• Date

    07 Jan 2021
  • Category

    Tax, VAT & Indirect Tax

New Year Tax Top Tips - Three “must do” things…

As the new year begins, it’s that time of year we start thinking about New Year’s Resolutions, so why not start with our three “tax top tips” for business owners and individuals.

Start the year the right way, with our top tips that will get you on the right track for a successful 2021.

Business Owners

 

1

Brexit

The Brexit transition period has now ended and we recommend that you now consider your future exposure. From a customs perspective:

INCOTERMS (shipping terms)

  • These determine the responsibilities and liabilities for the movement of goods (usually between the seller and the buyer) including which entity is responsible for rendering customs declarations and the payment of any import duties. This can apply to the EU and the UK. You should seek to confirm, re-negotiate and agree these terms with your EU suppliers and your EU customers.

Commodity codes

  • Confirm the commodity codes which will apply to the goods you import (and export). The commodity code will impact the amount of UK import duties you may need to pay to HMRC to clear your goods at the UK border. They will also impact any EU import duties which your customers (or you) may need to pay, depending upon which entity is responsible for EU import duties.

Engage a customs agent 

  • Aan import declaration will need to be submitted to HMRC to declare the goods imported into the UK. An export declaration will also be required for goods you export from the UK. If you engage a customs agent, they can facilitate this declaration on your behalf.

The payment of any UK import duties

  • These will be based on the UK Global Tariff (unless a trade agreement exists with the country of origin). You will need to confirm how these will be paid to HMRC, as required. You could engage your customs agent to assist you to pay these using their Duty Deferment Account. They will then seek reimbursement of the import duties and charge a fee for using their account. Alternatively, you could apply for your own Duty Deferment Account.

2

IR35 Changes – Be prepared

 

Identify who your ‘Off-payroll’ workers are in preparation for IR35

  • In April 2021 new rules will apply to Large & Medium businesses who engage with ‘Off-payroll’ workers providing their services through an Intermediary. The rules require the end engager to determine if the engagement falls within the scope of IR35. If it does, the engaging business will need to place the worker on its payroll as a ‘Deemed Employee’ if paying the workers company, or where the worker is supplied by an Agency, issue a ‘Status Determination Notice’ to the Agency.

Undertake IR35 status assessments ahead of April 2021

  • Once the workers have been identified, engagers will need to consider the IR35 status. IR35 status is determined on the facts of the engagement, both contractual and in practice. Status of a worker can be complex but key indicators will often be; Control, Financial Risk, Personal Service and Mutuality of Obligation. HMRC’s Check Employment Status for Tax (CEST) tool is useful in helping you to determine the workers status, but only if the facts of the engagement are interpreted correctly.

Actions post determination of Status

  • Once the status of the ‘Off-payroll’ workers has been determined the engager must put any ‘Deemed Employees’ they pay on their payroll and issue Status Determination Notices to all workers and where appropriate their agents.

    Recipients of these notices can request a review and justification of the engager’s decision and this must be completed by within 45 days of receiving the request. Failure to respond within the 45 days can result in liabilities for tax, national insurance and penalties arising on the engager.

3

Protect your people

 

January is often a key time when staff think about a change in their careersGiven the increased likelihood for individuals to want to transition to a more flexible and home-based work pattern, does this remove certain geographical barriers to attracting talent? We are seeing more and more businesses think long and hard on how they may introduce incentive plans to retain their best talent, this may include straight forward cash bonus plans or more complex equity based schemes, which in some cases due to lower business valuations are increasingly popular. What are you going to do to protect your people? 

If you would like more information on how you may be able to achieve this, please get in touch.



 

Individuals

 

1

Submit your tax return by 31 January 2021

The festive period is typically a time when a lot of busy business owners finalise their tax returns, if you have not done yours yet, or you need some additional support, please contact us or file without delay.

2

Focus on your tax liability

 

It may be too late to take action for the tax payment due on 31 January 2021, however you could still take action to spread your tax liabilities over 12 months or in deed consider some planning ideas for next year’s tax liability – Click here to find out more.

3

Protect your wealth

 

You have worked incredibly hard, taken business risks, house on the line and lots of sleepless nights. We could see a number of changes to the tax landscape this year, which could include an alignment of the CGT rates to income rates, the introduction of an one-time wealth tax, and the removal of some key tax reliefs. So it is important to ensure that you have the most effective business structure, that you have at least considered your options and perhaps started to think about succession planning. 

There may be areas that you have been putting off for later, however, now may well be the best time to take action, to potentially lock in the current tax rates which would provide you certainty on the tax position and may well protect your wealth. If you would like more information on how many be able to achieve this, please get in touch.



 

As 2021 progresses we will continue our series of top tips which if you are taxed for time, will provide you with valuable insight. At Azets, we strongly believe that planning is essential to ensure that individuals and businesses are fully briefed on key changes and how they may be impacted as a result.

We also know how important it is to have certainty regarding the tax you pay and our national tax experts, based locally to you, are on hand to provide support through the taxing times that are certainly ahead of us. 

For further information on the areas raised in this insight, or to discuss in more detail, please speak with your usual Azets contact or a member of our tax team.

About the author

Praveen Gupta Photo

Praveen Gupta

National Head of Tax Birmingham
View all news & insights

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