Happy July, everybody!by
It’s not that we like being the bearers of bad news, but as we head into the second half of 2021 the AccountingWEB editorial team is beginning to get the summertime blues.
Now that we all made it through the worst tax season ever and negotiated Brexit, new loan charge rules, the VAT domestic reverse charge and off-payroll reforms, what do things look like at the beginning of July 2021?
Maybe not as daunting as the first half of the year, but there are enough niggles in the in-tray to set accountants dreaming of rest and relaxation ahead during their summer “staycation”
Let’s see what’s on the menu
Furlough scheme starts winding down from 1 July - Employers will now have to contribute 10% to bring the government support grants up to the 80% of salary that furloughed employees will receive. It’s a minor change, but still requires new calculations for every employee. And the formula will change again next month, when the employer contribution will increase to 20% up until 30 September, when the CJRS is due to end. When the guidance was released in April, Kate Upcraft uncovered a new round of calculation challenges and AccountingWEB members started to experience furlough fatigue. The end may be in sight, but many accountants can’t wait until the end of September to wash their hands of furlough claims.
One reader’s hatred of furlough pushed them into considering a position in an entirely different sector. “Aside from finding myself constantly questioning if everything is in keeping with the scheme (which I'm sure has developed into a general unsubstantiated paranoia), it's just not the sort of rubbish I want to be dealing with,” they said.
VAT deferred payments - VAT payments held over from 20 March to 30 June 2020 have to be paid in full by 30 June 2021, unless a time to pay arrangement has been made with HMRC. Quarterly liabilities have been payable on the due dates for a year now. Just modelling the cash impacts is bad enough - but how many businesses will be able to find the extra funds while trading restrictions are still in place for many industries?
SEISS 5 claims - The portal for the fifth round of this grant scheme will open later in July, with self-employed business people required to demonstrate how their turnover has been affected by the pandemic. But HMRC has not released the guidance on how to calculate and report these figures yet, so advisers can expect a frenzy of questions and pleas for help between the arrival of the guidance and the deadline for final SEISS claims (probably by the end of the month, but HMRC isn’t saying yet).
P11D deadline on 6 July - Always a little spurt of stress as the deadline nears to revive memories of self assessment season, with new Covid-related home and company car expense measures to add to the fun.
It’s not just accountants and crippled businesses who are having a rough time. The effects of the pandemic are likely to reverberate through the wider economy for the rest of the year. Some of the businesses depending on furlough grants for survival will go to the wall or let workers go when the support scheme is withdrawn and many others are unlikely to meet tax and loan payments. The “business recovery” wing of the profession may prosper as more businesses get into trouble, but the stress of dealing with a sudden surge of insolvencies cannot be ignored.
Skills shortages - There are signs that expected post-pandemic bounce is being hampered by a shortage of skilled workers and resources. The chilled food and logistics industries been warning about increased costs for businesses and even empty shelves in supermarkets due to the shortage of lorry drivers. Even harder to stomach, the hospitality industry is struggling to come out of lockdown with thousands of positions unfilled due to Covid and Brexit. In some cases staff who have been put on furlough have taken on alternative employment and are no longer available to come back. Even accounting practices haven’t escaped the post-pandemic recruitment crunch. On a recent episode of Any Answers Live, Sharon Pocock from Hereford-based Kinder Pocock shared her recruitment headaches. With a shallow talent pool, perhaps due to furlough, Pocock is competing with five other accountants for local talent and has had to change her tack: “We’ve had a chance to completely review and reset. It’s a problem but we’ve changed processes so we’ve adapted and promoted internally and brought on apprentices and built them up.”
Inflation fears - Labour and material shortages in the face of increased demand usually add up to inflation. The Office for National Statistics reported a 0.6% increase in the consumer price index for May 2021, taking the annual rate (2.1%) beyond the Bank of England’s 2% target. But that’s kid’s stuff, according to the bank’s departing chief economist, Andy Haldane, who warned of inflation reaching 4% this year as he walked out the door.
At least we’ve got the football...
For some accountants, the delayed Euro 2020 football tournament may have brought some comfort and distraction. Now that their teams have been eliminated, however, Welsh and Scottish AccountingWEB members don’t have much to cheer about. And don’t hold your breath if you’re an England fan - by Monday morning you might be in the same boat.