HMRC is sending out about 2.5 million annual renewal packs to claimants of tax credits over the next six weeks
It is important for taxpayers to check their details in the renewal pack and report any change in circumstances to HMRC.
The deadline for taxpayers to renew their tax credits is 31 July 2021. If the packs are not received by 4 June, claimants will have to contact HMRC.
HMRC recognises that many tax credit claimants will have been affected by the pandemic and may have earned less money than in previous years. It is important that they check the details contained in their annual renewal pack are correct, including income details.
Renewing online is quick and easy. Customers can log into gov.uk to check on the progress of their renewal, be reassured it is being processed and know when they will hear back from HMRC. Claimants can also use the HMRC app on their smartphone to:
• renew their tax credits;
• check their tax credits payments schedule; and
• find out how much they have earned for the year.
Tax credits help working families with targeted financial support, so it is important that people do not miss out on money they are entitled to.
If there is a change in circumstances that could affect their tax credits claims, these must be reported to HMRC. Circumstances that could affect tax credits payments include changes to:
• living arrangements;
• working hours; or
• income (increase or decrease).
Claimants do not need to report any temporary falls in their working hours as a result of coronavirus. They will be treated as if they are working their normal hours until the Coronavirus Job Retention Scheme closes.
Criminals can take advantage of tax credits renewals to text, email or phone taxpayers offering ‘rebates’ or threatening them with arrest if they do not pay bogus tax owed. Many scams mimic government messages to look authentic.
If someone contacts a taxpayer claiming to be from HMRC, asks for bank or other personal details, threatens arrest or demands that they transfer money, it might be a scam. Check GOV.UK for HMRC’s scams checklist.
Over 3,000 UK businesses have voluntarily repaid over £760m in furlough grants to HMRC that they did not need.
According to the national accountancy group, furlough grant money that many businesses in the UK claimed at the beginning of the pandemic has been paid back to HMRC by 3,777 companies. The money, estimated at around £760m, was claimed but not actually needed as businesses later realised, they were not impacted as badly as first anticipated.
The furlough scheme was intended to support business that have been impacted by the pandemic and were unable to maintain their workforce. Many of these businesses claimed the furlough grant as a precaution in case of financial difficulties in the future.
‘Many businesses are beginning to realise they acted hastily when claiming furlough money and are doing the right thing by handing it back to HMRC.’
HMRC is now shifting the focus onto businesses who have incorrectly claimed the support money, as it was announced in the March 2021 Budget that £100m would be allocated towards the new HMRC Covid fraud taskforce. This team was set up specifically to investigate fraudulent claims under multiple Covid-19 support schemes.
There is currently no specific requirement for a business to demonstrate that they have been financially impacted by Covid-19 in order to claim furlough grants but with the shift towards investigating cases of fraud, the hope is to encourage more to make voluntary repayments.
Regarding the taskforce ‘It’s expected that HMRC’s Covid fraud taskforce will take a much tougher approach to tackling what it sees as abuse of its schemes. It has taken a ‘softly, softly’ approach so far by issuing nudge letters to those it suspects may have claimed furlough money incorrectly, encouraging them to hand back money voluntarily if necessary. The next stage of its investigations will be much more aggressive.’
The penalties for businesses deliberately claiming furlough grants they aren’t entitled to or overclaimed more than they needed will be considered as a ‘deliberate and concealed’ activity, which can lead to a penalty of up to 100% of the grant.
The furlough grant scheme was a lifeline for many businesses across the UK to survive the Covid-19 pandemic and since its introduction in March 2020, £53.8bn has been claimed by employers and it has protected over 11 million employees. The scheme will continue to 30 September 2021 although the government contribution will be reduced.
Over the last year, HMRC has received 975,420 referrals of suspicious contact from the public with 552,885 of these relating to bogus tax rebates
This is an increase of 71.3% with 2019 recording 569,140 referrals. There has also been a huge 1,350% increase in Covid-19 relief scams, as criminals target Covid-19 furlough scheme recipients and businesses.
In February 2020, HMRC recorded 34,538 complaints of fraudulent activity rising by 206% with 105,906 complaints reported in January 2021.
They have also detected almost 450 Covid-19 related financial scams since March 2020, most were sent by text message seeking to tempt people to respond with information about furlough payment claims.
The HMRC figures show an increase of fraudulent activity across all three sectors – emails, SMS, and phone which increased by 51%. Working with the telecoms industry and Ofcom, HMRC identified 2,968 phone numbers being used to commit HMRC-related phone scams. It also reported more than 19,820 malicious web pages for takedown and asked internet service providers to take down 402 Covid-related scam web pages.
An HMRC spokesperson said: ‘If someone calls, emails or texts claiming to be from HMRC, saying that you owe tax and face arrest, are due a tax refund, asking you to transfer money or for bank or other personal details, it might be a scam. Check gov.uk for our scams checklist and to find out how to report tax scams.
‘Criminals are taking advantage of the package of measures announced by the government to support people and businesses affected by coronavirus. Scammers text, email or phone taxpayers offering spurious financial support or tax refunds, sometimes threatening them with arrest if they don’t immediately pay fictitious tax owed.’
HMRC continues to urge the public to be vigilant and to follow the advice given out by the department which is to ‘Stop, Challenge, Protect’. This advice tells you to take a moment to think before parting with your information or money, to reject, refuse or ignore request as criminals will try to rush and panic you, and to report any suspicious activity you have experienced to HMRC.
The department also offers a checklist which can help the public to identify that what they have received is fraudulent. HMRC says that it could be a scam if it is unexpected, offers a refund, tax rebate or grant, asks for personal information like bank details, is threatening or it tells you to transfer money.
The details of the Finance Bill 2021 have been published by the government.
The Bill outlines the key measures set to be brought into legislation, including many measures announced in the recent 2021 Budget.
In his Budget speech, Chancellor Rishi Sunak announced an extension of the stamp duty holiday in England; a super-deduction capital allowance; extensions of the Coronavirus Job Retention Scheme (CJRS) and the Self-employment Income Support Scheme (SEISS); and an extension of the VAT cut for the tourism and hospitality sectors.
The Bill will make sure the measures announced in the Budget take effect from 6 April 2021. It also legislates for tax changes that were previously consulted on and subsequently confirmed at the Budget.
Internet link: UK Parliament website
The UK government has unveiled a £20 million Brexit support package to help small and medium-sized enterprises (SMEs) with changes to customs and tax rules when trading with the EU.
The SME Brexit Support Fund aims to help businesses prepare for the implementation of further import controls which come into force later this year.
Businesses who trade only with the EU and are therefore new to importing and exporting processes will be encouraged to apply for grants of up to £2,000 for each trader to pay for practical support, including training and professional advice, to ensure they can continue trading effectively.
Businesses must meet certain criteria, including having been established in the UK for at least 12 months, having fewer than 500 employees and no more than £100 million in turnover.
The closing date for applications is 30 June. HMRC states that the fund may close for applications earlier if the full £20 million is allocated.
Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said:
‘We have been asking for proper financial assistance of this scale so that a cash-strapped small business can afford to buy-in expertise, training and practical support. The new fund will make a significant difference.’
HMRC has published details of the eligibility criteria of the final two grants available under the coronavirus (COVID-19) Self-employment Income Support Scheme (SEISS).
At the 2021 Budget it was confirmed that the fourth SEISS grant will be set at 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500. It will cover the period from February 2021 to April 2021.
To be eligible for the fourth grant, self-employed workers must have filed their 2019/20 tax return by midnight on 2 March 2021. This includes those who became self-employed in 2019/20, provided they have filed according to the deadline.
Eligibility will be based on the 2019/20 self assessment tax return which may affect the amount of the fourth grant which could be higher or lower than previous grants.
The remaining eligibility criteria are unchanged so applicants must either be currently trading but impacted by reduced demand, or be temporarily unable to trade due to COVID-19. They must also declare an intention to continue trading.
Claims can be made from late April until 31 May 2021.
The fifth SEISS grant will cover the period from May to September 2021 and will be available from July.
It will be set at 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500, for those with a turnover reduction of 30% or more.
Alternately, it will be worth 30% of three months’ average trading profits, capped at £2,850 for those with a turnover reduction of less than 30%.
Further details of the fifth grant will be provided in due course.
Internet link: GOV.UK
The government is to extend business rates relief with a £1.5 billion fund targeted at those businesses unable to benefit from the current COVID-19 support.
Retail, hospitality and leisure businesses have not been paying any rates during the pandemic, as part of a 15 month-long relief which runs to the end of June this year.
However, many businesses ineligible for reliefs have been appealing for discounts on their rates bills, arguing the pandemic represented a ‘material change of circumstance’ (MCC).
The government says that market-wide economic changes to property values, such as from COVID-19, can only be properly considered at general rates revaluations, and will therefore be legislating to rule out COVID-19 related MCC appeals.
Instead, the government will provide a £1.5 billion pot across the country that will be distributed according to which sectors have suffered most economically, rather than on the basis of falls in property values. It says this will ensure the support is provided to businesses in England in the fastest and fairest way possible.
Chancellor of the Exchequer Rishi Sunak said:
‘Our priority throughout this crisis has been to protect jobs and livelihoods. Providing this extra support will get cash to businesses who need it most, quickly and fairly.
‘By providing more targeted support than the business rates appeals system, our approach will help protect and support jobs in businesses across the country, providing a further boost as we reopen the economy, emerge from this crisis, and build back better.’
Internet link: GOV.UK