Author: Glenn

If your business imports goods into the UK, it is important to be familiar with the Customs Declaration Service and to ensure that any duty payments are made correctly and on time to avoid delays, interest or penalties.

The Customs Declaration Service (CDS) is a specially designed IT platform used for completing customs declarations for businesses that import or export goods from the UK. All electronic import declarations must be submitted through the CDS.

When you import goods into the UK using the CDS, you must pay any tax due promptly. Payments should reach HMRC by the deadline, and if that falls on a weekend or bank holiday then the payment must arrive by the previous working day.

Late payments may result in interest charges and / or penalties. You will need your unique 16-character reference number starting with “CDSI,” which is specific to each declaration, to make a payment. Using the wrong number can delay the release of your goods.

Payment can be made online through your bank account or with a debit or corporate credit card (personal credit cards are not accepted). Online bank payments are usually instant but may take up to two hours to appear, while card payments are recorded on the date made.

Payments can also be made by bank transfer. CHAPS or Faster Payments usually arrive the same or next day, while BACS take about three working days. UK payments should go to HMRC’s Customs Duty Schemes account (sort code 08 32 10, account number 14077970). Overseas payments must be made in GBP. There are also options to pay by cheque, allowing three working days for delivery. If there are payment issues or further advice is required, you can contact HMRC’s National Clearance Hub.

There is a trivial benefit-in-kind (BiK) exemption that applies to small, non-cash gifts (such as a bottle of wine or a bouquet of flowers) that are occasionally given to employees.

This exemption enables employers to offer modest, tax-efficient rewards while simplifying the administration of BiKs. The BiK exemption allows businesses to recognise employees in a small way without creating additional reporting obligations or tax liabilities.

Trivial benefits are a simple and effective way to provide gestures of goodwill or recognition, as long as they are not given as a reward for work performed or duties carried out. Typical qualifying occasions include events such as a marriage, the birth of a child or other personal landmarks.

Employers also benefit since these trivial BiKs do not need to be included in PAYE settlement agreements or reported on P11D forms, and they are exempt from Class 1A National Insurance contributions.

The tax exemption applies to trivial BiKs where the benefit:

• costs £50 or less;
• is not cash or a cash voucher;
• is not a reward for work or performance; and
• is not in the terms of an employee’s contract.

Trivial benefits provided through a salary sacrifice arrangement are not exempt from tax. In such cases, the employer must report them on form P11D, using the higher of the amount of salary the employee gave up, or the cost of the trivial benefit provided.

For directors or officeholders of close companies (and their families), there is an annual cap of £300 on trivial benefit gifts. The £50 limit still applies per gift but allows up to £300 of non-cash benefits per person each year. If any single gift exceeds £50, the full value becomes taxable.

A Company Voluntary Arrangement (also known as a CVA) is a special arrangement that allows a company with debt problems or that is insolvent to reach a voluntary agreement to pay its business creditors over a fixed period of time.

The arrangement is similar to the Individual Voluntary Arrangement (IVA) that can be used by a sole-trader or self-employed person who is unable to pay their debts.

An application for a CVA can only be made with the agreement of all directors of the company in question or all of the partners of a limited liability partnership (LLP). A CVA can only be created by using the services of an insolvency practitioner. They will be responsible for set up and administration of the arrangement.

Once an insolvency practitioner has been appointed the following steps will take place:

1. The insolvency practitioner will work out an ‘arrangement’ covering the amount of debt the company can pay and a payment schedule. They must do this within a month of being appointed.
2. The insolvency practitioner will write to creditors about the arrangement and invite them to vote on it.
3. A CVA must be approved by creditors representing at least 75% of the debt value of those who vote (rather than 75% of the total overall debt).

If the agreement is approved and the company does not meet the terms of the CVA then any of the creditors can apply to have the business wound up.

A recent ruling has established that temporary worker arrangements do not constitute a single, continuous employment relationship in which workers retain the unfettered right to refuse assignments. This effectively confirms the prerequisite for a mutuality of obligation when accruing tax breaks.

Mainpay engaged temporary workers in the service sector, contending that its employment relationship constituted a single, albeit discontinuous form of employment, effectively rendering its various workplaces transient. Based on this viewpoint, Mainpay reimbursed its workers for travel and subsistence expenses and deducted these amounts from their income for tax purposes. Mainpay also used rounded sums, or benchmark scales, for subsistence expenses without obtaining formal dispensation from HMRC.

HMRC argued that each assignment was a separate instance of employment, making each workplace permanent for the purpose of a given assignment. This meant that travel and subsistence expenses were likely non-deductible without dispensation.

As the two contracts in question (2010 & 2013) were issued more than four years after the relevant tax year, this required HMRC to prove that the loss of tax was "brought about carelessly" by Mainpay so as to justify a six-year extended time limit. The Tribunal ruled in their favour, finding that neither the 2010 nor the 2013 contract constituted overarching contracts of employment, as the workers retained the unfettered right to refuse assignments. This, in turn, meant they lacked the necessary mutuality of obligation in the gaps between assignments. The Tribunal held that each assignment was an instance of separate employment and that the workplaces were therefore, in effect, permanent, making the expenses non-deductible. The Tribunal also found that Mainpay was "careless" in claiming the deductions, particularly in relation to the 2010 contract, because it had relied on vague assurances from employment lawyers.

This contention was escalated to the Court of Appeal, which rejected Mainpay’s argument that the parties’ intention should be decisive in construing the contract, as what essentially mattered was the reality of the arrangement, which was one of intermittent employment. Thus, each assignment was effectively under a separate contract of employment for the purposes of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) and, therefore, created a permanent workplace. The Court further upheld the finding that the loss of tax was "brought about carelessly" by Mainpay, validating the extended assessment time limit permitted under the Taxes Management Act 1970 (TMA).  

The case provides a clear distinction between a general agreement that governs future work and an actual contract of employment that lays out the terms under which future, separate contracts of employment will be formed. This type of agreement alone does not create a state of continuous employment. Companies are thus advised to seek advice when creating discontinuous employment frameworks in an effort to minimise tax liabilities.

Many businesses arrange insurance in the early days and then only look at it again when something changes, or when a renewal comes around. The difficulty with this approach is that risks evolve over time, and gaps in cover often only become visible when there is a claim. A short review with an insurance broker can help ensure that your policies reflect how the business currently operates and that protection remains adequate.

Business interruption

Business interruption cover is often misunderstood. It is designed to replace lost income while the business recovers from damage or disruption. The key issue is whether the indemnity period is long enough. If specialist equipment or premises are involved, recovery may take longer than expected. A broker can help evaluate assumptions and adjust cover accordingly.

Cyber risk

Cyber-attacks are now common across all sectors, not just large companies. Standard insurance policies rarely cover data breaches or ransomware incidents. Cyber insurance provides technical support as well as financial cover, which can make a major difference to recovery time.

Directors and officers

Directors and senior managers can face personal claims in relation to decisions they make. Reviewing Directors and Officers cover ensures that the right individuals are protected and that policy limits match the scale of business activity.

Supply chain and contractors

If contractors or suppliers are key to operations, it is worth checking who is responsible for what. Contracts should make insurance obligations clear, and your own policies should reflect any outsourced work.

Asset values and inflation

Rising costs mean many assets are now underinsured. Reassessing replacement values can prevent reduced payouts in the event of a claim.

A brief annual review can provide reassurance and avoid unwelcome surprises. If you would like support preparing for that conversation, we can help.