Insights – September 2021

Today marks the end of the furlough scheme.  With many businesses still in recovery mode, and the pandemic still at large in our community, there is genuine concern as to what the next weeks and months will bring if circuit breakers or lockdowns were to be deployed.   We encourage all our clients to critically review your businesses, examine all areas of revenue and spend, ask yourself – are you as efficient and as profitable as you should be?  And take the necessary steps to put your business in the best position to take on what may well be a very challenging winter period.

We bring the following matters to your attention this month:

1. VAT – Hospitality Sector

From 1 October 2021 the hospitality sector VAT rate will increase to 12.5%. Businesses in the hospitality sector have been able to avail of a reduced 5% VAT rate since 15 July 2020. The 12.5% rate will be effective until 31 March 2022 at which point it will return to the standard rate of 20%.

Businesses in the hospitality sector need to ensure that your financial system is fully updated to reflect this new temporary VAT rate.  If you need help, please contact us.

2. Self-Assessment – a gentle reminder!

The deadline for filing self-assessment income tax returns for the year to 5 April 2021 is 31 January 2022. In what was a very strange year for many individuals, including periods of closure, self-employment grants and localised restrictions support, you may be holding off looking at your tax affairs, as you prefer not to know!

HMRC continue to offer favourable time to pay arrangements for most taxes – so even if your income tax bill is more than you anticipate, there are ways of spreading out the payments.  So, get your information to us as soon as you can so that we can all be well ahead of the 31 January deadline.

3. Corporate insolvency changes

Suppliers and service providers who have been facing difficulty in getting paid by customers have had very limited options to chase debt since March 2020.  This is changing from tomorrow.

From 1st October 2021 creditors can issue winding up petitions against debtor companies if 4 conditions are met:

• The debt is not in respect of rent or any similar payment due under a business tenancy which is unpaid due to the financial effect of coronavirus on the debtor company.
• The creditor must first deliver written notice to the company containing prescribed details and inviting proposals for payment of the debt within 21 days.
• At the end of the 21-day period the creditor can only proceed if the debtor company has not made a proposal for payment that is to the creditor’s satisfaction.
• The threshold for issuing winding up proceedings has increased from £750 to £10,000.

These new conditions are scheduled to remain in place until 31st March 2022.  Contact our Business Restructuring team if you need further information on these changes.

4. Making Tax Digital Update

On 23^rd September the government announced that Making Tax Digital for Income Tax has been postponed until April 2024. Sole traders and landlords with income above £10,000 will need to register for MTD for Income Tax from April 2024 onwards.

Whilst the deadline for commencing MTD for Income Tax has been extended out to 2024, the deadline for smaller VAT registered businesses to start following the MTD rules has remained at April 2022.

VAT-registered businesses with a taxable turnover below £85,000 (those who are not already registered for MTD) will need to register for Making Tax Digital and start filing MTD returns from their first VAT quarter starting after 1 April 2022 onwards.

We will be issuing specific guidance to businesses affected by these changes in the coming months.

 

Should you have any queries on any of the above, please do not hesitate to contact us on 028 8772 4697 or at info@gildernewandco.com.

Gildernew & Co. Ltd make every effort to ensure the accuracy of the information herein.  However, no reliance should be placed on any of the above without seeking independent professional accountancy, legal and/or financial advice.