You will have to forgive me for the lack of big issues in this blog. The lack, by the way, is in the accounting and tax sector, not passenger transport. It is a little of the silly season press-wise in my profession.

Making Tax Digital

No more news on Making Tax Digital, although it is still on its inevitable little way. Although our work on helping drivers through the tax checks is still keeping us terribly busy, I fear we have already lost drivers who just didn’t want to go through the perceived rigmarole and certainly weren’t helped by their operators. Information and support are the key to help the unregistered drivers leave private hire to deliver that food or those parcels. Big thumbs up for those that took the time to spread the love and the word to their drivers (you know who you are) and you will benefit from the mutual trust that you create.

VAT on Fares

The VAT on fares discussions seem to have died down for a while, big thanks to industry leader Steve Wright of the LPHCA who has heard my opinion on what is going to happen with VAT and actually asked someone from the govt dept for their opinion. More about that later in the year as we seek to clarify direct and initiate consultation for the trade.

Self-Assessment Delays

Many drivers are still waiting for self-assessment returns from the 2020–21 tax year to be processed, we have found that even after we submit there can be wait times of 12 weeks, before HMRC does their bit. That means that in practical terms its putting pressure on us and our clients especially if you are waiting for rebates or a finished return for working tax credits etc.
Some 2020–21 returns which are still not processed were actually submitted last year. Also, many refunds for last year are still showing as ‘no liability’ on people’s digital HMRC accounts.
HMRC were quoted in the trade press as saying:

“The first quarter of the tax year is always our busiest period and we have seen a number of factors affecting demand on our services and our available resource to manage that demand – so some customers have continued to experience issues using our services,”

My view: We stepped up big time during and after The Pandemic to make sure clients got their info for grants and were able to get their tax returns done to claim what was needed. Maybe HMRC could do the same?

Problems with R&D Tax Relief Scheme

And finally…. I have had quite a lot of contact from limited company clients asking why I haven’t automatically put them in for the R and D (research and development) tax relief scheme. The common thought is that anyone that builds ‘a thing’ such as training or putting two pieces of software together can get in on the act.

And here is why, I have (occasionally) let them down:

HMRC responded to concerns about the rising tide of error and abuse within its £9.5bn R&D tax relief schemes with new controls and conditions set out in draft Finance Bill clauses.

The scale of the problem HMRC is facing with fraud and error in the research and development (R&D) tax credits system was laid bare in the auditor’s report on HMRC’s 2021–22 HMRC annual accounts.

According to the National Audit Office (NAO), HMRC estimated the level of error and fraud relating to R&D tax reliefs at £469m for the year, up from £336m in 2020–21.

Spending on the SME side of the R&D incentive scheme totalled £5.9bn for the year and also accounted for the lion’s share of the outgoings, which were up £510m on the previous year. 

he estimated overall percentage fraud and error rate was 4.9% in 2021–22 compared to 3.6% in 2020–21. HMRC’s Fraud Investigation Service (FIS) reported that the value of cases confirmed as fraudulent rose from £11.2m in 2020–21 to £26.9m in 2021–22.

Thanks to John Stokdyk of AccountingWeb.

And so, it begins. Drive Safe,

Gary

This article was originally written for Professional Driver Magazine (August 2022)