It has been reported by Reuters News Agency that Airbnb UK has agreed to share data with HMRC about the earnings of hosts on its UK platform. They will report historical data for the 2017/18 and 2018/19 tax years, as well as 2019/20 onwards.

For many years, residential letting agencies have reported their clients’ rental income to HMRC and it is safe to assume that holiday letting agents make similar reports.

It should go without saying that anyone in receipt of rental income should be aware that there will probably be tax consequences.

Rental earnings are income and are generally taxable. Even if it falls under one of the generous tax-free allowances, it should still be reported on your tax return and appropriate claims made for reliefs and expenses.

The addition of Airbnb to the sources of information available to HMRC will surely lead to more letters being sent to non-compliant taxpayers asking them if there is something that they have forgotten to declare. If you or your partner do have previously undeclared rental income, now would be a good time to start getting the information together ready to tell the taxman.

Since 2013, HMRC has been running a Let Property Campaign to encourage taxpayers who have not been declaring rental income to bring their tax affairs up to date with minimal pain and penalties.

If you do need to put your tax affairs for missed rents, we recommend that corrected 2018/19 and 2019/20 returns are filed if required and consideration is given to using the Let Property Campaign for earlier years.

If you have any queries regarding this, please contact our Tax Department by emailing tax@cogentaccountants.co.uk

According to analysis of the latest Companies House records, more than 200 new start-ups have used the pandemic as inspiration when naming their business to meet a demand for specialist services.

During lockdown, the number of new companies forming has increased to meet the growing demand for products and services related to the Coronavirus crisis.

Many of these new enterprises created since March feature ‘COVID-19’, ‘lockdown’ and ‘pandemic’ in their Companies House registration name.

In fact, 115 new businesses have used the phrase COVID-19 in their name, with around 20 per cent of these new business operating in the cleaning sector.

More than 50 UK businesses also include the word ‘lockdown’ in their name, with most operating in the retail sector selling products such as PPE, gardening tools and IT equipment.

The use of the word lockdown has also been popular for new businesses in the food industry, with names such as Lockdown Bakers, Lockdown Pizza and Lockdown Liquor established in recent months.

Meanwhile, the use of the word Coronavirus is most commonly featured in new businesses registered in the medical and pharmaceutical industries.

Finally, the word ‘pandemic’ has been incorporated into 18 new business names that are predominantly working across management consultancy, manufacturing and social work.

Of the new businesses formed since March featuring these COVID-related names, around 30 per cent were established in London.

If you are thinking of starting up a new business or know someone who is, why not get in contact with our team to find out how our tax and accountancy services can help.

A new Guinness World Record for the fastest wheelie bin has been set by a British engineer, who reached a top speed of more than 40mph.

Andrew Jennings used a small motorbike engine, bike seat and the steering from a mobility scooter to turn a regular green household waste bin into a speed machine.

To claim the title of world’s fastest wheelie bin, the Guinness World Record officials set Andy a benchmark speed of over 30mph.

Andy recently smashed this target at Elvington Airfield in Yorkshire by reaching a top speed of 43mph.

Speaking after he claimed the world record attempt, which was in memory of his best friend Ben Ellis who passed away in June, Andy said: “It’s been a great day all round I got my record, with 45.35mph – which is well above the target I was set of 30mph, so I was really happy with that.

“It was a bit hairy on my first attempt, because it was quite windy on the runway and I got caught in the crosswinds, so it was pretty bumpy, and pulling to the left and the right.

“I just got myself into fourth gear as quickly as possible and hoped for the best. Once I got to the end of the runway, it was a really nice feeling looking back and seeing all the spectators there cheering me on.”

As well as Andy’s record, several other runs were completed on the day by the world’s fastest motorised toilet, which reached 44.6mph, and the world’s fastest garden shed, which hit 106.1mph.

The Coronavirus Job Retention Scheme (CJRS) has supported more than 9 million people during the pandemic – amongst them many contractors and freelancers who were entitled to support as directors of their companies.

However, after 31 October 2020 support for these individuals will be completely withdrawn, leaving many unsure of what the future may hold for them.

To help answer some of the questions they may have our experienced team at Cogent have put together some common questions and provided answers to them.

What are the arrangements for the final month of furlough in October? 

From 1 October 2020, grants from the CJRS taper down to 60 per cent of a furloughed employee’s usual wages, capped at £1,875 a month, with employers required to contribute another 20 per cent, so that furloughed employees continue to receive 80 per cent of their usual wages. Under the current plans, the scheme then ends on 31 October.

When does the final claim for the CJRS have to be submitted by? 

Although the scheme ends in October, employers have until 30 November 2020 to submit claims for the CJRS. It is imperative that you carefully check all claims before submitting them.

I am unable to bring back an employee from furlough and I aim to make them redundant is there anything I should be aware of? 

Any furloughed worker that loses their job is eligible for redundancy pay based on their normal wage rather than the reduced rate paid under the Coronavirus Job Retention Scheme (CJRS), under new legislation.

Employees with two or more years of continuous service that are made redundant are typically entitled to a statutory redundancy payment that is based on length of service, age and pay – up to a statutory maximum of £16,140.

The new rules on redundancy also apply to statutory notice pay, which covers the period before a worker’s employment ends. This paid notice period typically varies from one to 12 weeks’ depending on an employee’s length of service.

Under the new legislation, notice pay must be based on an employee’s normal wages rather than the lower wages they may have been paid under the CJRS.

The legislation also ensures that basic awards for unfair dismissal cases are based on full pay rather than the reduced wages under the furlough scheme as well.

I think I may have made an error in one of my claims, what should I do? 

No penalty will be applied for errors in a CJRS claim if the excess grant is corrected within the later of:

• 90 days from the receipt of the grant, and
• 20 October 2020.

There are also no penalties for submitting an inaccurate CJRS claim which resulted in a grant that was lower than the employer was entitled to.

I have received a letter from HMRC about furlough fraud and I am concerned about potential penalties, what can I do? 

HMRC has been writing to employers, asking them to review their CJRS claims, often without specifying what is wrong with the claim, or even which month’s claim HMRC has an issue with. The tax authority estimates that as many as 10 per cent of claims either contain errors or are fraudulent.

It is important that you review your claims as suggested as the penalties for errors can be significant and included the reclaiming of 100 per cent of the grant paid plus additional penalties if HMRC believes a person attempted to conceal an error or acted fraudulently.

Is the Government likely to offer support if my business is required to shut again due to a local lockdown? 

Many business owners will be concerned about the introduction of local lockdowns and what it may mean for them.

In many cases, contractors will be able to work remotely or go into another business’s place of work.

However, if they own premises that are closed due to local restrictions, they may be entitled to grant funding. Under the new scheme:

• If a business occupies premises with a rateable value less than £51,000 or occupies property or part of a property subject to an annual rent or mortgage payment of less than £51,000, it will receive £1,000.
• If a business occupies premises with a rateable value of exactly £51,000 or above or occupies property or part of a property subject to an annual rent or mortgage payment of exactly £51,000 or above, it will receive £1,500.

The new grants will be delivered by local authorities, who will be responsible for distributing the grants to businesses in circumstances where they are closed due to local interventions. Local authorities are being given the discretion to determine additional eligibility criteria should it be deemed necessary.

These new grants can be used alongside other support, but as with other COVID grants, funding from this new initiative will be treated as taxable income.

Here to help

Throughout lockdown we have assisted our clients with the requirements of the CJRS, ensuring they have been able to achieve maximum benefit from the grant that is available as part of our wider package of support during the pandemic.

The end of furlough is likely to have a significant impact on the lives of contractors, freelancers and small businesses – in many cases forming the only financial support available to them.

As the CJRS ends, we want to reassure our clients and businesses that we are standing by them to ensure they have the support they need. To find out how you can make the simple switch to our services, please call 020 8952 2234 or email info@cogentaccountants.co.uk

***PLEASE IGNORE THIS REMINDER IF YOU HAVE ALREADY SENT US YOUR QUESTIONNAIRE***

If you would like Cogent to prepare and file your 2019/20 tax return and you have not yet sent us your completed Self-Assessment Tax Return Questionnaire, you will need to do so by 30 September 2020 to benefit fully from our discounted fee.

If you have a second shareholder, they may also need to file a tax return, even if they haven’t previously; this is due to the changes to dividend tax from April 2018, which affect any dividends over £2,000 (£5,000 in 2017/18).

The standard charge including VAT for a basic tax return is £240. Questionnaires received by 30 September 2020 will receive the full discount on a basic tax return, charged at £85.

If your questionnaire is received between 1 October and 31 December 2020, the fee will be discounted to £120; any returns received after 31 December 2020 will be charged at the full rate of £240.

Please note, more complicated tax returns where additional work or supplements are required, will be subject to additional charges.

Our Cogent deadlines have been set so that we can complete your return in time to meet the HM Revenue & Customs’ (HMRC) online filing deadline of 31 January 2021.

Penalties for late filing of tax returns can be as much as £1,600, even when there is no tax due, so please ensure your tax return is filed on time, whether you ask Cogent to prepare it for you, or you have made other arrangements.

You can request a questionnaire for 2019/20 by emailing tax@cogentaccountants.co.uk

Due to postal delays arising from Coronavirus issues, please send your completed and scanned questionnaire and return it together with any attachments by email only to our Tax Department – tax@cogentaccountants.co.uk

You are required to file a tax return if:

• You have been asked to file one by HMRC
• You have a tax liability for the year (e.g. additional and higher rate tax, student loan in repayments, high income child benefit charge or if you have any income which has not been taxed at source)
• You have a new source of income that needs to be declared.

***PLEASE IGNORE THIS REMINDER IF YOU HAVE ALREADY SENT US YOUR QUESTIONNAIRE***

This month…

The Green Green Grass Of Home

Some of us remember this ballad from Tom Jones from 1967, other younger readers of this article may know Tom Jones as a judge on The Voice UK.

This year, summer holidays have for many of us been about ‘Staycation’… another new word brought to us courtesy of Corona. Thanks Corona!

But to my surprise and I bet for many of you, the Staycation proved to be a great break. Without the need to sit on suitcases to get everything from your cupboard into one suitcase weighing less than 20 or 23kg (depending on which air carrier you take), no dash in a taxi to the airport, no queue to check-in, get on the plane, get off the plane, immigration going and returning etc etc. Staycation really had a good head start on providing a relaxing break.

I had two small breaks, one in the Peak District and the other in the Cotswolds. With some good weather, and some mixed weather. Regardless, we loved these beautiful spots of the country. When the weather was bad, soaking us to the skin walking from the car park to Warwick Castle, we still had a laugh wearing our one-time yellow plastic macs. Only in England!

So Tom Jones was right… “It’s good to touch the green green grass of home”. No doubt, having tasted the benefits of Staycation this year, in the future we’ll say “It’s not unusual” to have more Staycations!!

In recent weeks, we’ve seen a good number of our clients who were out of work finding new contracts. Let’s hope that’s a positive indicator of the state of business and the need for businesses to bring in valuable skill sets through hiring freelance contractors. We look forward to more positive indicators in the coming months.

My comments about Staycation come from recognising that situations that initially look difficult can be made to feel good with the right approach. It’s been hard for those without work for months, but for many it’s created an awareness of other parts of their lives such as family, hobbies, exercise and health that should also be in their focus. The media thrives on horror stories, and without a careful filter of what we read and listen to, we could feel that things are worse than they really are.

I enjoyed my UK mini-Staycation breaks with friends and family and going into Autumn, am looking forward to seeing all our clients obtain good profitable work, whilst at the same enjoying a better work-life balance due to learning from their experiences over the last six months.

Best regards,

Victor Korman
Managing Director
Cogent Accountants

New research has found that the delay to IR35 has resulted in a third of hirers making a U-turn on blanket bans for PSC’s when implementing the IR35 rules.

The study suggests that the extension to the introduction of the Off-Payroll rules has encouraged more employers to move away from HMRC’s widely criticised determination tool (CEST) and give more reasoned decisions.

According to it’s findings, 31 per cent of respondents revealed they were using CEST in the run-up to April 2020, but just 18 per cent plan to use it in future.

Instead of using the Government’s own tool, 71 per cent of participants indicated that they would now only use a tool that’s backed up by insurance. The reason for this decision was that the extension provided more time to better protect the entire recruitment chain.

As well as changing their approach to IR35 decisions, a further 79 per cent of the businesses surveyed cited having developed a dedicated policy that covers the end client as a high priority.

It’s very encouraging to see so many employers reversing the blanket bans that were originally imposed and it is hoped that more will follow suit as organisations begin working with staffing companies to prepare in order to get it right this time around.

With contractors likely to play a larger role in the UK economy over the coming years as companies seek flexible resources in a changing market, it is more important than ever that vigorous processes are put in place that allow contractors to be engaged in a compliant manner.

While the introduction of the IR35 rules is still many months away, it is important that you prepare now for these important changes.

new study by Trinity Business School and the University of Derby has found that businesses, where at least 11 per cent of their workforce are contractors, are more productive.

Conducted among more than 1,000 UK businesses, the research found that hiring a freelancer helped to generate on average an extra £4,669 per person for the company.

It would also seem that hiring freelancers helps businesses to grow their own team, with firms that hire freelancers and contractors above the 11 per cent threshold creating an additional 914,400 new jobs – or 1.2 additional new roles per firm.

According to the researchers, freelancers are most effective when added to an existing workforce, as opposed to simply using them as a replacement, with most businesses seeing a clear improvement in performance.

Professor Andrew Burke, Chair of Business Studies and Dean at Trinity Business School, said: “People normally associate the use of freelancers with employment destruction, as they are perceived as doing work that otherwise could have been done by employees. This view overlooks a different type of freelancer who works in sync with employees but brings expertise and innovation not available within firms and on a swift basis, thereby enabling these businesses to innovate, grow faster and ultimately create more employee jobs.

“Our research is the first empirical research to see which type of freelancing effect dominates. Using UK data, we find that there is a positive net effect of freelancing on employment creation but to generate these gains, firms have needed to take a deliberate strategic initiative to adopt a freelance intensive workforce model comprising of at least 11 per cent by freelancers.”

Marc Cowling, Professor of Business Economics at the College of Business, Law, and Social Sciences University of Derby, added: “Our research was the first to debunk the view that freelancers are cheap, low-value workers who cause job losses by replacing core employees. Rather, we found they add specialist skills and expertise that create value and profit and allow firms to increase their core workforce as they accelerate their growth.”

This new study is positive news and help gives credence to the importance that contractors and freelancers play in the economy. We hope studies such as these will help businesses and the Government to appreciate the importance of the sector.

Kids of the 1990s will fondly remember Neil Buchanan from his hit TV shows Art Attack and Finders Keepers.

However, rumours recently started to emerge that the star may be none other than famous and elusive street artist Banksy.

Originating on social media, many people were quick to give their thoughts on Buchannan as the man behind the graffiti, leading to his website being overwhelmed by enquiries.

However, the artist and presenter has issued a statement claiming he is not Banksy. In the statement on his website, Buchanan said:  “We have been inundated with enquiries over the weekend regarding the current social media story.

“Unfortunately, this website does not have the infrastructure to answer all these enquiries individually, however, we can confirm that there is no truth in the rumour whatsoever.

“?Neil spent lockdown with vulnerable members of his family and is now preparing to launch his new art collection in 2021.”

While the famed presenter is not Banksy, according to him, he is a man of many talents and played in a heavy metal band called Marseille in the 1970s, later choosing art over his music career after touring with the band for several years.

The Coronavirus Job Retention Scheme (CJRS) is slowly being wound down and it is important contractors, freelances and small businesses owners adapt to reflect the required funding contributions and reductions.

To help, we have provided a list of key dates for September and the following months to ensure you are prepared for the changes ahead:

• 1 September 2020 – Grants from the Coronavirus Job Retention Scheme (CJRS) tapered down to 70 per cent of a furloughed employee’s usual wages, capped at £2,187.50 a month, with employers required to contribute another 10 per cent, so that furloughed employees continue to receive 80 per cent of their usual wages.
• 1 October 2020 – Grants from the CJRS taper down to 60 per cent of a furloughed employee’s usual wages, capped at £1,875 a month, with employers required to contribute another 20 per cent, so that furloughed employees continue to receive 80 per cent of their usual wages.
• 31 October 2020 – The CJRS closes. Employees can no longer be furloughed after this date.
• 30 November 2020 – The last date for making claims for the CJRS.

The closure of the CJRS is likely to have a significant impact on you and your income, especially if you work within a sector with reduced economic activity.

However, businesses should also remain aware of the Job Retention Bonus, which offers employers £1,000 for every furloughed employee who is brought back, continuously employed and paid at least £520 a month on average from the end of October 2020 to 31 January 2021.

It is important that you begin to prepare now for the end of the scheme by seeking specialist advice at the earliest opportunity. To find out how the team at Cogent can assist you, please call 020 8952 2234 or email info@cogentaccountants.co.uk