC. This will ensure cooperation with SBC investigations and provide more information about company payment practices.
  • the power to launch investigations into suspected bad payment practice, without the need to have first received a complaint from a small business.
  • expanding the scope for complaints to the SBC, to allow the Commissioner to investigate complaints about other businesses relating to payment matters in connection with the supply of goods and services.
  • to review and report on wider business practices outside of payment matters, on instruction of the BEIS Secretary of State. This could be a practice unrelated to payment matters specifically impacting small businesses such as supply problems, or broader issues like barriers to the adoption of payment technology.
  • the power to claim investigation costs from an investigated company when there are adverse findings against them.

The consultation opens 1 October 2020 and will run until 24 December 2020. Businesses are invited to share their views.

Tax Diary October/November 2020

Monday, October 5th, 2020

1 October 2020 – Due date for Corporation Tax due for the year ended 31 December 2019.

19 October 2020 – PAYE and NIC deductions due for month ended 5 October 2020. (If you pay your tax electronically the due date is 22 October 2020.)

19 October 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2020.

19 October 2020 – CIS tax deducted for the month ended 5 October 2020 is payable by today.

31 October 2020 – Latest date you can file a paper version of your 2020 Self-Assessment tax return.

1 November 2020 – Due date for Corporation Tax due for the year ended 31 January 2020.

19 November 2020 – PAYE and NIC deductions due for month ended 5 November 2020. (If you pay your tax electronically the due date is 22 November 2020.)

19 November 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2020.

19 November 2020 – CIS tax deducted for the month ended 5 November 2020 is payable by today.

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