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January – Monthly Round up

‘Gig economy’
reprieved in overhaul of workplace rights

The government has responded to the
Taylor Review into workplace rights by adopting the majority of its
recommendations to provide greater protection for workers on flexible
or zero hour contracts.

The working economy has changed
substantially and with it the need to ensure that all workers are
treated fairly. Matthew Taylor’s 2017 investigation into the ‘gig
economy’ and those on zero-hours or flexible contracts highlighted
the need for some recognition of how this kind of working impacted on
workers’ rights and employers’ obligations.

In a report titled ‘Good Work’, the
government has taken in 51 of 53 Taylor recommendations and pledged
to provide greater protection for agency and gig economy workers. It
stopped short, however, of going as far as banning the contracts
completely. Instead, new rules to be introduced will:

  • Ensure agency staff are paid at
    the same level as permanent employees.

  • Increase the holiday reference
    period from 12 to 52 weeks, so that seasonal or other workers
    receive their entitlement of paid time off.

  • Require companies to provide a
    written statement of rights to workers from the first day of
    employment, setting out paid leave, sickness and maternity/paternity
    leave entitlements.

  • Increase employment tribunal fines
    four-fold from £5,000 to £20,000

Other provisions have been proposed to
‘name and shame’ employers who do not make employment tribunal
payments. This will operate similarly to the scheme around employers
who fail to meet their national minimum wage obligations.

The announcements were met with the
expected up-beat assessment from the government and criticisms from
trades unions and Labour, who feel the provisions do not go far
enough to protect the most vulnerable workers. The national minimum
wage is also under scrutiny in a separate consultation which closes
in March.

Employers who have workers on flexible
or zero -hour contracts will need to be aware of the changes outlined
in the ‘Good Work’ report that are likely to go through to
legislation. As with all employment issues, clarity and fairness are
the bywords. If you need any guidance for your business, we’re here
to help.

Bonus gender
pay gap revealed

Men are receiving almost twice the level of bonuses as women,
according to data from the Office for National Statistics (ONS).

The spotlight in 2018 fell on the
gender pay gap and revealed significant differences across many
industries. With the annual bonus season on us, the ONS figures for
2018 bonuses show an average for full-time male employees of £2,613,
as opposed to female employees receiving £1,158. The overall average
bonus was £2,242.

Across the country there were also wide
disparities, with London workers earning bonuses up to three times
the national average. Workers in Wales received the lowest average

The gaps are even greater when
comparing directors and corporate managers (at £7,878) and those in
the caring services (£37 at the lowest). The range between the
extremes covers business, media and public services, technology,
administration, trades and secretarial.

Having fallen from a 2008, pre-crash
peak of £3,038, incentive pay has gradually been increasing, with
private sector bonuses growing since 2015. However, the gap in gender
parity – possibly linked to the types of roles women often occupy
towards the lower end of the earnings spectrum – is still a
reminder of the work remaining to be done.

With bonuses and incentives a key
element in certain sectors, making sure employees feel that they are
being properly rewarded is a crucial consideration for retention and
recruitment in the new year.

Partnership tax
filing – lessons from the tax tribunal

If you’re in a partnership, who is responsible for filing the
partnership tax return? A recent First Tier Tax Tribunal (FTT) case
has highlighted not just worrying HMRC practice, but also the need
for clarity.

Mrs L is a partner in a two-partner
business. HMRC had charged her penalties for failure to file a
partnership tax return for the 2015/16 tax year. The other partner,
Mr F, did not receive any penalty notices. HMRC said that Mrs L was
the “representative partner” for the business who was required
under statute to deliver the relevant tax return.

There are two definitions in the
relevant legislation as to how a return can be notified:

  • A notice to “the partners”
    already identified to file; or
  • A notice to “any partners”.

Since HMRC sent the notices to the
business’s address rather than the personal address of Mrs L, the
judge in the case felt the notice was given under the second
definition. That is, any partner at the business could have fulfilled
the requirement.

More pertinently for HMRC, the judge
cancelled the penalty orders after reviewing what he believed to be
an inadequate train of evidence from the Revenue, who had not only
failed to keep adequate records of what had been sent and to whom,
but had also sent the wrong letter to Mrs L and not pursued the other
partner at any time.

While the individuals and business in
this case were lucky to come before a rigorous judge, partners need
to be aware of the responsibilities each must ensure they comply with
on the tax filing rules. One of the issues raised in the case was why
one partner had been pursued over another. It transpired that Mrs L
was already registered for self-assessment and had a unique taxpayer
reference (UTR) number, while her partner did not. This meant it was
simpler for HMRC to find and fine her.

A partnership return must be filed,
regardless of whose name is on the notices. If a named partner is
unable to comply, for whatever reason, the notice should not be set
aside until they are able to deal with it. HMRC should have pursued
both partners for the return in this case and should have been able
to produce the proper notifications when required.

The simplest way to avoid becoming
embroiled with either HMRC or tribunals, however, is to be clear
within your partnership about how to manage such events. We’re
happy to discuss your options with you.

Counting down
to Making Tax Digital for VAT

The stage is still set for Making Tax Digital (MTD) for VAT to be
rolled out on 1 April. But according to the Institute of Chartered
Accountants in England and Wales, 40% of relevant businesses aren’t
aware they are about to be affected.

Despite calls from the House of Lords
at the end of last year to postpone MTD, there appears to be no
stopping this significant change going forward. The first wave of
implementation requires all VAT-registered businesses with turnover
above the £85,000 VAT threshold to file and pay VAT online through
specific software interfaces, as well as keep digital records.

The pilot programme was expanded in
October to cover around 500,000 businesses and you can still join it.
HMRC is still issuing guidance and clarification, so it’s important
that you know where you are in your preparations.

Businesses that are eligible for MTD
for VAT should now be working through the developments necessary to
be able to comply. Depending on how you have been managing your
accounting, you may need to change in one of the following ways:

  • Move from paper-based records to
    digital MTD.

  • Move from spreadsheets to filing
    with MTD via bridging software.
  • Move from spreadsheets to full
    MTD-enabled software.
  • Work with your existing software
    as it becomes MTD compatible.

We can work with you to help you plan
the best way forward. If you will be submitting your VAT returns
yourself, a growing list of software providers is on the HMRC
. You can also check that your existing software supplier
is already included or planning upgrades.

It may take time to settle into the
best solution. But even if you are not immediately affected by the 1
April change for VAT, there are other deadlines on the horizon.
Certain other VAT registered businesses will need to start filing
under MTD from October 2019, and from April 2020, MTD is scheduled to
be implemented for income and corporation taxes. All VAT registered
businesses may also end up coming under MTD, regardless of turnover.

If you are in the first wave of
businesses required to move to MTD for VAT on 1 April, you need to
ensure that you are ready. Get in touch if you need to discuss your
MTD preparations.

Setting your intentions for 2019

It’s that time of year again.

Have your New Year’s resolutions
fallen by the wayside already? We all mean to do better about eating
healthily, drinking less and exercising more as the year turns over a
new page. But it’s not easy to maintain the lifestyle changes that
fulfilling these resolutions often takes, especially in these short,
dark days.

Thinking about your intentions rather
than resolutions can be a more helpful approach. And to try to look
beyond the short-term goals to longer term outcomes to boost the
likelihood of sticking to them.

Here are four simple financial New
Year’s resolutions which only require one-off actions, not
sustained effort. And they could provide long term benefits:

  1. Make a
    If you don’t have a will, you have no say in how your
    estate is distributed. That may not matter if the laws of intestacy
    match your wishes, but often the two diverge considerably, leaving
    difficult issues for your dependants. If you have made a will, you
    are not completely off the hook: resolve to look at it and make sure
    it is still the right will for your current circumstances.
  2. Set up lasting powers of
    Who would make decisions about your finances and
    medical treatment if you were unable to do so? Just as with a will,
    a lasting power of attorney lets you decide the answer rather than
    falling back on what the state determines or leaving your family
    without the ability to really help you.
  3. Check your credit rating.
    If you have plans for 2019 that might require a loan, or you are
    applying for any kind of finance, your credit rating is important.
    You can easily check your credit score at one of the three credit
    reference agencies – Experian, Equifax or Transunion – and get a
    copy for just £2.
  4. Check your state pension
    This is easy to do online
    and shows both what you should receive based on current rates and
    when you should start to receive it. The projection will also
    indicate any scope you have for increasing your state pension.

For help with any of these resolutions
(we probably can’t help with the more personal ones), please get in
touch with us.