Significant number of UK firms ‘unaware of Making Tax Digital for VAT’

Research carried out by the Institute of Chartered Accountants in England and Wales (ICAEW) has suggested that over 40% of UK businesses are ‘not yet aware’ of Making Tax Digital for VAT (MTD for VAT).

MTD for VAT is set to come into effect from 1 April 2019 for businesses with a taxable turnover above the VAT registration threshold (currently £85,000). As part of the initiative, firms will be required to file their VAT returns using MTD-compatible software.

The ICAEW found that just 54% of VAT-registered firms are currently utilising accounting software.

An additional 34% of firms surveyed stated that they will be relying on their accountant to assist them with MTD for VAT, whilst a further 20% revealed that they intend to purchase suitable software in the near future.

‘We continue to fully support HMRC’s ambition to increase the use of digital technology, but we are concerned that, based on these results, many businesses are not going to be ready for implementation in April 2019,’ said Anita Monteith, Technical Tax Manager at the ICAEW.

‘The lack of awareness among businesses about MTD is of concern and needs to be addressed: the communications on MTD do not appear to be getting through to VAT-registered businesses.’

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BCC downgrades UK growth forecasts as result of Brexit uncertainty

The British Chambers of Commerce (BCC) has downgraded its growth forecasts for the UK economy as a result of ongoing uncertainty surrounding Brexit.

The BCC downgraded its forecast for GDP growth from 1.3% to 1.1% for 2018, and its growth forecast for 2019 from 1.4% to 1.3%. For 2020, however, the BCC’s growth forecast remains unchanged at 1.6%.

By this time, the economy will have experienced its ‘second weakest decade’ of average annual GDP growth, the BCC predicted.

Commenting on the growth forecasts, Dr Adam Marshall, Director General of the BCC, said: ‘Brexit uncertainty continues to weigh heavily on many firms, as most of the practical questions facing trading businesses remain unanswered.

‘The lack of precision on the nature of the UK’s future relationship with the EU is lowering expectations for both business investment and export growth.’

Michael Izza, Chief Executive of the Institute of Chartered Accountants in England and Wales (ICAEW), agrees. He stated: ‘Brexit has been restricting business growth since the referendum in 2016, and with the potential of a no-deal exit, businesses don’t expect any comforting news in the immediate future. It is likely that these unpredictable factors will result in business investment growth remaining modest for the foreseeable future.’

However, he remains hopeful. He continued: ‘It’s not all bad news. Once negotiations come to a climax, whether it is a deal or no-deal Brexit, businesses will have more clarity on what to expect for the future.’

New technology ‘could pave way for better working conditions’, states TUC

In a new report, the Trades Union Congress (TUC) has stated that new technology, such as artificial intelligence (AI) and robotics, could help to ‘pave the way for better working conditions’ for UK employees.

The TUC surveyed 2,145 individuals, and found that 81% want to reduce their working time in the future. The business group stated that, if firms make the most of new technology, UK employees could work a shorter week whilst earning more.

A further 66% of those polled by the TUC believe that automation will lead to work becoming ‘faster-paced and more intensive’. However, workers are positive in regard to what could be achieved if technology is used in the correct manner: 68% believe that the number of dangerous jobs could be reduced, whilst 66% think that the implementation of new technology could result in work becoming ‘more enjoyable’.

Commenting on the matter, Frances O’Grady, General Secretary of the TUC, said: ‘Workers are having a hard time. They’ve suffered the longest pay squeeze in 200 years.

‘Bosses and shareholders must not be allowed to hoover up all the gains from new tech for themselves. Working people deserve their fair share – and that means using the gains from new tech to raise pay and allow more time with their families.’

Government publishes the next set of ‘no deal’ Brexit documents

The government has published a second batch of 28 technical notices, offering further guidance for businesses and individuals in the event of a ‘no deal’ Brexit.

Following on from the 24 technical notices that were published in August, these new notices cover areas such as mobile phone roaming charges in Europe and contingency plans for driving licences and passports.

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According to the advice, free data roaming for people using their mobile phones in another EU country will no longer be guaranteed, although most phone companies state that they will not reinstate previous charges. If operators were to reinstate the charges, the government has said that it will set a cap of £45 a month for those using data abroad.

Meanwhile, UK drivers who choose to drive in the EU may require an international driving permit, according to the documents.

Passports, too, will change, beginning with the removal of the words ‘European Union’, followed by the issue of blue passports starting from late 2019. The papers advise those travelling to the EU to ensure that they have at least six months on their passport, in the event of no deal.

Brexit Secretary Dominic Raab insisted that the UK would not pay the full £39 billion Brexit ‘divorce bill’ if the UK fails to reach an agreement with EU. He added that the UK would ‘recognise our strict legal obligations’ but that the amount paid would be ‘significantly, substantially lower’.

Further ‘no deal’ Brexit publications are expected to be released in the coming weeks.

Government launches new Help to Save scheme

The Government has launched its new ‘Help to Save’ scheme, which is designed to encourage workers on lower incomes to save.

The government-backed scheme was originally due to come into force in April 2018, but was subject to a delay.

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Under the scheme, eligible individuals can save up to £50 every calendar month, for up to four years. After two years they will receive a 50% tax-free bonus on their savings, followed by a further 50% bonus after four years, on any additional savings made.

This means that taxpayers saving the maximum of £2,400 over four years would receive a total bonus of £1,200.

The scheme is open to working people who are entitled to Working Tax Credit and receiving Working Tax Credit or Child Tax Credit. It is also available to those claiming Universal Credit who have a household or individual income of at least £542.88 at their last monthly assessment. (Universal Credit payments are not included in household income for this purpose.)

Help to Save will be available until September 2023.

Small business group unveils plans for ‘fairer energy market’

The Federation of Small Businesses (FSB) has called for the introduction of ‘Open Banking’ style measures to the energy market, in a bid to allow small businesses access to cheaper tariffs and make it easier for them to switch energy provider.

A new report, produced by the FSB and Fingleton Associates, sets out how energy data could be shared and used to ‘empower customers’.

Under the proposals, the introduction of a new ‘Open Energy’ system would see a number of reforms, including:

  • the standardisation of tariffs and other relevant information, to allow for automated comparisons
  • making smart meter data available to third parties via secure Application Programming Interface (API)
  • allowing energy customers to delegate their power to switch contracts to a third party.

FSB National Chairman, Mike Cherry, commented: ‘We need an open and transparent energy market that allows smaller businesses to take control of their data and use it – via an intermediary if they choose – to find the best energy deal, switch providers, take advantage of smart technology, manage when and how they use their energy, and even how it is generated.

‘Open Energy, like Open Banking, has the potential to transform the market – if implemented correctly. It would help small businesses to be more energy efficient and empower them to make energy choices that are cleaner, greener and more sustainable.’

New laws aim to help small businesses to secure funding

Small businesses struggling to access invoice finance could be helped by the introduction of proposed new laws. The plans form part of the government’s ‘modern Industrial Strategy’.

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Invoice financing is an advance against a future payment, under which businesses can approach a finance provider and assign them their right to be paid in exchange for around an initial 80% of the value of the invoices. This initial advance is received within a few days while the balancing 20% (less fees and charges) is paid when the customer settles the invoice.

Currently, small suppliers which are in a contract with a larger company may not be able to secure invoice finance, due to the terms of the contract. Small suppliers often find themselves in a situation where they do not have sufficient power to renegotiate their terms and conditions.

Under the plans, after 31 December 2018 such restrictions will have no effect (with certain exceptions), and small businesses will be able to go to their lending partner to secure the finance they need.

Commenting on the news, Small Business Minister Kelly Tolhurst said: ‘These new laws will give small businesses more access to the finance they need to succeed and will help ensure they have a level playing field from which to set fair contracts with the businesses they supply.’