July 2018

tax tips & finance e-newsletter

In this issue

New Vat Rules for Building Trade in 2019
Notify HMRC of EBT and Similar Loans by 30 September
Trust Taxation
Productivity = Success
Exam Success for Humphrey & Co Accountant!

New Vat Rules for Building Trade in 2019

HMRC are consulting on new rules due to come in on 1 October 2019 builders, sub-contractors and other trades associated with the construction industry will have to start using a new method of accounting for VAT.

The measure is designed to combat VAT fraud in the construction sector labour supply chain which HMRC argue presents a significant tax loss. HMRC has now published draft legislation to introduce the Reverse Charge for Construction Services.

Under the proposed new rules, supplies of standard or reduced-rated building services between VAT-registered businesses in the supply chain will not be invoiced in the normal way. Under the reverse charge a main contractor would account for the VAT on the services of any sub-contractor and the supplier does not invoice for VAT. The customer (main contractor) would then account for VAT on the net value of the supplier’s invoice and at the same time deducts that VAT - leaving a nil net tax position. This is intended to ensure that VAT is correctly accounted for on supplies by sub-contractors.

CONSTRUCTION WORK AFFECTED

The reverse charge will apply to a wide range of services in the building trade, including construction, alteration, repairs, demolition, installation of heat, light, water and power systems, drainage, painting and decorating, erection of scaffolding, civil engineering works and associated site clearance, excavation, and foundation works. The definitions have been lifted directly from the CIS legislation.

EXCLUDED WORKS

Professional services of architects or surveyors, or of consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape are not covered by the new rules. The draft legislation sets out other work to which the reverse charge does not apply.

It is hoped that the legislation and guidance will be finalised by October 2018 to allow businesses at least 12 months in which to make the necessary changes to systems. Please contact us if you are likely to be affected by these changes and we can work with you to ensure you are ready for the new system.

Notify HMRC of EBT and Similar Loans by 30 September

HMRC have published revised guidance on settling tax liabilities in relation to the use of disguised remuneration schemes involving Employee Benefit Trusts (EBTs) and similar arrangements.

In order to settle on preferential terms before the outstanding loan charge arises on 5 April 2019, taxpayers must register with HMRC and provide all of the required information by 30 September 2018.

WHAT IS THE 2019 LOAN CHARGE?

This is a tax charge on any outstanding loans that exist as a result of a disguised remuneration tax avoidance scheme. It applies to any loans that were taken out under a disguised remuneration scheme since 6 April 1999.

The most common schemes were Employee Funded Retirement Benefit Schemes (EFRBS) and Employee Benefit Trusts (EBT). When used for tax avoidance, both involved the diversion of employment income to a trust; the trust would then ‘loan’ the employment income to the individual (meaning no PAYE/National Insurance tax was paid) who sought to benefit from the Scheme.

It is the responsibility of the employer/company to pay the 2019 Loan Charge under PAYE legislation. The employer is then expected to pass this cost on to the individual. Whilst the initial liability falls to the employer, it can be passed to the individual beneficiary of the scheme by HMRC if unpaid.

If your employer has entered into such a scheme please contact your usual Partner for further information on what action to take.

Trust Taxation

We are still awaiting the promised consultation on the taxation of trusts announced in the Autumn 2017 Budget. However, in the meantime HMRC have updated their guidance on how different types of trust income are taxed, what management expenses and reliefs can be deducted, and understanding the tax pool.

Please contact a member of our Trust & Estates Support Services team if you are considering setting up a trust or wish to discuss estate planning more generally.

Productivity = Success

Most business owners, managers and senior executives are juggling day to day responsibilities, growing the business and various projects. With so much to do, improving your productivity is key if you want to succeed. Here are a few top tips to help you to improve your productivity.

Stop multi-tasking

In today’s always-on environment, many of us have fallen into the trap of multi-tasking and trying to do too much. Instead, try to focus on doing individual tasks properly. Create a priority list each day and focus on getting each item on that list ticked off. That way you can focus on processing the task at hand.

Delegate

The very best business leaders are masters of delegation. Build a team of effective people around you and delegate as much as you can. Empower them to take on projects and avoid micro managing. Delegation is the key to productivity 

Learn to say no

Taking on too much at once will reduce your productivity and increase your stress levels. Say no to things that are not important.

Just because you are invited to a meeting doesn’t mean it should be a priority. Focus on the things that really matter to you and your firm and say yes to them. Everything else is just a distraction.

Cut out the noise

With email, instant messaging, social media and phone calls, we are all distracted by constant noise. Schedule specific time for checking your various email and messaging inboxes and refrain from checking your messages outside of these specific times.

A day of no meetings

Scheduling a “no-meeting day” every week can have a positive impact on your productivity. Every manager needs uninterrupted blocks of time to deal with projects, reporting and whatever else is on the “to do” list.

Leave work at a reasonable hour

The most productive managers make it home at a reasonable time. Successful leaders don’t work long hours every day in an attempt to tick more items off their to-do list. Instead, they think through their priorities, schedule time for each, then it’s time to go home.

Exam Success for Humphrey & Co Accountant

Eastbourne-based Chartered Accountants Humphrey & Co are pleased to announce that Matt Lakin has passed his exams to qualify as a Chartered Accountant (ACA).

Matt joined Humphrey & Co in 2014 having completed a Mathematics degree at the University of Kent, and has now achieved his Chartered Accountancy qualification (ACA). Matt is an integral part of the Lloyds of London specialist team and assists Partner Andrew Robinson with accounts and tax work for individuals, limited companies and partnerships.

“I am proud to attain this qualification and I am extremely grateful for all the support Humphrey & Co have given me along the way. I look forward to using the knowledge I have gained to help assist our clients even further” said Matt.

Senior Partner Anthony Smith comments “Matt has shown complete commitment throughout his studies and we are thrilled he has achieved success, it’s well deserved! We look forward to putting his skills to good use and combining those with his broad experience to deliver the best possible service that our clients expect and enjoy.”