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Private Sector IR35 Changes From 6 April 2021

Paul Cooper IR35 , , , , ,

The new rules for IR35, which is another name for off-payroll working, will hit businesses from the private sector from 6 April 2021. They should have been in place in April 2020 but have been held back due to the COVID-19 crisis. These rules have been live in the public sector since April 2017. In a nutshell the changes mean that it will be the responsibility of the client and not the contractor to determine the employment status of contractors. In the latest article from Caroline Streatfield Bookkeeping, based in Eastbourne, East Sussex we look at what constitutes Off-Payroll working (IR35), why the new rules are being implemented, the main changes, your responsibilities according to the government and how we can help you.

Why are the new rules being implemented?

It was a year ago that Steve Barclay MP, Chief Secretary to the Treasury made an announcement that the Off-Payroll private sector rollout would be deferred for a year. It was made clear that this was a deferral and not a cancellation. The aim is ensure that people who work in a similar way to an employee but through their own limited companies broadly pay the same tax as those employed directly. By implementing the new rules, the tax advantages of individuals providing services via a limited company will be removed.

What Is Off-Payroll working?

This is a term used by HM Revenue & Customs (HMRC) to describe the following situation:

It is when an individual provides their own personal services via their own private company, known as their Personal Service Company (PSC) to an end client where the following test is met: if the worker is actually providing those services directly to the end client, the worker would thereby meet the employment status tests to make them an actual employee of the end client.

Main Changes To IR35

  • The end-client is responsible for determining if a contract is inside or outside IR35
  • Small businesses are exempt from the new rules
  • A Status Determination Statement must be provided by the end-client confirming the IR35 status of a contract
  • IR35 status dispute is led by the end-client
  • The 5% administration allowance is to be withdrawn although it will continue for PSCs working with small end clients
  • Employment tax liabilities are transferred to a relevant person who is any party involved in the payment to a PSC

What Constitutes A Small Business?

 End clients are classified as small businesses if they meet two of the following criteria for two consecutive financial years:

  • Annual turnover of no more than £10.2m
  • Balance sheet total of no more than £5.1m
  • No more than 50 employees

 Your responsibilities from 6 April 2021

You may have Tax and National Insurance responsibilities. This will apply if your worker provides services to a small private organisation and the off-payroll working rules apply. You will then be responsible for deducting tax and National Insurance from your worker’s fees and paying them to HMRC. When it comes to paying your worker, you could find yourself in a situation whereby your income for your worker’s services will have already had tax and National Insurance contributions deducted from them. If your worker provides services to public authority or to a medium or large-sized private sector client and the off-payroll working rules apply, it will mean that when you pay the worker they do not need to pay tax and National Insurance contributions again on those fees.

How can Caroline Streatfield Bookkeeping help you with the new IR35 rules?

Off-payroll (IR35) working is a broad topic and it’s not straightforward determining if the rules apply to you. However, from April 6th 2021 the emphasis will be on you as an employer to determine the contractor status. If you are struggling with off-payroll working, Caroline Streatfield Bookkeeping, based in Eastbourne in East Sussex can help you unravel this complicated status. Call us on 07982 682746 or 01323 885205 or email info@bookkeepereastbourne.co.uk. We will visit your home or workplace, if possible within East Sussex and can also work remotely to cover other locations, which are further afield.

HMRC Says Phone Scams On The Increase

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HMRC has reported that there has been a huge rise in reports of phone scams since the beginning of the year. The numbers tripled between December 2020 and January 2021. Scammers have been targeting people through texts, emails and phone calls with text messages climbing from 11,192 to 26,643 in January and phishing email rising from 39,564 to 46,210. Reasons for the increase in scams included people continuing to work from home and January being the height of the Self Assessment tax period.

Ways scammers will target you

Caroline Streatfield Bookkeeping would like to warn you that these unscrupulous people offer bogus tax rebates, as well as threatening legal action over unpaid tax bills and offering fake grants or other financial support. Another ruse is to inform people that their National Insurance (NI) number has been used in an illegal scam. Here they demand payment on a debt that doesn’t exist or demand personal and financial details.

Advice from HMRC

A spokesperson for HMRC said: “If someone calls, emails or texts claiming to be from HMRC, saying that you can claim financial help, are due a tax refund or owe tax, or asks for bank or other personal details, it might be a scam.”

You can check the scams checklist from HMRC and also find out how to report tax scams. Naturally, if you can’t verify the identity of the caller, HMRC recommends that you do not speak to them.

Actions to take to keep you safe

  • Do not give any private information away
  • Forward suspicious emails claiming to be from HMRC to phising@hmrc.gov.uk and texts to 60599
  • Contact your bank immediately if you think you may have fallen victim to a scam
  • Report it to Action Fraud

For more information visit the government website.

 

 

 

Deadline Is Approaching – Less Than 100 Days To File Your Self Assessment

Paul Cooper Tax Returns , , , , , , ,

File your self-assessment now!

The deadline of 31 January 2021 to file Self Assessment forms is fast approaching and will be here before we know it. Even though it has been an extraordinary year, you will still have to file your Self Assessment forms by the deadline. You should have been notified by HMRC as to whether you need to file a Self Assessment tax return and of course if you are not sure, please call the friendly team at Caroline Streatfield Bookkeeping, based in Eastbourne in East Sussex. We will be delighted to offer help and any guidance you may need. We strongly advise you do not leave filing your Self Assessment form until the last moment. The sooner your tax return is submitted, the quicker you will know how much your tax contribution will be.

Changes to the furlough scheme due to the second lockdown

The furlough scheme was due to end at the end of October but is now being extended until December. It will help employers who had previously had to top up furloughed wages by 20% with the government paying 60%. The state will now put in the full 80%, but as an employer you will have to cover your employees’ national insurance and pension contributions. To be eligible, employees must have been on the payroll by 30 October 2020.

Self-Employment Income Support Scheme Grant Extension (SEISS)

 There are also changes to the Self-Employment Income Support Scheme (SEISS) with the government taking more action to support the self-employed. The SEISS Grant Extension will provide critical support to the self-employed in the form of 2 grants. These are available for two 3-month periods covering November 2020 to January 2021 and February 2021 to April 2021. For the first period, the government will provide a taxable grant covering 55% of average trading profits, which will cover 3 months of profits, capped at £5,160. It will be paid out in a single instalment. This is an increase to the previously announced level of 40% of trading profits to 80% for November 2020. The second grant starting on 1 February 2021 will be reviewed and an announcement made in due course. You should note that the grants are taxable income and subject to National Insurance contributions.

How can Caroline Streatfield Bookkeeping Help Your Business

 If you are a local tradesman or professional wanting bookkeeping and Self Assessment services, Caroline Streatfield Bookkeeping is here to help. Much of our business comes through referrals with recommendations coming because of our personal approach and our honest and open pricing structure. We are here to help all types and sizes of businesses and will listen and respond to the needs of each client – we know that one size does not fit all. Call us on 07982 682746 or 01323 885205 or email info@bookkeepereastbourne.co.uk to find out more.

A word of warning about scam emails and text messages

HMRC has pointed out that there has been an increase in scam emails, calls and texts. Please do not respond if someone claiming to be from HMRC contacts you. They may say that financial help can be claimed or that you are owed a tax refund and will ask for personal information including your name, credit card and/or bank details. Please note that you can forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599. Again, if you are not sure, please do get in touch with Caroline Streatfield Bookkeeping.

Less than 100 days to file your tax return.

New Government Support For Businesses – Winter Economy Plan

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New support was announced on 24 September for businesses that continue to feel the impact of coronavirus. There is a wide range of help available aimed at supporting jobs and the economy over the forthcoming months. The government reports that as restrictions have changed, government support has evolved with the goal of supporting people’s jobs and their livelihoods through these uncertain times. In the latest article from Caroline Streatfield Bookkeeping based in Eastbourne, East Sussex, we look at the measures, known as the Winter Economy Plan, in more detail which will help business owners to manage their finances and protect jobs due to reduced or uncertain demand.

Additional government support:

  • New Job Support Scheme
  • Extension to the Self-Employed Income Support Scheme (SEISS)
  • Help for the hospitality and tourism sectors through a continuation of the reduction in VAT
  • Extension of the application period for 4 government-backed loan schemes
  • Changes to the terms of repayment for Bounce Back Loans (BBLS) and Coronavirus Business Interruption Loans(CBILS)
  • New payment schemes to ease the burden of paying VAT and Self-Assessment tax liabilities

Job Support Scheme

This comes into force from November 1 and will run for 6 months. It is aimed at protecting jobs where businesses are facing a lower demand for their services or products over the winter months due to COVID-19. Here the government will contribute towards the wages of employees who are working fewer hours due to reduced demand. You will be able to claim in December with Grants paid on a monthly basis. This scheme is in addition to the Job Retention Bonus. Further information can be found about the scheme by clicking here.

Extension to the Self-Employed Income Support Scheme (SEISS)

This is aimed at protecting the self-employed with fresh support grants available. These are not as generous as the previous grants. At the start of November, there will be a first taxable grant to cover 20% of average trading profits. This will be paid out in a single instalment to cover 3 months of profits with a limit of £1,875. The second grant will cover the period from February 1 2021 until the end of April. However, the amount has not been set.

Extension to the reduced rate of VAT for Hospitality and Tourism

The temporary rate of VAT (5%) has been extended. The relief came into effect on 15 July 2020 and will now run until 31 March 2021.

VAT Deferral New Payment Scheme

Any VAT payments that were due between 20 March and 30 June 2020 and which have been deferred will need to be paid to HMRC by 31 March 2021. The New Payment Scheme can be used to spread these payments over equal instalments up to 31 March 2021. However, these payments can be paid as normal or you can make Time To Pay arrangements with HMRC.

New Self Assessment Self-Serve Time To Pay Scheme

If your July 2020 Payment on Account was deferred, you will need to pay this deferred amount in addition to any balancing payment and first 2020/21 Payment on Account by 31 January 2021. If you cannot pay your Self-Assessment bill in full, a Time to Pay payment plan can be set up online which can run for up to 12 months. If your debts are up to £30,000, you’ll get automatic and immediate approval. However if your debts are larger than this and you are unable to pay in full, you may still be able to use the scheme, but you will need to speak to HMRC.

How can Caroline Streatfield Bookkeeping help with the New Winter Economy Plan?

If you’re not sure how the Winter Economy Plan will work for your business please do get in touch with the experts at Caroline Streatfield Bookkeeping in Eastbourne. Call us on 07982 682746 or email info@bookkeepereastbourne.co.uk to find out more about how the government packages could help you. We have over 20 years of experience and can assist you with your bookkeeping and VAT requirements, Self Assessment tax returns as well as payroll and automatic enrolment.

Starting A New Business And Becoming Self-Employed

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Although the last few months have been difficult and the future will continue to be unknown for some time, it has been a time when many people have had an opportunity to consider and reflect on their work prospects with their current employers. Some may have had the worst possible outcome and lost their jobs, but for others it has proved to be a wake-up call where they have been able to evaluate their current employment. Some may even be contemplating starting up their own businesses and joining the ranks of becoming self-employed.

A good time to start a new business?

History indicates that there can be a spike in new business start-ups after a recession and that many successful companies have been formed during unlikely times. In the latest article from Caroline Streatfield Bookkeeping, we look at why it’s not unusual for new businesses to start-up following a recession, what you have to consider becoming self-employed and how CSB can help you.

Why do new businesses start-up during a recession?

 It could be quite simply that you have lost your job and you have to do something. There really isn’t anything wrong in finding yourself in this position; it will just mean that you will have to proceed with some urgency. There are also lots of good reasons why it’s a good time to start.

  • A lot of talent is available
  • Government initiatives are accessible
  • Banks are willing to finance new ventures – better credit options
  • People are more likely or have to take the risk
  • Adversity brings people together
  • Less competition

What to think about if you become self-employed

 Economic downturns can bring advantages to start-ups and it could be an excellent time to open a new business. There are lots of pros to starting up your own business and perhaps one of the most important reasons is that you become your own boss. You will have more control and flexibility and can work around your commitments. However, you will have to manage your own business including cash flow, keeping accurate records and completing tax returns.

  • Formulate a business structure – take advice if necessary
  • Register as self-employed within three months
  • Register for VAT if taxable turnover is expected to exceed £85K
  • Set up a business bank account
  • Establish a process for your accounts, business expenses etc.
  • Look at the accounting software you need
  • Arrange insurance

How can Caroline Streatfield Bookkeeping help?

CSB is a bookkeeping company with offices based at Archer House in Eastbourne and we can help you with any questions you may have about starting your own business and becoming self-employed. We can also advise on your tax implications, National Insurance, registering as self-employed and help you with the best software for your business. Call us on 07982 682746 or 01323 885205 or email info@bookkeepereastbourne.co.uk to find out more about becoming self-employed and how we can help you.

How To Reconcile Your Bank Account In QuickBooks?

Paul Cooper #businesssupport, Quickbooks, Tax Returns , , , , , ,

As a business owner, you need to keep accurate financial accounts and reconciling a bank statement is an important part of ensuring this, so that the monies you record are consistent with the figures that your bank is reporting. Here, at Caroline Streatfield Bookkeeping, based in Eastbourne in East Sussex we recommend bank reconciliation should be carried out every month in order to ensure accuracy of your accounting records, which could flag up unusual transactions quickly. Software such as QuickBooks makes this process a lot easier as there is an automatic bank feed, which allows information from your business bank account to be fed into the accounting system. In our latest blog, we look at what bank reconciliation is, how you do it, top tips and why you might see errors in your figures.

What is bank reconciliation?

This is the process of matching the balances in your business accounting records to the corresponding information in your bank statement. Bank reconciliation will establish if there are any differences between the two cash balances and if there are, you will need to check your business accounting records. Regular checks will highlight anything that appears fraudulent and any accounting errors.

How to carry out a bank reconciliation?

  • Compare your 2 statements
  • Add bank-only transactions to your book balance
  • Add book transactions to your bank balance
  • Compare both of the adjusted balances

First of all you will need to see if both cash balances match. You will have to go through the transactions individually and make a note of any discrepancies. This process will ensure all entries have been downloaded and checked for any errors. You could find for example that duplication has resulted if a transaction has been manually added in addition to the bank feed. Any slight cash differences may be caused by payments that haven’t been processed or interest charges. QuickBooks accounting software has a reconciliation module that allows you to enter the ending cash balance of your bank account to aid this process.

Tips from Caroline Streatfield Bookkeeping on bank reconciliation

CSB recommends that it is easier to reconcile the bank on QuickBooks if you have a copy of the paper bank statement in front of you. If you have multiple transactions on a daily basis, it is a good idea to tick them off manually on the paper statement as well as using the reconciliation screen on QuickBooks. Also if the monthly bank statement is long in length with entries, for example 12 pages long, you may find it easier to reconcile to the balance of each page rather then trying to do the whole month in one go.

Reasons for errors in bank reconciliations

  • A transaction hasn’t been recorded
  • An error in the amount registered
  • The cash balance at the beginning was incorrect
  • Mistakes have been made in journal entries

How can Caroline Streatfield Bookkeeping help you with your bank reconciliation?

Caroline Streatfield Bookkeeping is a registered HMRC agent and can help you with any questions you have regarding bank reconciliation with QuickBooks. Caroline and her team are fully qualified and undertake regular training to keep up to date with HMRC changes. CSB can help you with all your bookkeeping requirements, Self Assessment Tax Returns and payroll services with accounting software training also offered on QuickBooks. For more information, call Caroline on 07982 682746 or 01323 885205 or email info@bookkeepereastbourne.co.uk

Does Your Business Need An Accountant Or A Bookkeeper Or Both?

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The coronavirus pandemic is one that could not have been predicted or planned for and its ramifications are being felt throughout the business world. There is a tremendous amount of uncertainty with many people already feeling the financial implications with some losing their jobs and others on reduced incomes. Some businesses are being hit harder than others although on the other side of the coin, there are some real winners in terms of business. Those who are feeling the pinch financially are already tightening the purse strings and looking at ways in which costs can be cut and money saved. In the latest article from Caroline Streatfield Bookkeeping based in Eastbourne in East Sussex, we look at whether you could reduce your overheads by using a bookkeeper rather than an accountant.

What do the terms bookkeeper and accountant mean?

Bookkeeping has traditionally been viewed as the first part of the accounting process involving the efficient running of finances including recording and organising of data. Monies coming into and out of a business are accurately tracked and the day-to-day cash flow is managed. Bookkeepers can also prepare for year-end tax returns and file them. Accountants are able to carry out audits and sit down with business owners to forecast future business needs.

The line between bookkeeping and accountancy is diminishing

Many people are unsure as to whether they need a bookkeeper, an accountant or both and are actually not clear about the differences between the 2 roles. It’s true that the work involved in bookkeeping and accountancy has always overlapped and today it can be said that the line between the two is slowly diminishing. With the advent of accounting and bookkeeping software, some parts of accounting are being slowly absorbed into the bookkeeping process. Bookkeeping software can now generate financial statements, which used to be an exclusive part of accountancy.

Does your business need a bookkeeper or an accountant or both?

Using a bookkeeper could be more cost effective and like accountants, they can provide tax advice. Whether you require a bookkeeper or an accountant is very dependent on the level of service that your business requires. Both an accountant and a bookkeeper can help you manage your day to day finances as they can monitor cash flow from different accounts, can deal with bills and invoices and organise your books for better management. Accountants are more expensive but are not involved in everyday bookkeeping.

How Caroline Streatfield Bookkeeping could help your business

Caroline Streatfield Bookkeeping works with all businesses including sole and limited companies with CSB doing the bookkeeping for the majority of the latter with an accountant doing the year-end filing. A growing trend is for more limited companies, perhaps with limited transactions, to have their annual accounts prepared by a bookkeeper. CSB is also fully trained in preparing the accounts for micro-entities, smaller companies, which often need a simpler set of year-end accounts.

Contacting Caroline Streatfield Bookkeeping

If you are looking to reduce your overheads, why not talk to the experts at Caroline Streatfield Bookkeeping as you may be using an accountant when you actually only need a bookkeeper? We keep in touch with our clients, have local connections, and you would have one point of contact. CSB can prepare self-assessments, small limited company accounts and can do the payroll for you. Caroline is fully qualified and undertakes regular training to keep up to date with HMRC changes. The company complies with data protection and money laundering policies. For more information, call Caroline on 07982 682746 or email info@bookkeepereastbourne.co.uk

 

Making Tax Digital – Are You And Your Business Ready?

Paul Cooper Quickbooks, Xero , , , , ,

Do you know what Making Tax Digital is? If you don’t, no need to worry, as here at Caroline Streatfield Bookkeeping, the leading bookkeepers in Eastbourne, we’re going to give you a quick run through. If you do know about it – are you confused? Perhaps, you don’t know quite what your next steps are? In our latest blog, we give a quick overview of what MTD is, the key points, those that should have already started filing out their returns, the software you can use and what you should do next to ensure that you and your business are MTD compliant.

What Is Making Tax Digital?

It has been years in the making and has been designed by the government for individuals and businesses to make it easier to get their tax right and to keep on top of things. Tax administration is transforming, making it more effective, more efficient and easier for taxpayers. We live in a digital age and hence MTD is a digital tax reporting system whereby business accounts will have to be submitted in this way seeing an end of paper records. HMRC is going ‘paperless’, which is not a bad thing.

Key Points of the Digital Tax System

  • No more bureaucratic form-filling
  • No repetition of information
  • A faster and more efficient service
  • Taxpayers have access to their digital accounts
  • Information automatically uploaded

Deadline Day Has Arrived

MTD has already come into effect for some businesses and since 1 April 2019, companies with a taxable turnover of £85,000, have been required to keep digital VAT records using software such as QuickBooks, Xero or FreeAgent. June 7th saw the first submission deadline for monthly filers whilst August 7th was the first deadline for quarterly (April to June stagger) filers. Those on the May to July stagger have a filing deadline of 7th September. One million businesses are now in the service with 900,000 VAT submissions having been filed.

Conclusion

All businesses, which are affected by MTD must sign themselves up or get an agent to sign upon their behalf. HMRC are running 4 webinars throughout September, which you can sign up for. Your choice of software is up to you as HMRC does not recommend or endorse any products although a software choices selection tool is available.

What To Do Next

Caroline Streatfield Bookkeeping is a registered HMRC agent and can help ensure your business is MTD compliant. We will be able to help and to advise you on which software will be the most suitable for your business and provide training if required. Alternatively we offer a complete bookkeeping and VAT service. There really is no reason to struggle any longer. For more information and a without obligation chat, please call Caroline on 07982 682746 or email info@bookkeepereastbourne.co.uk