UK taxpayers that file a tax return will need to pay a variety of self-assessment tax and NIC liabilities that will fall due at the end of January 2021. They include:

· The second payment on account for 2019-20 if deferred when first due 31 July 2020.

· Any balance of taxes unpaid for 2019-20

· The first payment on account for 2020-21

The second two amounts will have been quantified when your self-assessment tax return was filed for 2019-20.

If you have concerns that you will not have sufficient funds to meet these liabilities on 31 January 2021, it is possible to negotiate under HMRC’s time to pay scheme. On their website HMRC offer the following advice:

If you cannot pay your Self-Assessment tax bill

You can set up a payment plan to spread the cost of your latest Self-Assessment bill if:

• you owe £30,000 or less

• you do not have any other payment plans or debts with HMRC

• your tax returns are up to date

• it’s less than 60 days after the payment deadline

You do not need to contact HMRC if you set up a payment plan online. Call the Self-Assessment helpline if you’re not eligible for a payment plan or cannot use the online service.

Self-Assessment Payment Helpline
 

Telephone: 0300 200 3822
Monday to Friday, 8am to 4pm
Find out about call charges

If you cannot pay other taxes

You might be able to set up a Time to Pay Arrangement with HMRC if you’re unable to pay any other taxes in full. This lets you spread the cost of your tax bill by paying what you owe in instalments.

How you do this depends on whether you’ve received a payment demand.

If you’ve received a payment demand, like a tax bill or a letter threatening you with legal action, call the HMRC office that sent you the letter. If you’ve not received a bill or letter, call the Payment Support Service.

Payment Support Service
Telephone: 0300 200 3835
Monday to Friday, 8am to 4pm
Find out about call charges

For a man that has admitted he has concerns about the level of government funding committed to the support of businesses during the last nine months, Rishi Sunak’s disclosure last week that he is extending the furlough scheme to the end of April 2021 points to a deepening concern in government that we are not out of the woods just yet.

He also extended the deadline for making applications under the government-guaranteed loan schemes. Applications were required before 31 January 2021, this deadline is now 31 March 2021.

In his statement to parliament the Chancellor hinted that he may be offering more financial support when he stands to present his budget on 3rd March 2021.

None of us want to contemplate another year like 2020. Although the various vaccines coming online should make some difference to the efforts to control infection it is likely that these efforts will not be some magic bullet to completely tame COVID.

What is likely, is that as soon as government is able to cut-back on its furlough funding and other commitments it will turn its attention to pay-back.

This will likely involve public expenditure cuts and higher taxation. Described by the pundits in the past as austerity.

We will have wait for Rishi Sunak’s announcements on 3rd March to see how this will play out.

The options the Treasury are probably contemplating are reductions in costly tax reliefs – such as continuing higher rate tax relief for pension contributions – and increases in taxation.

Economists that have a different view of government spending and whether it needs to be paid back, will be pressing for a different fiscal agenda. They will no doubt point out that we need to kick-start the economy by encouraging investment and stimulating consumers to buy.

The Chancellor’s parting shot for 2020 will also be coloured by the outcome of the present, protracted EU trade negotiations. At the time this article was written the outcome of discussions was far from clear and mirrors the general feeling of uncertainty that has grown since the first signs of COVID appeared March 2020.

Meantime, we are required to make the best of a situation that is feeling increasingly like self-imposed house arrest and yet there is a note of optimism that 2021 will see a change in our fortunes, and for the better.

If the following criteria apply, this is what our government recommend that you do from 1 January 2021:

You:

• Are British
• Live and work in the UK
• Travel to the EU for business reasons
• Have no plans in the short-term to travel abroad for holidays
• Do not plan to move to the EU
• Run and/or own a business in the UK
• Do not employ EU citizens in your business
• Do not exchange any form of personal data with customers or suppliers in the EU
• Do not sell your products or services to the UK public sector
• Do not rely on intellectual property protection
• Do not have a website with an .eu domain
• Import and export goods from and to the EU
• Are manufacturers of consumer goods

If the above apply to your circumstances, our government advises that you need to attend to the following matters to comply with our new trading relationship with the EU from 1 January 2021:

1. URGENT Check what you need to do to export to the EU from 1 January 2021
2. URGENT Check what you need to do to import from the EU from 1 January 2021
3. URGENT Decide how you want to make customs declarations and whether you need to get someone to deal with customs for you.
4. Check if you need to pay a tariff on the goods you import from 1 January 2021
5. Get an EORI number that starts with GB to move your goods into or out of the EU. It takes up to a week and you will not be able to move your goods into or out of the EU without an EORI number.

There are also a number of specialist issues that you may have to consider including:

1. Moving goods between or through common transit countries including the EU
2. How to comply with REACH chemical regulations
3. Exporting controlled goods from 1 January 2021
4. Meeting climate change requirements from 2021
5. Movement of wood packaging material from 2021
6. Trading and moving endangered species protected by CITES
7. Applying for a trade remedies investigation

Additionally, you and your family will need to consider

1. Taking out travel insurance and health insurance before travelling to the EU.

2. Check if you need a visa or work permit.

3. Check your mobile contract as providers may reintroduce roaming charges.

4. Allow more time at border crossings.

We will need to get used to treating countries in the EU as non-local. Borders will be re-established at the end of December, no more quick-access to EU gates in airports.

Hopefully, you will have attended to most of these issues already. If not, use the hyperlinks in our text to find out what’s to do next. And call if you want to discuss these or your wider options as we grapple with Brexit and COVID-19.

From 1 January 2021, if your business is registered for VAT in the UK, you will need to consider how to treat VAT added to imports from the EU.

Accounting for import VAT on your VAT Return means you will declare and recover import VAT on the same VAT Return, rather than having to pay it upfront and recover it later.

The normal rules that may restrict the amount of VAT you can claim back will remain the same.

Who can account for import VAT on their VAT Return?

You will be able to account for import VAT on your VAT Return for goods you import into:

• Great Britain (England, Scotland and Wales) from anywhere outside the UK
• Northern Ireland from outside the UK and EU

There will be no changes to the treatment of VAT or how you account for VAT for the movement of goods between Northern Ireland and the EU.

You do not need any approval to account for import VAT on your VAT Return.

When you can account for import VAT on your VAT Return

You can do this if:

• the goods you import are for use in your business
• you include your VAT registration number on your customs declaration

When you must account for import VAT on your VAT Return

If you import goods that are not controlled into Great Britain from the EU between 1 January and 30 June 2021, you must account for import VAT on your VAT Return if you either:

• delay your customs declaration
• use a simplified customs declaration to make a declaration in your own records

You must make sure that when you complete the supplementary declaration you select that you will be accounting for import VAT on your VAT Return.

How to complete your customs declaration in order to account for import VAT on your VAT Return

When you complete your custom’s declaration you can select that you will be accounting for import VAT on your VAT Return.

If you use the Customs Handling of Import and Export Freight (CHIEF) system

On your declaration, you’ll need to enter:

• your EORI number starting with ‘GB’ which includes your VAT registration number into box 8 (Header Consignee), or, if applicable, your VAT registration number in box 44h (Registered Consignee)
• ‘G’ as the method of payment in Box 47e

If you use the Customs Declaration Service

You need to enter your VAT registration number at header level in data element 3/40.

VAT will be recorded against your EORI and will be at declaration level only.

The following update is copied from a government press release recently issued by the Department for Business, Energy & Industrial Strategy.

New proposed measures to allow workers’ greater freedom to find new or additional work were unveiled by Business Secretary Alok Sharma 4 December 2020.

In a major win for the UK’s lowest paid workers, the government will consult on banning the use of exclusivity clauses in contracts, which prevent workers from taking on additional work with other employers. This would apply to workers whose guaranteed weekly income is below the Lower Earnings Limit, currently £120 a week.

This change will put more power into the hands of an estimated 1.8 million low paid workers across the UK to top-up their income with additional work if they want to – ending an unfair penalty on hardworking Britons who want the freedom and flexibility to make a living and support their families.

It will also greatly expand the pool of talent available for businesses who rely on part-time and flexible workers, as those already in low-paid part-time employment will no longer be bound by restrictive contracts.

The plans also look to reform the use of non-compete clauses, which can prevent individuals from starting up or joining competing businesses after they leave a position. The move will ensure talented individuals have the freedom to apply their skills in another role if they wish while unleashing a wave of new start-ups across the country.

Plans involve introducing a mandatory compensation requirement for any employer that wishes to use non-compete clauses, ensuring that workers receive a fair settlement if they are restricted from joining or starting a business within their field of expertise. This aims to discourage the unnecessary and widespread use of non-compete clauses by employers.

The government is also seeking views on whether it is necessary to go further and ban non-compete clauses all together.

Exclusivity clauses were banned for workers on zero hours contracts, where employers are not obliged to provide any minimum working hours and the worker is not obliged to accept any work offered, in 2015.