The Engine Issue 8

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Read the detailed review from our recent national manufacturing temperature check

The COVID pandemic has undoubtedly had a significant impact on our lives and on business changing the “normal” to “new normal” and six months after the first nationwide lockdown across the UK, MHA surveyed its manufacturing clients and contacts across the country to assess the impact this was having.

We posed six questions which we intend to return to on a quarterly basis to see how the answers might change and in this edition we provide a summary of our findings and measure the overall mood of the industry during this difficult period.

The next article we focus on is the manufacturing outlook from the view of the North West and West Midlands regions of the UK. Showing a spotlight on what regional industries are trading well and recovering quicker, also highlighting where government support is needed the most to help manufacturers return to pre-COVID levels of trading.

No insight would be complete without talking about the other hot topic of the moment – Brexit. With negotiations between the UK and EU no closer to agreement the scales are tilting ever more to the UK leaving the EU with no deal in place.

Head of Sector at MHA UK, Chris Barlow comments on what the industry views are towards a no deal Brexit and what he recommends manufacturers need to put in place now to protect supply chains, operations and international trade.

Download Issue 8 of the Engine

Contact us

To discuss any of the matters raised in this edition please get in touch with Ginni Cooper, Partner or alternatively contact us here.

This update originally appeared on the MHA-UK website.

Using Personal Data & Data Protection after 1 January 2021

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Regardless of whether the UK and the EU agree a trade deal, if a business needs to continue to receive personal data from the EU for business use, they may need to take action on data protection.

If no UK data adequacy decisions have been made by the end of the transition period, UK businesses will need to map out data flows with their EU partners and put alternative transfer mechanisms in place to continue to lawfully receive personal data from the EU. Most commonly, this will require standard contractual clauses being put in place.

Businesses will also need to familiarise themselves with the data protection provisions of the Withdrawal Agreement, to ensure they are in a position to comply.

Refer to the Information Commissioner’s Office (ICO) website as they have detailed guidance on any additional steps businesses may need to take and an interactive Standard Contractual Clauses tool to use.

Further guidance is available online by searching for ‘using personal data from 2021’ on the GOV.UK website.

This update originally appeared on the website of our colleagues at MHA Monahans.

Remote Working – are you sure of the impact on your business?

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Impact of Remote Working

As we have entered a second national lockdown in the UK and other countries globally are maintaining their own domestic restrictions, it is imperative to consider what impact remote working may have on your business.

Remote working can be broadly described as an employee performing their working duties in a location other than their usual place of work (for example, working from home instead of their usual office environment).

Whilst the idea of remote working is not a new one, recent events have forced many businesses to embrace this method of working, often to the fullest extent possible. The COVID-19 pandemic has led to the closure of international borders and countrywide lockdowns and this has had a significant impact on all workforces, whether they were already globally mobile or have had to become so due to these restrictions.

Remote working from outside the UK

Employees that work remotely, but still within their own country, are unlikely to create any global compliance issues for their employer. However, employers that have employees working for them outside of the employee’s home country will need to look closely at how this affects their business.

For many jurisdictions, an employee working in a country will bring with it associated compliance obligations, and costs, for the employer. This may be in the form of:

• a requirement to register the employer as having a presence in that country
• the operation of tax and social security withholding
• or an assessment to determine whether the employee has created a Permanent Establishment (PE) for corporation tax purposes.

Whilst this may bring associated administrative expenses for your business, failure to address these local compliance obligations can lead to costly penalties and difficulty to resolve any historical issues.

Moreover, as each country tackles the COVID-19 pandemic in their own way, it does mean less consistency when considering mitigating circumstances. For example, one country may lift travel restrictions before another, so an employee may still not be able to return to their usual country for work purposes but the authority in the host country may no longer allow a relaxation of local employer compliance obligations.

The key initial thoughts for your business – so you can be sure of the impact – are therefore:

• Do you have employees working across borders? Are you satisfied you have considered all local employer compliance obligations and accounted for these costs?
• Are you sure you know where all your employees are working? The pandemic has led to many different working patterns that may not yet have been communicated to you by your employees.
• If you are considering implementing, or updating, a remote working policy, possibly following a request from your employees, are you comfortable you can track their working pattern for employer compliance purposes?

Contact Us

Please get in touch by emailing us at info@mooreandsmalley.co.uk, if you need support.

This update originally appeared on the website of our colleagues at MHA Macintyre Hudson.

Self-Employment Income Support Scheme (SEISS) Grant Extension

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Following the Chancellor’s announcement, as part of the Winter Economy Plan the SEISS continues to be a key part of the financial support that the Government, via HMRC, is providing to many self-employed people to help get through the economic downturn caused by COVID-19 and the lockdown.

Are you eligible?

To be eligible for the scheme you must meet the following criteria:

  • Currently be eligible for the SEISS (although you do not need to have claimed the previous grants – this is explained below)
  • Declare that you are currently actively trading and intend to continue to trade
  • Declare that you are currently impacted by reduced demand caused by COVID-19 in the period of 1 November to the date of your claim

You are currently eligible for SEISS if you meet the following conditions. The first condition is that your self-employment income is less than £50,000 and the self-employment income must be more than half of your total income. This is met in one of the two following ways:

  • Your self-employment income for 2018/19 is less than £50,000 and the self-employment income is more than half of total income for 2018/19.
  • Your average self-employment income for 2016/17, 2017/18 and 2018/19 is less than £50,000 and that average is more than half of the average of your total income for the same three years.

The other conditions are that you:

  • Have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19
  • Traded in the tax year 2019-20
  • Are trading when you apply, or would be except for COVID-19
  • Intend to continue to trade in the tax year 2020-21
  • Have lost trading/partnership trading profits due to COVID-1

How does the grant extension work?

The extension will provide two grants for the six month period from November 2020 to April 2021. The grants will be paid in two lump sums, the first for the period from the start of November until the end of January, the second for the period from the start of February to the end of April. The second grant may be adjusted to respond to changing circumstances.

This grant is subject to Tax and National Insurance Contributions and will amount to 20% of your average monthly qualifying trading profits capped at £1,875 per month. This has dropped from the previous 70% with a cap of £2,190.

Making a claim

The government will release full details about when and how you can make a claim soon although we expect you will have to apply online via the government website.

Contact us

If you have queries regarding the SEISS please contact our tax team if you require advice on this issues.

A version of this blog originally appeared on the website of MHA member firm, MHA Tait Walker.

Government announces further extension to Furlough Scheme

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On 5 November 2020 the Chancellor Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) – also known as the Furlough scheme – will be extended for a further five months.

The furlough scheme was initially extended until 2 December. However, evidence from the first lockdown showed that the economic effects are much longer lasting for businesses than the duration of restrictions. Hence the Government has decided to extend the scheme until the end of March 2021, with a review in January.

CJRS key points to note

  • The grant will be paid at the rate of 80% of reference pay, capped at £2,500 per month
  • Employers will therefore still need to pay:
  • Employer National Insurance Contributions (NICs), and
  • Pension contributions
  • Flexible furloughing will be allowed in addition to full-time furloughing
  • Neither the employer nor the employee needs to have previously used the CJRS that was in place from March to October
  • There will be no gap in eligibility for support between CJRS schemes

While the government updates the system, employers will submit their wage claim to the government, and be refunded afterwards. After that, they will be paid upfront to cover the cost.

Further details, including when claims can first be made in respect wage costs during November and how to claim this extended support through an updated claims service will be provided shortly.

It is still unclear what reference pay will be applied, as there are now ‘new’ employees able to participate. The working assumption is that, like the delayed JSS arrangements, it will be the higher of the normal regular contractual pay at 19th March or at 30th October. We will advise as soon as this is clarified or confirmed.

Qualification is as previously, but as a reminder:

Employers must have:

  • A UK bank account and
  • A UK PAYE scheme
  • Agree any working arrangements with employees

Eligible employees are:

  • Those on an Employer’s PAYE payroll by 23:59 on 30th October 2020. This means employees included in a Real Time Information (RTI) submission notifying payment for that employee to HMRC on or before 30th October 2020
  • Employees can be on any type of contract

Need further advice?

We will provide a further update when more details are known, but if you have queries in the meantime please contact our tax team if you require advice on this issues.

Time saving and the benefits of using Receipt Bank

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Over the past year there has been a lot of change forced upon many businesses.  If there is something positive that we can take from all of this, it is the knowledge that when required we have the ability to adapt.

So maybe now is the right time to start changing the way we work? Instead of working harder let’s try to work smarter and use the technology that is readily available to our advantage.

As an example I am often asked, when talking about the automation of a purchase ledger role, ‘What will I be doing if I’m not processing invoices manually?’ The answer to this is simple. You won’t be processing invoices or receipts so you will have the time to now do the things that you haven’t been able to get round to doing.

By taking advantage of the OCR technology available from Receipt Bank you will have extra time to concentrate on the things that you have always wanted to do in your business, or take some time away from the business to gain that home/work life balance that you have always aimed for.

Some of the main benefits of using Receipt Bank:

  • Save time and improve accuracy by uploading invoices in to your accounts package using the latest OCR Technology.
  • Can potentially save you VAT by automatically analysing your invoices and identifying the right amount of VAT to claim.
  • Save you tax by encouraging you to upload copies of receipts and invoices immediately rather than at the month end, which reduces the risk of paper being mislaid, lost or destroyed.
  • Seamless integration with Xero, Quickbooks and Sage making claiming expenses easy.
  • It runs in the browser on the desktop, laptop, tablet and many smart phones. It also has phone apps for both iOS and Android, and a new app for Apple Watch.
  • Can be given to your workforce, who can then upload their receipts and generate an automatic expense claim.
  • Keeps copies of your receipts and supplier invoices, meaning you can go paperless – saving you more time and money!
  • Maximises the use of cloud storage systems like Dropbox by uploading your receipts and invoices directly into your account, allowing you to use Receipt Bank to download them automatically for analysis.

If you are interested in seeing a demonstration of Receipt Bank, how it works or details of the prices, please get in touch with our Digital Solutions team at digitalsolutions@mooreandsmalley.co.uk.

Pension Season Preparation

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Pension certificates’ season will soon be upon us once again and, as many will have seen, PCSE can sometimes run into problems with processing the end of year certificates. What can be done  to try and help the process  run smoothly?

Partners and salaried GPs

Generally speaking, a partner or salaried GP without GP Solo earnings should not encounter too many issues. One key consideration here is whether or not previous year’s certificates have been processed. This year we have seen, on a number of occasions, PCSE being unable to process the current year certificate due to the prior year’s certificate not yet being resolved. The best way to check this is to  access the  most recent Total Rewards Statement. This can be obtained by going to https://www.totalrewardstatements.nhs.uk/ logging in and downloading a copy of the latest statement. Once downloaded we recommend that a copy  should be provided to your accountant  so they can review the  pension record. This can be a useful exercise for a number of reasons: to ensure the record  is up to date; to identify any potential errors or gaps in the  record.

GP Solo forms

A common cause for issues in the processing of certificates arises due to  GP Solo income and contributions. The reason that certificates are often rejected where there is a  GP Solo income source is due to a discrepancy between the certificate that is submitted and the doctor’s respective Open Exeter record.

It is  first necessary  to make sure that the GP Solo form(s), that form the basis of what will be included on the certificate, is correct. The easiest way to check this is  to confirm that the figure included in box I of the form (Total paid to member after deducting all employee contributions) is correct and agrees to what has actually been received. We recommend that this is  done before signing and agreeing the form.

It is also important to ensure that any employee’s contributions (and potentially AVCs, Added Years or Additional Pension contributions) have been collected by the GP Solo provider, if appropriate. The next step is to check what is currently in the  Open Exeter record. This can be confirmed by checking the  2019/20 superannuation statement which  is available from Open Exeter and the  practice manager should  know how to find this for you. It is not uncommon for the Open Exeter record to show different figures to those on the  GP Solo form. If the figures on the GP Solo form agree to those in Exeter, then there should be no issue. If there is a discrepancy, then the  GP Solo provider needs to assist to discuss and amend this discrepancy and  help to get the  Exeter record updated.

A change in  role?

If there has been a change of role from a salaried GP to a partner or vice versa then this can often cause issues with pension administration. There is a requirement to ensure that each practitioner is accurately recorded on the GP performer’s list. PCSE have recently made changes to their systems and changes to the performer’s list can be made online: https://pcse.england.nhs.uk/services/performers-lists/gp-performers-list-for-england/.

The next step is to ensure that the  Open Exeter record is up to date and accurate. If   roles have changed during the year (and the performer’s list has been updated accordingly), then there  should be  two separate local GP codes during the year. These should split out the  pension contributions between the  two roles.

We have seen on numerous occasions where all contributions are recorded on one code and have not been transferred to a new code as they should. An update to the performer’s list should trigger the opening of a new local GP code and the contributions should be moved to this. It is also important to note that an updated estimate of pensionable pay should be submitted by the practice to reflect the change in role and provide a new estimate on which the deductions are  based . If the contributions have not been transferred, then  PCSE should be contacted to  ask them to update the  record . It is also worth noting that a change in role will make the completion of the pension certificate more complicated, as  both a Type 1 and Type 2 form will be needed. Each of the respective forms will rely on the other, so it is recommended that these are prepared at the same time.

Conclusion

As ever the regulatory requirements around the processing of pension certificates and the interaction with PCSE continues to be complex. We are here to help, so please do contact us.

Contact us

If you are unsure about how the above may apply to you, then please get in touch with Chris Ellison, Healthcare Services Senior Accountant, or alternatively contact us here.

Click here to find out more about our healthcare team and the services we provide to the sector

Tax free gifts for employees

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It is that time of year again, Christmas is around the corner. However, this year is a little different as many of us  will be working from home on Christmas jumper day and it is unlikely that we be catching up with colleagues at the annual Christmas party.

To stay in the Christmas sprit employers may want to send gifts to their employees instead, however if that gift gives rise to a personal tax charge it may be unwelcome. As HMRC see gifts to employees as benefits it will be necessary to consider if the trivial benefit rules for employers and employees apply, so certain gifts are exempt from income tax and national insurance.

The key conditions

The current form of the trivial benefit rules imply that no tax is payable if all of the following points apply.

  • The gift has cost the employer  £50 or less, including VAT, per employee.
  • The gift is not cash or a cash voucher (retail gift vouchers should be allowable).
  • The gift is not a reward for the employees work, past or present.
  • The gift is not part of the work contract or other arrangement.

Tax is due on all gifts that do not meet these conditions. As this is an all or nothing exemption, gifts with a value in excess of £50 will be fully taxable in line with the benefit in kind rules.

Where the  benefits are classed as ‘trivial’, HMRC do not require any notification of these gifts  being made.

Where various gifts are bought in bulk and provided to employees, working out the exact cost per individual gift may be impractical. When this happens the average cost of the gift can be used, and it must come under the £50 limit to remain ‘trivial’.

The special treatment of directors

Directors of close companies i.e. companies owned and controlled by five or fewer shareholders, have an annual cap placed on the value of ‘trivial’ gifts they receive in one tax year. The current form of the rules has a cap of £300. General employees are not subject to this rule.

What to watch out for

There is no general rule which places a limit on the number of ‘trivial’ gifts an employee can receive in one tax year, provided all the rules are met per gift. HMRC do however have rules in place which prevent employers from trying to divide a larger gift into several smaller gifts.

An example of this provided by HMRC shows how providing an employee with a gift card costing £10, would initially fall within the ‘trivial’ benefit rules. If the employer were then to top up the same card on 7 further occasions at a cost of £10 per time the total cost to the employer would be £80. Even though the card is topped up at separate occasions, the provision of the card forms a single benefit, and the total cost would be fully taxable in line with the benefit in kind rules. Retail vouchers from different stores should not fall under this treatment as they do not constitute one single benefit, so the limit per voucher would remain at £50.

Contact us

If you are unsure about how the rules may apply to gifts you are giving to your employees, please get in touch with Uzair Qasim, Healthcare Tax Assistant Manager, or alternatively contact us here.

Click here to find out more about our healthcare team and the services we provide to the sector

Desktop or cloud accounting – is switching really worth it?

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In short – Yes – being able to access your accounting records from anywhere, is more important now than ever.

Cloud accounting has been around for many years and hundreds of thousand of small businesses are benefiting from the technology of cloud accounting software. Although, there are still some businesses who still rely on manual books or spreadsheets to record their transactions.

The cost of standard Cloud accounting bookkeeping packages range from free up to £30 plus VAT per month. The software can be easily adapted and upgraded by adding compatible applications (at a further cost) which will enhance the bookkeeping package, saving you even more time and providing better insights in to the performance of your business.

Cloud accounting software pulls through your banking transactions directly from your bank, which means you do not have to manually write or type them into books or spreadsheets. You simply allocate the transactions to categories as you go along, meaning you can instantly see how much income you have taken, payments that have gone out and what level of profit or loss you are making – this can be shown daily, weekly, monthly or annually.

Having up to date information allows you to make better decisions for your business and adapt quickly to change. The invoicing function on all the systems that we deal with are brilliant, and they allow you to send invoices via email, there is no longer a need to print invoices or post them. You can also send reminders and statements to chase up monies owed within just a few of clicks of your mouse.

The main products that we deal with at MHA Moore and Smalley are:

1) QuickBooks Online – from £7.00 – £30.00 per month
2) Xero – from £10.00 – £30.00 per month
3) FreeAgent – free to Natwest business banking customers

QuickBooks Online

• QuickBooks is the global leader in cloud accounting software with more than a million subscribers worldwide.
• They have great reporting options such as projects, department and budgeting built in as standard.
• Management report packs are simple and quick to set up and there are lots of insights available to you when you log on.
• Like FreeAgent it links to HMRC, your accountant and your bank.
• A good function for many businesses in the current climate is that you can track employee time through the software for free, which many businesses have found really helpful for furlough claims.
• There are hundreds of third-party apps which you can link to but not as many as Xero.

Xero

• Xero is the market leader in the UK having penetrated the market early on after significant growth in Australia and New Zealand.
• It is slightly more expensive than QuickBooks Online and there are additional charges for its Project management and CIS module, which are free and come as standard with QuickBooks Online.
• However, Xero has more third party integrations than QuickBooks Online meaning it provides a better ecosystem for growing businesses looking to expand quickly and wanting an accounting system linking into their other front office systems.

FreeAgent

• This is a great tool for contractors and consultants.
• It has the facility to link to your bank account, HMRC and your accountant.
• It has limited integrations to third party apps compared to QuickBooks Online or Xero.
• The more complex accounting functions, such as departmental reporting, budget reporting and advanced management reports, are limited in FreeAgent which is why I would recommend this for micro businesses.

ReceiptBank

• This is an amazing product which takes your paper invoices and posts them into your software via OCR technology. No more manually posting individual invoices.
• The software can even get invoices from some of your suppliers through a “fetch” function, which means you don’t need to even scan in the invoice! Having supplier invoices in your accounting system on a timely basis allows you to be able to focus on available cash, which leads to better business decisions.

Contact Us
To find out more about cloud accounting software and ReceiptBank please contact the Digital Solutions team.

Urgent – Third round of Small Farm Grant Scheme announced with limited application window

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The third and final round of the Countryside Productivity Small Grants scheme was announced on 7 October. The scheme is aimed at encouraging farming businesses to acquire new equipment which will improve efficiency and animal welfare, and also benefit the environment. Only equipment on the approved list will be eligible for the grant, which can be between £3,000 and £12,000 per farm, and applications must be made through the online portal by 4 November 2020.

As previously, the grant will be based on a standard cost for the equipment concerned and will cover 40% (50% in Cornwall) of that cost irrespective of the actual price paid. The approved list includes, for example, livestock handling, weighing and testing equipment, precision drills, GPS updating and input monitoring systems, wireless network repeaters and digital weather stations.

Claimants for grants in earlier rounds of the system can make further application this round, but only up to a maximum of £12,000 overall. The budget for the current round of £25 million brings the total funding offered under the schemes to £60 million.

The press release announcing the grants, confirmed that this will be the final round of the scheme. However, it went on to add that, “Powers have been included in the Agriculture Bill to allow the government to provide financial assistance to support farmers to invest in equipment, technology and infrastructure that will not only boost their productivity, but also deliver environmental and other public benefits.”

This implies perhaps that new initiatives might follow in future, along much the same lines, as part of the wider policy of subsidy reform.

Commenting on the news, MHA Moore and Smalley agriculture manager, Yvonne Coulston, said, “We welcome a third round of this very popular scheme, but are concerned at the very tight timescale for applications. Clients will have to act quickly to decide what they need, check it’s on the approved list and complete the claim.”

Find out more  

To discuss this and how we can help your agriculture and rural business, please get in touch.

This update originally appeared on the website of our colleagues at MHA Larking Gowen.