UK small firms spending ‘significant amount’ on tax and employment obligations

According to new research, UK small businesses are spending 15% more on tax and employment obligations when compared to 2011.

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The Impact of Government Policy Index (IGPI), which was compiled jointly by the Federation of Small Businesses (FSB) and the Centre for Economics and Business Research (CEBR), found that the average UK small business spends £480,788 on complying with government policies, including business rates, auto-enrolment and Insurance Premium Tax (IPT).

The IGPI also revealed that small firms lose an average of £5,000 per year to tax administration and paperwork.

‘Come the beginning of April, small firms will not only have Brexit Day to worry about, but also Making Tax Digital (MTD), a higher living wage, rising employer auto-enrolment contributions and further business rate hikes,’ said Mike Cherry, National Chairman of the FSB.

‘The competition to attract entrepreneurs to the UK is more intense than ever. With Brexit on the horizon, it’s critical that the government at all levels does its utmost to help, rather than hinder, the UK small business owners who are being tempted to other shores.’

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Chancellor announces Spring Statement date

Chancellor Philip Hammond has announced that this year’s Spring Statement will be delivered on Wednesday 13 March.

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The 2019 Spring Statement will be the second of its kind: in the 2016 Autumn Statement, the Chancellor announced a major shake-up of the government’s fiscal timetable. This saw the abolition of the Autumn Statement, in favour of an Autumn Budget and a Spring Statement.

This year’s Statement will be delivered just 17 days before so-called ‘Brexit Day’ – the day that the UK is set to leave the EU. Many expect Mr Hammond to deliver an emergency Budget if the UK leaves the EU without a Brexit deal.

The Spring Statement is used by the Chancellor as a way of responding to new economic forecasts produced by the Office for Budget Responsibility (OBR), and to discuss long-term issues ahead of the 2019 Autumn Budget.

The government retains the right to make changes to fiscal policy during the Spring Statement.

Taxpayers urge HMRC to delete biometric data

Thousands of taxpayers have urged HMRC to delete the biometric data it stored during phone calls made to its Voice ID system.

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HMRC has gathered millions of callers’ biometric data since launching its Voice ID system in 2017. However, non-profit organisation Big Brother Watch stated that people have been ‘railroaded into a mass ID scheme by the back door’.

HMRC’s Voice ID system allows taxpayers to say a key phrase when calling its helpline, which is used in place of a conventional password in order to grant access to accounts. The Revenue now permits individuals to opt out of using the Voice ID scheme, and delete any data captured. However, millions of Voice ID records have been stored in a third-party database.

Big Brother Watch said that it has reported HMRC to the Information Commissioner’s Office (ICO), on the grounds that it has ‘broken data protection laws’.

Figures show that there are seven million taxpayers currently enrolled in HMRC’s Voice ID database. According to a Freedom of Information request, 162,185 individuals have opted out of the Voice ID scheme and have had their biometric data deleted by HMRC.

A spokesperson for HMRC said: ‘Our Voice ID system is very popular with millions of customers as it gives a quick route to access accounts by phone.

‘All our data is stored securely, and customers can opt out of Voice ID or delete their records any time they want.’

IMF warns ‘no deal’ Brexit could ‘damage global economy’

The International Monetary Fund (IMF) has warned the UK that a ‘no deal’ Brexit could ‘damage the global economy’.

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In a recently published report, the IMF downgraded its global growth forecast for 2019 to 3.5%, and its forecast for 2020 to 3.6%.

A no deal Brexit ‘could cause global growth to worsen’, the IMF warned.

Within the report, the IMF wrote: ‘A range of triggers beyond escalating trade tensions could spark a further deterioration in risk sentiment, with adverse growth implications, especially given the high levels of public and private debt.

‘These potential triggers include a no deal withdrawal of the UK from the EU, and a greater-than-envisaged slowdown in China.’

Commenting on the matter, Gita Gopinath, Chief Economist at the IMF, said: ‘As of mid-January, the shape that Brexit will take remains highly uncertain.

‘We have done our estimates of how costly it would be on the British economy to have a no deal Brexit, which would be a decline of long-run GDP of about five to eight percentage points. It is absolutely essential that [the Brexit] uncertainty is resolved sooner rather than later.’

HMRC urges 3.5 million taxpayers to submit their tax return before deadline

With less than a week to go until the deadline, HMRC has urged the 3.5 million taxpayers yet to file their self assessment tax return to do so before 11:59pm on 31 January 2019.

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A total of 11,564,363 self assessment tax returns are due, of which 70% have already been filed, as of 22 January 2019. 7,359,607 of these were filed online: only 703,943 returns were filed on paper.

According to HMRC, more than 93% of taxpayers filed their tax return on time last year. It has reminded taxpayers that penalties will be issued for late filing: those who are late in submitting their return face a penalty of £100, even if there is no tax to pay, or if the tax has been paid on time. Additional penalties will be issued for continued late payments and late filing.

Commenting on the matter, Mel Stride, Financial Secretary to the Treasury, said: ‘The deadline for the self assessment tax return is fast approaching, but there is still time for the 3.5 million customers who haven’t completed their return to file by 31 January.

‘It is important that customers are reminded of the self assessment deadline in order to avoid paying penalties.’

As your accountants, we can assist you in preparing and filing your self assessment tax returns – please contact us for more information.

Businesses to begin disclosing climate change risks in annual reports

According to research published recently by the Carbon Trust, 67% of UK businesses will begin to incorporate climate change risks and opportunities in their 2019 annual reports.

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However, only 23% of firms are expected to report in line with the Climate-related Financial Disclosures recommendations, which were published by the G20 Financial Stability Board in 2017.

The research also revealed that 31% of businesses see ‘financial benefits’ in reporting on climate change-related issues. An additional 21% of business leaders believe that improved climate change reporting will result in ‘an increased company valuation’.

Commenting on the matter, Hugh Jones, Managing Director of Business Services at the Carbon Trust, said: ‘We are now able to see how our changing climate is moving markets more quickly than many had anticipated.

‘For corporate leaders, going through the process of assessing their company’s climate change opportunities and risks is a vital strategic tool for navigating the necessary transition to a sustainable, low carbon economy.’

HMRC confirms Brexit will not affect roll-out of MTD for VAT

HMRC has confirmed that Brexit will not affect the introduction of Making Tax Digital for VAT (MTD for VAT).

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MTD for VAT is set to come into effect from 1 April 2019 for businesses which have a taxable turnover above the current VAT registration threshold of £85,000. As part of the initiative, firms must keep some records digitally, and must submit their VAT returns via an Application Programming Interface (API).

Experts previously suggested that HMRC would have to delay the introduction of MTD for VAT if the UK was to leave the EU without a Brexit deal. However, in a recent letter, Jim Harra, Deputy Chief Executive of HMRC, wrote: ‘Our system is already live and by the end of February we’ll have written to every affected business, encouraging them to join the thousands of others who have registered.’

In 2018, the British Chambers of Commerce (BCC) called for HMRC to postpone the introduction of MTD for VAT until April 2020, citing a ‘lack of awareness’ of the scheme and its requirements amongst UK firms.

The BCC stated that a delay of a year would ‘provide extra headroom’ to HMRC, allowing it to support businesses with MTD-related issues.