Month: February 2022

If politicians have it right, we may be approaching the end of the major disruption to economic activity of the past two years.

Which is great news for those trades badly affected by continuing lockdown and other restrictions.

Unfortunately, rapid growth following a long period of depressed trading conditions can prove to be disastrous.

The danger arises if you offer your customers more generous trading terms than your suppliers and you have very little left in your bank accounts.

Consider that you have £1,000 in your current account and have no chance of overdraft or loan support from your bank. Your sales for January 2022 are excellent, £20,000, but to secure these sales you were obliged to offer customers 60 days to pay their bills.

You were able to supply goods from stock so there is no need to immediately re-stock. However, in the month of January, you need to settle past VAT and Corporation Tax liabilities amounting to £10,000 and in January and February general overheads (wages, rent, transport costs etc.) totalling a further £9,000.

The terms you have offered customers mean that the sales you have achieved in January will not generate cash-flow until March and you are faced with fending-off HMRC (£10,000) and other creditors (£9,000) for two months with just £1,000 in your bank account.

Business owners facing this dilemma need to consider their options and creating a simple cash-flow forecast will reveal the peaks and troughs in your bank balances and give you time to consider your choices.

Please call if you need help in drawing up suitable cash-flow forecasts.

1 February 2022 – Due date for Corporation Tax payable for the year ended 30 April 2021.

19 February 2022 – PAYE and NIC deductions due for month ended 5 February 2022 (If you pay your tax electronically the due date is 22 February 2022).

19 February 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2022.

19 February 2022 – CIS tax deducted for the month ended 5 February 2022 is payable by today.

1 March 2022 – Due date for Corporation Tax due for the year ended 31 May 2021.

2 March 2022 – Self-Assessment tax for 2020-21 paid after this date will incur a 5% surcharge unless liabilities are cleared by 1 April 2022, or an agreement has been reached with HMRC under their time to pay facility by the same date.

19 March 2022 – PAYE and NIC deductions due for month ended 5 March 2022 (If you pay your tax electronically the due date is 22 March 2022).

19 March 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2022.

19 March 2022 – CIS tax deducted for the month ended 5 March 2022 is payable by today.

HMRC has confirmed that four million out of twelve point two million taxpayers have yet to file their 2020-21 self-assessment tax returns. Which means that an equivalent proportion of taxes due 31 January 2022 will remain unpaid; at least for the foreseeable future.

We have reported on our blog earlier in January 2022, that HMRC will allow a further month, until 28 February 2022, for unfiled 2020-21 returns to be filed without incurring a late filing penalty.

And further, anyone who cannot pay their tax liabilities by the 31 January 2022 deadline will not receive a late payment penalty if they pay their tax in full, or set up a time to pay arrangement, by 1 April 2022.

Which begs the question, why bother filing a return earlier in the tax cycle?

Two reasons for filing – or preparing a return for filing – earlier in the tax cycle, are:

• Preparing a 2020-21 return quantifies any income tax or NIC that will need to be paid on 31 January 2022. In a nut-shell, taxpayers who prepare their returns shortly after the end of the relevant tax year, will have more time to save funds to clear tax due the following January. In theory you could prepare your 2020-21 return during April 2021 which would give you nine months to save for any tax due.
• The 2020-21 return will reveal any balance of taxes due for 2020-21 and also set the amount of any payments on account for 2021-22 (these payments on account are due 31 January and 31 July 2022). If you consider that taxable earnings in 2021-22 are going to be lower than those during 2020-21, you can elect to reduce payments on account for the later year.

The four million taxpayers, who we are advised are still to file for 2020-21, may be in for a shock when their liabilities are finally revealed in the coming month. Although HMRC have been generous in forgoing late filing and late payment penalties for restricted periods, interest will still be charged on tax paid after due dates.

We have all suffered from the impact of the pandemic to some degree, either personally or in a business capacity in the last two years, but the old maxim, be prepared, still holds water; and we would advise all taxpayers to adopt the sooner rather than later approach when they come to consider tackling their self-assessment tax returns for 2021-22.

In between the other political distractions of the last few weeks, England has returned to the COVID measures set out in Plan A. This means:

• The government is no longer asking people to work from home if they can. People should now talk to their employers to agree arrangements to return to the office.
• Face coverings are no longer advised for staff and pupils in secondary school and college classrooms.
• Face coverings are no longer advised for staff and pupils in communal areas of secondary schools, nor for staff in communal areas of primaries.
• There is no longer a legal requirement to wear a face covering. The government suggests that you continue to wear a face covering in crowded and enclosed spaces where you may come into contact with other people you do not normally meet.
• Venues and events are no longer required by law to check visitors’ NHS COVID Pass. The NHS COVID Pass can still be used on a voluntary basis.

High Street traders and businesses in the hospitality and entertainment sectors will welcome these changes as they are desperate to return to pre-COVID trading conditions.

Regional variations

Wales

From 28th January changes are:

• nightclubs will be able to re-open
• COVID Pass needed for large indoor events, nightclubs, cinemas, theatres, and concert halls
• working from home remains important but moves from law to guidance
• in hospitality, no restrictions on meeting people and no requirement for table service or 2 metre physical distancing
• face coverings still required on public transport and in most indoor public places

Scotland

Current published regulations are:

• get the vaccine or the vaccine booster,
• if you don’t have symptoms take regular lateral flow tests – especially before mixing with other people and visiting hospitals and care homes,
• if mixing with others keep gatherings small – keep your distance from people not in your group,
• if you have symptoms – self isolate and book a PCR test,
• wash your hands regularly, and cover your nose and mouth if coughing or sneezing,
• open windows when meeting indoors,
• a mixture of home and office working is allowed,
• use the apps: COVID status (vaccine passport), Protect Scotland and Check-in Scotland.

Northern Ireland

The current range of COVID-19 regulations for Northern Ireland are best reviewed on the https://nidirect.gov.uk website.