Author Archives: Henry Cooper

Christmas and New Year 2011

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This is just to let everyone know that our opening hours over the festive period, will be as follows:

We will close at 14:00 on Friday 23rd December and re-open at 9:00 on Tuesday 3rd January 2012.

We would like to take this opportunity to wish everyone a very happy Christmas and a very happy and prosperous 2012

Finally, please do not forget the 31st January 2012 deadline for electronic submission of personal tax returns – ALL late returns will incur a penalty of at least £100, whether or not there is any unpaid tax.

Newsletter – November 2011

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In this month’s enews we report on various issues including the Chancellor’s Autumn Statement and HMRC’s latest targets. Please contact us if you would like any further details on any of the issues covered.

 

eNEWS quicklinks
Autumn Statement New HMRC Taskforces
VAT and duty on shopping Parties for employees
Consultation – have your say Fighting Customs and Excise fraud and tax evasion
Unemployment rises to 2.62 million EU VAT registration letter scam

 

Autumn Statement

On Tuesday 29 November the Office for Budget Responsibility (OBR) published its updated forecast for the UK economy. Chancellor George Osborne responded to that forecast in a statement to the House of Commons later on that day.

The Chancellor emphasised that the OBR does not predict a recession in Britain but they have revised down their short term growth prospects for the country. He also made clear that the OBR central forecast assumes ‘the euro finds a way through the current crisis’.

The Autumn Statement sets out the actions the government will take in two main areas:

  • protecting the economy and
  • building a stronger economy for the future.

In order to maintain economic stability and meet its fiscal rules, the government will:

  • set plans for public spending in 2015/16 and 2016/17 in line with the spending reductions over the Spending Review 2010 period
  • raise the State Pension age to 67 between April 2026 and April 2028
  • set public sector pay awards at an average of 1% for each of the two years after the current pay freeze comes to an end.

The growth plans include the publication of a National Infrastructure Plan 2011. The plan sets out a pipeline of over 500 infrastructure projects.

Other announcements include:

Credit easing

In order to free up lending to business, the government is launching a package of measures worth up to £21 billion to ease the flow of credit to businesses. This includes up to £20 billion for the National Loan Guarantee Scheme and £1 billion for the Business Finance Partnership.

Small business rate relief holiday

The government will extend the current small business rate relief holiday for a further six months from 1 October 2012 and also give businesses the opportunity to defer 60% of the increase in their 2012/13 business rate bills.

Employment regulations

In an attempt to make it easier to ‘hire and fire’, the government intends to:

  • look for ways to provide a quicker and cheaper alternative to a tribunal hearing in simple cases by introducing a ‘Rapid Resolution’ scheme
  • complete a call for evidence on the impact of reducing the collective redundancy process for redundancies of 100 or more staff from the current 90 days to 60, 45 or 30 days.

Youth Contract

A number of measures under the heading of a ‘Youth Contract’ will be introduced including government funding of:

  • wage incentives for 160,000 young people to make it easier for private sector employers to take them on
  • at least 40,000 incentive payments for small firms to take on young apprentices.

Seed Enterprise Investment Scheme (SEIS)

This is a new tax relief which will be introduced from 6 April 2012. It will provide income tax relief at 50% in respect of investment in a small company whose total assets before the investment are less than £200,000. The relief will be limited to investments of up to £150,000 in each company and a maximum of £100,000 investment for an individual. In addition an individual who makes a capital gain in 2012/13 and reinvests some or all of the gain in a SEIS company in the same year will obtain exemption from capital gains tax for the sum invested.

Tax treatment of asset-backed pension contributions

Rules are to be introduced from 29 November 2011 to limit tax relief for employers who enter into arrangements to make asset-backed contributions into their pension schemes. The new rules will ensure that the tax relief obtained more accurately reflects the actual costs to the employer.

Further announcements expected

It is also expected that large amounts of draft legislation for the Finance Bill 2012 will be issued for consultation on 6 December 2011.

We will update you on significant announcements in next month’s enews.

Internet link: Treasury website

New HMRC Taskforces

Five new taskforces have been set up to tackle tax evasion in different areas of the country. The new HMRC taskforces will target:

  • scrap metal dealers in Scotland
  • construction traders who are self employed or run their own company who suppress sales or over-claim expenses in the North West and North Wales
  • taxpayers not submitting their statutory returns across Corporation Tax, Income Tax Self Assessment, PAYE and VAT in the South East
  • fast food outlets deliberately falsifying their records and mis-declaring their true sales levels to avoid paying the correct taxes in Scotland, and
  • landlords – owning or renting three or more properties – evading their tax responsibilities in North West and North Wales.

Internet link: Press release

VAT and duty on shopping

Angela Shephard, Head of Customs Policy, HMRC is warning individuals not to get caught out by ‘unexpected charges when you are shopping for Christmas bargains this year’.

‘If you are going abroad to do Christmas shopping, or buying goods online from non-EU countries, you need to know how much you can buy before you have to pay import duty or VAT.’

‘We know many people like to go abroad at this time to buy their Christmas gifts, or buy online from non-EU countries, and think that the ‘cheaper’ price they see is always the price they finally pay. HMRC is keen to remind the general public how much they can actually bring back from abroad or buy from an online overseas seller without having to pay import duty or VAT.’

‘You don’t want to be faced with unexpected extra charges, when you thought you had found a bargain.’

HMRC advise that:

  • Arriving in the UK by commercial sea or air transport from a non-EU country, you can bring in up to £390 worth of goods for personal use without paying customs duty or VAT (excluding tobacco and alcohol, which have separate allowances, and fuel). Detailed information on the non-EU limits can be found at http://www.hmrc.gov.uk/customs/arriving/arrivingnoneu.htm
  • Should you buy goods over the internet or by mail order from outside the EU, you will have to pay VAT if the value of the package is over £15.
  • If the goods are over £135 in value, customs duty may also be due, although this will depend on what they are and where they have been sent from. Where, however, the actual amount of duty due is less than £9, this will not be charged.
  • If someone sends you a gift from outside the EU, import VAT will only be due if the package is valued at over £40. To qualify as a gift, the item must be sent from one private individual to another, with no money changing hands.
  • Please note that excise duty is always due on all alcohol and tobacco products purchased online or by mail order.
  • The spirits or tobacco products, there are no limits on the amounts of duty and tax paid goods you can bring back personally from another EU country, as long as they are for your own use.

Internet link: Press release

Parties for employees

With the season for office parties fast approaching we thought it would be a good idea to remind you of the tax implications. The good news is that, unlike entertaining customers, the costs of entertaining employees are generally allowable against the profits of the business.

But what about the tax consequences for the employees themselves? Is it a perk of their jobs and will they have to pay tax on a benefit?

Generally, as long as the total costs of all employee annual functions in a tax year are less than £150 per attendee (VAT inclusive) there will be no tax implications for the employees themselves. In considering this limit make sure you have included all the costs, which may include not only the meal itself but also any drinks, entertainment, transport and accommodation that you provide.

If the costs are above the £150 limit then the full cost will be taxable on the employee. In that case do get in touch so we can advise you how best to deal with them.

Internet link: HMRC guidance

Consultation – have your say

The government has launched a consultation, ‘Modernising the administration of the personal tax system’. They would like to hear interested parties views on a number of issues regarding the personal tax system.

‘This consultation seeks feedback and ideas for how the administration of the personal tax system could be improved to achieve better understanding and make it easier for taxpayer to deal with it.’

To have your say visit the link below.

Internet link: HMRC consultation

Fighting Customs and Excise fraud and tax evasion

HMRC are asking for information to help them tackle Customs and Excise fraud and tax evasion.

The HMRC guide explains ‘how you can help HMRC by either telling them about your suspicions, or give information that will help stop people committing fraud, bringing goods into the UK that they shouldn’t or deliberately not paying tax’.

For more information visit the link below.

Internet link: HMRC reporting fraud

Unemployment rises to 2.62 million

The CBI commented on official data showing unemployment rose by 129,000 to 2.62 million in the three months to September 2011, including a rise in youth unemployment to over a million.

John Cridland, CBI Director-General, said:

‘These figures underline why we need urgent action to help our young people take their first steps in the labour market. A generation risks being scarred by the devastating effects of long-term unemployment.

We are calling for action for jobs now, with a clear plan to get the UK working, focusing on our young people.’

Internet links: BBC news CBI press release

EU VAT registration letter scam

HMRC are warning of a new scam letter which is being sent to businesses. The letter requests payment of a fixed fee by credit card and provides a website address to activate VAT registration.

HMRC are advising that these letters are not issued by HMRC and the registration should not be completed or payment made.

Internet links: HMRC security examples Copy scam letter

Chancellors 2011 Autumn Statement 29 November 2011

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On Tuesday 29th November the Office for Budget Responsibility (OBR) published its updated forecast for the UK economy. Chancellor George Osborne responded to that forecast in a statement to the House of Commons later on that day.

In the period since the Budget in March a number of consultation papers and discussion documents have been published by HMRC. Draft legislation relating to many of these areas will be published on 6 December 2011. Some of these proposals are summarised here. We will provide an update for you if significant changes are announced on 6 December.

This summary also provides a reminder of other key developments which are to take place from April 2012.

The Chancellor’s statement

The Chancellor emphasised that the OBR does not predict a recession in Britain but they have revised down their short term growth prospects for the country. He also made clear that the OBR central forecast assumes ‘the euro finds a way through the current crisis’.

General measures

The Autumn Statement sets out the actions the Government will take in two main areas:

  • protecting the economy and
  • building a stronger economy for the future.

In order to maintain economic stability and meet its fiscal rules, the Government will, for example:

set plans for public spending in 2015/16 and 2016/17 in line with the spending reductions over the Spending Review 2010 period

  • Raise the State Pension age to 67 between April 2026 and April 2028
  • set public sector pay awards at an average of 1% for each of the two years after the current pay freeze comes to an end.

The growth plans include the publication of a National Infrastructure Plan 2011. The plan sets out a pipeline of over 500 infrastructure projects including:

introducing a new approach to financing infrastructure, by obtaining £20 billion of private investment from pension funds

  • investing over £1 billion to tackle areas of congestion and improve the national road network
  • investing more than £1.4 billion in railway infrastructure and commuter links
  • investing £100 million to create up to ten ‘super-connected cities’ across the UK, with 80-100 megabits per second broadband and city-wide high-speed mobile coverage.

Comment

The proposal to raise the state pension age is expected to save around £60 billion in today’s prices between 2026/27 and 2035/36.

The aim of the National Infrastructure Plan is to kick start the economy by accelerating infrastructure projects with a view to job retention/creation. Time will tell how successful the new strategy is.

NON-TAX MEASURES FOR SMEs

Credit easing

In order to free up lending to business, the Government is launching a package of measures worth up to £21 billion to ease the flow of credit to businesses. This includes up to £20 billion for the National Loan Guarantee Scheme and £1 billion for the Business Finance Partnership.

Comment

The hope is that credit easing will encourage bank lending and enhance the demand for credit by reducing the price of loans for eligible businesses.

Small business rate relief holiday

The Government will extend the current small business rate relief holiday for a further six months from 1 October 2012 and also give businesses the opportunity to defer 60% of the increase in their 2012/13 business rate bills.

Employment regulations

In an attempt to make it easier to ‘hire and fire’, the Government intends to:

  • look for ways to provide a quicker and cheaper alternative to a tribunal hearing in simple cases by introducing a ‘Rapid Resolution’ scheme
  • complete a call for evidence on the impact of reducing the collective redundancy process for redundancies of 100 or more staff from the current 90 days to 60, 45 or 30 days.

The Government will begin a call for evidence on two proposals for reform of UK employment law. They will:

  • seek views on the introduction of compensated no-fault dismissal for micro-businesses with fewer than 10 employees
  • look at how it could move to a simpler, quicker and clearer dismissal process, potentially including working with ACAS to make changes to their code or by introducing supplementary guidance for small businesses.

Youth Contract

A number of measures under the heading of a ‘Youth Contract’ will be introduced, including Government funding of:

wage incentives for 160,000 young people to make it easier for private sector employers to take them on

  • at least 40,000 incentive payments for small firms to take on young apprentices.

Planning reform

The Government has announced a series of changes to the planning regime. Changes will include:

  • introducing a 13-week maximum timescale for the majority of non-planning consents
  • building more flexibility into the new major infrastructure planning process, particularly in the pre-application phase
  • reviewing the planning appeals procedures to make them faster and more transparent
  • consulting on proposals to allow existing agricultural buildings to be used for other business purposes such as offices, leisure and retail space.

Comment

These changes are designed to speed up building projects. ‘Red tape’ has been cited as a major reason for UK infrastructure development being more expensive than in other European countries.

Housing

In an attempt to increase house building, stabilise the housing market and enable more people to own their own home, the Government will:

  • introduce a new build indemnity scheme under which home buyers will be able to purchase new build houses and flats with a 5% deposit, with house builders and the Government helping to provide security for the loan
  • reinvigorate the ‘Right to Buy’ to help social tenants buy their home
  • launch a new £400m ‘Get Britain Building’ investment fund, which will support firms in need of development finance
  • support new development, which could include modern garden cities and urban and village extensions.

PERSONAL TAX

The personal allowance for 2012/13

For those aged under 65 the personal allowance will be increased by £630 to £8,105. This increase is greater than the minimum required and is part of the plan of the Coalition Government to ultimately raise the allowance to £10,000.

The personal allowance is reduced by £1 for every £2 of adjusted net income over £100,000. Next year the allowance ceases at adjusted net income in excess of £116,210.

Comment

Planning should be considered where adjusted net income is expected to exceed £100,000. This figure is calculated after giving a deduction against income for pension contributions and gift aid payments. Consider whether these could be made to protect some or all of the personal allowance.

 

Tax band and rates 2012/13

The basic rate of tax is currently 20%. The band of income taxable at this rate is being reduced to £34,370 so that the threshold at which the 40% band applies will remain at £42,475.

The 50% band currently applies where taxable income exceeds £150,000.

If dividend income is part of total income this is taxed at 10% where it falls within the basic rate band, 32.5% where liable at the higher rate of tax and 42.5% where liable to the additional rate of tax.

Tax credits

The child element of Child Tax Credit will rise by £135 per year in 2012/13 which is in line with the inflation increase but the additional increase above inflation of £110 which was planned has been dropped.

The disability elements of tax credits will be uprated by the increase in the Consumer Price Index of 5.2% but there is to be no uprating of the couple and lone parent elements of Working Tax Credit.

 Integration of the operation of income tax and NIC

Following an invitation for people to express views on a proposed integration of the operation of income tax and NIC the Government has decided to continue with the review. The Government will establish a number of working groups with stakeholders to explore options for integration. Depending on the results of the working groups, further rounds of consultation will proceed after Budget 2012. It is unlikely that there will be any substantive change in reality before 2017.

Junior ISAs

Provisions to allow these accounts were introduced this tax year. At present there is not a wide availability of these accounts although some building societies have launched products. The key features of the accounts are:

  • the accounts are available to any child who does not qualify for a Child Trust Fund
  • all returns will be tax free
  • funds placed in the account will be owned by the child and would be locked in until the child reaches adulthood although they can manage the account from the age of 16 years
  • investments will be available in cash or stocks and shares
  • annual contributions will be capped at £3,600
  • there will be no Government contributions into the account.

Comment

These accounts provide a way of increasing the tax free income available to a family in addition to the use of adult ISAs for the parents.

Child Trust Funds

These ceased to be available for children born on or after 1 January 2011 although existing accounts remain in place and can be added to by parents and family members. The maximum annual contribution has been increased to £3,600 to keep in line with the Junior ISA. No further Government contributions will be made to any account.

Furnished holiday lettings

From 6 April 2012 the tests which determine whether a property can qualify for treatment as a furnished holiday let will change. The number of days for which the property is available for letting increases from 140 days to 210 days and the number of days actually let increases from 70 to 105 days.

If an individual can show there was a genuine intention to meet the letting conditions but has been unable to do so they will be able to make an election to continue to treat the property as a furnished holiday let. This will protect the special tax treatment that such properties receive.

Statutory Residence Test

There is currently no definition of ‘residence’ in UK tax law and yet the liability to income tax and capital gains tax (CGT) rests on knowing an individual’s UK residence status for a tax year. Currently the determination of residence is based on old case law and, as a recent Supreme Court decision has shown, it can lead to significant uncertainty and large tax liabilities.

The Government published a consultation document in summer 2011 on the introduction of a Statutory Residence Test (SRT) which would come into effect in April 2012. The SRT is based on three parts and an individual would consider each part in turn. If a definite answer on their residence status is found on the first part then there is no need to proceed further. Similarly if the second part gives a definitive answer there is no need to move to the third part. That final test then provides a definitive answer.

The parts and the conditions are as follows:

  • Part A – satisfy any one of three conditions and the individual is conclusively non-resident in the year:
  • an individual with no UK residence in the three previous tax years spends less than 45 days in the UK
  • an individual who has been UK resident in one of the three previous tax years spends less than ten days in the UK
  • an individual goes to work abroad in a full time employment or self- employment and spends less than 90 days in the UK and has less than 20 working days in the UK.
  • If no definite answer under Part A then proceed to Part B
  • Part B – satisfy any one of three conditions and the individual is conclusively resident for the year:
  • an individual spends 183 days or more in the UK
  • an individual has their only home in the UK or if they have more than one home all are in the UK
  • an individual works full time in the UK for a continuous period of at least nine months and not more than 25% of duties are outside the UK.
  • If no definite answer under Part B then proceed to Part C
  • Part C – here the rules combine the time spent in the UK and a number of connection factors which are deemed to link an individual to the UK. Five connection factors have been identified:
  • spouse and/or minor children are resident in the UK at any time in the year
  • the individual has accessible accommodation in the UK and uses it in the year
  • the individual spends at least 40 working days in the UK
  • in either of the two previous tax years the individual spent at least 90 days in the UK
  • the individual spent more time in the UK than in any other single country in the tax year.
  • Part C then provides for a combination of factors and time which will make an individual resident in the UK.

A day will count as being in the UK if the individual is physically present in the UK at midnight unless they satisfy specific rules for those in transit through the UK.

There are a number of issues which have been raised in the consultation process on which clarification has been sought and it is hoped that these will be clarified in the draft legislation. It is intended that the new rules will apply from 6 April 2012. From that point they will supersede all existing case law and practice. However residence status for years up to 2011/12 is determined using the present rules.

Comment

The proposed rules do seem to work to give a definitive answer to the question ‘Am I resident in the UK?’ The answer may not be the one that you want but it should then be possible to identify the factors which need to change in order to achieve the desired result.

Individuals planning a move into or out of the UK after 6 April 2012 should be taking the new rules into account in their planning. They should also note that they are going to need to keep comprehensive records not just of their time in the UK but also, where relevant, their working days in the UK and the time they spend in each other country that they may visit.

Some individuals who are currently outside the UK, particularly those working abroad, will need to note that the new rules could change their residence status and they may wish to review plans for visits back to the UK and the impact of any potential connecting factors.

Changes for non-domiciled individuals

Following changes in 2008 all UK resident individuals are taxable on overseas income and gains overseas arising in the tax year. Individuals who are not domiciled in the UK or who are not ordinarily resident can make a claim to be taxed only on sums actually remitted to the UK in the year. These rules, known as the ‘remittance basis rules’ are complex but can mean a significant tax saving.

There are currently two downsides to making a remittance basis claim:

  •  the individual automatically loses their personal allowance for income tax and their annual exempt amount for CGT unless the remittances amount to almost all of the overseas income and gains arising
  • an individual who has been resident in the UK for at least seven out of the preceding nine UK tax years must pay a remittance basis charge of £30,000 in addition to the tax actually due.

Two significant changes are planned in the remittance basis rules from 6 April 2012:

  • the remittance basis charge will be increased to £50,000 where an individual has been resident in the UK for 12 out of the preceding 14 tax years
  • if an individual remits funds to invest in a UK business then that remittance will be tax free if the remittance basis is claimed (although the remittance basis charge will still be payable). A consultation paper has proposed a wide definition of business and indicates that the business vehicle can be a company or an unincorporated business. When the investment is realised it will be necessary for the individual to either reinvest the funds immediately in another qualifying venture or remove the funds from the UK within 14 days otherwise they will be treated as a remittance for that year.

Some administrative changes in the remittance basis rules will also be introduced.

BUSINESS TAX

Corporation tax rates

In accordance with the plans announced in March the main rate of corporation tax will fall from 26% to 25% from 1 April 2012. The small company rate is 20% and there has been no announcement of the rate for next year.

Enterprise Investment Scheme (EIS)

Changes announced in the March Budget are due to come into effect on 6 April 2012. These are:

  • the maximum amount that an individual can invest in total in a tax year rises from £500,000 to £1m.
  • the maximum funds that a company can receive under EIS rises from £2m to £10m
  • the size of a company that can benefit from EIS (subject to meeting all the qualifications) is increased to £15m gross assets and fewer than 250 employees.

A number of other changes were announced in the Autumn Statement:

  • the rules which identify individuals who are deemed to be connected to the company are to be relaxed in some circumstances
  • the £1m per company limit that currently applies for Venture Capital Trusts will be removed
  • anti-avoidance rules will be introduced  to exclude companies set up for the purpose of obtaining the relief, and to exclude the purchase of shares in another company
  • investment in Feed-in-Tariffs will be excluded.

Seed Enterprise Investment Scheme (SEIS)

This is a new relief which will be introduced from 6 April 2012. It will provide income tax relief at 50% in respect of investment in a small company whose total assets before the investment are less than £200,000. The relief will be limited to investments of up to £150,000 in each company and a maximum of £100,000 investment for an individual. In addition an individual who makes a capital gain in 2012/13 and reinvests some or all of the gain in a SEIS company in the same year will obtain exemption from CGT for the sum invested.

Comment

This relief will encourage business angels or perhaps family members to invest in small enterprises and obtain a tax refund of half their investment. The details of the conditions which the recipient company will have to meet are not yet known.

Annual Investment Allowance (AIA)

The AIA is a capital allowance available for many businesses on most purchases of plant and machinery, long-life assets and integral features. Relief is given on the full cost up to a current maximum allowance of £100,000 for a full year. This allowance is to be reduced to £25,000 with effect from 1 April 2012 for companies and 6 April 2012 for unincorporated businesses.

Where a business has an accounting period that straddles the date of change the allowances have to be apportioned on a time basis. For example a company with an accounting period ending on 30 September 2012 will have an allowance of £62,500 (£100,000 x ½ + £25,000 x ½). However it should be noted that for expenditure incurred after the 1/6 April, the maximum allowance that can be attributed to that expenditure is a fraction of £25,000. The fraction will be the amount of the £25,000 that is included in the calculation of the overall AIA for the accounting period.

Comment

Planning the timing of purchases of significant items of plant becomes very important over the next year to ensure that the maximum available AIA can be secured.

Suppose the company with the 30 September year end wishes to buy new plant costing £35,000. If they buy it in February 2012 they will be able to claim an AIA on the full £35,000 but if they buy it in June 2012 they will only be able to claim an AIA of £12,500. They would actually then be better off if they waited until October when they would have a full £25,000 available.

Writing down allowances

Writing down allowances are to be reduced from April next year. The normal rate of 20% will be reduced to 18% and the lower rate of 10% which applies to integral features and long-life assets will reduce to 8%. It will be necessary to calculate hybrid rates where the accounting period straddles 1/6 April which will give a rate between 20% and 18% (or between 10% and 8%) for that period.

Capital allowances in Enterprise Zones

Over the past year the Government has designated a number of very specific areas as Enterprise Zones. Businesses in these areas enjoy certain reliefs, for example, a relief from business rates. The Chancellor has announced that 100% capital allowances will now be available for the Zones in the Black Country, Humber, Liverpool, North East, Sheffield, and the Tees Valley.

Compulsory pooling

The Government is considering whether to introduce a requirement that businesses should pool their expenditure on fixtures within a short period after acquisition in order to qualify for capital allowances.

Research and development expenditure (R&D)

There are currently a number of restrictions which effectively limit the scope of this relief and it is planned to remove these for expenditure incurred on or after 1 April 2012. The proposals include:

  • removing the rule limiting a company’s payable R&D credit to the amount of PAYE and NIC it pays
  • removing the £10,000 minimum expenditure condition
  • changing the rules governing the provision of relief for work done by subcontractors under the large company scheme
  • increasing the additional deduction for R&D expenditure by SMEs by a further 25% making the total deduction 225% of actual expenditure.

The Chancellor has announced a consultation next year on the introduction of an ‘above the line’ tax credit in 2013 for larger companies.

Controlled Foreign Companies (CFCs)

The CFC regime can apply to a UK company which has a subsidiary operating in a country with a low rate of corporation tax. The rules have been in place for 25 years but are seen as complex and in some cases disadvantageous to business. Some interim changes were made in 2011 but a major overhaul is planned for 2012. The aims of the new rules will be:

  • to target and impose a CFC charge on artificially diverted UK profits, so that UK activity and profits are taxed fairly
  • to exempt foreign profits where there is no artificial diversion of UK profits
  • to not tax profits arising from genuine economic activities undertaken offshore.

General Anti-avoidance Rule (GAAR)

The Government commissioned an independent report from a leading tax lawyer on whether or not it would be appropriate to introduce a GAAR into the UK tax system. This is a route that has been used in a number of other countries.

The reviewer has just presented his report to the Government and recommends that a moderate rule targeted at abusive arrangements would be beneficial to the UK tax system. Such a GAAR would apply for income tax, CGT, corporation tax and NIC. It would not apply to ‘responsible tax planning’.

It is now likely that the Government will undertake a consultation process in this matter but legislation is not likely until 2013 at the earliest.

High risk tax avoidance schemes

Certain types of tax avoidance schemes are currently subject to a disclosure regime which requires the scheme promoter to disclose details of the scheme to HMRC and for the users of the scheme to indicate their involvement on their tax return. Such schemes are usually challenged by HMRC but this procedure can take many years with Tribunal and Court hearings being required. If the scheme is blocked the scheme users have to pay the tax due but HMRC is concerned that the delay can still give them a significant cash-flow advantage.

HMRC is currently consulting on a proposal to introduce an additional charge on scheme users where the scheme fails. A user will be able to prevent this charge by paying the disputed tax to HMRC ahead of the challenge.

Tax treatment of asset-backed pension contributions

Rules are to be introduced from 29 November 2011 to limit tax relief for employers who enter into arrangements to make asset-backed contributions into their pension schemes. The new rules will ensure that the tax relief obtained more accurately reflects the actual costs to the employer.

EMPLOYMENT TAX

Employer-provided cars

From 6 April 2012 the CO2 emissions bands used to work out the taxable benefit for an employee who has use of an employer-provided car will be shifted downwards by 5gm/km. This will have the effect of increasing the charge for each vehicle.

In addition, the current graduated table of employer-provided car bands will extend down to a 10% band and will apply to cars with CO2 emissions between 76 and 99gm/km. As a result ‘qualifying low emission cars’ will no longer exist as a separate category.

In summary the new rules from 6 April 2012 will be:

  • no emissions                              0%
  • 75gm/km or less                        5%
  • 99gm/km or less                      10%
  • 100gm/km                               11%
  • graduated increases of 1% per 5gm/km up to a maximum, including diesel supplement, of 35%

Real Time Information (RTI)

HMRC have produced draft legislation to introduce probably the most significant change in the PAYE system since its introduction in 1944. Under the RTI scheme, employers will electronically provide monthly information to HMRC related to wages and salaries paid to employees. Once the scheme is ‘bedded in’ employers will no longer have to complete year end returns such as the P35 and P14. The new system will also see the end of the use of the P45 when an employee leaves an employment.

Volunteer employers are to pilot the new scheme from 6 April 2012. The intention is that it will apply to employers on a phased basis from 6 April 2013 so that all employers are operating the system by October 2013.

Comment

This really is a major change but the success or otherwise of the scheme will depend on the ability of the HMRC computer system to cope. History suggests that this could be the problem.

CAPITAL TAXES

CGT rates

The current rates of CGT are 18% to the extent that any income tax basic rate band is available and 28% thereafter. The rate for disposals qualifying for Entrepreneurs’ Relief (ER) is 10% with a lifetime limit of £10m for each individual.

No announcement has been made of the rates for next year.

Comment

The ER limit is very generous and owners of businesses should ensure that they meet all the conditions necessary to secure the relief throughout the twelve months up to the date of a disposal.

CGT annual exemption

The CGT annual exemption has been frozen at £10,600 for 2012/13.

Inheritance tax (IHT) nil rate band

The IHT nil rate band remains frozen at £325,000 until 6 April 2015.

Reduced rate of IHT for the charitable

The Government will introduce a reduced rate of IHT for an estate where a minimum level of legacy has been left by the deceased to charity. The actual legacy to charity remains exempt from IHT and it is the rate of tax on the balance of the estate that would be reduced to 36% from 40%.

The intention is that the reduced rate will apply where charitable bequests satisfy a 10% test. A comparison will be made between:

  • the total value of charitable legacies for IHT purposes and
  • the value of the net estate as reduced by:
  • any available nil rate band
  • the value of assets passing to the surviving spouse or civil partner and
  • other IHT reliefs and exemptions for example Business Property Relief.

If the first figure is at least 10% of the second then the balance of the estate will qualify for the reduced IHT rate of 36%.

The changes will apply to estates where the individual dies on or after 6 April 2012.

Comment

Because the benefit of the reduced IHT rate will be dependent on whether or not the amount of the charitable legacy is sufficient for the estate to pass the 10% test there will be a ‘cliff edge’ effect. Where the amount of the charitable legacy is close to the critical 10% point, a small difference to the amount of the legacy could have a much larger impact on the estate’s IHT liability. There are no plans to apply any taper or other mechanism to mitigate this.

OTHER TAXES

VAT – Low value consignment relief (LVCR)

LVCR is an administrative simplification to reduce the costs for businesses, Royal Mail and other carriers and consumers all of whom would otherwise be involved in the collection and/or payment of small amounts of VAT on large numbers of low value packages coming into the UK from outside the EU. It is the main reason that suppliers of DVDs and CDs often use a base in the Channel Islands from which to ship their products.

The amount at which LVCR was to apply was reduced from £18 to £15 from 1 November 2011.

The Government recently announced that the relief is to be abolished from 1 April 2012 for goods imported as part of a distance selling transaction from the Channel Islands.

VAT cost sharing exemption

The Government is to introduce an EU VAT exemption for organisations that wish to share costs between themselves on a non-profit basis. The exemption can be used, amongst others, by organisations such as charities, universities and higher education colleges and housing associations wanting to make efficiency savings by working together to achieve economies of scale.

Under current UK legislation a VAT cost can arise creating a barrier to the sharing of services. The exemption once implemented would also, in certain circumstances, remove this VAT barrier.

Stamp Duty Land Tax (SDLT) holiday for first time buyers

Currently first-time buyers do not have to pay SDLT on house purchases where the cost is no more than £250,000. This relief is due to expire at midnight on 24th March 2012.

Air Passenger Duty (APD)

The Government intends to proceed with the introduction of APD to flights taken aboard business jets from 1 April 2013.


Disclaimer – for information of users

This summary is published for the information of clients. It provides only an overview of the Autumn Statement and previous announcements. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this summary can be accepted by the authors or the firm.

Newsletter – October 2011

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In this month’s enews we report on HMRC’s latest disclosure opportunity. Please contact us if you would like any further details on any of the issues covered.

 

eNEWS quicklinks
HMRC launch the Tax Catch Up Plan Plan to boost the economy
HMRC extend Business Records Checks Make sure your employee information is correct
National Insurance Numbers – by letter HMRC issue updated guidance for employees on childcare
Importing and Exporting Guide

 

HMRC launch the Tax Catch Up Plan

HMRC have launched a campaign to target private tutors and coaches who have undeclared tax liabilities.

The Tax Catch Up Plan (TCUP) is aimed at individuals who provide private lessons, or who profit from tuition and coaching, as a main or secondary income where the correct tax has not been paid. The types of tuition, instruction or coaching covered by the TCUP include tuition of traditional academic subjects, fitness and dance instruction, musical instrument tuition, art, services provided by life coaches and others.

Under the TCUP, tutors and coaches have until 31 March 2012 to advise HMRC about their outstanding tax for the years up to 5 April 2010, and pay what they owe. HMRC have confirmed that those who come forward by the deadline are likely to receive the best possible terms for paying the tax owed. If they have to pay a penalty, it is unlikely to be more than 20%.

Those who wait for HMRC to come to them will find that they have to pay much higher penalties (as much as 100% and may even face criminal prosecution). After 31 March 2012, using information pulled together from different sources, HMRC will investigate those who have chosen not to come forward.

Marian Wilson, Head of HMRC Campaigns, said:

‘Our campaigns are designed to ensure tax is paid so that the money is available to spend on public services used by everyone. We are making it as easy as possible for people offering tuition and coaching to use this unique opportunity to put their tax affairs in order by making a full disclosure, and benefit from the best possible terms.

We are using various intelligence sources to identify and then target those who do not take advantage of this opportunity to declare their full income. The message is clear: contact us before we contact you.’

The Tax Catch Up Plan has two stages:

  • From 10 October 2011 to 6 January 2012, tutors/coaches/instructors must register with HMRC to ‘notify’ that they plan to make a voluntary tax disclosure.
  • By 31 March 2012 those who have registered to notify must tell HMRC what they owe and pay the tax, interest and penalties due.

People can register online by completing a notification form which can be accessed using the link below or by calling HMRC on 0845 601 8817.

Please do get in touch if you have any concerns in this area.

Internet links: Press release TCUP guidance

Plan to boost the economy

The Institute of Directors (IoD) has proposed a new economic growth plan which aims to improve business investment and development. ‘The Route Back to Growth’ contains several recommendations including:

1. Monetary policy – Quantitative easing; launch QE2 in October with an initial £50 billion
2. Fiscal rules – A new 35% of GDP public spending target by 2020
3. Taxation – Remove the 50% top rate of income tax
4. Taxation – Extended corporation tax cuts to 15% by 2020
5. EU policy – Use future Treaty and/or budget negotiations to repatriate key employment powers
6. Infrastructure – Ring-fence transport, energy and ITC infrastructure spending
7. Energy policy – Do no harm – don’t sacrifice UK competitiveness for green credentials
8. Education – Further expand free school provision with profit incentives
9. Taxation – End the £100,000 personal allowance anomaly
10. Competition policy – Intensify competition policy both domestically and within the EU
11. Regulation policy – Radical civil service reforms to promote de-regulation
12. Employment Law – Nine major changes to free up the labour market
13. Planning – Incremental ‘Green Belt’ and developer rights to propose, and reduce political influence over infrastructure planning
14. Public sector performances – Greater decentralisation of public sector pay
15. Public sector performances – No watering down of reforms to unfunded public sector pensions

The IoD claims that if its suggestions are adopted by the government, it could make the UK one of the most advanced economies in the world.

Internet link: IoD plan

HMRC extend Business Records Checks

HMRC have announced that they are extending their Business Records Checks programme.

These checks were piloted earlier this year and involved checks on the adequacy of Small and Medium Sized Entities’ business records. The pilots apparently found that around 44% of businesses visited had issues with their record-keeping, while around 12% of those visited had seriously inadequate records.

HMRC are now extending this activity from mid-September to cover a number of key areas across the UK. As part of this, the number of full-time staff employed on the programme will rise from 30 to 120.

HMRC are planning to complete up to 12,000 checks by the end of the current financial year, with 20,000 provisionally planned for 2012/13. HMRC are increasing the number of visits so it can refine the process, before final decisions on a national roll-out are taken in the New Year. If you have any concerns in this area please contact us.

Internet link: Press release

Make sure your employee information is correct

HMRC are reminding employers of the importance of correct employee information and have updated the questions on the introduction of Real Time Information (RTI). They have issued a number of questions and answers stressing the importance of correct details in the run up to the introduction of RTI in 2012/13.

According to the advice which has been issued:

‘It has always been important to make sure the information that you send HMRC about your employees is accurate to help ensure that your employees pay the correct Income Tax and NICs. Improving the accuracy of the information you hold and send to HMRC will help match the information to the correct HMRC record. This could save you money by helping to reduce the number of employee enquiries you receive.

This is not just important for tax and NICs. From October 2013, RTI will support Universal Credit by providing the Department for Work and Pensions with up to date information about claimants’ employment income. Ensuring your employee information is correct will help to ensure they receive the right amount of Credit.

As part of the process for an employer joining RTI, HMRC will align the records of employees held on the NPS system and the records held by employers. HMRC will publish more information about the ’employer alignment’ process soon.

In the meantime HMRC recommends that you start to prepare for RTI by checking the information you hold.’

Over 80% of matching problems experienced by HMRC are caused by incorrect information about an individual’s name, date of birth or National Insurance number.

Please use the following link to read the guidance on the correct format for information.

Internet link: HMRC RTI FAQs

National Insurance Numbers – by letter

HMRC have for many years notified individuals of their National Insurance number (NI No) for the first time by sending them a plastic NI No card.

Last year, as part of the Government’s Spending Challenge, it was announced that HMRC would stop issuing NI No cards and send letters instead. The government estimate this will save approximately £1 million per annum.

Late last year HMRC introduced a system of notification by letter for those requesting a reminder of their NI No, and in July this year adults requesting a number for the first time will be issued with one by letter by Jobcentre Plus.

HMRC have confirmed that they will stop sending NI No cards altogether. Anyone needing a number (adults and juveniles approaching age 16) will now receive their NI No on a notification letter.

HMRC are advising employers that new employees may now have a letter or a card with their NI No information and that either is acceptable.

Internet link: HMRC NI news

HMRC issue updated guidance for employees on childcare

HMRC have updated their guidance on employers helping with childcare costs.

Leaflet IR155 which sets out the circumstances and the amounts of tax and National Insurance (NI) free childcare costs that an employer may provide has been updated.

The update reflects the change to the rules which mean that where a new claimant enters into a scheme from 6 April 2011 the amount of exempt childcare is restricted

  • for higher rate taxpayers to £28 a week, and
  • for additional rate taxpayers to £22 a week.

The amount available to basic rate tax payers and those in relevant schemes prior to 6 April 2011 remains at £55 a week.

If you would like any further information on tax and NI efficient childcare please do get in touch.

Internet link: IR155 leaflet

Importing and Exporting Guide

HMRC have issued a ‘Guide to Importing & Exporting – Breaking down the Barriers’. According to the introduction to the lengthy document:

‘This information pack is for anybody, whether already in business or not, who wishes to bring goods into the United Kingdom (UK) from outside the European Union (EU), or intends to send goods from the UK out of the EU.

The pack has been designed to help you get started on importing and / or exporting, and to help you better understand the procedures involved in these activities.’

If you have any queries or would like advice in this area please do get in touch.

Internet link: HMRC guidance

HMRC Business Records Checks

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HMRC extends Business Records Checks

HM Revenue & Customs (HMRC) has announced an extension of its Business Records Checks programme.

Business Records Checks were piloted earlier this year in eight key areas, and involve checks on the adequacy of small and medium-sized enterprises’ business records.
The pilots found that around 44 per cent of businesses visited had issues with their record-keeping, while around 12 per cent of those visited had seriously inadequate records.

HMRC will be now be extending this activity from mid-September to cover a number of key areas across the UK. As part of this, the number of full-time staff employed on the programme will rise from 30 to 120.

HMRC plans to complete up to 12,000 Business Records Checks by the end of the current financial year, with 20,000 provisionally planned for 2012/13. HMRC is increasing the number of visits, so it can refine the process, before final decisions on a national roll-out are taken in the New Year.

Initially, HMRC will only levy a record-keeping penalty in the most extreme cases of poor record-keeping. In the longer-term, HMRC intends to issue penalties of up to £3,000 for serious inadequacies in record-keeping. HMRC will issue guidance on this, and make a further announcement on when it will happen, in due course.

HMRC’s Director of Local Compliance, Richard Summersgill, said:

“Good record-keeping helps businesses pay the right amount of tax at the right time, thereby potentially avoiding interest and penalties.

“Adequate records give businesses a clear idea of their trading position and profitability, allowing them to make business decisions and adjustments to ensure survival and success. And where a check has shown a business keeps adequate records, it gives HMRC a greater degree of assurance as to the likely accuracy of its tax returns.

“Ultimately, this is about supporting businesses and reducing the tax gap.”
For further information on record-keeping, visit www.hmrc.gov.uk/record-keeping

 

Notes for editors
1. The Business Records Checks pilots involved around 800 visits, focusing on eight different sites (Edinburgh, Irvine, Sunderland, Liverpool, Manchester, Stockport, Sheffield and Portsmouth). The extended programme of visits will cover key areas in England, Scotland, Wales and Northern Ireland.

2. Research by the Organisation for Economic Cooperation and Development (OECD) indicates that poor business record-keeping generally leads to an underassessment of tax, even where there is an audit-type check into a return for the period covered by such records. On this basis, poor business record-keeping is responsible for a loss of tax in up to two million SME cases annually.

3. A guide to setting up a basic record-keeping system is available from the Business Link website at www.businesslink.gov.uk/startrecordkeeping.
Issued by HM Revenue & Customs Press Office

Newsletter – September 2011

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In this month’s enews we report on increases to the NMW rates. Please contact us if you would like any further details on any of the issues covered.

 

eNEWS quicklinks
National Minimum Wage rates Advisory fuel rates for company cars
Agreement with Switzerland to secure billions in unpaid tax Unemployment figures
HMRC reminder on new tax return penalties School Charities – Gift Aid and Payroll Giving guide
Revised construction industry penalties HMRC report increase in phishing scams

 

National Minimum Wage rates

The adult rate of the National Minimum Wage (NMW) increases to £6.08 (£5.93) an hour from 1 October 2011. This is payable to those age 21 and over.

The rate for those aged 18 to 20 increases to £4.98 (£4.92) and for 16 and 17 year olds to £3.68 (£3.64) an hour.

The apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship, increases to £2.60 (£2.50) and hour.

Updated guidance available on the Business Link website includes specific situations such as those engaged on work experience or internships and their entitlement to the NMW. The guidance also includes a new worker checklist for employers and case study examples.

The press release confirms:

‘Entitlement to the NMW does not depend on a job title but on whether the arrangement they have with an organisation makes them a worker for NMW purposes. Where an individual is a worker – and no exemption applies – then they must be paid at least the NMW.’

Employment Relations Minister Edward Davey said:

‘Internships and work experience of all forms offer an excellent opportunity in helping to bridge the gap between education and the workplace. And for businesses it allows them access to a wide talent pool of some of our best and brightest who didn’t take the traditional route into a job.

Fairness though is absolutely paramount with all placements. When a worker is entitled to the minimum wage, they should be paid it and we will continue to enforce the law. Today’s publication will help clarify this for employers and will also make sure that all interns and those on work experience placements have a better understanding of their entitlement to the minimum wage.’

HMRC are able to charge penalties to those employers found to be in breach of the NMW rules.

If you have any queries on the NMW please do get in touch.

Internet links: NMW rates Business link guidance Press release NMW Penalties

Advisory fuel rates for company cars

New company car advisory fuel rates have been published to take effect from 1 September 2011. HMRC’s website states:

‘These rates apply to all journeys on or after 1 September 2011 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.’

The advisory fuel rates for journeys undertaken on or after 1 September 2011 are:

Engine size Petrol LPG
1400cc or less 15p (15p) 11p (11p)
1401cc – 2000cc 18p (18p) 12p (13p)
Over 2000cc 26p (26p) 18p (18p)
Engine size Diesel
1600 cc or less 12p (12p)
1601cc – 2000cc 15p (15p)
Over 2000cc 18p (18p)

Please note that only one rate has changed and that has been reduced and care must be taken to apply the correct rate after the one month period of grace.

Other points to be aware of about the advisory fuel rates:

  • Employers do not need a dispensation to use these rates.
  • Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
  • The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.

If you would like to discuss your car policy, please contact us.

Internet link: HMRC advisory fuel rates

Agreement with Switzerland to secure billions in unpaid tax

The government has agreed measures with Switzerland to tackle offshore tax evasion. Under the terms of an agreement, existing funds held by UK taxpayers in Switzerland will be subject to a significant one-off deduction of between 19% and 34% to settle past tax liabilities.

From 2013, a new withholding tax of 48% on investment income and 27% on gains will ensure the effective future taxation of UK residents with funds in Swiss bank accounts. This will be accompanied by new information-sharing rules which will make it easier for HMRC to find out about Swiss accounts held by UK taxpayers. The new charges will not apply if the taxpayer authorises a full disclosure of their affairs to HMRC.

Internet link: Press release

Unemployment figures

The latest unemployment figures show the number of people out of work rose by 80,000 to 2.51 million in the three months to July 2011.

Neil Carberry, CBI Director for Employment Policy, said:

‘This rise in unemployment is troubling, particularly the growing number of young people out of work.

With one in five 16-24 year olds currently unemployed, tackling youth unemployment must be a priority. Businesses are eager to play their part through apprenticeships, training and work placements, but now the government must do all it can to create the right conditions for the private sector to create much-needed jobs.’

Internet link: Press release

HMRC reminder on new tax return penalties

HMRC are reminding individuals and businesses about new Self Assessment penalties for late returns and late payments, which come into effect this autumn.

The changes will apply to Self Assessment returns for 2010/11 which must be submitted by 31 January 2012. As stated on the HMRC website:

‘The new penalties for late Self Assessment returns are:

  • an initial £100 fixed penalty, which will now apply even if there is no tax to pay, or if the tax due is paid on time
  • after 3 months, additional daily penalties of £10 per day, up to a maximum of £900
  • after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater; and
  • after 12 months, another 5% or £300 charge, whichever is greater. In serious cases, the penalty after 12 months can be up to 100% of the tax due.’

If you would like help or advice on your Self Assessment return please do contact us.

Internet links: Press release HMRC deadlines and penalties

School Charities – Gift Aid and Payroll Giving guide

HMRC have published a Gift Aid and Payroll Giving guide for School Charities.

The guide contains information and simple examples specifically related to funds received by school charities to help make the most of these donations and identify what qualifies for Gift Aid. The guidance covers the following scenarios:

‘Appeals to fund extra lessons

Non-uniform days

School fees

Appeals towards school running costs

Appeals to fund scholarships

Appeals to a general reserve fund

Educational school trips

Appeals to buy a minibus or other equipment

Sponsored events

Payments to e-Learning Foundations

Building appeals

Other fundraising events’

Internet links: HMRC website Guidance

Revised construction industry penalties

From October 2011 the late submission Construction Industry Scheme monthly returns will result in revised penalties. The penalties are as follows:

  • a basic penalty of £100 for failure to meet due date of the 19th of the month
  • where the failure continues after two months after the due date, a further penalty of £200 will be charged
  • after six months an additional penalty will be due, rising to the greater of 5% of the tax or £300
  • after 12 months a further penalty will again be due being the greater of £300 or 5% of the tax but, where the withholding of information is deliberate and concealed, it will be 100% of the tax (or £3,000 if greater) and where information is withheld deliberately 70% of the tax (or £1,500 if greater).

Please get in touch if you would like help or advice on the Construction Industry Scheme.

Internet link: HMRC guidance on CIS penalties

HMRC report increase in phishing scams

HMRC have confirmed that reports of fraudulent ‘phishing’ emails have risen by 300% over the past year. The figure for August 2011 was 24,000. HMRC are currently helping to shut down around 100 scam websites a month.

They are stressing that if anyone receives an email claiming to be from HMRC advising that they are due a tax repayment that they do not follow the email’s instructions.

The emails provide a ‘click-through link’ to a cloned replica of the HMRC website, where the recipient is asked to provide their credit or debit card details. HMRC advise that victims risk not only having their bank accounts emptied but also their personal details being sold on to other organised criminal gangs.

Joan Wood, Director of HMRC Online and Digital, said:

‘We only ever contact customers who are due a tax refund in writing by post. We currently don’t use telephone calls, emails or external companies in these circumstances. If anyone receives an email claiming to be from HMRC, please send it to phishing@hmrc.gsi.gov.uk before deleting it permanently.

The increase in reports is partly due to improved awareness of this scam. However, I have no doubt that more of these “phishing” emails are in general circulation than ever before.

HMRC will do everything possible to ensure those receiving this email know what steps to take to protect their information, and we are working closely with other law enforcement agencies to target the criminals behind this serious crime and see them brought to justice.’

Internet link:

Newsletter – July 2011

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eNEWS – July 2011

In this month’s enews we report on the late issue of taxpayer statements and penalty notifications. Please contact us if you would like any further detail on any of the issues.

 

eNEWS quicklinks
HMRC late issuing statements Tribunal criticises HMRC for delay in issuing penalties
Online Olympics advice Payments Council to keep cheques
HMRC target businesses not registered for VAT Tax credit fraud
Holiday entitlement Real Time Information

 

HMRC late issuing statements

HMRC have advised that there are apparently more Self Assessment statements than usual to issue this year. Normally these would be issued in July but this year some will be issued later. The majority of statements have been sent on time.

However, many taxpayers wait for the statement to confirm what they need to pay. More importantly, if HMRC have asked taxpayers to make a second payment on account in July, they normally have to pay this by 31 July. However, due the delays in issuing some statements HMRC have advised:

‘If you receive your statement in August, you should still pay the tax due as soon as you can. You’ll only be asked to pay interest on the tax due on the second payment on account if you still haven’t paid it more than 30 days after you receive your statement.’

If you have any concerns regarding payment please do get in touch.

Internet link: Press release

Tribunal criticises HMRC for delay in issuing penalties

In a potentially wide-ranging case, HMRC have been criticised for deliberately issuing penalties for late forms P35 (Payroll end of year forms) several months late, which generated more penalties than were necessary. A summary of the case is reported below.

This case has potentially wide ranging implications for other employers. Please do get in touch if you would like further guidance in this area.

The case (TC01286: Hok Ltd) concerned an appeal against a penalty of £400 for late filing of the 2009/10 P35. The penalty was calculated at £100 per month for four months. In October 2010 a further penalty of £100 was issued, given that the filing had taken place on the 15 October 2010 once the company had been alerted to its default.

The company argued that it thought it did not need to file the appropriate returns because its only employee had ceased employment part way through the year. It acknowledged that it was wrong and that HMRC was entitled to levy a penalty. However, the company argued that, if HMRC had notified it of its default, it would have been remedied it a far earlier time, thus avoiding ongoing penalties.

During the Tribunal HMRC stated that it runs a:

‘…structured programme to enable penalties to be issued regularly throughout the year, rather than waiting for the late return to be submitted and then issue a final penalty. These penalties, although aimed at encouraging compliance and having the effect of reminding are not designed to be reminders for the outstanding return.’

The Tribunal was amazed by this and stated that:

‘….HMRC deliberately waits until four months have gone by and does not issue the first interim penalty notice until, as in this case, September of the year of default.’

‘There can be no logical reason whatsoever for HMRC to delay sending out a penalty notice for four months so that, in effect, a minimum penalty of £500 will be levied unless the taxpayer has unilaterally realised that it has failed to undertake the necessary filing.’

‘In our judgement it would be a very simple matter for HMRC to set its computer settings so that a default or penalty notice was sent out immediately after the 19 May in any year, instead of some four months later. That might generate less penalty cash for the State, but it would be fair and conscionable as between the taxpayer and the State (acting by HMRC).’

‘As, in our judgement, HMRC has neither acted fairly nor in good conscience, in the manner described above, we do not consider that any penalty is recoverable over and above the £100 penalty for the first month unless HMRC proves (the onus being upon it) that even if such a penalty notice, which would have acted as a reminder, had been issued, the default would nonetheless have continued. It has proved no such thing.’

Internet link: Tribunal

Online Olympics advice

Small and medium-sized companies hoping to win Olympics contracts are invited to take advantage of a free HMRC online advice seminar which is available to download by following the link below.

According to the press release HMRC:

‘….it is estimated that the Olympic and Paralympic Games will involve more than 50,000 contracts, worth about £6 billion. The sectors affected range from construction, engineering and manufacturing to creative, merchandising and retail, and contracts will be available at or near the 34 Games venues around the country.’

‘The seminar will cover issues such as talking to a bank about financing, ensuring that the right systems are in place to comply with procurement policies and how firms go about making a bid for an Olympic contract. It will also explain how businesses can get support and guidance on any tax obligations and entitlements.’

Internet link: Press release

Payments Council to keep cheques

The Payments Council has announced that cheques will continue for as long as customers need them and the target for possible closure of cheque clearing in 2018 has been cancelled.

This change is as a result of public concern about the proposed phasing out of cheques by 2018. The issue has been of concern to many small businesses who continue to make payments by cheque and charities which receive substantial amounts of donations from the public by cheque.

According to the press release the:

‘The Payments Council Board will continue to focus on security, efficiency and encouraging innovation in all types of payments to ensure customers have options best suited to the 21st century.’

Richard North, the Chairman of the Payments Council said:

‘It’s in the DNA of the Payments Council to consult and listen to all those people who actually make payments and use cheques. Listening to over 600 stakeholder groups, working with the banks and following our appearance before the Treasury Select Committee, we have concluded we should reassure customers that the cheque is staying.’

‘Over the last two years we have learnt a great deal about what is important to our many stakeholders and we are really grateful to all of those groups and individuals who took the time to talk to us and help us reach this decision. We will use what we’ve learnt to keep improving existing systems, as well as introducing innovation, so that customers benefit from 21st century ways to pay. Innovation must be at the heart of what we do.’

Internet link: Press release

HMRC target businesses not registered for VAT

HMRC have launched a campaign aimed at VAT rule-breakers. As part of this campaign they have confirmed that they will be sending letters informing certain businesses how to register to pay what they owe. The campaign is focusing on individuals and businesses trading above the VAT turnover threshold of £73,000 but who have not registered for VAT.

HMRC have advised that they will be sending in excess of 40,000 letters over the next few weeks. Those who come forward that have not registered to pay VAT have up until 30 September 2011 to let HMRC that they want to take part. If they make a full disclosure, most face a low penalty rate of 10% on VAT that has been paid late.

They will also be invited to disclose any other tax arrears. Where they have to pay a penalty on undeclared tax other than VAT, this will be lower than the customary penalty of up to 100% charged to those who fall outside the opportunity.

HMRC are warning that after 30 September 2011, using information pulled together from different sources, they will investigate those who have failed to come forward. Substantial penalties or even criminal prosecution could follow.

Mike Wells, HMRC’s Director of Risk and Intelligence, said:

‘This is our third campaign, raising more than £500m from voluntary disclosures and a further £100m so far from follow-up activity. Our campaigns are designed to ensure tax is paid so that the money is available to spend on public services used by everyone.’

‘The aim is to make it easy for individuals and businesses to contact us, make a full disclosure of their income and face a reduced penalty on any tax owed.

I urge people who have not registered their businesses for VAT to get in touch with HMRC and get their tax affairs in order simply and on the best available terms.’

Internet link: Press release

Tax credit fraud

Following an HMRC investigation a West Midlands woman, Kerry Melia, a mother of six, has been send to prison for eight months for tax credit fraud. She wrongly claimed in excess of £62,000 in tax credits by fraudulently claiming for nine fictitious children. The woman first claimed tax credits for her five children in 2005 (she subsequently had another child).

From 2007 onwards, she began adding fictitious children to her claim, stating that she was their foster mother. She then unsuccessfully attempted to add another six non-existent children.

David Gauke, Exchequer Secretary to the Treasury, said:

‘The government will not tolerate dishonest people stealing public money which pays for vital services. This sentence shows that those who think they can cheat the benefits system should think again. The extra £900m we have invested in HMRC will allow them to carry on the fight against benefit cheats and tax fraudsters.’

Internet link: Press release

Holiday entitlement

With many thinking of their summer holidays, the Business Link website offers help in calculating minimum statutory entitlement.

An employee’s holiday entitlement is generally set out in their contract of employment. The legal minimum entitlement is 5.6 weeks, which can include bank and public holidays. The calculator includes help on calculations for part-time work and other working patterns.

Internet link: Business link holiday calculator

Real Time Information

HMRC have issued some further guidance on Real Time Information (RTI) which may be useful to employers with regard to the introduction of RTI. RTI is a system of monthly/weekly PAYE returns which will replace the annual end of year forms.

The new web page entitled ‘Improving the operation of PAYE: Real Time Information (RTI)’ can be reached using the link below and the link includes access to some new Frequently Asked Questions which, HMRC advise may be added to from time to time.

HMRC have confirmed that employers who are not part of the pilot will have to join RTI in the period from April 2013 to October 2013. All employers will be using the RTI service by October 2013.

HMRC will pilot the RTI service with volunteer software developers and employers for a year, starting in April 2012 as part of a trial to ensure that the software is fully tested.

Internet link: Real Time Information

Newsletter – June 2011

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In this month’s enews we report on HMRC’s plans to extend their ‘tax cheats’ campaigns.

Please browse through the articles using the links below and contact us if any issues or questions arise.

 

eNEWS quicklinks
HMRC extend ‘tax cheats’ campaigns Another email scam warning from HMRC
Workplace pensions reform Consultation on residency
The Bribery Act Tax credits renewal deadline
Changes to the law to protect Patent and Design rights P11D deadline looming

 

HMRC extend ‘tax cheats’ campaigns

HMRC have announced that they will be launching new campaigns over the next year targeting VAT defaulters, private tutors and e-marketplaces.

HMRC will use more IT, such as ‘web robot’ software, to search the internet and find targeted information about specified people and companies. Using the software, HMRC feel that they can pinpoint more accurately people who have failed to pay the right tax. The software, used with HMRC’s Connect computer system, also helps find people who are trading without telling HMRC.

The Connect computer system alerts HMRC to previously invisible tax evasion by matching a vast amount of HMRC and third-party data. It can identify previously hidden relationships, uncovering anomalies between such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies.

HMRC announced last month that a campaign targeting VAT rule-breakers trading above the £73,000 turnover threshold but who have not registered for VAT will be launched in the summer.

Other campaigns to be launched in 2011/12 will focus on:

  • those who provide private tuition and coaching
  • e-marketplaces, which buy and sell goods as a trade or business
  • trades, which will build on HMRC’s plumbers’ campaign and give an opportunity to another group of ‘tradespeople’ to declare unpaid tax.

Mike Wells, HMRC’s Director of Risk and Intelligence, said:

‘We want to make sure HMRC listens to as many informed views as possible for our future campaigns. We want the views and experience of people and organisations outside the department to play a fuller part in the campaigns that we design for customers.’

‘By being open about our areas of interest for the coming year we hope to maximise that exchange of information and ensure we reduce the tax gap and help customers pay what they owe.’

‘We will use the information we gather to pursue people who choose not to use the opportunities we provide for them to put their affairs in order on the best possible terms. It will be more expensive if we come and find people, so I urge them to come forward and disclose voluntarily.’

Internet link: News release

Another email scam warning from HMRC

HMRC are once again alerting taxpayers to a surge of fake ‘phishing’ emails sent out by fraudsters in the run-up to the tax credits renewal deadline.

The email informs the recipient they are due a tax rebate and provides a click-through link to a cloned replica of the HMRC website. The recipient is asked to provide their credit or debit card details. Fraudsters then try to take money from the account using the details provided.

Since the beginning of April 2011, when the first tax credits renewals forms were sent out to claimants, more than 46,000 phishing emails have been reported. During the same period of time HMRC helped shut down more than 150 scam websites.

Joan Wood, Director of HMRC Online and Digital, said:

‘We currently only ever contact customers who are due a tax refund in writing by post. We don’t use telephone calls, emails or external companies in these circumstances. If anyone receives an email claiming to be from HMRC, please send it to phishing@hmrc.gsi.gov.uk before deleting it permanently.’

HMRC strongly advises taxpayers to:

Internet links: News Release www.hmrc.gov.uk/security/index.htm

Workplace pensions reform

The government has introduced measures aimed at encouraging greater private saving which includes workplace pension reforms. New legal obligations will require employers to automatically enrol their eligible jobholders into a qualifying pension scheme.

A new workplace pension scheme called NEST (National Employment Savings Trust) will be one of the qualifying schemes and will be open to any employer who wants to use it to meet their obligations.

The initial roll out of the scheme will be October 2012 but this will impact on employers with 120,000 employees or more. For those with a more modest workforce the start date varies; for example, those with less than 500 employees the date is 1 January 2014 and for those with less than 50 employees the earliest start date is 1 March 2014.

Employees eligible for automatic enrolment will be:

  • those who are not already active members of a qualifying scheme
  • are aged at least 22 years and below the State Pension age, and
  • earn over £7,475 gross a year.

The qualifying scheme may be the existing employer pension scheme if it meets certain conditions or if an employer does not have a qualifying scheme, they will have to set one up or use a NEST pension scheme.

Minimum contributions levels for qualifying schemes are as follows:

Minimum Contribution Employee Pays Tax Relief Minimum Employer Contribution
8% 4% 1% 3%

Employees will be able to opt out of the scheme if they so wish. However, for those employees within the scheme it is expected that the employer will have to contribute at least 3% of ‘qualifying’ earnings. These earnings are the employees’ basic salary plus commissions, bonuses and overtime between £5,035 and £33,540 a year (in 2006/07 terms but to be uprated). Pension contributions are to be phased in.

A great deal more information is starting to be released and can be viewed via The Pensions Regulator website.

Internet links: The Pensions Regulator website Basic employers guide

Consultation on residency

Over recent weeks, HMRC have issued numerous consultation documents totalling hundreds of pages.

One of these details how individuals will be judged to be resident or not resident in the UK for tax purposes.

The government proposes to introduce a statutory residence test (SRT) to take into account both the amount of time the individual spends in the UK and the other connections they have with the UK.

There are parts of the test where a distinction will be made between:

  • arrivers – defined as individuals who were not UK resident in all of the previous three tax years; and
  • leavers – defined as individuals who were resident in one or more of the previous three tax years.

The SRT will:

  • determine tax residence for individuals but not companies
  • apply for the purposes of income tax, capital gains tax and inheritance tax
  • not apply for non-tax purposes (including national insurance contributions), and
  • supersede all existing legislation, case law and guidance for tax years following its introduction.

The SRT will have three parts:

  • Part A contains conclusive non-residence factors that would be sufficient in themselves to make an individual not resident.
  • Part B contains conclusive residence factors that would be sufficient in themselves to make an individual resident.
  • Part C contains other connection factors and day counting rules which will only need to be considered by those whose residence status is not determined by Part A or Part B.

The above is part of a consultation process at present. HMRC intend to implement the measures from 6 April 2012.

We will keep you informed of developments but please do contact us if you have any concerns in the meantime.

Internet link: Press release

The Bribery Act

The Bribery Act 2010 comes into force on 1 July 2011. The new Act replaces, updates and extends the existing UK law against bribery and corruption. This important new legislation:

  • introduces a corporate offence of failure to prevent bribery by persons working on behalf of a business. A business can avoid conviction if it can show that it has adequate procedures in place to prevent bribery;
  • makes it a criminal offence to give, promise or offer a bribe and to request, agree to receive or accept a bribe either at home or abroad. The measures cover bribery of a foreign public official; and
  • increases the maximum penalty for bribery from seven to 10 years imprisonment, with an unlimited fine.

The introduction into law of the new corporate offence of failure of commercial organisations to prevent bribery is an important development that essentially requires all businesses to consider the requirements of the new Act. This new corporate offence is coupled with a defence where, if the business can show that it had ‘adequate procedures’ in place to prevent bribery, it can be protected from committing the new criminal offence.

All businesses should familiarise themselves with the statutory guidance and assess the risk of bribery occurring in the business. The extent of any further action will be dependent on the results of this risk assessment.

The Act also requires the government to produce guidance on what constitutes ‘adequate procedures’ and the Ministry of Justice has produced this. This can be found using the links below.

Internet links: Bribery Act 2010 guidance Quick start guide

Tax credits renewal deadline

Tax credits are state benefits which are generally available to lower income families. However, entitlement to the credits is significantly increased where individuals pay for childcare or suffer a drop in normal levels of income perhaps due to incurring trading losses or redundancy.

Individuals who have already claimed tax credits for 2010/11 have to finalise their provisional award, which would have originally been based on their 2009/10 income, and advise HMRC of any changes in their circumstances for 2011/12. This procedure is known as the renewals process. The deadline for the submission of tax credit renewals is generally 31 July 2011.

HMRC have been busily advertising the renewals process in the national press and on their website. Claimants need to be aware that the payment of tax credits will stop at the end of July if they have not renewed their applications by that date. There are significant changes to the income limits and claw back of entitlements for 2011/12 so you may wish to review the HMRC guidance. Alternatively if you need any help with the completion of your form or any advice on tax credits generally please do get in touch.

Internet links: HMRC tax credit deadlines HMRC Tax credit changes

Changes to the law to protect Patent and Design rights

The government has announced that it expects small and medium sized businesses to benefit from a new law which gives them easier access to justice to protect their patent and design rights. The introduction of a damages cap of £500,000 for claims made in the Patents County Court (PCC) means smaller businesses seeking damages up to that amount are less likely to have to resort to the High Court which could prove more costly.

The Patents County Court (Financial Limit) Order 2011 sets out to create a clearer definition of what disputes can be heard in the PCC and which ones should go to the High Court. Under the previous system businesses with a legal case worth less than £500,000 could face litigation in either court. This potentially exposed them to unknown levels of financial risk.

According to the press release:

‘The change in law will ensure that lower value, less complex cases, which would typically involve small businesses, will automatically fall within the jurisdiction of the lower, cheaper PCC. Therefore the risk of having costly disputes over where the case should be heard will be reduced. In the past some companies were put off protecting their rights due to the uncertainty of how much it would cost.’

Minister for Intellectual Property, Baroness Wilcox said:

‘Maintaining an effective and efficient intellectual property framework for businesses is not enough to drive innovation. We must offer businesses a more accessible justice system for them to enforce their rights. By making it easier for small firms and entrepreneurs to use the legal processes it will give them more time to concentrate on business activities.’

‘These changes will help small businesses and encourage them to innovate. It will also provide clarity over the legal processes, certainty over the risks and give small enterprises the confidence to stand on an equal footing with financially stronger companies.’

Internet link: News release

P11D deadline looming

The forms P11D, and where appropriate P9D, which report benefits and expenses for both employees and directors for the year ended 5 April 2011, are due for submission to HMRC by 6 July 2011.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A national insurance contributions at 12.8% (for 2010/11) on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form. For those employers who submit paper forms P11D these should all be sent to the address detailed in the link at the end of this article.

If you would like any help with the forms P11D or the calculation of the Class 1A liability please get in touch.

Internet links: HMRC P11D guidance HMRC advice HMRC new address for paper forms P11D

Newsletter – May 2011

Posted on by

In this month’s enews we report on HMRC’s plans for compliance checks and important information for employers and employees. Please do get in touch if you would like more detail.

 

eNEWS quicklinks
Advisory fuel rates for company cars HMRC trial single compliance process
CBI survey on sick days and the impact of fit notes HMRC warn of email rebate scam
Flexible working consultation HMRC’s new task force to tackle ‘tax dodgers’
Agency workers guidance HMRC’s Basic PAYE Tools update
HSE launch Health and Safety Made Simple

Advisory fuel rates for company cars

New company car advisory fuel rates have been published to take effect from 1 June 2011. HMRC’s website states:

‘These rates apply to all journeys on or after 1 June 2011 until further notice, allowing them to reflect fuel prices more quickly. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.’

The advisory fuel rates for journeys undertaken on or after 1 June 2011 are:

Engine size Petrol LPG
1400cc or less 15p (14p) 11p (10p)
1401cc – 2000cc 18p (16p) 13p (12p)
Over 2000cc 26p (23p) 18p (17p)
Engine size Diesel
1600cc or less 12p (13p)
1601cc – 2000cc 15p (13p)
Over 2000cc 18p (16p)

Please note that not all of the rates have been increased, so care must be taken to apply the correct rate. The rate for diesel cars up to 2000cc was previously set at 13p per mile from 1 March 2011. This band has now been split into two, 1600cc or less, and 1601cc – 2000cc. The fuel rate payable for diesel cars of 1600cc or less is reduced by 1p per mile from 13p to 12p so please take care when amending the rates payable.

Other points to be aware of about the advisory fuel rates:

  • Employers do not need a dispensation to use these rates.
  • Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
  • The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.

If you would like to discuss your car policy, please contact us.

Internet link: HMRC advisory fuel rates

HMRC trial single compliance process

HMRC have announced trials of a single compliance process for enquiries across a range of different taxes.

According to the press release they believe that:

‘By simplifying and standardising the process for compliance checks HMRC will improve customer experience and reduce costs as the check will only take as long as the risks and behaviours encountered dictate.’

‘The trials of the new process will run for six months from 1 June in 10 different locations across the UK: Reading/Slough, Newcastle, Warrington, York, Exeter, London Euston and Southampton in England; Cardiff in Wales; Belfast and Edinburgh/Dundee.’

‘The new process will be rolled out nationally from January 2012, subject to the results of the trials.’

David Gauke, Exchequer Secretary to the Treasury, said:

‘This Government is committed to relieving the burden on businesses. We know that agents, individuals and businesses find some of HMRC’s current compliance practices drawn out and costly. A single compliance process could help HMRC improve the customer experience and reduce costs.’

We will keep you informed of developments. Please do get in touch if HMRC contact you.

Internet link: Press release

CBI survey on sick days and the impact of fit notes

According to the CBI’s Absence and Workplace Health Survey fit notes have failed to deliver a reduction in sickness absence. This is the conclusion drawn from the new absence figures included in the survey.

The survey showed that the UK economy lost 190 million working days to absence last year, with each employee taking an average of 6.5 days off sick. This is an increase on 2009’s figures, which showed employee averages of 6.4 sick days, despite the introduction of fit notes in 2010.

Fit notes were introduced in April 2010 and allow GPs to advise the employer whether the employee could return to work sooner if certain changes were made. Some examples of the changes which could be made would be a temporary reduction in hours or duties (such as lifting, driving etc). See the link below regarding fit notes for more information.

According to the survey employers have been disappointed by their experience of fit notes so far. With 66% of employers saying that fit notes had not yet helped their rehabilitation policy. More than 70% ‘were not confident that GPs were using the fit note differently from the old sick note’.

Katja Hall, CBI Chief Policy Director, said:

‘The substantial costs of absence to the economy put a premium on managing longer-term absence well. The fit note is a great initiative, which could play an important role in helping people back to work and stopping them slide into long-term absence. But employers are far from convinced that the scheme is working properly and don’t think doctors are getting the necessary training.’

The government is still planning to introduce electronic fit notes and although these were originally expected in autumn 2010 this has been delayed and is now expected in autumn 2011. Katja Hall said:

‘The launch of the electronic fit note should be an ideal opportunity for the Department for Work and Pensions to extend the reach of its training programme and address GPs’ engagement. There can be no room for complacency in addressing the so-called sick note culture.’

If you would like any advice on sick pay and managing sickness absence please do get in touch.

Internet links: Press release Survey Fit Notes

HMRC warn of email rebate scam

HMRC are warning that taxpayers are being emailed stating that they are entitled to a tax rebate. These emails are being sent from a number of bogus email addresses. They inform recipients that they are entitled to a tax rebate and invite them to complete an online form to receive a rebate of tax.

HMRC are advising that taxpayers should not visit the website contained within the email or disclose any personal or payment information.

Email addresses used to distribute the tax rebate emails include:

New addresses

noreply@hmrc.gov.uk

srvcs@hmrc.gov.uk

secure@hmrc.gov.uk

message@tax.co.uk

Ref@hmrc.gov

info@hmrc.gov.uk

confidential@hmrc.gov.uk

securemail@hmrc.co.uk

refunds@hmrc.org.uk

Support@hmrc.gov

srvshm@hmrc.gov.uk

services@hmrc.gov.uk

Historical addresses

no_reply@ir-efile.gov.uk

officer.robinson@hmrc.co.uk

refunfform@hmrc.gov.uk

success@gov.co.uk

irs@egroup.com

info@hmrc.co.uk

HM_R&C@HMRC.GOV

Tax.refunds@hmrc.gov.uk

helpdesk-hm@hmrc.gov.uk

notice@hmrc.gov.uk

help-centre@hmrc.gov.uk

refunds@hmrc.gov.uk

HMRC have confirmed that they do not send out emails using these email addresses.

Internet link: HMRC scam email examples

Flexible working consultation

The government has launched a consultation on plans to introduce a new system of flexible parental leave from 2015. This is part of the government’s plans to ‘create a modern workplace for the modern economy.’

According to the press release:

‘Under the proposals, once the early weeks of maternity and paternity leave have ended, parents will be able to share the overall leave allowance between them. Unlike the current system this leave could be taken in a number of different blocks and both parents could take leave at the same time. Crucially employers would have the ability to ensure that the leave must be taken in one continuous period if agreement can not be reached. They will be able to ask staff to return for short periods to meet peaks in demand or to require that leave is taken in one continuous block, depending on business needs.’

The Modern Workplaces consultation includes the following proposals:

  • flexible parental leave
  • 18 weeks maternity leave and pay – in one continuous block around birth
  • four weeks of parental leave and pay exclusive to each parent to be taken in the first year
  • 30 weeks of additional parental leave available to either parent – of which 17 weeks would be paid and can be broken in blocks between parents
  • flexible working – extending the right to request for all workers who have been with their employer for 26 weeks

Business Secretary Vince Cable said:

‘Our proposals will encourage greater choice by giving employees and their employers the flexibility to find arrangements to suit them both. New parents should be able to choose their childcare arrangements for themselves, rather than being dictated to by rigid Government regulation as is currently the case. And employers should be encouraged to come to agreement with employees on how work and family responsibilities can be met simultaneously.’

‘These measures are fairer for fathers and maintain the existing entitlements for mothers – but crucially give parents much greater choice over how to balance their work and family commitments.’

‘Of course I’m mindful of the need to minimise the costs, bureaucracy and complexities on businesses. This has been at the forefront of my mind throughout the development of our proposals. So we will ensure that businesses will still be able to take into account their needs when agreeing how leave can be taken. But I’m also confident that we have a good case to make on the wider benefits to business – not least from a motivated and flexible workforce and we will be making this case to employers over the next few years before these changes are introduced.’

We will keep you informed of developments.

Internet links: Press release BIS consultation modern workplaces

HMRC’s new task force to tackle ‘tax dodgers’

HMRC are introducing specialist teams which will undertake intensive bursts of compliance activity in specific high risk trade sectors and locations across the UK.

HMRC state that the first task force will focus on the restaurant trade in London over the coming weeks, with the restaurant trade in Scotland and the North West later.

Mike Eland, Director General Enforcement and Compliance, said:

‘These task forces are a new approach which uses HMRC’s resources to identify and tackle rule-breakers and evaders swiftly and effectively.’

‘Only those who choose to break the rules, or deliberately evade the tax they should be paying, will be targeted. Honest businesses have absolutely nothing to worry about.’

‘But the message is clear – if you deliberately seek to evade tax HMRC can and will track you down, and you’ll face not only a heavy fine, but possibly a criminal prosecution as well.’

HMRC are planning a further nine task forces in 2011/12, with more to follow in 2012/13.

To read more about HMRC’s plans visit the link below.

Internet link: HMRC news release

Agency workers guidance

The government has published guidance to help employers and the recruitment sector prepare for the introduction of the Agency Workers Regulations.

The Regulations which implement the EU Agency Workers Directive come into force in the UK on 1 October 2011. These regulations give agency workers the right to the same basic employment and working conditions as if they had been recruited directly by the hirer. These employment rights will apply when they complete a 12 week qualifying period in a job.

As detailed in the press release the rights include key elements of pay, duration of working time, night work, rest periods and breaks, annual leave and paid time off for ante – natal appointments. The Regulations also include new entitlements for agency workers from ‘day one’ of their assignment with regards to access to facilities at the workplace and the right to be notified of any relevant vacancies.

The Directive states that rights should apply from ‘day one’ of an agency worker’s assignment. However Member States are allowed some flexibility as to how this principle is applied including the possibility of a qualifying period before the right to equal treatment arises. The UK, following agreement between the government CBI and TUC, has agreed a qualifying period of 12 weeks.

Employment Relations Minister Edward Davey said:

‘The agency sector is a key part of the UK’s flexible labour market. It provides the flexibility needed for employers to meet surges in demand, cover temporary absences or cope with seasonal fluctuations and provides a route into employment for thousands of individuals.’

‘The Agency Workers Regulations have been on the statute book since January 2010 and followed negotiations between the CBI and TUC. We looked carefully at the possibility of amending the Regulations to address employers’ concerns but were forced to conclude that we could not do so without putting the 12 week qualifying period at risk. This qualification period is something that is a key flexibility that we know is vital to business.’

‘Our focus therefore has been providing the best possible guidance to help everyone affected understand these regulations. We have collaborated with key organisations including employment agencies, employers, trade unions and representative bodies to develop this guidance and I believe the resulting document will help prepare everyone for the forthcoming changes.’

Separate guidance is to be published for the agency workers themselves.

Internet links: BIS press release Business Link Agency workers guidance Regulations

HMRC’s Basic PAYE Tools update

HMRC have released a new version of the Basic PAYE Tools which reflect the Budget 2011 changes. These tools replaced the Employers CD-ROM and give employers access to PAYE guidance. The latest version is 3.1.0.15205.

It is possible to check which version of the tools you are using by selecting the ‘Options’ icon and then the ‘Application Settings’ tab.

It is possible to sign up for automatic updates and the link gives details of how to do this.

Internet link: Business link update PAYE tools resource

HSE launch Health and Safety Made Simple

The Health and Safety Executive have launched a new microsite for businesses, Health and Safety Made Simple. The aim of the site is to make it easier for businesses to comply with the law and manage health and safety in their business. The site takes users through the steps required to ensure that they have done all that is required by the law.

Internet link: HSE website