Anna’s Accountancy Alerts – Week 1(5th April 2021- 11th April 2021)

Accounting and taxes

Tax-free childcare bonus of up to £500 not being claimed

Families using tax-free childcare accounts to pay for their childcare costs could receive a government top-up worth up to £500 every three months, but thousands are missing out on the payout.

Tax-free childcare allows parents or carers who have children aged up to 11, or 17 if their child is disabled, to pay their childcare provider through the scheme, and receive a 20% government top-up on any money deposited.

For every £8 per child a parent or carer deposits, they will receive £2 in top-up, up to the value of £500 every three months, or £1,000 if their child is disabled. That equals £2,000, or £4,000 for the care of a disabled child, for a whole year. The top-up is paid directly into the child’s account and is ready to use almost instantly.

Families can use the money to pay their childcare provider including childminder fees, after school clubs or sports activities, where the childcare provider has signed up to tax-free childcare. Families could also save money now to earn the government top-up and use the money to pay for childcare, summer camps and play schemes during school holidays.

Penalty regime for VAT returns to be overhauled in 2022

The new system will come into effect for VAT return periods beginning on or after 1 April 2022.

 Currently, late submission and payment of VAT returns are penalised by a single default surcharge, which is calculated as a percentage of the VAT due on the return. Businesses receive a surcharge liability notice for the first default, and subsequent defaults are successively surcharged at 2%, 5% and 10% up to maximum of 15%. However, the surcharge is imposed at a fixed amount for a late filing – it does not increase according to how late the return is submitted, and no interest is charged on late payments.

Late submission penalty – HMRC will issue a single penalty point for a late submission of a VAT return and, once the business has exceeded a points threshold for multiple missed returns, a flat penalty of £200 will be imposed for each late return.

Late payment penalties – this will be a two-part penalty. The first charge will be imposed at 2% of the outstanding tax if the tax due on a return remains unpaid 15 days after its due date. If any of this tax is still unpaid after 30 days, the penalty increases to 4% of the tax still outstanding at that point. The second charge is a daily penalty (set at 4% per year on the outstanding amount) starting from 31 days after its due date until the business pays the tax that is due.

Late payment interest (calculated at 2.5% above the Bank of England base rate) will be payable on tax outstanding after the due date for a VAT return. Where a payment is made after the due date, late payment interest will be payable from the due date until the date full payment of that tax is received by HMRC.

Regulator launches campaign to help charity trustees improve governance

The regulator has launched a set of five visually engaging animated videos across social media channels, each promoting one of the Charity Commission’s five-minute guides, which launched in November 2020. The guides provide simple, easy to understand information on all the governance basics trustees need to know.

Paul Latham, director of communications and policy at the Charity Commission, said: ‘The past year has been incredibly tough for charities. The pandemic has meant they are facing unprecedented challenges and trustees are making very difficult decisions, often at pace. In these uncertain times, we want to help trustees feel more confident they are getting things right.

‘This campaign is aimed at new and experienced trustees alike – all charities stand to gain from trustees who take active responsibility for acquiring and refreshing their knowledge of sound charity management.

The campaign prompts trustees to consider their understanding of their key responsibilities by a posing question connected to each guide:

  • Does every decision help your charity with its mission? (Charity purposes and rules guide)
  • Could your charity be drifting into activities that your charity is not set up to do? (Making decisions at a charity guide)
  • Is your charity reporting the right things at the right time? (What to send to the Charity Commission and how to get help guide)
  • Could you spot a conflict of interest and manage it? (Addressing conflicts of interest in a charity guide)
  • Is there more you can do to prevent fraud? (Managing charity finances guide)

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