December TaxAngles

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TAXANGLES

A newsletter for proactive planning...

In this edition...

December
2020 Issue

Grants for businesses affected by national restrictions
www.compassaccountants.co.uk
Have you got your EORI number?
Postponed VAT accounting from 1 January 2021
Should I reduce my payments on account?
Utilise the trivial benefits exemption to provide tax-free Xmas gifts
Compass Babies!

COMPASS ACCOUNTANTS
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Grants for businesses
affected by national
restrictions
Many businesses have been forced to close as a
result of the national and local restrictions
introduced to slow the spread of Coronavirus.
Where this is the case, the business may be eligible
for a grant from their local authority.
The following grant support is available to
businesses in England during the second national
lockdown. Grants to businesses in Wales, Scotland
and Northern Ireland are subject to devolved rules.

Businesses closed due to national
retractions
Business that were previously open as usual, but
which were required to close between 5 November
2020 and 2 December 2020 as a result of the
second national lockdown in England may be
eligible for a grant from their local council for the
28-day period for which the national lockdown
applies. A business may qualify for a grant if it meets
the following conditions:
• it is based in England;
• it occupies premises in respect of which it pays
business rates;
• it has been required to close between 5
November 2020 and 2 December 2020 as a result
of the national lockdown; and
• it has been unable to provide its usual in-person
service from those premises as a result.
Businesses that qualify may include non-essential
shops, leisure and hospitality venues and sports
centres. Business that normally operate as an inperson venue but which have had to modify their
services as a result of the lockdown also qualify.

COMPASS ACCOUNTANTS
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An example here would be a restaurant that is not
allowed to provide eat-in dining but which stays
open for takeaways.
Businesses are only entitled to claim one grant for
each non-domestic property.

A business which has exceeded the permitted
state aid limit – set at €200,000 over a three-year
period – is not eligible for further funding but may
qualify for help under temporary Covid-19
measures.

Local restrictions
Amount of the grant
The amount of the grant is based on the rateable
value of the business premises on the first day of the
second national lockdown.
Where the rateable value of the business premises is
£15,000 or less, the business will receive a grant of
£1,334 for each 28-day period for which the
restrictions apply. Where the rateable value of the
business premises is between £15,000 and £51,000,
the business will receive a grant of £2,000 for each
28-day period for which the restrictions apply.
Where the rateable value of the business premises is
£51,000 or above, the business will receive a grant
for each 28-day period for which the restrictions
apply. Applications should be made to the local
council following the application procedure on the
relevant council’s website.

Excluded businesses
A business is not eligible for a grant if it can continue
to operate during the restrictions because the
business does not depend on providing in-person
services from their premises. Businesses that would
fall into this category would include accountants and
solicitors.
Businesses that are not required to close, but which
choose to, are also ineligible for a grant.

Where local restrictions are in force, businesses
may qualify for separate grants if they are either
forced to close or, where they can remain open,
their business is severely impacted as a result of
those restrictions. Details of the grants available
where local restrictions apply can be found on the
Gov.uk website.

COMPASS ACCOUNTANTS
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Have you got your EORI number?

If you do not already have an EORI number, you will
need to obtain one in order to move goods between
Great Britain and the EU. You may also need one
you move goods between Northern Ireland and nonEU countries.

Applying for an EORI number
From 1 January 2021, you will need an EORI
number that starts with ‘GB’ to move goods
between Great Britain and other countries.
If you do not already have an EORI number that
starts with ‘GB’ and you have yet to apply for one,
this should be done as soon as possible.

Applications for an EORI number can be made
online.
To make an application, you will need:
• your VAT number and the effective date of your
registration (which can be found on your VAT
registration certificate);
• your National Insurance number (if you are
applying as an individual);
• your Unique Taxpayer Reference (UTR);
• the date that your business started and its
Standard Industrial Classification (SIC) code (which
can be found on the Companies House register for
a company); and
• your Government Gateway User ID and
password.
Making an application using the online service
should only take 5—10 minutes. You will receive
your EORI number straight away unless HMRC
need to make further checks, in which case it will
take up to five working days.

5 g p -t n o C

From 1 January 2021, you will need an Economic
Operators Registration and Identification (EORI)
number to move goods between Great Britain and
the EU. Prior to 1 January 2021, you only needed an
EORI number if you move goods between the UK
and non-EU countries.

COMPASS ACCOUNTANTS
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Once an application has been made, the status of that application can be checked online.

Moving goods between Great Britain and Northern Ireland
The Northern Ireland Protocol comes into effect on 1 January 2021. Special rules apply to the movement of
goods between Great Britain and Northern Ireland. From that date, an EORI number that starts with ‘XI’ will
be needed to:
• move goods between Northern Ireland and other countries;
• make a declaration in Northern Ireland; or
• get a customs decision in Northern Ireland.
To obtain a EORI number that starts with ‘XI’ you will need to have one that starts with ‘GB’ – if you don’t, you
will need to apply for one first. If you already have an EORI number that starts with ‘GB’ and HMRC have
identified that you are likely to need one that starts with ‘XI’, then they should send you one automatically,
Expect to receive this from mid-December 2020.

Trader Support Service
If you move goods between Great Britain and Northern Ireland, sign up to the Trader Support Service (see
www.gov.uk/guidance/trader-support-service) for help and support on moving goods between Great Britain
and Northern Ireland.

Postponed VAT accounting
from 1 January 2021
The Brexit transitional period comes to an end of 31 December
2020 and various changes come into effect from 1 January
2021. One of these changes is the introduction of postponed
VAT accounting.
This will affect you if you are a VAT-registered business and
you import goods into the UK, particularly if you do not use
duty deferment.

Nature of postponed VAT accounting
Under postponed VAT accounting, you declare and recover
VAT on the same VAT return. This is beneficial as it means that
you do not have to pay the VAT upfront and recover it later.
Normal VAT rules continue to govern what can be reclaimed.
6 gp no tnoC

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You can use postponed VAT accounting from 1
January 2021 if your business is registered for VAT
in the UK and you import goods into Great Britain
from anywhere outside the UK or into Northern
Ireland from outside the UK and the EU.
There are no changes to the VAT treatment of goods
moved between Northern Ireland and the EU, or in
the way in which the VAT is accounted for.
Accounting for import VAT on your VAT return
You can account for import VAT on your VAT return
if:
• you import goods for use in your business;
• you include your EORI number, which starts with
‘GB’ on your customs declaration; and
• you include your VAT number on your customer’s
custom declaration if required.
If you use customs special procedures, you can
account for the import VAT on your VAT return
when you submit the declaration to release those
goods into free circulation.

Completing your VAT return
The introduction of postponed VAT accounting
means that there are some changes to the way in

which you will complete your VAT return from 1
January 2021.
You will need to download a monthly statement
which shows the total import VAT postponed for the
previous month which you will need to include on
your VAT return. There are also changes to what you
need to enter in Boxes 1, 4 and 7.
• In Box 1, include the VAT due in the period on
imports accounted for through postponed
accounting.
• In Box 4, include VAT reclaimed in this period on
imports accounted for through postponed
accounting.
• In Box 7, include the total of all imports of goods
shown on your online monthly statement,
excluding any VAT.

Consignments not exceeding £135
Where the value of the consignment is less than
£135, VAT will be collected at the point of sale
rather than at the point of importation.

COMPASS ACCOUNTANTS
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Utilise the trivial benefits exemption
to provide tax-free Xmas gifts
The Covid-19 pandemic has placed the office Christmas party firmly off the menu this year. Regardless of
what restrictions are in place over the Christmas season, many employers will want to take the opportunity
to spread some seasonal cheer amongst workers, who may have been furloughed or working from home for
much of 2020.

COMPASS ACCOUNTANTS
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The impact of any goodwill gesture is somewhat
diminished if it comes with an associated tax bill. This is
where the trivial benefits exemption can come into its
own, enabling employers to provide employees with
tax-exempt Christmas gifts, while keeping the costs low
at a time when many businesses are struggling
financially. Personal and family companies can similarly
make use of the exemption.

As it would be impracticable to work out the exact
cost of the turkey provided to each individual
employee, the average cost of £48 is taken as the
cost of the benefit. Assuming all the other
conditions are met, the gift of the turkey falls within
the trivial benefit exemption and is free from tax.

Nature of the exemption

Care should be taken using gift cards which are
topped up on several occasions. Rather than
evaluating each use of the card separately for the
purposes of the trivial benefits exemption, HMRC
look at the total cost of providing benefits via the
card in the tax year in question. The following
example illustrates the trap.

Under the trivial benefits exemption, a benefit is
exempt from income tax and National Insurance if all of
the following conditions are met.
• The cost of providing the benefit does not exceed
£50.
• The benefit is not in the form of cash or a non-cash
voucher.
• The employee is not contractually entitled to the
benefit.
• The benefit is not provided in recognition of, or in
anticipation of, services performed as part of the
employee’s employment duties.
Where a benefit is provided to a group of people and it
is impracticable to work out the exact cost of providing
it to each recipient, the average cost is used to
determine whether the benefit is trivial.
Directors of close companies (together with members
of their family or household) can only receive tax-free
trivial benefits to a maximum value of £300 in a tax
year. For other recipients, there is no annual limit (but
each individual trivial benefit must cost £50 or less).

Seasonal gifts
The following example illustrates how the trivial
benefits exemption can be utilised to provide tax-free
Christmas gifts to employees.

Example 1
An employer purchases 100 turkeys to be given to
employees at Christmas. The total bill is £4,800. The
turkeys vary slightly in weight but are not priced
individually.

Gift card trap

Example 2
An employee is given a gift card at Christmas which
can be exchanged in a particular store for a gift. The
card costs the employee £30 to provide. The card is
topped up by a further £30 on the employee’s
birthday. Although each top-up costs the employer
less than £50, the total cost of providing the
employee with a gift card is £60 for the tax year. As
this exceeds the £50 trivial benefit limit, the
exemption does not apply.
Instead, the employer should give the employee
separate gifts costing £30 each, both of which would
be exempt.

COMPASS ACCOUNTANTS
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Compass Babies!

2020 has been an unusual year for all of us, but we are delighted
to say, that it hasn't stopped the Compass family from growing!
Senior Administrator, Stacey Leggett (above left), had a baby boy
called Jesse on the 6th July 2020. Jesse weighed 7lb 5oz.
Client Manager, Sam Beavan gave birth to Sienna (above right) on
February 16th whilst in lockdown. Sienna weighed 8lb 10 ½ oz.
Welcome to the family Jesse and Sienna!

COMPASS ACCOUNTANTS
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TAX DIARY
December 2020
• 1 December 2020 – New Advisory Fuel Rates (AFR) for company car users
Due date for payment of Corporation Tax for period ended 28 February 2020
• 7 December 2020 – Deadline for VAT returns and payments of Accounting Quarter period ending 31
October 2020
• 14 December 2020 – Due date for Corporation Tax quarterly instalment for “very large” companies with
year end 31 March 2021
• 19 December 2020 – Monthly deadline for postal payments of CIS, NICs and PAYE to HMRC
• 22 December 2020 – Monthly deadline for electronic remittance of CIS, NICs and PAYE to HMRC
• 30 December 2020 – Deadline for online submission of Self Assessment tax returns for tax year ended 5
April 2020
• 31 December 2020 – Due date to file Corporation Tax for companies with 31 December 2019 year end
Due date to file company accounts with Companies House for limited companies with 31 March 2019 year
end

For further information on any of the stories in this month’s newsletter, or for any other matter that Compass Accountants can assist you
with, please contact us on 01329 844145 or contact@compassaccountants.co.uk

Compass Accountants, Venture House, The Tanneries, East Street, Titchfield Hampshire. PO14 4AR



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