National Minimum Wage warning for employers

Employers who are flouting the law and not paying their workers at least the National Minimum Wage for their age have been warned that they face hefty fines.

Steve Timewell, HMRC’s Individuals and Small Business Compliance, director, spelled out its approach to those flouting the rules.

He said: “We always apply the law and take action. Workers cannot be asked or told to sign-away their rights.

“We are making sure that workers are being paid what they are entitled to and, as the economy reopens, reminding employers of the rules and the help that is available to them.”

In the 2020 to 2021 tax year, HMRC says it helped more than 155,000 workers across the UK recover more than £16 million in pay which was due to them, and it also issued more than £14m in penalties.

Steve Timewell says that there is help and advice available for businesses that are unsure of the rules.

However, he added: “Any employer deliberately or unapologetically underpaying their staff will face hefty fines and other enforcement action.”

The National Minimum Wage hourly rates are currently:

• £8.91 – Age 23 or over (National Living Wage)
• £8.36 – Age 21 to 22
• £6.56 – Age 18 to 20
• £4.62 – Age under 18
• £4.30 – Apprentice

HMRC: ‘We are here to help’

HMRC has reinforced the message that it recognises “the pressure” many people are still facing because of the Covid-19 pandemic, and it is here to help.

It used the publication of its performance report for the first quarter of 2021-2022 to make the point.

In a statement HMRC said: “We are doing everything we can to help. Our message to customers remains: if you can pay your taxes then you should do so – but if you’re struggling, we want to work with you to agree a plan based on your financial position.”

It added: “During the pandemic we have taken a common-sense approach to individual customer circumstances.

“Where people cannot pay their tax, we have enabled them to defer payment, and to pay off their debts over time in affordable instalments.

“Where people cannot deal with our compliance enquiries, we have deferred these if possible – with some direct face-to-face interventions moving into the next financial year.”

The report revealed that the amount of outstanding tax debt has continued to reduce as HMRC has “supported customers to pay where they can, including through affordable instalment plans.”

And it added: “As the UK slowly emerges from the pandemic, we are also working towards a return over time to more normal levels of compliance activity, while recognising the very real needs and challenges that businesses and individuals still face.

“We are contacting customers who have fallen behind with their tax during this difficult time. At all times, we will take an understanding and supportive approach to dealing with those who have tax debts or are concerned about their ability to pay their tax.”

It added: “These decisions to support customers – as well as the economic impact of the pandemic itself – have inevitably had an impact on compliance yield (the additional revenue we collect from our compliance activity).

“Between April and June 2021, with much of the economy still under Covid-19 restrictions, compliance yield remained lower than its usual pre-pandemic level for quarter one, at £7.4billion. However, we expect yield to recover over the course of the financial year.

“As the country slowly returns to a steady state, we are restarting our debt collection work – but we will continue to carry out this work in a way that is sensitive to customers’ altered needs and capabilities.

“Our immediate priority for customers is to continue helping them to comply with their tax obligations and supporting them with the economic impact of the pandemic, through the Coronavirus Job Retention Scheme, the Self-Employment Income Support Scheme (both of which have been extended to September 2021) and other measures to support people while the economy recovers.

“As the UK builds back better, we will continue to ensure the right tax revenue comes in and protect the tax system and individuals from fraudulent attack.

“Our approach to increasing compliance activity will be informed by customers’ individual circumstances, particularly if they are still severely affected by the effects of the pandemic.

“We will also carry-on supporting businesses to adjust to the changes to trading rules following the UK’s transition from the EU, so they can continue to compete successfully on the global stage.”

Help is at hand to grow international trade

North West businesses are being urged to take advantage of match-funded grants to help grow their international trade.

The Department for International Trade (DIT)’s Internationalisation Fund offers eligible businesses match-funded grants of £1,000-£9,000 for future activity to develop international markets.

The fund, which is supported by the European Regional Development Fund (ERDF) can be used to support a market research, translation services, market visits and several other areas of market development.

Speaking at a recent international trade conference organised by Lancashire Business View magazine, Bobbie Charleston Price, international trade team leader at the DiT, urged North West SMEs in all sectors looking to increase their exporting potential to apply to the fund.

She told the conference: “If business believe they have got a product or service that will be of interest to international markets we want to talk to them.”

The funding can be used for help with a range of issues, including market research, IP advice, translation services, international social media and SEO work, trade fairs, independent market visits and consultancy.

As well as the money, the scheme will introduce businesses to a network of support, including DiT’s international trade advisors, who worked with companies to develop international action plans.

The scheme is already supporting North West businesses, but it is still available for firms based across the region, with a closing date of March 2023 for applications. For more information email

An International Trade Adviser will:

• Check your eligibility
• Provide more details about the fund
• Discuss your project and support your company to make the application

The fund can be used to support areas including (but not exclusively limited to):

• Market research
• Intellectual Property advice
• Translation services
• International social media/SEO
• Trade fairs
• Independent market visits
• Consultancy and other international commercial services

Is your business eligible?

The company must be based in England and must be a small or medium sized enterprise (SME) with up to 250 employees.

No more than 25 per cent of the business is owned by an enterprise which is not an SME.

Annual turnover does not exceed €50 million or annual balance sheet does not exceed €43 million.

End of furlough: are you prepared?

The government’s Coronavirus Job Retention Scheme (CJRS) will come to an end on Thursday September 30.

Furlough was introduced in the first lockdown of 2020 following the financial struggles of thousands of businesses

Employers were given the option to furlough workers instead of making them redundant, with the government paying a certain amount of an employee’s pre-tax monthly salary.

The end of furlough at the end of September means that some employers will have difficult choices to make.

The Chartered Institute of Personnel and Development (CIPD) has spelled out some of those on its website.

It says that apart from a full return of furloughed staff – with additional recruitment in some cases – there are several options, depending on the needs of the business.

These could include agreeing temporarily reducing working hours with some or all staff, or considering other strategies, including natural wastage, recruitment freezes, stopping or reducing overtime and offering early retirement to volunteers – subject to complying with age discrimination law.

The CIPD says retraining or redeployment, sabbaticals and secondments, pay freezes or short time working could be other alternatives to considering redundancy.

It is important to take advice on the HR and legal aspects of taking and carrying out some of these choices, including ensuring the correct consultation is carried out.

Businesses also need to be aware of the health and wellbeing aspects of a return to work for staff who may have been away for some time.

CIPD says that some form of ‘re-induction’ process should be considered, and managers should talk people on an individual basis if they have concerns.

Its advice also says that, depending on your business plans, some form of hybrid working or a ‘phased’ return might be suitable.

If you have an Employee Assistance Programme, or other professional support, you may want to signpost staff to that.

CIPD adds: “Ensuring all staff are aware of the health and safety steps you have taken to minimise Covid related risks is important, but people may have additional mental health issues about the return, and you need to be able to address them.”

It is also important to keep everyone fully in the picture about the business and its future direction. Good communication will help things go more smoothly.

The end of furlough, coupled with the repayment of Covid loans, makes it even more vital that businesses manage their cash flow.

There may be increased costs as staff return, with some needing retraining, adding to the pressure.

Businesses that manage their cash well will come out of this stronger. Keep on top of your cash flow forecasts.

Look at your payment terms and see if they need to be changed to meet the new climate. Do you need to ask for more payment up front? Have honest conversations with suppliers and customers.

Control your costs. Look at your overheads to make sure you are getting the best deals possible.

Assess your office systems and purchasing and ordering processes to make sure you are not incurring unnecessary costs.

Ensure that your stock control is in order and is fit for purpose. Again, are the right processes in place? Now is the time to re-evaluate.

Support call for small firms

The government’s flagship levelling-up agenda will fall short unless more is done to bolster business support for smaller firms, according to a new report from the Federation of Small Businesses (FSB).

It says that SMEs will be crucial if levelling-up is to happen, describing them as “crucial to balancing-up productivity, innovation, jobs and opportunities across towns and rural areas as well as cities”

However, significant gaps in business support for small firms and the self-employed have been exposed in FSB’s new ‘Open for Business’ report.

It sheds light on how business support advice was used by small firms during the pandemic, drawing lessons from how while it supported some, others were left with little assistance.

The report reveals that 84 per cent of small firms received some sort of business support advice during the pandemic

And 45 per cent of small firms say the advice they received helped their business survive the pandemic

But most sole traders found that business support advice targeted at them was not helpful, according to the report

FSB national vice chair Martin McTague said: “We’ve seen huge numbers of small firms, almost half in fact, state that their business is still standing today thanks in part to the economic advice they managed to access. And while this is excellent news, it means that almost half didn’t have the same levels of success.

“For too many, knowing where to look, who to speak to and what to do leads to a dead end and that needs to change. Every day, small firms ask themselves how can I manage my debt? How can we achieve Net Zero without breaking the bank? Or how can I attract more staff? It’s these sorts of questions where the right advice, can make huge differences.

“Our findings show that existing business support advice already helps small firms when it comes to taxation and regulation, but as our post-EU journey continues and while we continue to weather the economic Covid-19 storm, there is plenty more government could be doing to help make things easier.”

He added: “Government needs to simplify and streamline how and where small firms can access critical business support advice, building on what currently works.

“It should also ensure that the level of funding for business support via UK Shared Prosperity Fund matches, or exceeds, those funds previously received under European Structural and Investment funding.”

• The WNJ team is on hand to offer small businesses and sole traders help and advice. To discuss your needs please call 01772 43000. We are here to help

Simplified tax reporting announced

Reforms to the tax system that will make it easier for small businesses to fill their returns have been announced by the government.

The changes, which will come into force by 2023, have been drawn-up alongside representatives of small businesses.

The reforms will mean that businesses will pay tax on profits in the tax year that they actually occur.

HMRC says the move should help them spend less time filing their taxes – aligning the way self-employed profits are taxed with other forms of income, such as property and investments.

Under the current system, tax returns filed by the self-employed, sole traders and partnerships are based on a business’s set of accounts ending in the tax year (April 5).

More complex rules apply when a business starts and draws up its accounts to a date different to the end of the tax year.

HMRC says those rules can be confusing, particularly for new businesses, leading to thousands of errors and mistakes in tax returns.

More than half of those affected do not claim relief they are entitled to and could pay tax twice.

It says the new system will make it easier for businesses to understand and will prevent thousands of errors every year.

Announcing the move Financial Secretary to the Treasury Jesse Norman said: “These complex rules lead to thousands of errors and mistakes in self-employed tax returns every year.

“Simplifying them will allow self-employed people to spend less time doing tax admin and more time growing their business and creating jobs.”

The government has also announced plans to deliver on its commitment to clamp down on promoters of tax avoidance schemes.

The package of measures announced will be legislated for in the next Finance Bill.

Government’s bid to boost investment in R&D

New plans to boost private sector investment and to put the UK at the front of the global innovation race have been set out by the government.

The Innovation Strategy was launched by Business Secretary Kwasi Kwarteng. It aims to boost private sector investment in R&D.

It will also look to create the right conditions for all businesses to innovate so they have the confidence to do so.

The UK is committed to increasing annual public investment on R&D to a record £22billion. However, the government says the private sector has also a key role to play in boosting spending on R&D.

The strategy “takes lessons learned from the pandemic”, including from the UK’s Vaccine Taskforce – where the public and private sectors successfully worked alongside each other.

The aim is to use those lessons to find solutions to fundamental challenges facing the UK – including the relative decline in business R&D investment and skills gaps.

The strategy also outlines how the government will focus its efforts to support businesses and institutions at the cutting edge of innovation, setting out plans in four areas:

• Unleashing Business – fuelling businesses who want to innovate by ensuring effective access to private and public investment
• People – creating “the most exciting place in the world” for talented innovators
• Institutions and Places – ensuring R&D institutions serve the needs of businesses and promoting innovation in places across the UK
• Missions and Technologies – stimulating innovation in technology and missions that will provide the UK with a strategic advantage and will be critical to tackling some of our greatest challenges

Announcing the strategy, Kwasi Kwarteng said: “The UK can look back on a proud history of changing the world through innovation. From the industrial revolution to the vaccine development of the past year, the impact on our everyday lives is undeniable.

“That spirit of discovery is still alive in this country today, but we have not always turned our genius for innovation into jobs and companies here in Britain.

“The countries that secure leadership in such transformational technologies will lead the world, enjoying unrivalled growth, security and prosperity for decades to come – and it’s our job to ensure the UK keeps pace with the global innovation race.

“Through this long-term plan, we want to rekindle our country’s flame of innovation and discovery, helping businesses to seize the vast opportunities that innovation can bring.

“If we get this right, we can build the foundations for the new industries of tomorrow, and ensure British firms are at the front of the pack to turn world-leading science into new products and services that are successful in international markets.”

The Innovation Strategy also aims to ensure government procurement is “proactive and supportive”, providing a route to market for innovative new products and services.

It will also look to reduce complexity for innovative companies by developing an online finance and innovation hub between Innovate UK and the British Business Bank within the next 12 months.

And £200m will be invested through the British Business Bank’s Life Sciences Investment Programme to target the growth-stage funding gap faced by UK life science companies.

There are also plans to support 30,000 senior managers of small and medium sized businesses through ‘Help to Grow: Management’ – a scheme designed to boost their business’ performance, resilience, and long-term growth.

A number of pioneering projects will receive a share of £127m through the Strength in Places Fund, delivered by UK Research and Innovation (UKRI):

In the North of England, £22.6m will help the Advanced Machinery and Productivity Initiative to drive innovation for the UK’s advanced machinery manufacturers to put them at the cutting edge of emerging technologies such as robotics.

Cumbria will also benefit from £21.3m of funding awarded to the Digital Dairy Value-Chain project which will create a more sustainable dairy industry by combining digital communications and advanced manufacturing.

Fifth SEISS grant – how it will work

Details are emerging about the government’s fifth Self Employed Income Support Scheme (SEISS) grant.

If you’re eligible based on your tax returns, HMRC will be contacting you this month to give you a date that you can make your claim from. It will be given to you either by email, text message, letter or within the online service.

The online service to claim the fifth grant will be available from late July. You’ll need to confirm that you meet other eligibility criteria when you make your claim.

And you must make your claim on or before September 30, 2021.

The fifth SEISS grant is the last in a series of government payments worth up to £7,500 made available to support eligible self-employed individuals through the pandemic.

Those who were eligible for the fourth grant should be eligible for the fifth payment. To be eligible, you need to be a self-employed individual or a member of a partnership.

You can claim the fifth grant if you think that your business profit will be impacted by coronavirus between 1 May 2021 and 30 September 2021.

Who can claim

You must be a self-employed individual or a member of a partnership.

You must also have traded in both tax years: 2019 to 2020 and 2020 to 2021

You cannot claim the grant if you trade through a limited company or a trust.

You must have:

• submitted your 2019 to 2020 tax return on or before 2 March 2021
• trading profits of no more than £50,000
• trading profits at least equal to your non-trading income
• Non-trading income is any money that you make outside of your business. For example, if you also have a part-time job or pension.

If you’re not eligible based on the trading profits in your 2019 to 2020 return, HMRC will look back at previous years.

When you make your claim, you must tell HMRC that you intend to keep trading in 2021 to 2022 and reasonably believe there will be a significant reduction in your trading profits due to the impact of Covid-19 between 1 May 2021 and 30 September 2021

The fifth grant is different from previous grants. In most cases, when making your claim you will need to tell HMRC about your business turnover so it can work out your grant amount.

Turnover includes the takings, fees, sales or money earned or received by your business.

To make your claim, you’ll need to have two different turnover figures. You’ll need to work out your turnover for:

• April 2020 to April 2021
• either 2019 to 2020 or 2018 to 2019

HMRC will compare these figures to work out how much you’ll get.

You will not be asked for any turnover figures if you started trading in 2019 to 2020 and did not trade in the following tax years:

• 2018 to 2019
• 2017 to 2018
• 2016 to 2017

There are two levels of grant. HMRC will work out your grant amount based on how much your turnover is down by after comparing your two turnover figures.

The grant is taxable and is worth either 30 per cent or 80 per cent of your average trading profits for three months.

The government has issued guidance to help business work out their turnover when making a claim:

Around 600,000 more people are eligible to apply for both the fourth and fifth grants, after Chancellor Rishi Sunak announcing changes to the scheme which meant newly self-employed people were able to claim.

A “cautious approach” to unpaid tax

HMRC will take “a cautious approach” this summer when it comes to pursuing businesses struggling with Covid-related debts for unpaid taxes, according to a report in the Financial Times.

There are fears that many under pressure companies may be unable to survive once emergency support measures begin to wind down from next month.

According to the FT report, business secretary Kwasi Kwarteng has written to business groups saying HMRC will take “a cautious approach to enforcement of debt owed to government that will have accrued” during the pandemic.

He said HMRC would shortly be updating the approach to enforcement and seek to bring outstanding debts that companies were struggling to pay into managed arrangements.

The minister said he recognised that the “path back to full trading will be difficult for many companies, particularly those with accrued debt and low cash reserves”.

And he added that HMRC enforcement “during this critical period will be largely driven by a lack of engagement by companies with it, rather than just their inability to pay and that using insolvency to enforce payment will remain a last resort”.

The minister’s letter came as a ban on landlords evicting firms for unpaid commercial rent has been extended for another nine months.

The current moratorium, which prevents landlords taking tenants to court for non-payment, was set to come to an end on June 30, 2021. It will now be extended until March 25, 2022.

The move follows the delay of the final stage of the government’s roadmap out of lockdown. Lockdown restrictions, which were to be lifted on June 21 in England, will now not end until July 19, amid alarm at the spread of the Delta variant of the Covid-19 virus.

Announcing the move, chief secretary of the Treasury Stephen Barclay said that the delay in easing lockdown restrictions “present additional challenges” to business.

The government also has plans to introduce a mandatory arbitration process to tackle debts where landlords and tenants cannot agree.

Mr Barclay said the government was acting because of the “threat to jobs” in many businesses affected by the pandemic.

And he added: “We believe this strikes the right balance between protecting landlords and supporting those businesses that are most in need.”

Mr Barclay also said that businesses no longer facing trading restrictions should start to pay rent again.

Hospitality industry leaders had warned of a “cliff edge of failure” without a longer grace period, with venues still closed or operating at less than full capacity.

• To discuss any tax issues that you have please contact WNJ on 01772 430000

Charities Bill proposed key changes

The new Charities Bill announced in last month’s Queen’s Speech will see several important changes to charity law.

The Charities Commission, which regulates charities in England and Wales, has welcomed the proposals, saying they should make “life simpler” for trustees and maximise the benefits their charity delivers.

It says that when enacted, subject to Parliamentary approval, the changes would also ease some of the regulatory pressures on trustees and reduce unnecessary red tape.

And it adds that the aim is to free up trustees get on with the important work of running their charity, whilst maintaining strong oversight for the instances when things do go wrong.

The proposed bill follows several years of extensive consultation, with the commission working closely with charities, their representative bodies, the Law Commission and the Department for Digital, Culture, Media and Sport (DCMS)

The Institute of Chartered Accountants in England and Wales (ICAEW) has highlighted some of the proposed changes and what they would mean for charities and their trustees:

• Charities and trustees will be able to amend their governing documents or Royal Charters more easily – remaining subject to the commission and the Privy Council’s approval in certain circumstances.

• Charities will have access to a much wider pool of professional advisors on land disposal, and to more straightforward rules on what advice they must receive, which could save them time and money when selling land.

• Charities will have more flexibility to make use of a ‘permanent endowment’ – this is money or property originally meant to be held by a charity forever. This includes a change which will allow trustees to borrow a sum of up to 25 per cent of the value of their permanent endowment funds, without the commission’s approval.

• Trustees will be able to be paid for goods provided to a charity in certain circumstances, even if not expressly stated in the charity’s governing document – currently trustees can only be paid for supply of services. From pencils to paint, this will allow charities the flexibility to access goods from trustees when it is in the best interests of the charity, for example if they are cheaper, without needing commission permission.

• Charities will be able to take advantage of simpler and more proportionate rules on failed appeals. For example, if a charity appeal raises too little money, the charity will be able to spend donations below £120 on similar charitable purposes without needing to contact individual donors for permission.