Updates for Businesses: 20th June 2022

Making Tax Digital for VAT – New Penalties for Non-compliance

HMRC have issued guidance for VAT-registered business and their agents on how to avoid penalties for non-compliance with the Making Tax Digital for VAT (MTD) rules.

In particular, there is a new £400 per return penalty if you file a return but do not use functional compatible software.

There are additional penalties if the business does not keep its records digitally. HMRC may charge you a penalty of between £5 to £15 for every day on which the business does not meet that requirement.

Key extracts from HMRC guidance include:

You Must File Your VAT Return Using Functional Compatible Software

Functional compatible software means a software program, or set of software programs, products or applications (apps) that can:

• record and store digital records.
• provide HMRC with information and VAT returns from the data held in those digital records.
• receive information from HMRC.

You Must Keep Records Digitally

You must keep some records digitally within your functional compatible software. This is known as your ‘electronic account’. Your electronic account must contain:

• your business name, address and VAT registration number.
• any adjustments from calculations you make outside your functional compatible software for any VAT accounting schemes you use.
• the VAT on goods and services you supplied, meaning everything you sold, leased, rented or hired (supplies made).
• the VAT on goods and services you received, meaning everything you bought, leased, rented or hired (supplies received).
• any adjustments you make to a return.
• the ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you bought and sold.
• the rate of VAT you charged on goods and services.
• your reverse charge transactions, where you record the VAT on the sale price and the purchase price of the goods and services you buy.
• copies of documents that cover multiple transactions made on behalf of your business, like those made by volunteers for charity fundraising, a third-party business or employees for expenses in petty cash.

All transactions must be contained in your electronic account, but you do not need to scan paper records like invoices and receipts.

Please contact us if you need assistance in complying with MTD.

See: Compliance checks: How to avoid penalties for Making Tax Digital for VAT – CC/FS69 - GOV.UK (www.gov.uk)

National Minimum Wage Rate Reminder for Employers: Summer Staff

All workers are legally entitled to be paid the National Minimum Wage (NMW). This includes temporary seasonal staff, who often work short-term contracts in bars, hotels, shops and warehouses over the summer.

The National Minimum Wage hourly rates from 1 April 2022 are:

• £9.50 - age 23 or over (National Living Wage)
• £9.18 - age 21 to 22
• £6.83 - age 18 to 20
• £4.81 - age under 18
• £4.81 - apprentice

Employers can contact the Acas helpline for free help and advice.

Please contact us if you need help with your payroll.

See: National Minimum Wage and National Living Wage rates

Travelling Time and the National Minimum Wage

HMRC have recently updated their guidance to employers on travelling time with reference to National Minimum Wage calculations. Travelling for the purpose of working (i.e. in connection with the employment) which does not fall under a daily average agreement is counted as working time.

This includes the time a worker spends travelling between “assignments” which need to be carried out at different places, to which the worker is obliged to travel. An example here would be a care worker visiting several clients in their own homes.

Travelling between a worker’s place of residence (including temporary residence) and the place of their work is not considered as travelling for the purposes of work. Any time spent on such “home to work” travelling is not considered as working time.

For more details see:  NMWM08490 - Working time: unmeasured work: travelling time - HMRC internal manual - GOV.UK (www.gov.uk)

Please note that this blog post is correct as of the 20th June 2022.