Some tax enquiry cases…

ON THE FACE of it, the UK left the EU on 31 December 2020. From 1 January 2022 there were additional customs rules to be aware of for businesses trading with the bloc, our former partners in the EU.

In today’s Shipleys Tax brief we look at what these rules are and how Shipleys Tax can help.

What is Customs Duty?

Customs duty is payable on goods imported into the UK. The rate of customs duty payable is determined by the tariff classification of those goods.

Customs duty cannot be recovered, therefore where payable, it is a cost to businesses resulting in reduced profit margins.

Following Brexit, all imports to mainland Britain (England, Scotland and Wales) from overseas may be subject to import duties. Certain processes, mainly regarding paperwork, were not initially required in order to allow affected businesses time to get used to the new relationship with their customers. These have now taken effect:

Customs duty cannot be recovered, therefore where payable, it is a cost to businesses resulting in reduced profit margins.

• full customs import declarations are needed for all goods at the time a business or the courier/freight forwarder brings them into Great Britain
• customs controls at all ports and other border locations
• the possible need for a suppliers’ declaration proving the origin of your goods (either UK or EU) if using the zero tariffs agreed in the UK’s trade deal with the EU
• commodity codes, which are used to classify goods for customs declarations, are changing.

As such, it is now pivotal for importers to proactively consider their customs duty position.  

How can Shipleys Tax help? Can your business benefit from customs duty planning to make tax savings?

Shipleys Tax can provide guidance to importers on many aspects which drive the duty rates payable on imports, using our experience to identify opportunities to optimise the duty position as follows:

• Tariff Classification – The commodity code used for imports drives the import duty payable on those goods to HMRC. Establishing which code to use can be a complex task and can result in significant variations of duty paid to HMRC. Using our expertise, we can identify saving opportunities by using appropriate tariff codes and where necessary, obtain rulings from HMRC to confirm the treatment.

• Preference – Preferential trade agreements (i.e. the EU trade deal with the UK post Brexit) exist between the UK and its key trading partners. What this means is that where goods are imported from trade partners (i.e. the EU), preferential duty rates can be claimed, resulting in savings. We can establish where and how preference can be claimed to make tax savings for your business.

• Valuation – We can advise on the appropriate customs valuation method used for goods imported into the UK.  

• Customs Special Procedures – Customs special procedures allow businesses to suspend, relieve, reduce or defer customs duty payable on imports. We will establish whether these special procedures offer customs duty or cash flow savings for your business and use our experience to assist in their implementation.

Shipleys Tax can provide guidance to importers on many aspects which drive the duty rates payable on imports, using our experience to identify opportunities to optimise the duty position.

HMRC claims

Our reviews often result in opportunities for three-year backdated claims for overpaid customs duty. We will manage the claim process for your business, liaising with HMRC to obtain the duty refunds your business is due!

Get in touch

With wholesale changes impacting importers following the UK’s departure from the EU, now is the ideal time to ensure you are seeking advice from the experts, to ensure you pay no more customs duty than is due, whilst remaining compliant with HMRC rules.

At Shipleys Tax we have experienced indirect tax advisers and are well placed to ensure that your business is operating as effectively as possible, while remaining compliant with the duty regulations in this area.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that Shipleys Tax do not give free advice by email or telephone.

MANY SECOND home owners use a loophole to avoid council tax on the property. However, the government has announced that new rules will apply to prevent abuse from April next year.

In today’s Shipleys Tax brief we look at how this works and what you can do about the changes.

What’s going on?

Under the current system, owners of second properties in England can avoid a council tax bill if there is an intention to let the property to holiday makers. This brings the property into the business rates regime and, as a result, small businesses rates relief can be claimed. The problem is that many second home owners are declaring an “intention” to let their property, when in reality they just remain empty for most of the time.

New rules

From April 2023, the rules will change so that only genuine holiday lettings will qualify for the relief, bringing non-qualifying properties back into the charge to council tax. A property will only be assessed under the business rates regime if the owner can provide evidence that:

• it will be available for letting commercially, as self-catering accommodation, for short periods totalling at least 140 days in the coming year
• during the previous year, it was available for letting commercially, as self-catering accommodation, for short periods totalling at least 140 days; and
• during the previous year, it was actually let commercially, as self-catering accommodation, for short periods totalling at least 70 days.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that Shipleys Tax do not give free advice by email or telephone.

A GOVERNMENT SCHEME launched 20 Jan 2022 gives businesses up to £5,000 saving on accounting and customer relationship management software.

What it is it?

The scheme, called “Help to Grow: Digital”, is an attempt by the government to give support to small businesses by helping them improve their digital systems and processes:

• scheme provides businesses with discounts of up to £5,000 on approved Digital Accounting and Customer Relations Management (CRM) software
• dedicated website providing free, impartial support now open to boost businesses’ digital skills.

Who is it for?

To qualify for the financial discount, businesses from any sector must meet all 4 of the following criteria:

• be a business based in the United Kingdom registered with Companies House or be a registered society on the Financial Conduct Authorities Mutuals Register
• be employing between 5 and 249 people.
• have been actively trading for over 12 months, and have an incorporation date of at least 365 days prior to application
• be purchasing the approved software for the first time

What do you get?

Eligible businesses will receive one financial discount towards the purchase of one approved software product up to a maximum of £5,000 (not including VAT) in Customer Relationship Management and Digital Accounting software product categories.

• additional software product categories will be available with the discount soon, including e-Commerce software
• the financial discount covers 12 months’ worth of approved software product core costs, exclusive of VAT

How do I apply?

Businesses can also access the support through a new online platform.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that Shipleys Tax do not give free advice by email or telephone.

THE GOVERNMENT has confirmed that the upcoming Finance Bill will include changes to discovery assessments, allowing HMRC to recoup unpaid high income child benefit charges going back almost ten years.

In todays Shipleys Tax brief we look at this concerning development.

What’s the High-Income Child Benefit charge (HICBC)?

The unpopular High-Income Child Benefit Charge (“HICBC”) was introduced in 2013 and is a tax charge paid by so called “higher earners” which claws back up to 100% of any child benefit received by the earner or their partner. A high earner for this purpose is when the income of the child benefit claimant or their partner exceeds £50,000 p.a. The charge is collected via the annual self-assessment tax system and taxpayers affected by these rules are required to register for self-assessment and pay their HICBC by 31 January following the end of the tax year.

What is happening now?

Despite HMRC administering the collection of child benefit payments from high earners, it is still finding taxpayers that have not declared the benefit in previous years. In a recent case, it was found that HMRC did not have the specific legal powers to recover the HICBC even where the charge remained unpaid for a few years. The decision in Wilkes v HMRC found that HMRC did not have the power to impose the HICBC by means of “discovery assessment” (a form of enquiry into a tax return) as there was no income which ought to have been assessed. As a result, the child benefit claimant Mr Wilkes did not have to pay the tax charges.

If you can’t beat it – change the law…

As a consequence of losing the case, the government has confirmed that the upcoming Finance Bill will include changes to tax investigation powers, allowing HMRC to recoup unpaid high income child benefit charges going back almost ten years.

Once the Finance Bill is enacted, HMRC will be able to open tax investigations (“discovery assessments”) to collect any unpaid child benefit tax charges from as far back as 2013. However, the rule change will not apply to those that have already appealed against such assessments.

What does this mean?

Individuals with income over £50,000, where either they or their partner receives child benefit, could soon receive a large unexpected tax bill from several years ago.

This could have drastic consequences on unsuspecting child benefit claimants. For example, complications around relationships where parents are separated or where a relationship ends, or those who are not married are not properly accounted for. At Shipleys Tax we advocate paying the correct amount of tax, however where the collection system is flawed there are many instances where injustices will occur and individuals will be faced with large tax bills that they were genuinely unaware of, or don’t have the finances to meet the liability due to the pandemic, or the amount has been incorrectly assessed due to inherent flaws in the system.

If you are affected by any of the issues above and would like more information, or need help with tax investigations please call 0114 272 4984 or email info@shipleystax.com.

Please note that Shipleys Tax do not give free advice by email or telephone.