Navigating Workplace Regulations

Stay Informed: Latest Insights and Strategies Across Various Business Sectors

Welcome to Our Roundup of the Latest Business News for Our Clients. Please Get in Touch if You’d Like to Discuss How These Updates Impact Your Business. We’re Here to Assist You!

Understanding the Advantages and Disadvantages of the VAT Flat Rate Scheme for Businesses

Value-added Tax (VAT) is significant for businesses, impacting cash flow, administrative workload, and overall profitability. For businesses with a VAT-exclusive turnover of £150,000 or less, one available option is the VAT Flat Rate Scheme (FRS), which offers a simplified approach to VAT accounting. However, deciding to adopt this scheme requires careful consideration of its benefits and drawbacks.

The Advantages

One primary advantage of the VAT Flat Rate Scheme lies in its simplicity. Unlike traditional VAT accounting, where separate tracking of VAT on sales and purchases is necessary, FRS simplifies this process by applying a flat rate to total turnover. This saves time, reduces administrative burden, and benefits smaller businesses.

Businesses under the VAT Flat Rate Scheme may also benefit from paying less VAT to HM Revenue and Customs (HMRC) than traditional accounting methods. The scheme allows businesses to retain the difference between VAT charged to customers and VAT paid to HMRC, providing an additional margin.

The Disadvantages

Despite its simplicity and potential cost savings, the VAT Flat Rate Scheme may only suit some businesses. One notable drawback is the inability to reclaim VAT on purchases, except for certain capital assets over £2,000. Consequently, businesses heavily reliant on supplies subject to VAT payments may not benefit as much from the scheme.

Moreover, HMRC’s fixed rates may not always accurately reflect a business’s VAT position. While designed to approximate the average VAT payable for different industries, businesses with atypical cost structures or profit margins may need help.

Additionally, businesses must consider future growth and its impact on VAT liabilities under the Flat Rate Scheme. As turnover increases, the fixed percentage applied to turnover may result in higher VAT payments than traditional VAT accounting methods, potentially offsetting cost-saving benefits.

A careful evaluation of the current VAT position is essential before deciding whether to adopt the VAT Flat Rate Scheme. This includes assessing the proportion of VATable sales and purchases and anticipating potential changes in turnover.

We offer free consultation regarding VAT returns and Flat Rate Scheme. Please feel free to book a free meeting; we’re here to assist you!

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Could You Be Eligible for a £252 Tax Saving?

With the tax year ending on 5 April, March presents an opportune time to consider whether sharing unused tax allowances with your partner could lead to savings.

According to HM Revenue and Customs (HMRC), March is the peak for Marriage Allowance applications. Last year, almost 70,000 couples applied during this month. Additionally, eligible couples can backdate their claim for up to the previous four tax years, potentially resulting in a lump sum payment exceeding £1,000.

Marriage Allowance enables individuals to transfer up to 10% of their tax-free Personal Allowance to their spouse or civil partner. For the 2023/24 tax year, this could mean a maximum amount of £252 available to qualifying couples.

To benefit, you or your partner must have an annual income below the Personal Allowance threshold, currently at £12,570. Furthermore, the higher-earning partner’s income must fall within the range of £12,571 to £50,270, or £12,571 to £43,662 for those residing in Scotland.

To determine eligibility, you can utilise HMRC’s online calculator, accessible at HMRC’s Marriage Allowance Benefit Calculator.

If you need help assessing eligibility or applying for the allowance, book a free consultations with us.

Additional Protection Now Available for UK Food and Drink Sold in Japan

Last week, 37 Geographical Indications (GIs) were formally protected following an agreement between Japan and the UK.

Iconic food products such as Cornish Pasties, Welsh Lamb, Scotch Beef, Cornish Clotted Cream, and Melton Mowbray Pork Pies are set to receive protection under this agreement. This ensures that UK businesses exporting these food and drink items to Japan will be safeguarded against imitation by local and other businesses within Japan.

In return, the GIs of a selection of Japanese agricultural products and beverages will also be protected in the UK.

For a comprehensive list of the protected foods and drinks, please refer to UK Government’s Announcement.

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Financial Handbook for Independent Training Providers Released

David Withey, Chief Executive of the Education and Skills Funding Agency (ESFA), has penned a letter to independent training providers receiving direct funding from the Department for Education (DfE) or ESFA. The correspondence heralds the release of a financial handbook explicitly tailored for independent training providers.

The financial handbook delineates a blend of requirements, best practices, and discretionary elements, categorised according to the organisation’s level of funding. Encompassing various facets of financial management and governance, these procedures may already form part of many independent training providers’ established good financial management practices. However, novel requirements may necessitate adjustments, particularly in areas concerning internal review and audit.

The handbook, scheduled to come into effect on 1 August 2024, allows a few months for any requisite adjustments. Certain sections will be introduced gradually over a longer 2-to-3-year period.

The financial handbook is available at Financial Handbook for Independent Training Providers.

Additionally, a webinar introducing the handbook can be accessed on YouTube at Introduction to Financial Handbook for Independent Training Providers.

Please don’t hesitate to book a free meeting if you need assistance with reviewing or implementing financial systems. We would be delighted to help!

Director of Care Home Investment Scheme Fraud Banned

Robin Forster, the director of two companies involved in operating an unauthorised care home investment scheme, has been disqualified from serving as a company director for 14 years.

The scheme, which operated in the north-east of England through Qualia Care Properties Ltd and Qualia Care Developments Ltd, offered investors the opportunity to invest in care homes by purchasing long-term leases on care home rooms. These rooms were then sublet back to the companies by a third entity, Qualia Care Ltd.

Investors were enticed with promises of returns ranging between 8-10% of the purchase price. However, the Financial Conduct Authority (FCA) successfully argued in court that the scheme was unlawful and constituted an unauthorised collective investment scheme. The court concurred that Mr Forster had misled investors with false promises, as the projected returns were unachievable and the scheme unsustainable.

The FCA is pursuing efforts to recoup the £57 million lost by investors. Furthermore, in the days preceding the administration of the two companies, Mr Forster orchestrated the transfer of over £2 million to a connected company despite outstanding debts to creditors.

Both factors – running the unauthorised scheme and diverting funds owed to creditors – led to the imposition of a 14-year ban.

This news underscores the importance of exercising caution in investment decisions. When an opportunity appears excessively lucrative, it is often prudent to approach it sceptically.

For further details, refer to Director of Unlawful Care Home Investment Scheme Banned for 14 Years.

Addressing Loneliness Among Young Employees

The UK government has initiated a campaign to combat the stigma surrounding loneliness among young people. Research indicates that individuals aged 16 to 24 experience the highest levels of loneliness, yet they are the least inclined to seek assistance. Many conceal feelings of loneliness for fear of judgment.

The impact of loneliness among young people extends to the workplace, significantly affecting employee performance. Isolation can lead to diminished motivation, engagement, and productivity. Moreover, loneliness may contribute to heightened levels of stress and anxiety, which can adversely affect work quality and overall job satisfaction. Consequently, fostering an environment that prioritises the mental health and performance of young employees benefits them and enhances business outcomes.

Consider implementing proactive measures within your business, such as:

1. Encourage Social Interaction: Organise team-building activities, mentorship programmes, and regular social events to foster camaraderie. Collaboration and relationship-building opportunities can enhance young employees’ connection with their colleagues.

2. Prioritise Open Communication: Encourage managers to regularly check in with their team members and cultivate a supportive atmosphere where employees feel comfortable discussing their feelings and concerns, whether work-related or personal.

3. Promote Work-Life Balance: To accommodate the diverse needs of young employees, offer flexible work arrangements, such as remote work options or flexible hours. Encouraging them to prioritise self-care and allocate time for activities outside of work can enhance their overall well-being and positively impact their work approach.

4. Provide Mental Health Support: Normalise conversations around loneliness and mental health by offering access to resources and support services. Educate employees about available resources and ensure there is no stigma associated with seeking help for mental health issues.

5. Lead by Example: Leadership behaviour sets the tone for the workplace. Demonstrate genuine care and concern for team members to create a positive work environment and inspire others to do the same.

By proactively addressing loneliness and supporting the well-being of young employees, businesses can cultivate a positive and fulfilling work environment where all team members feel valued, connected, and supported in their personal and professional growth.

Making Tax Digital: New Policy Paper Published

HM Revenue and Customs (HMRC) has released a new policy paper concerning Making Tax Digital (MTD) for Income Tax Self Assessment, tailored explicitly for sole traders and landlords.

This updated tax information and impact note supersedes the previous version and incorporates changes in scope and timelines announced in December 2022, along with other policy amendments and improvements outlined in the Autumn Statement 2023.

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) requires businesses and landlords to maintain digital records and provide updates to HMRC every quarter using compatible software.

According to the policy paper, MTD for ITSA will be introduced for sole traders and landlords in two phases:

  1. For those with qualifying income exceeding £50,000, starting from April 2026.
  2. For those with qualifying income exceeding £30,000, commencing from April 2027.

The government intends to introduce MTD for ITSA for partnerships later.

The government anticipates that MTD for ITSA will mitigate tax errors. However, if implementing MTD for ITSA affects you, it may necessitate adjustments to your current accounting practices. It may also require more frequent bookkeeping updates due to the obligation to submit quarterly returns.

As your business advisers, we will proactively communicate with you well before any changes take effect. We are available to guide accounting systems or any necessary training you may require.

For further details, please refer to: Extension of Making Tax Digital for Income Tax Self Assessment to Sole Traders and Landlords

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Customer Service at HM Revenue and Customs Reaches New Low

According to Members of Parliament (MPs), waiting times for phone calls to HM Revenue and Customs (HMRC) have deteriorated. A committee found that nearly two-thirds of callers had to endure waiting times exceeding 10 minutes to speak to an adviser.

The report from the Public Accounts Committee reveals that in the year leading up to April 2023, the average wait time for HMRC phone calls was 16 minutes and 24 seconds, compared to 12 minutes and 22 seconds the previous year. The percentage of callers waiting more than 10 minutes rose to 63%, up from 46% in the previous year. This proportion has steadily increased since 2018-19.

Interestingly, HMRC’s hold music has garnered the dubious distinction of being among the most streamed!

The issue appears to need a more straightforward resolution. To handle inquiries, HMRC is directing its focus towards digital services, such as its app and online platforms.

HMRC has received over three million calls regarding online password resets, tax codes, and National Insurance number checks, many of which could have been managed through their digital services instead of by phone.

The takeaway is that if you need to contact HMRC, it is best to settle into an easy chair with coffee!

For more details, please refer to BBC News – Customer Service at HM Revenue and Customs Reaches New Low.

Cybersecurity: Evolving Tactics from Russian State-Linked Cyber Actors

The National Cyber Security Centre (NCSC) in the UK has brought attention to the evolving tactics of cyber actors linked to the Russian state.

NCSC has observed that malicious cyber actors associated with Russia’s Foreign Intelligence Service (SVR) have broadened their target list beyond governmental, think tank, healthcare, and energy organisations. They now include aviation, education, law enforcement, local and state councils, government financial departments, and military organisations.

Traditionally, SVR actors have exploited software vulnerabilities to access information held by organisations in these sectors. However, these traditional methods are becoming less effective with the increasing adoption of cloud-based infrastructure.

As a result, NCSC reports that tactics have evolved to target cloud-based systems. Since access to such systems heavily relies on gaining initial access to the cloud provider, a strong foundation of cybersecurity fundamentals can help prevent successful attacks.

Utilising multi-factor authentication, also known as 2-step verification, and employing vital, unique passwords effectively mitigate and defend against this malicious cyber activity.

Additionally, it is crucial to ensure that user and system accounts are promptly disabled upon employees’ departure. Dormant or inactive accounts often contribute to successful cyber attacks.

For further information and mitigation strategies, please refer to NCSC’s advisory, which is accessible here: NCSC’s Advisory on SVR Cyber Actors’ Tactics.

Are you ready? The Carer’s Leave Act comes into force from 6 April 2024.

The Carer’s Leave Act, effective from 6 April 2024, will impact all employers in the UK.

If an employee has a dependent with:

  • An illness or injury (mental or physical) expected to need care for more than three months,
  • A disability defined by the Equality Act 2010, or
  • Care needs due to old age,
  • Then, the Act grants them the right to unpaid leave to provide or arrange care.

The dependent can be anyone reliant on them for care, not limited to family members.

The entitlement to carer’s leave begins on an employee’s first day of work. During the leave, the employee’s holiday, return to work, and other employment rights are protected.

Employees can take up to one week (pro-rated for part-timers) of leave every 12 months. This leave can be taken in a block or split into individual or half days throughout the year.

The leave entitlement is per employee, not per dependent. Employees needing leave to care for their child can take up to 18 weeks, separate from carer’s leave.

Employees must give notice when requesting leave, with minimum notice periods outlined in the Act. Requests don’t have to be in writing, and evidence of care needs isn’t required.

The Act also specifies circumstances under which an employer can delay a carer’s leave.

For more information, visit: https://www.gov.uk/carers-leave

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