Category Archives: Construction Industry Scheme (CIS)

COVID-19: Construction industry furlough claims rejected

COVID-19: Construction industry furlough claims rejected as ineligible.

Why are claims by construction companies for furloughed staff being rejected as ineligible?

One of the qualifying criteria for claiming 80% of the salaries of furloughed employee under the Coronavirus Job Retention Scheme (CJRS) is that the employer must have operated a PAYE scheme prior to the 19th March 2020.

PAYE/Construction Industry Scheme (CIS) Anomaly

HMRC operates two PAYE schemes for construction companies: Subcontractor Only and the hybrid Subcontractor/PAYE scheme.

Subcontractor Only PAYE Scheme – Ineligible for CJRS Grant

Construction companies which fall under the Subcontractor Only category are automatically rejected as ineligible when applying for the CJRS grant. This is despite the fact that these companies have been running employee payrolls for several years.

Construction industry furlough claims rejected

Subcontractor Only / PAYE Scheme – Eligible for CJRS Grant

All is not lost. Construction companies that have been rejected as ineligible for the CJRS grant can contact HMRC’s Employer Helpline on 0300 200 3200 and request that their PAYE scheme be modified to the hybrid version: Subcontract Only / PAYE.

Once HMRC has updated their system, the construction companies affected can re-apply for the grant after 72 hours.

Hector has his limitations

Despite the multiple qualifying criteria listed by the government for making a CJRS claim, Hector has decided to keep things Plain Vanilla for the construction industry by limiting his checks to whether the company’s PAYE scheme is Subcontractor Only or not.

Hector has no time for Tutti Frutti logic like IF PAYE Scheme equals Subcontractor Only and Company runs Payroll then Eligibility is TRUE.

To be fair, Hector is only a tax inspector and not an IT programmer.

This post on The COVID-19: Construction industry furlough claims rejected as ineligible was sponsored by Canalitix.com

COVID-19: Befuddled? We are tax agents

Canalitix Accountants

Canalitix Accountants are tax agents who can guide you through the claims process for Coronavirus Job Retention Scheme (CJRS) and Self Employed Income Support grants.

HMRC has recently reached out to Canalitix Accountants and other UK tax agents to assist businesses with their claims for furloughed staff wages under CJRS.

The CJRS dedicated online claims system is expected to go live on 20 April 2020 and we would welcome the opportunity to assist businesses including company directors and contractors on PAYE with their claims.

HMRC Step by Step Guide for submitting CJRS claims

COVID-19: Befuddled? We are tax agents

Payroll bureau and HMRC file only agents

Payroll bureau and HMRC file only agents cannot access the CJRS dedicated online services.

However, file only agents can assist business with their CJRS claims because they hold information on furloughed staff, such as national insurance (NI) number, salary, employer’s NI and pension contributions.

HMRC Money Laundering Regulations

Contact us

You can contact us via our main website Canalitix.com or using the from the Contact Us menu above: https://canalitix.org/contact-us/

RECAP – Coronavirus Job Retention Scheme

This post on The COVID-19: Befuddled? We are tax agents was sponsored by Canalitix.com

COVID-19: The forgotten self-employed

COVID-19: The forgotten self-employed are individuals who have started their self-employment businesses since 5th April 2019 and, as a consequence are excluded from claiming grants through the self-employment Income Support Scheme.

Being self-employed is like walking a tightrope and trying to balance the demands of creditors, staff and bank overdrafts on the one hand while using the other hand to extract payments from customers while driving new sales. This is on top of satisfying your own physiological needs. Even without a pandemic, walking the walk can be hazardous with the slightest jolt capable of disrupting the balancing act.

Then along comes the news that the government’s coronavirus self-employment Income support scheme excludes individuals who started their businesses as sole traders and/or partnerships after 5th April 2019.

Who can claim a grant for Self-Employment Income Support?

The Self-Employment Income Support Scheme provides a taxable grant worth 80% of self employment trading profits up to a maximum of £2,500 per month for the next 3 months starting 1 March 2020 with the possibility of being extended.

COVID-19: The forgotten self-employed

To be eligible to apply, the application must be a self-employed individual or a member of a partnership satisfying the following conditions:

  • have submitted a Self Assessment tax return for the tax year 2018-19
  • traded in the tax year 2019-20
  • are trading when they apply, or would have been except for COVID-19
  • intend to continue to trade in the tax year 2020-21
  • have lost trading profits due to COVID-19
  • self-employed trading profits must be less than £50,000
  • more than half of the individual’s income must come from self-employment

Further, the averaging process will only apply to those years between 2016 and 2019 where a Self Assessment tax return has been submitted to HMRC.

Allowance for late submission of 2018/19 SA tax return

HMRC has agreed to allow late submissions of Income Tax return for the tax year 2018-19 by 23 April 2020. However, late returns will be risk assessed.

Why not allow the early submission of 2019/20 SA tax return

Considering the 2019/20 tax year comes to an end on 5th April 2020 and the grants are not going to be paid for several months until June 2020, why can’t the government ask the newly self employed to get their 2019/20 SA tax returns submitted online before the end of May 2020.

This is indeed a strange anomaly because the same computer logic that’s required to check whether or not the self-employed is still trading in 2019/20 could easily be applied to process the tax returns of newly created self employment business for 2019/20.

In order to save these new entrepreneurs from the growing food bank and universal credit queues, the government should request all self employed businesses to submit their 2019/20 tax returns before 31 May 2020.

No doubt HMRC are keen to mitigate the risk of fraud from false claims. However, the same risk assessment process being applied to late 2018/19 tax returns could be applied to early returns for 2019/20.

This post on COVID-19: The forgotten self-employed was sponsored by Canalitix.com

VAT PAYE and Corporation Tax Help for Covid-19

The government has promised support for all businesses and self-employed people in financial distress, and with outstanding tax liabilities, such as VAT PAYE and Corporation Tax.

The HMRC’s Time To Pay service has been set up to support business with their tax affairs. Eligibility will be assessed on a case-by-case basis and will be tailored to individual circumstances and liabilities.

Covid-19: VAT PAYE and Corporation Tax Help

HMRC dedicated COVID-19 helpline 0800 0159 559 has been set up for those concerned about being able to pay their tax due

Fraud and the VAT Reverse Charge

This article entitled Fraud and the VAT Reverse Charge is meant to provide an insight into the changes coming into force on 1 October 2020.

HMRC considered fraud prevention as the primary reason for introducing the VAT reverse charge to the construction and building services industry. The VAT Reverse Charge which was initially planned for 1 October 2019 comes into force on 1 October 2020. This delay was to allow construction industry services (CIS) participants and accounting systems developers sufficient time to be prepare for the change.

This change means that CIS contractors / customer receiving the service will be responsible for paying the VAT due to HMRC instead of the subcontractor / supplier. The subcontractors’ invoices will carry a note stating that the VAT should be paid by contractors to HMRC.

While some contractors may find themselves with cashflow issues at the start of the reverse charge, some subcontractors may find themselves reclaiming VAT on purchases. This is a direct result of shifting the responsibility for payment of VAT on the subcontractor sales invoices onto the CIS contractor.

Fraud and the VAT Reverse Charge

Preparing for the reverse charge
Accountant and their clients need to ensure that they are prepared for the 1 October 2020 introduction by:
1. Verifying whether sales and/or purchases are in scope for the reverse charge
2. Ensuring that accounting systems have been updated to deal with the reverse charge
3. Budgeting for the cash flow implications of paying the reverse charge
4. Providing staff training

Who are excluded from the reverse charge
1. End users (consumers and intermediaries)
2. Professional services of architects and surveyors
3. Extraction of minerals
4. Drilling for oil and gas
5. Repair of building service components
6. Supplies of staff or temporary workers provided by employment businesses who are responsible for paying them. However, if an employment business contracts to deliver a specific construction service, such as installation of windows the reverse charge applies.

By shifting the burden of VAT payment to CIS contractors, HMRC anticipates that the level of VAT fraud will be reduced in the building and construction industry when the reverse charge comes into force on 1 October 2020.

Useful links

Domestic reverse VAT charge for building and construction services