Welcome to the December 2019 'Need to Know' update. You'll find the latest key information on IR35, the Loan Charge, supply chain contracts and the impact of counterfeit goods on the UK economy
Continue IR35 preparations, businesses are advised despite pledges to delay tax changes
The Conservatives have promised to review IR35 tax reforms which are due to be introduced to the private sector if they remain in power, bringing their policy into line with Labour, the Liberal Democrats and SNP amid the campaigning for the General Election.
It is now likely that the introduction of private sector IR35 next April is almost certain to be delayed and may be significantly amended. But while that has been welcomed, legal experts said businesses would be “foolish” to halt preparations for a 2020 rollout.
Chancellor Sajid Javid told FSB’s election hustings that a Conservative government would keep the changes “under review,” but stopped short of committing to a delay. He later told Radio 4’s Moneybox programme that his party would look again at the rules to “make sure that the proposed changes are right to take forward”.
Labour’s shadow small business secretary, Bill Esterson, has previously said Labour would review the current plan to roll out IR35 changes to the private sector, while the Liberal Democrats have explicitly pledged a review in their manifesto of a reform, which will have a huge impact on HR and finance departments. The SNP manifesto also promised “a review of the tax rules around intermediaries.”
But Matt Fryer, group compliance director at Brookson Legal, said: “Businesses would be foolish to halt their preparations now and a contractor workforce audit is still incredibly valuable.” He argued that a review was unlikely to result in the policy being abandoned given the £1.3bn of additional tax revenue the Treasury believes the change would generate.
“The latest announcements from Labour and the Conservatives only add to the uncertainty for contractors and businesses, many of whom have already invested considerably in preparation for April 2020,” Fryer said, adding: “Clear communication is a priority for those who are likely to be most affected.”
You can read more about the latest developments here; http://bit.ly/384KNG1
Small firms' opportunity to win supply chain contracts with Atkins
The construction group, Atkins have opened-up an online portal asking SME firms for help fixing potholes.
The Digital Intelligent Brokerage (DIB) has been launched in conjunction with Wiltshire Council in a bid to find innovations for highways repairs.
All ideas submitted online will be screened automatically using algorithms before being accessed by experts from Atkins.
The DIB approach was initially developed by Atkins and Scottish Water to identify new ideas to help address water supply, quality and pollution challenges affecting rural communities in Scotland.
That project saw over 50,000 SMEs invited to participate resulting in 500 submissions which led to 49 opportunities for Scottish Water to work with SMEs – 77% of whom had never previously worked in the water sector.
Peter Binley, Head of Highways Asset Management, Wiltshire Council, said: “Wiltshire, like many other areas across the UK, faces a pothole challenge which needs to be addressed.
“By using the DIB, we believe we can get access to a wider pool of suppliers who offer unique solutions and different insights as we look to tackle a well documented problem.”
Dr Arthur Thornton, Associate Director at Atkins and DIB innovator, said: “Small organisations are often at the forefront of both product and digital innovation across the country but taking that innovation to industry challenges can be a problem when engaging in procurement processes.
“The Atkins approach is respectful of the SME’s time and provides an efficient platform for them to offer their technical capabilities and express how they would like to work with our clients.”
You can visit the portal here; http://bit.ly/2Pc4S4T
UK economy losing £9.2bn per year to counterfeit goods
The UK economy is missing out on billions a year as a result of the global trade in fake goods, which was behind more than 86,000 lost jobs in 2016, according to the OECD
In terms of UK imports, the OECD report estimates that fake goods imported to the UK were worth £13.6bn in 2016, equivalent to 3% of genuine imports, up from £9.3bn in 2013. The most common imported fakes include mobile phones and accessories, clothes, footwear, handbags, and games.
The value of counterfeit and pirated British goods sold worldwide was estimated at £16.2bn in 2016, up from £13.4bn in 2013 and equivalent to 3.3% of UK manufacturing sales.
UK goods particularly targeted by counterfeiters include perfumes, cosmetics, clothing, footwear, leather goods, telecoms equipment, electronic goods, cars and motorbikes.
In absolute terms, IT kit, particularly mobile phones and computers, were the most counterfeited type of goods, with an estimated value of £2.5bn of fakes imported to the UK in 2016.
You can read the report here; http://bit.ly/2DMrIe0
Delay to loan charge review
The outcome of the independent loan charge review has been delayed by the upcoming general election. However, that has a knock-on effect for those currently in the process of agreeing a settlement with HMRC.
In its guidance for those in the process of settling and where all of the required information was provided to HMRC by 5 April 2019, HMRC states:
“HMRC recognise you may want to wait for the government’s response to the review before finalising your settlement. You will need to report the loan charge on your tax return if your settlement is not finalised by 31 January 2020. Reporting your loan charge will not prevent you finalising your settlement. Once your settlement is finalised you can amend your tax return if necessary.”
Despite the current independent loan charge review, the loan charge is enacted in law. It is therefore correct that in cases where a settlement is not reached with HMRC by 31 January 2020, the loan charge should be included in the self assessment return. For some taxpayers, this might trigger a requirement to register for self assessment for the first time.
The guidance says very little concerning the payment of tax arising as a result of including a loan charge on the self assessment return, aside from commenting: “If you choose to settle, HMRC will continue its existing practice of not charging statutory late payment interest from 1 October 2018, or, if later, the month in which you provided the required information to HMRC.”
You can read more here: http://bit.ly/388j3Ai