It is important that anyone responsible for the accounts and tax filing regime for private limited companies is aware of their obligations.

After the end of its financial year, a private limited company must prepare full annual accounts and a company tax return. The deadline for filing the first set of accounts with Companies House is 21 months after the date the company was registered with Companies House. Annual accounts must be submitted 9 months after the company’s financial year ends.

There is a fixed date for the payment of Corporation Tax which is 9 months and 1 day after the end of the relevant accounting period. Note that a company is usually required to pay the tax due in advance of the filing deadline for a company tax return.

In most cases a company’s tax return must be submitted within 12 months from the end of their accounting period. Online Corporation Tax filing is compulsory for company tax returns. Company tax returns have to be filed using the iXBRL data standard using either HMRC’s own software or third-party commercial software.

The accounting period for Corporation Tax is normally the same twelve months as the company financial year covered by the annual accounts. Note that there are penalties for late filing with Companies House and HMRC.

The weekly child benefit rates for the only or eldest child in a family is currently £25.60 and the rate for all other children is £16.95.

Taxpayers entitled to child benefit should be aware that HMRC usually stops paying child benefit on 31 August following a child’s 16th Birthday. Under qualifying circumstances, the child benefit payment can continue until a child reaches their 20th birthday if they stay in approved education or training. A qualifying young person is someone aged 16, 17, 18 or 19 in full-time, non-advanced education or on unpaid approved training courses.

HMRC has just sent more than 1.4 million reconfirmation letters to parents whose child may be affected. The letters include a QR code which, when scanned, directs them to GOV.UK to update their claim quickly and easily online. This can also be done on the HMRC app.

Parents have until 31 August 2024 to tell HMRC that their 16-year-old is continuing their education or training, and their intention to continue receiving Child Benefit. No child benefit is payable after a young person reaches the age of 20 years.

HMRC’s Director General for Customer Services recently said:

‘Child Benefit is an important financial support for many families, so make sure you don’t miss out on any payments if your teenager intends to continue approved education or training. You can quickly and easily extend your claim online or via the HMRC app, just search ‘Child Benefit when your child turns 16’ on GOV.UK.’

Child benefit is usually payable for children who come to the UK. However, there are some rules which must be met before making a claim. HMRC must be notified immediately if a child receiving child benefit moves permanently abroad.

Business Asset Disposal Relief (BADR) applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. When the relief is available, Capital Gains Tax (CGT) of 10% is payable in place of the standard rate. This can mean a substantial CGT saving for someone looking to exit their business.

There are a number of conditions that must be met in order to qualify for the relief. BADR used to be known as Entrepreneurs’ Relief before 6 April 2020 but the name change did not affect its operation.

You can currently claim a total of £1 million in BADR over your lifetime. The £1m lifetime limit means you can qualify for the relief more than once. The lifetime limit may be higher if you sold assets before 11 March 2020.

Claims for BADR are made either through your self-assessment tax return or by filling in Section A of the Business Asset Disposal Relief helpsheet.

The deadline for claiming relief is as follows:

Although there have been no specific announcements affecting this relief there are likely to be significant tax changes when the new Chancellor, Rachel Reeves, delivers her first Budget later this year. If you are thinking about selling your business we can help you consider your options.

According to the competition and Markets Authority, certain UK banks are not meeting their obligations to keep customers informed about their products and services.

HSBC, Lloyds, TSB and AIB all failed to make available correct data on their products or services and have breached the Order in the following ways:

• HSBC failed to keep information about its branches accurate and up to date – 167 closed branches were listed as still being open and two open branches were not listed.
• HSBC failed to keep some of its annual rates for business loans and overdrafts accurate and up to date on its website.
• HSBC told some customers the incorrect maximum amount they would be charged for going into unarranged overdraft on their Personal Current Accounts.
• TSB failed to disclose the maximum amount customers would be charged for going into unarranged overdraft on their Personal Current Accounts.
• AIB failed to make available the correct annual rates for some loans and some overdrafts through Open Banking and on its own website.
• Lloyds failed to make available addresses of 363 ATMs through Open Banking.

Compliance with the Order is closely monitored by the CMA and banks are obliged to report all incidences of non-compliance within 14 days.

Lloyds, TSB and AIB have confirmed they are making changes to their operations to prevent further breaches – ranging from enhancing their internal procedures, to improving oversight by senior managers, updating internal checklists and retraining staff.

In the case of HSBC – which the CMA considers has breached the Order more extensively in this instance – added measures are needed to prevent future breaches. To start the process, the CMA has issued HSBC with detailed directions which include an action plan to ensure full compliance in future.

According to the pundits, there are a number of issues that the new government will have to tackle if it wants to increase government revenues by achieving higher economic growth.

They include:

• Encouraging investment
• Reduce unemployment, and
• Improve productivity

Encouraging investment

There are already generous tax reliefs that allow businesses to write off the full cost of productive assets to reduce tax charges. Any upward movement in present allowances would reduce tax revenues and compound the current government funding crisis. It’s an unlikely component of the first Labour budget.

Reduce unemployment

In a recent press release, Liz Kendall announced that the Department for Work and Pensions will be setting out changes to employment support in a focussed attempt to improve employment opportunities for the unemployed and those unable to work because of ill health or long-term disability. According to the press release:

• Britain remains the only country in the G7 whose employment rate has still not returned to pre-pandemic levels.
• 2.8 million people out of work due to ill health or disability.
• 1 in 8 young people not in education, employment or work.
• Spending on sickness and disability benefits is set to increase by £30bn over the next five years according to the OBR.
• Too many people trapped in low paid, poor quality work, with little prospect of improving their lot in life. Of those in low pay in 2006, only one-in-six escaped it a decade later.

Liz Kendall argued:

“The fundamental problem we face is that the current system of employment support is designed to address the problems of yesterday – not today, tomorrow and beyond.

She said over the last 14 years the DWP has focused almost entirely on the benefits system, and specifically on implementing Universal Credit, and that “nowhere near enough attention has been paid to the wider issues – like health, skills, childcare and transport – that determine whether people get work, stay in work and get on in work.”

Improve productivity

Improvements in productivity would mean that output would rise without an immediate increase in the direct labour costs associated with its production. In turn, this would improve profitability and create the means for future increases in earnings.

According to government sources, the UK came fourth highest out of the G7 countries, with the US and Germany highest and Japan lowest. UK productivity was about 16% below the US and Germany.

Outlook

Much will depend on the government’s ability to enthuse the business community with ideas to kick-start economic activity. But if they continue to hold down taxation and reduce government borrowing, the only source of funding they will have to finance expansion will be economic growth. In some respects, this does present government with a classic – which comes first, chicken or the egg conundrum.

Trader recommendation sites are websites and apps often used by people to find and connect to traders from a wide range of specialisms, such as building and home improvements, plumbing, and home heating.

Working in partnership with four key consumer organisations – National Trading Standards (NTS), Trading Standards Scotland (TSS), The Society of Chief Officers of Trading Standards in Scotland (SCOTSS), and Northern Ireland Trading Standards (TSNI) – the Competition and Markets Authority (CMA) analysed the conduct of these sites and identified a number of concerns that had the potential to cause harm to consumers. The issues identified include:

• making potentially misleading claims – or creating the misleading impression – that a trader can be trusted, when in fact the platform does not vet or monitor traders;
• failing to have appropriate vetting or verification processes in place for traders using their site or app;
• failing to deal appropriately with and sanction problematic traders;
• not operating effective and accessible complaints processes; and
• presenting consumer reviews in a misleading way and failing to take appropriate steps to remove fake reviews.

To tackle these issues, the CMA’s draft advice will help trader recommendation sites better understand their obligations under consumer protection law. It provides practical advice on the key principles they should follow to protect consumers and outlines six key principles that these sites should follow:

1. ensure that claims about services and the traders on their sites are clear and accurate, and do not mislead consumers;
2. conduct appropriate checks before traders are allowed to advertise on their site;
3. have accessible, transparent, and effective complaints processes;
4. effectively monitor the performance of traders on their site;
5. act effectively on issues highlighted by complaints or monitoring activities, including imposing sanctions; and
6. have an effective, transparent and impartial process concerning online consumer reviews.

On her first visit as Secretary of State, with the rest of the Ministerial team, Liz Kendall MP will confirm the three pillars of the Government’s Back to Work Plan:

• A new national jobs and career service to help get more people into work, and on in their work.
• New work, health and skills plans for the economically inactive, led by Mayors and local areas.
• A youth guarantee for all young people aged 18 to 21.

Under the DWP’s plan, Jobcentre Plus and the National Careers Service will be merged to get more people into work and to support those seeking better opportunities with the means to find better paid work.

The Youth Guarantee will mean more opportunities for training, an apprenticeship or help to find work for all young people aged 18-21 years old, to prevent young people becoming excluded from the world of work at a young age.

More disabled people and those with health conditions will be supported to enter and stay in work, by devolving more power to local areas so they can shape a joined-up work, health, and skills offer that suits the needs of the people they serve.

Expect more incentives to be announced to reduce unemployment as the new government digs into this issue in the coming months.

As Work and Pensions Secretary, Liz Kendall said:

“Growth is our number one mission and, as the Chancellor said, our Back to Work Plan is central to achieving our plans.

“Economic inactivity is holding Britain back – it’s bad for people, it’s bad for businesses, and it’s bad for growth.

“It’s not good enough that the UK is the only G7 country with employment not back to pre-pandemic levels.”

But of course, the real test of these remarks is positive results following any necessary actions. We shall have to wait to see if these early changes have the expected results.

At some point between now and the end of 2024, Rachel Reeves will step up to the despatch box and deliver her first Autumn Statement. As tax changes announced will likely have the Office for Budget Responsibility oversight, changes announced will form the basis of the 2025 Finance Bill.

And some of her commentary will be the subject of consultation with interested parties rather than immediate integration into the UK tax code.

Manifesto pledges

The new government has declared its intention to action three tax related changes:

• Ending some of the tax privileges of private schools, primarily exemption from VAT and non-payment of business rates.
• Tightening the rules that govern the tax status of non-domiciled individuals, and
• Introducing an increased windfall tax on energy companies.

Funding economic growth

As the new government seems committed to achieving economic growth, and therefore higher tax revenues, how will it fund the initial changes required to accomplish this?

Although the Labour Party manifesto made it clear that they would not increase income tax, National Insurance or VAT, there are a raft of other taxes that could be tweaked. For example:

• Capital Gains Tax rates could be increased such that gains were taxed at the same rates as income. This would simplify an overly complex tax and be fairly easy to impose.
• Inheritance tax rates could be increased, although press speculation recently has focussed on trimming IHT reliefs such as lifetime gifts, business and agricultural land reliefs.
• Dividends are still taxed at rates slightly lower than other income sources. These lower dividend rates could be scrapped, and dividends taxed at income tax rates.
• Stamp Duty Land Tax could be increased especially for non-domiciled individuals.

Tax Planning

It is highly likely that any significant tax changes will have an impact on our recommended tax planning strategies. As and when these tax changes are declared, we will notify you of the relevant detail and flag how these changes will have an impact on present tax strategies.

The Government Actuaries Department has declared it is using artificial intelligence to help government departments process consultation responses. In a recent news story, they said:

“We are using artificial intelligence (AI) to help clients in government departments process responses to consultations.

“This development helps public sector clients analyse responses which are submitted by people in industry and from the public. We have helped clients from government departments across the UK.

“Categorise and analyse

Recently the Government Actuary’s Department (GAD) used AI software to help categorise and analyse almost 120 responses for a consultation issued by a central government department. In all we processed close to half a million words through either the use of AI or reading responses.

We had to consider how best to use AI to produce an initial summary of the responses that were received. For example, we grouped respondents by industry type so that the AI could pick out themes within these groups.

We used the AI program ChatGPT to summarise the largest consultation responses (about 50 out of the number received). The team fed in all these responses for each question and instructed the AI program to summarise views in 1 to 2 paragraphs. The output was read by an actuary to ensure it reflected a technically correct summary.

“Themes and replies

The output was then collated into 40 summarised responses (one per question) from which we were able to draw out key themes and collate replies.

Actuary Laura Brunton worked on the project and said:

“While we read all the responses, the AI output was a really useful starting point to analyse the responses to make sure the output was coherently presented. We undertook further editing and were able to ensure that the AI created an initial summarised view which we could use to build in the views of all respondents.”

Is this a slippery slope or progress? It is worth noting that in future government may be tempted to use AI on a more widespread basis especially if it cuts down on the cost of producing reports and consultations.

Class 1A NICs for 2023-24 are payable if you have provided employees with taxable benefits for that year. You are also required to pay them on payments of more than £30,000 that you make to employees when their employment ends, for example, if they are paid termination or redundancy payments.

When to pay

When you pay Class 1A National Insurance contributions depends on whether they are work benefits or termination awards.

If work benefits, you need to pay contributions by 22 July 2024 (for the tax year 2023-24). You will need to pay by 19 July 2024 if paying by post, for example, sending a cheque.

Class 1A due on termination payments is settled via PAYE.

You can make online payments via your bank software, set up a direct debit – in which case the payment will be collected by HMRC – or pay by debit or a corporate credit card.

Be sure to quote the correct tax reference number when making the payment. This will normally be printed on the formal notice to pay Class 1A NIC, sent by HMRC.

Other ways to pay contributions on work benefits

Make sure you pay HM Revenue and Customs (HMRC) by the deadline. You may have to pay interest and penalties if your payment is late.

The time you need to allow depends on how you pay.

Same or next day:

• approve a payment through your online bank account

• online or telephone banking by Faster payments or CHAPS

• online by debit or corporate credit card

3 working days

• Direct Debit (if you have set up one for HMRC before)

• online or telephone banking by Bacs

• by cheque through the post

5 working days

• Direct Debit (if you have not set up one for HMRC before)

If the deadline falls on a weekend or bank holiday, your payment must arrive in HMRC’s bank account on the last working day of the week (unless you are paying by Faster Payments using online or telephone banking).