If politicians have it right, we may be approaching the end of the major disruption to economic activity of the past two years. Which is great news for those trades badly affected by continuing lockdown and other restrictions. Unfortunately, rapid growth following a long period of depressed trading conditions can prove to be disastrous. The danger arises if you offer your customers more generous trading terms than your suppliers and you have very little left in your bank accounts. Consider that you have £1,000 in your current account and have no chance of overdraft or loan support from your bank. Your sales for January 2022 are excellent, £20,000, but to secure these sales you were obliged to offer customers 60 days to pay their bills. You were able to supply goods from stock so there is no need to immediately re-stock. However, in the month of January, you need to settle past VAT and Corporation Tax liabilities amounting to £10,000 and in January and February general overheads (wages, rent, transport costs etc.) totalling a further £9,000. The terms you have offered customers mean that the sales you have achieved in January will not generate cash-flow until March and you are faced with fending-off HMRC (£10,000) and other creditors (£9,000) for two months with just £1,000 in your bank account. Business owners facing this dilemma need to consider their options and creating a simple cash-flow forecast will reveal the peaks and troughs in your bank balances and give you time to consider your choices. Please call if you need help in drawing up suitable cash-flow forecasts.

With rare exceptions, once the end of the tax year has passed, tax planning options to reduce liability are no longer possible. For Income Tax and Capital Gains Tax purposes, this means that the majority of the tax reduction options will cease unless actioned before 6 April 2022, the start of the next tax year. Which means individuals and the self-employed have just over two months to consider their options. If you fall into any of the following categories, please contact us so we can discuss your options: Your annual income is approaching £100,000, perhaps for the first time. You claim Child Benefit and the income of either parent is likely to exceed £50,000 for the first time during 2021-22. You have not yet considered topping-up pension contributions for 2021-22. You are self-employed with a 31 March 2022 year-end. You are self-employed and considering a significant purchase of equipment including commercial vehicles. You are the director/shareholder of a limited company and have not yet considered voting final dividends or bonuses for 2021-22. You have experienced, or are contemplating, a change in your personal status (single, married, separating, joining, or dissolving a civil partnership). This list is by no means complete. If your tax affairs are complex pick up the phone. There is no joy in being advised after the tax year end, 5 April 2022, that if you had acted on or before that date you may have reduced your tax liabilities.

HMRC is waiving late filing and late payment penalties for Self-Assessment taxpayers for one month – giving them extra time, if they need it, to complete their 2020-21 tax return and pay any tax due.
HMRC is encouraging taxpayers to file and pay on time if they can, as the department reveals that, of the 12.2 million taxpayers who need to submit their tax return by 31 January 2022, almost 6.5 million have already done so.
HMRC recognises the pressure faced this year by Self-Assessment taxpayers and their agents. COVID-19 is affecting the capacity of some agents and taxpayers to meet their obligations in time for the 31 January deadline. The penalty waivers give taxpayers who need it more time to complete and file their return online and pay the tax due without worrying about receiving a penalty.
The deadline to file and pay remains 31 January 2022. The penalty waivers will mean that:
• anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file online by 28 February,
• anyone who cannot pay their Self-Assessment tax by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, by 1 April 2022.
Interest will be payable from 1 February 2022, as usual, so it is still better to pay on time if possible.

1 January 2022 – Due date for Corporation Tax due for the year ended 31 March 2021.
19 January 2022 – PAYE and NIC deductions due for month ended 5 January 2022. (If you pay your tax electronically the due date is 22 January 2022).
19 January 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2022.
19 January 2022 – CIS tax deducted for the month ended 5 January 2022 is payable by today.
31 January 2022 – Last day to file 2020-21 self-assessment tax returns online.
31 January 2022 – Balance of self-assessment tax owing for 2020-21 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2021-22.
1 February 2022 – Due date for Corporation Tax payable for the year ended 30 April 2021.
19 February 2022 – PAYE and NIC deductions due for month ended 5 February 2022. (If you pay your tax electronically the due date is 22 February 2022)
19 February 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2022.
19 February 2022 – CIS tax deducted for the month ended 5 February 2022 is payable by today.

As you will see from the tax diary notes this month, there are two significant tax payment deadlines this month.
• 1 January 2022 – Companies with a 31 March 2021 year end date will need to settle their Corporation Tax payment on or before this date.
• 31 January 2022 – Taxpayers who are subject to self-assessment will need to pay any underpaid tax and NIC for 2020-21 plus any first payment on account for 2021-22.
Clients reading this reminder who need to know how much to pay or reference numbers to quote should contact us asap.
And if you cannot make payment in full, on the due date, you could contact HMRC to ask for more time.
You can make your own Time to Pay arrangement using your Government Gateway account, if you:
• have filed your latest tax return
• owe less than £30,000
• are within 60 days of the payment deadline
• plan to pay your debt off within the next 12 months or less
Call the Self-Assessment helpline if you cannot make your own Time to Pay Arrangement online, for example, if you owe more than £30,000 or need longer to pay.
Self-Assessment Payment Helpline
Telephone: 0300 200 3822
Monday to Friday, 8am to 4pm
For other taxes, contact the Payment Support Service, 0300 200 3835.

Do you have half-completed plans to open an online-shop this year?
Even if you have never considered internet trading, could this be an option for 2022?
Business owners
If you are selling goods, creating a web-based sales platform will vastly expand your reach to willing buyers. Combined with effective social media and other marketing activity this may be an effective hedge against future dips in the wider economy.
If you supply services, perhaps you could create online resources to be purchased and downloaded from your website.
Non-business individuals
Do you have a hobby that you could expand into a part-time business selling goods online?
It isn’t necessary to build your own website to do this. There are a number of ready-made sales platforms like Etsy.com. You should be able to trial this, and see if the idea has legs, without giving up your day job.
We can help
Please call if you would like to brainstorm this option for your business or to develop additional income streams.

We have listed below a number of ideas that might ease your progress through any continuing COVID-19 related disruption during 2022.
The following comments are not advice. Every business is different so please call if you have concerns due to a reduction in trade this year.
• Mothball investment plans. Could you defer decisions on buying that new car or other equipment for your business. In a year’s time the economy may have had a chance for a more sustainable recovery that would make more productive use of your acquisition.
• Discuss a hiatus in pensions investments with your pension’s advisor.
• Agree an instalment plan with HMRC to clear any current or future Income Tax or Corporation Tax liabilities.
• Reduce stocks of goods. If turnover falls due to future lockdown activity, reducing stocks will ease pressure on cash-flow and release storage space.
• Negotiate a reduction in hours with your staff rather than laying people off. This may be a solution to keeping teams together.
• Consider your staff as a service option if they become under-employed by reduced activity. i.e., sell their time to firms who need periodic, additional support but don’t want to commit to taking on a full-time worker.
• Clear out under-utilised office or production space and offer to sub-let on short-term lease arrangements.
• Hire out under-utilised plant.
• Defer any expenditure that can be safely delayed for a year without unduly affecting your ability to trade.
Planning is key
As soon as you become aware of threats to your future trading, take time out to formally plan a survival process.
We can help. Don’t wait until cash resources are exhausted. Contact us as soon as you feel your hard-earned business is under threat.

1 December 2021 – Due date for Corporation Tax payable for the year ended 28 February 2021. 19 December 2021 – PAYE and NIC deductions due for month ended 5 December 2021. (If you pay your tax electronically the due date is 22 December 2021). 19 December 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2021. 19 December 2021 – CIS tax deducted for the month ended 5 December 2021 is payable by today. 30 December 2021 – Deadline for filing 2020-21 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2022-23. 1 January 2022 – Due date for Corporation Tax due for the year ended 31 March 2021. 19 January 2022 – PAYE and NIC deductions due for month ended 5 January 2022. (If you pay your tax electronically the due date is 22 January 2022). 19 January 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2022. 19 January 2022 – CIS tax deducted for the month ended 5 January 2022 is payable by today. 31 January 2022 – Last day to file 2020-21 self-assessment tax returns online. 31 January 2022 – Balance of self-assessment tax owing for 2020-21 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2021-22.

Readers are reminded that there is a tax-free allowance for the provision of an annual party or other event for the benefit of staff and their partners. The present limit to tax relief is £150 per head. If this amount is exceeded, the full cost of the benefit is taxable, not the excess over £150. Where it’s not possible to calculate individual costs, an averaging process can be adopted. There are also other considerations that must be met to qualify for this relief. Another way to benefit staff tax-free for Christmas is to consider making small gifts. You don’t have to pay tax on a benefit (gift) to your employee if all of the following apply: it costs you £50 or less to provide it isn’t cash or a cash voucher it isn’t a reward for their work or performance it isn’t in the terms of their contract Gifts that fall into this category are known as a ‘trivial benefit’; and whilst they may be much more than trivial in substance, you don’t need to pay tax or National Insurance or let HMRC know you are making the gift. Any gifts that do not meet this definition will likely be taxable. Gifts to directors are treated in a similar fashion with one over-riding condition: a director cannot receive trivial gifts of more than £300 in total each tax year. This restriction only applies to the directors of “close companies”. A close company is a limited company with five or fewer shareholders. Watch out for VAT charge If you recover the input tax charged when you buy gifts for employees, and if the total value of gifts given to an employee in a tax year exceeds £50, then you will have to account for VAT on the total value of gifts provided. If this is the case, you may be advised to avoid recovering the VAT in the first place.

Business gifts are not allowed as a tax deduction against profits. The legislation treats gifts in the same way as business entertaining expenditure, which is also disallowed.

HMRC define a gift as:

“… something that is given to a person without receiving anything in exchange. It is offered voluntarily and without any expectation of a return. An example of this would be gifts provided for potential customers who take a test drive in a new car – there is no obligation to buy the car and so nothing has been given to the trader in return for the gift.

Gifts may also arise where goods or services are supplied at less than the cost to the trader. For instance, a hotel might offer meals to its suppliers at a nominal charge. Here the difference between the cost of the meal and the price paid is a non-allowable gift. By contrast, if a baker reduces the price of fresh bread at the end of the day, this is a normal commercial transaction (as the bread will be worthless by the next day) and the cost is allowed in full.”