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Need To Know: Your Business Updates for August 2019

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Welcome to the August 2019 'Need to Know' update. You'll find the latest key information on IR35, tax credits and intellectual property

IR35 means end for Treasury assurance process

It’s been announced that the Treasury will end the departmental assurance processes for the use of off-payroll employment practices as the introduction of the IR35 tax rules means that department-specific checks are no longer needed.

The move was announced on July 23rd by the then Chief Secretary to the Treasury, Liz Truss. She said that the rules introduced in 2012 requiring departments’ most senior staff to be on payroll, and to seek assurance in relation to the tax arrangements of their long-term, high-paid contractors, were no longer needed.

The regulations required departments to ensure that their most senior staff were on the payroll, unless there are exceptional temporary circumstances. Off-payroll staff are those who are paid through an intermediary, often their own personal service company, but who would count as an employee if they were providing their services directly. Compliance was monitored through an annual Treasury review.

But reforms to IR35 off-payroll employment regulations introduced in April 2017 had superseded the Treasury controls, Truss said. The IR35 rules require all public bodies to deduct tax and contractors' national insurance contributions if they work like an employee, with compliance monitored by HMRC.

To read the updated guidance, go to; http://bit.ly/2LPPFXU

How No Deal Brexit will affect intellectual property rights

The UK Government’s Intellectual Property Office has issued a new guide detailing the changes that would occur in the event of a No Deal Brexit to the exhaustion of intellectual property rights (IPRs).

The exhaustion of IPRs refers to the loss of the right to control distribution and resale of that product after it has been placed on the market within a specified territory by, or with the permission of, the right holder.

The UK is currently part of a regional European Economic Area (EEA) exhaustion scheme. This means IP rights are considered exhausted once they have been put on the market anywhere in the EEA with the rights holder’s permission.

In the case of No Deal, the UK will continue to recognise the EEA regional exhaustion regime from exit day. This will provide continuity in the immediate term for businesses and consumers.

This approach means there will be no change to the rules affecting imports of goods into the UK. Businesses that undertake this activity may continue unaffected.

Ongoing UK recognition of the EEA regional exhaustion area will ensure that parallel imports of goods, such as pharmaceuticals, can continue from the EEA.

You can read more on the guidance at http://bit.ly/2K5vPFW

 

Firms face cap on tax credit qualification

The government is investigating making changes to research and development (R&D) tax reliefs, as announced in the 2018 Budget. Any change is intended to prevent abuse of the tax relief scheme.

The government is introducing a cap on the amount of payable tax credit that a qualifying loss-making business can receive through the relief in any one accounting period.

The cap will be three times the company’s total PAYE and NICs liability for that year and will be begin in April 2020.

The government consultation is now seeking views on how the cap will be applied before it is planned to be legislated in the Finance Bill in 2019-20.

The whole of the PAYE and NICs liability which is payable during the accounting period will count towards the cap, not just that part which relates to staff involved in the R&D activity.

HMRC says the consultation explores ways to mitigate affect on genuine companies who have low PAYE and NICs liability relative to R&D spend.

The government is aware that applying a cap on the amount of payable tax credit a company could claim will add some administrative burden for businesses. It is therefore considering applying the cap only to payable tax credit claims above a certain ‘threshold’, so that the smallest claims would be unaffected, keeping things as simple as possible.

You can read more here; http://bit.ly/2GC3Uvj

 

New proposals for flexible working conditions

As part of the government’s Good Work Plan, there will be a consultation on proposals to improve conditions for flexible workers, including compensation for short-notice cancellations.

The proposals issued by the Department for Business, Energy and Industrial Strategy (BEIS) also include entitlement to a reasonable period of notice for allocated shifts, and additional protections for individuals who are penalised if they do not accept shifts at the last minute.

Bryan Sanderson, chair of the Low Pay Commission (LPC), said: “We are delighted to see the government taking forward our recommendation to consult on these measures.

“Last year we looked at the data on one-sided flexibility and talked to workers and businesses across the UK. Our report, published in December, found that shift cancellations and short notice of work schedules were significant problems, especially for low-paid workers.”

You can find out more here; http://bit.ly/32ZphjF