Morgan Hemp Blog

VAT margin scheme for car dealers

Thursday, June 1, 2023

Brexit has introduced a VAT border between Great Britain and Northern Ireland, the implications of which are still being worked through.

From 1 May 2023, second-hand vehicles which are purchased in Great Britain then sold in Northern Ireland have to carry VAT on the full selling price. Before this date motor traders could use the second-hand margin scheme under which VAT is charged only on the margin of sales value added by the dealer.

To compensate these dealers, HMRC has introduced a…

HMRC warn of BAD relief claims

Thursday, June 1, 2023

Entrepreneurs’ Relief (ER) was renamed Business Asset Disposal (BAD) relief on 11 March 2020, and at the same time the value of gains which can be covered by this relief was reduced from £10m to £1m on 11 March 2020. Where gains qualify for either ER or BAD relief the capital gains tax (CGT) is payed at 10% instead of at the full rate of 20%.

This cap of £1 million of gains is a lifetime cap for the taxpayer not an annual cap. What’s…

How to spread your PAYE payments

Thursday, June 1, 2023

Your business may well be stretched right now, the NMW rates rose by over 10% from 1 April and other input costs have increased by even more, particularly food and energy. It is tempting to use the amounts deducted from your payroll to pay pressing bills, but that is not a good idea.

Where the payroll deductions are not paid over to HMRC on time – by 22nd of each month – late payment interest is charged at 7%.

In addition to…

Payroll hygiene

Tuesday, May 2, 2023

It is very irritating when HMRC accuses you of owing more PAYE than is actually due. This can happen when the HMRC computer has recorded a duplicate employment for an employee, without ceasing the previous employment.

For example, William Smith is employed and is paid a regular salary of £2,000 per month. On the first FPS, he is recorded as William Smith. On a later FPS, he is recorded as Bill Smith. The HMRC computer will assume that William Smith and Bill Smith…

Payroll settlement agreements (PSA)

Tuesday, May 2, 2023

A payroll settlement agreement (PSA) is used by employers to declare and pay the tax and NIC due on benefits that they don’t want the employee to be taxed on.

These may be one-off benefits paid on an irregular basis, such as the use of a company flat for a short period, or a holiday. The PSA can also be used where the value of the benefit exceeds the statutory exemption, such as for taxi fares, non-trivial gifts, or a staff party that…

Planning for retirement

Tuesday, May 2, 2023

On 6 April 2023, the pensions annual allowance increased from £40,000 to £60,000, and the pensions lifetime allowance was effectively abolished.

You can now contribute far more to your pension funds each year, and so can your employer. Any unused annual allowance can also be carried forward up to three years.

This freedom to contribute also applies to those with large pension savings who have fixed protection on their pension pots, to stop the lifetime allowance charge from…

VAT penalty notices

Tuesday, May 2, 2023

Two new VAT penalty regimes came into effect for VAT periods beginning on and after 1 January 2023, for late filing of VAT returns and for late payment.

Late filing of a VAT return now attracts a penalty point rather than a warning or formal default surcharge notice. Only when you reach a certain threshold of points do you have to pay a fixed financial penalty of £200.

The points threshold which generates a financial penalty varies according…

Electronic returns of benefits and expenses

Monday, April 3, 2023

In February 2022 HMRC suddenly withdrew the interactive online PDF form for reporting expenses and benefits for employees (form P11D). Employers were forced to submit their P11Ds electronically or go back to using paper P11D forms.

In the February 2023 edition of the Employer Bulletin HMRC has made it clear that paper P11D and P11D(b) forms won’t be accepted for the tax year 2022/23 or any other year. Also, paper amendments for P11D forms for earlier years will be rejected from 6 April 2023.
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Employment status of Associate Dentists

Monday, April 3, 2023

For years HMRC has accepted that associate dentists can be treated as self-employed rather than as employees of the dental practice they work for, but this informal agreement is about to end on 5 April 2023.

This was first announced by HMRC in September 2021, in December 2021, and again in the February 2023 Employer Bulletin.

Where a contract for engaging an associate dentist runs from or over 6 April 2023 the Dental Practice that they work for will no longer be…

Cleaning up your sales till

Monday, April 3, 2023

Electronic sales suppression (ESS) is the term for when a sales till is programmed to hide or reduce the value of individual sales.

For example, the electronic point of sale (EPOS) software installed on the till may deliberately exclude certain items from the sale records. Alternatively, the EPOS software may be set to operate in a training mode, allowing the sale to be rung up, but excluding it from the daily takings.

In December 2022 HMRC raided 90 businesses that were involved…