Category Archives: Newsletters

Newsletter – December 2012

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eNEWS – December 2012

In this month’s enews we report on some key issues from the Autumn Statement and subsequent publication of draft Finance Bill legislation. The Autumn Statement has sparked much debate with the biggest surprise being the tenfold increase in the AIA only months after it was reduced.

We also report that HMRC are urging those who have not yet filed their self assessment tax return to do so now and experience ‘inner peace’.

Please contact us if you would like any further details on any of the issues covered.

With all best wishes for the festive season and the New Year.

 

eNEWS quicklinks
Tenfold increase in Annual Investment Allowance Personal allowance for 2013/14
Pensions Saving A simpler tax system for smaller businesses
Statutory residence test Government must tackle red tape
Reminder to those with high income and child benefit Advisory fuel rates for company cars
2013/14 statutory payments Charities and Gift Aid
File your self assessment return

Tenfold increase in Annual Investment Allowance

The shock announcement of the Autumn Statement was the tenfold increase in the amount of the Annual Investment Allowance (AIA).

The AIA provides a 100% deduction for the cost of plant and machinery purchased by a business up to an annual limit which is currently £25,000 for expenditure incurred from April 2012. The Chancellor announced that this limit will rise to £250,000 for a period of two years for expenditure incurred from 1 January 2013.

Where a business has an accounting period that straddles the date of change the allowances have to be apportioned on a time basis.

Where a company has a 12 month accounting period ending on 30 June 2013 the AIA will be £137,500 (£25,000 x 6/12 + £250,000 x 6/12).

However for expenditure incurred before the 1 January 2013, rules will limit the maximum figure available. The maximum allowance will be the AIA that would have been due for the whole of the accounting period to 30 June 2013 if the increase in AIA had not taken place. This would have meant that the company would have been entitled to £25,000 for the 12 months and so this is the limit for the six months to 31 December.

The rules for accounting periods straddling 1 January are complicated and this is without the additional complications that arise if part of the accounting period commences prior to April 2012 (as yet another AIA limit needs to be factored in).

The main point to appreciate is that expenditure incurred after 31 December 2012 may give a full tax write off but expenditure incurred before the 1 January 2013 may not give this result.

Please contact us before capital expenditure is incurred for your business in a current accounting period, so that we can help you to maximise the AIA available.

Internet link: HMRC TIIN

Personal allowance for 2013/14

For those aged under 65 the personal allowance will be increased from the current £8,105 to £9,440. This increase in the personal allowance is greater than the amount previously announced and is part of the plan of the Coalition Government to ultimately raise the allowance to £10,000.

For basic rate taxpayers this increase in the personal allowance should result in a tax saving next year of £267.

The reduction in the personal allowance for those with ‘adjusted net income’ over £100,000 will continue. The reduction is £1 for every £2 of income above £100,000. Next year the allowance ceases when net adjusted income exceeds £118,880.

Tax band and rates 2013/14

The basic rate of tax is currently 20%. The band of income taxable at this rate is being reduced from £34,370 to £32,010 so that the threshold at which the 40% band applies will fall from £42,475 to £41,450.

Additional rate tax payers

The 50% band currently applies where taxable income exceeds £150,000 but the rate will fall to 45% next year.

Tax bands for 2014/15 and 2015/16

For 2014/15 and 2015/16 the increase in the higher rate threshold will be capped at 1%. Over the last few years the value of the higher rate threshold has fallen so a small increase should be welcome.

Internet link: HMRC autumn statement personal

Pensions Saving

It was announced in the Autumn Statement that for tax year 2014/15 onwards:

  • the annual allowance for pensions tax relieved savings will be reduced from £50,000 to £40,000
  • the standard lifetime allowance for pensions tax relieved savings will be reduced from £1.5 million to £1.25 million
  • a transitional ‘fixed protection’ regime will be introduced for those who believe they may be affected by the reduction in the lifetime allowance.

Legislation will be introduced in Finance Bill 2013 to make these changes.

The Government considers that these measures are expected to affect only the wealthiest pension savers as 98% of individuals currently approaching retirement have a pension pot worth less than £1.25 million which is the revised level of the lifetime limit. Annual contributions made by 99% of pension savers are below £40,000, the average annual contribution being around £6,000 per annum.

Please contact us if you would like any pensions advice.

Internet link: HMRC pensions tax relief

A simpler tax system for smaller businesses

The Chancellor is to proceed with proposals to make the tax system simpler for small unincorporated businesses from April 2013. Where a business has a turnover up to £77,000 it will be able to calculate its profits on a simplified cash basis. In addition it will not have to distinguish between revenue expenditure and capital expenditure. A business will be able to continue to use this basis until its turnover reaches £154,000.

Flat rate expenses will be available for some types of expense including:

Cars, vans and motorcycles

For cars or vans the rate for the first 10,000 business miles is 45p, after which the rate reduces to 25p. For motorcycles the rate is 24p

Business use of a home

Provided certain conditions are satisfied, the following monthly rates will be allowed:

Business use in a month Deduction
25 hours or more £10
51 hours or more £18
101 hours or more £26

The new rules are not quite as simple as the Government would have us believe. Whilst the actual accounting treatment may be simpler it will still be necessary to have regard to tax rules for the deductibility of some expenses. There will also be transitional rules for existing businesses wishing to opt into the new system.

Please do get in touch if you think this may be of interest to you.

Internet link: HMRC update

Statutory residence test

HMRC have announced that legislation will be introduced in Finance Bill 2013 to put the rules which determine an individual’s tax residence on a statutory basis. The new statutory residence test will come into force from the start of the 2013/14 tax year.

The new legislation includes circumstances such as the situation where a tax year is split into a UK part and an overseas part. The rules also cover the taxation of certain income and gains arising during a period of temporary non-residence.

HMRC has published draft guidance to assist individuals on the application of the statutory residence test and on eligibility for overseas workday relief.

Please do contact us if you would like any assistance in this complex area.

Internet link: HMRC finance bill draft

Government must tackle red tape

The CBI is calling on the Government to tackle ‘red tape’. The CBI is warning that economic growth faces being held back because of tens of millions of pounds in extra business red tape coming from the UK Government and Europe.

It has published a report ‘Changing the rules – eight steps to a better regulatory regime’, which calls on ministers to tackle the red tape and bureaucracy created in Whitehall.

According to the report the net added cost of regulation on UK businesses will increase by £177.7m as a result of policies created in 2011 alone, when for every £3 of costs removed, another £5 was added.

Katja Hall, CBI Chief Policy Director, said:

‘Regulation has an essential role to play in a thriving market economy, promoting competition and protecting consumers, but we know it can be a major barrier to growth.’

‘The Autumn Statement contained some really welcome proposals to improve the accessibility and accountability of the regulators that enforce many of the rules, but the facts speak for themselves. Small and medium-sized businesses are the engines of growth, but they’re telling us they are drowning under the weight of extra regulation coming out of Whitehall, layered on top of outdated red tape which has not been repealed.’

‘We’re calling on the Government to back up its words with action. We want to toughen up the law so there is a presumption that every piece of regulation has a sunset clause, so it expires after a set date unless it is actively renewed.’

Internet link: Press release

Reminder to those with high income and child benefit

HMRC are reminding Child Benefit recipients with higher incomes that they have a month to decide whether to stop receiving the benefit or to pay a charge on it through self assessment.

Lin Homer, HMRC’s Chief Executive, said:

‘Over 680,000 people have already looked at information on HMRC’s website that explains the changes and what steps those affected can take. It is really easy to use and will help families come to a decision.’

The High Income Child Benefit Charge (HICBC) is being introduced from 7 January 2013. It will mainly apply to a taxpayer who has ‘adjusted net income’ in excess of £50,000, where either they or their partner is in receipt of Child Benefit. The effect of the charge is to claw back some or all of the Child Benefit paid. Where both partners have income in excess of £50,000 the charge will apply to the partner with the higher income.

Adjusted net income, which is broadly gross income less pension payments and gift aid payments, has the same meaning as for the withdrawal of the personal allowance for taxpayers with income above £100,000.

Where a taxpayer has adjusted net income of £60,000 or more then the charge has the effect of cancelling out the Child Benefit paid. A sliding scale charge operates where income is between £50,000 and £60,000.

The charge will apply to the Child Benefit paid from 7 January to the end of the tax year. However, the income taken into account will be the full income for 2012/13.

Child Benefit claimants will be able to elect not to receive Child Benefit if they or their partner do not wish to pay the new charge.

If Child Benefit recipients want to stop receiving the benefit, they should contact HMRC before 7 January 2013. Please visit the HMRC Child Benefit guidance link below for more details.

Internet links: Press release HMRC Child Benefit guidance

Advisory fuel rates for company cars

New company car advisory fuel rates took effect from 1 December 2012. HMRC’s website states:

‘These rates apply to all journeys on or after 1 December 2012 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 December 2012 are:

Engine size Petrol LPG
1400cc or less 15p 11p
51 hours or more 18p 13p
101 hours or more 26p 18p

 

Engine size Diesel
1600cc or less 12p
1601cc – 2000cc 15p
Over 2000cc 18p

Please note that not all of the rates have been increased, so care must be taken to apply the correct rate.

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

2013/14 statutory payments

HMRC have announced the following statutory payment rates for 2013/14. These rates are still subject to Parliamentary approval and will be confirmed by HMRC before the start of the new tax year.

Statutory Maternity Pay (SMP) £136.78 per week
Ordinary Statutory Paternity Pay (OSPP) £136.78 per week
Additional Statutory Paternity Pay (ASPP) £136.78 per week
Statutory Adoption Pay (SAP) £136.78 per week
Statutory Sick Pay (SSP) £86.70 per week

Please contact us if you would like any help with payroll issues.

Internet link: Proposed benefit rates

Charities and Gift Aid

HMRC will introduce a new online service which will enable Charities and Community Amateur Sports Clubs (CASCs) to submit repayment claims electronically, Charities Online, in April 2013.

It will replace the current R68(i) Gift Aid and tax repayments claims form and will be a way for charities and CASCs to claim Gift Aid, tax repayments on other income and Gift Aid Small Donations Scheme top-up payments by using an online form.

Internet link: HMRC charities online

File your self assessment return

A HMRC advertising campaign is urging anyone who hasn’t sent in their 2011/12 self assessment tax return to do it now and find ‘inner peace‘.

The new advertising campaign, highlights the imminent 31 January 2013 deadline for online returns, and the automatic £100 penalty for missing the deadline. The adverts will encourage people who still haven’t sent their return to ‘do it today, pay what you owe and take a load off your mind‘, so they can experience ‘inner peace‘.

According to HMRC, the campaign has been developed to touch on the emotions that HMRC found people typically experience after they have filled in their tax return, often described ‘as a real sense of relief or peace of mind, like a weight being lifted from their shoulders‘. The new adverts will feature individuals from different professions experiencing this feeling of post return wellbeing.

The 31 January 2013 deadline is relevant to individuals who need to complete a self assessment tax return and make direct payments to HMRC in respect of their income tax, Class 4 National Insurance and any capital gains tax liabilities. There is an automatic penalty of £100 if the return is not submitted on time, even if there is not tax due or the return shows that a refund is due.

The balance of any outstanding income tax, Class 4 NI and capital gains tax for 2011/12 is also due for payment by 31 January 2013. Where the payment is made late interest will be charged.

The first payment on account for 2012/13 is also due for payment by 31 January 2013.

If we have already dealt with your self assessment return on your behalf and advised you what you need to pay you need take no additional action.

Internet links: Press release HMRC SA deadlines and penalties

Autumn Statement 2012 – Follow Up

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We recently gave you a summary of the key tax issues announced in the Autumn Statement on 5 December. We promised to provide you with an update if there were any significant changes announced on 11 December when much of the draft legislation for the Finance Bill 2013 was issued for consultation.

Once again, HM Treasury did not disappoint! Well over 1,000 pages of draft legislation and explanatory notes hit the Treasury website. Much of this is very heavy technical material but from within it we have distilled some key issues which update the items covered in the earlier summary.

Please click here for our summary http://birchcooper.co.uk/wp-content/uploads/4/files/2012/12/update/index.htm

As always, if you have any queries, re the above, please do not hesitate to get in touch.

2012 Autumn Statement

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On Wednesday 5 December 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 and some of these proposals are summarised here. Draft legislation relating to many of these areas will be published on 11 December. We will provide an update for you on 12 December if significant changes are announced.

Our summary also provides a reminder of other key developments which are to take place from April 2013.

Please click here for our summary http://birchcooper.co.uk/wp-content/uploads/4/files/2012/12/index.htm

 

As always, if you have any queries, re the above, please do not hesitate to get in touch.

Newsletter – November 2012

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eNEWS – November 2012

In this month’s enews we report on HMRC’s expanded online VAT service and the latest round of HMRC campaigns.

Please contact us if you would like any further details on any of the issues covered.

 

eNEWS quicklinks
Changes to VAT online services HMRC close in on ‘tax cheats’
HMRC announce latest targets Updated approach to Business Records Checks
VAT registration threshold no longer due to those not established in the UK Parties for employees
Simpler health and safety guidance More flexibility in the leave available to parents
Payroll RTI system ‘unrealistic’ Improving gender diversity in boardrooms
Proposal to remove red tape on building extensions

Changes to VAT online services

HMRC have announced various changes to their online services including the introduction of the VAT online registration service which was promised earlier this year.

They have also taken the opportunity to introduce a new online variations service which should allow businesses to:

  • make changes to the principal place of business and contact details
  • deregister for VAT
  • apply for Annual Accounting or Flat Rate Scheme
  • view and print the VAT certificate and
  • enrol for VAT Online.

Please do get in touch if you would like any assistance with any of these issues.

Internet link: HMRC news

HMRC close in on ‘tax cheats’

HMRC have launched an advertising campaign warning ‘tax cheats’ to declare all their income before it is too late.

The campaign is part of HMRC’s targeted approach to help taxpayers pay the right amount of tax, at the right time. Guidance is available at www.gov.uk/sortmytax.

David Gauke, Exchequer Secretary to the Treasury, said:

‘Most people play by the rules and pay what they owe, but HMRC is cracking down on those who don’t. Using the £917 million the government has made available to tackle avoidance, evasion and fraud, HMRC is closing in on tax cheats.’

‘It always makes sense to declare all your income and tax dodgers are simply storing up trouble for the future; getting caught means higher fines, and in the most serious cases criminal prosecution. There is an alternative. Simply visit the new website and make a fresh start.’

Internet link: HMRC press release

HMRC announce latest targets

HMRC have launched new taskforces to tackle ‘tax cheats’ in the following sectors:

  • the rag trade (manufacturing, wholesale, retail and textile recycling in the Midlands, North Wales and the North West)
  • the Scottish alcohol industry and
  • the rental property sector in the South East.

David Gauke, the Exchequer Secretary, said:

‘The vast majority of people play by the rules. We will not tolerate tax evasion and will crack down on the minority who choose to break the rules.’

‘It cannot be fair that, while most people are paying the right tax, a tiny minority are not paying what they should.’

‘HMRC is on target to collect more than £50 million as a result of taskforces launched in 2011/12.’

Internet links:

Press release on the rag trade Press release on alcohol industry Press release on rental property

Updated approach to Business Records Checks

HMRC have announced an updated approach to business records checks.

Following a pilot programme of Business Records Checks (BRC), which looked at the records of in excess of three thousand SMEs, HMRC have amended their approach to these checks.

Businesses which HMRC believe are more likely to be at risk of having inadequate records will initially be contacted by letter. HMRC will then phone the business to go through a short questionnaire.

Depending on the outcome of this phone call, HMRC will subsequently confirm to some businesses that no further action is required. Where some issues are identified, businesses will be offered targeted self-help education options.

HMRC have confirmed that where businesses are assessed as being at risk of keeping inadequate records they will be referred for a BRC visit.

Please let us know if HMRC contact you about a BRC.

Internet link: HMRC BRC

VAT registration threshold no longer due to those not established in the UK

A decision in the European Court of Justice has confirmed that only businesses established in a Member State can benefit from its domestic VAT registration threshold.

As a consequence, from 1 December 2012, ‘non-established taxable persons’ (NETPs) will no longer be able to benefit from the UK VAT registration threshold. This means that they will be required to register for UK VAT when they make their first supply of goods or services in the UK regardless of the value.

NETPs already making supplies here will be required to register for UK VAT with effect from 1 December 2012.

As detailed in the HMRC guidance:

‘From 1 December 2012, any non-established business which makes or intends to make taxable supplies in the next 30 days has 30 days from the date it formed that intention to notify HM Revenue & Customs (HMRC) that it is required to register for VAT. Businesses which become required to register in the UK on 1 December 2012 will have to notify HMRC of that fact by 30 December 2012.’

Please contact us if you have any concerns in this area.

Internet link: VAT Brief

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

Simpler health and safety guidance

The Health and Safety Executive (HSE) has launched an online ‘Health and Safety Toolbox’ aimed at smaller, low-risk businesses. It is hoped that the Toolbox, which can be accessed from the right hand side of the HSE’s home page, will make it quicker and easier for small businesses to find the information that applies to their industry. This should enable them to manage health and safety issues themselves, without the need to use health and safety consultants.

Employment Minister Mark Hoban said:

‘Small and low risk businesses should be focusing their time on growing and becoming a success not having to waste precious time and money on unnecessary bureaucracy. This Toolbox will make it quick and simple for businesses to discover everything they need to know about health and safety.’

Internet links: Press release HSE website

More flexibility in the leave available to parents

Deputy Prime Minister Nick Clegg has announced that parents will be able to share up to 12 months leave after the birth of a child from 2015.

The plans will allow working parents to take up to 52 weeks off in total either together or in separate blocks and will be more flexible than the current system.

Nick Clegg said:

‘Reform is long overdue and the changes we are making will shatter the perception that women have to be the primary care-givers.’

‘In the future, both mothers and fathers will be able to take control of how they balance those precious first months with their child and their careers.’

Internet link: BIS top stories

Payroll RTI system ‘unrealistic’

The Institute of Chartered Accountants in England and Wales (ICAEW) has warned that the RTI reporting system will be ‘at best unrealistic and at worst impossible’ for small employers. This is despite HMRC publishing proposals explaining when employers will be allowed up to an extra seven days to send some information to HMRC.

Frank Haskew, head of ICAEW Tax Faculty, said:

‘We are particularly concerned about the impact this will have on smaller businesses, which are the lifeblood of the UK economy and essential if the UK is to continue to grow.’

Under the RTI, employers will have to submit payroll information to HMRC electronically on or before every payday, with potential penalties applying to employers submitting returns late.

The ICAEW suggestion is that HMRC move the RTI return date to the 19th of the month following the tax month of payment, which is the same as the current PAYE due date, being familiar to employers.

RTI is compulsory for most employers from April 2013.

We will keep you informed of developments.

Internet link: ICAEW press release

Improving gender diversity in boardrooms

The CBI commented on proposals from the European Commission, aimed at achieving a better gender balance in the boardrooms of some European companies. The proposals apply to companies listed on stock exchanges in EU’s Member States.

Katja Hall, CBI Chief Policy Director, said:

‘Businesses will be relieved that the Commission has listened to their concerns. These new proposals rightly focus on the need to improve boardroom diversity, while allowing firms to recruit the best candidates from the widest possible talent pool. MEPs should get behind this approach.’

‘Increasing the number of women in boardrooms is important for businesses, who know that gender diversity brings greater creativity, higher performance and better customer insight. That is why firms are already taking action to increase the flow of women to the top, such as targeting mentoring schemes at women and offering flexible working.’

Internet links: CBI press release Europa press release

Proposal to remove red tape on building extensions

The government has announced proposals to make it quicker and cheaper to make improvements to homes and business premises.

The proposals would mean that, for a limited period, much of the red tape required to complete a planning application for a small-scale, single-story extension would be removed. It has been confirmed that the current safeguards that ensure neighbours and communities are not adversely affected will remain in force. The proposals will also not apply to protected areas or listed buildings.

Internet link: News

Newsletter – October 2012

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eNEWS – October 2012

In this month’s enews we report that HMRC are about to issue letters to those families likely to be affected by the High Income Child Benefit Charge.

Please contact us if you would like any further details on any of the issues covered.

 

eNEWS quicklinks
High income child benefit charge letters Too late for ‘paper’ self assessment tax returns
Plans for a new type of Employment contract RTI – Closing payroll schemes
Guidance on reclaiming National Insurance contributions paid in error Health and Safety Executive Fee for Intervention
Retirement funds set to fall HMRC checklist for EC VAT registration numbers

High income child benefit charge letters

HMRC are about to write to taxpayers who they believe will be affected by the High Income Child Benefit Charge.

In Budget 2012, as part of the reforms to the welfare system, it was confirmed that Child Benefit will be withdrawn from households that include certain higher earners.

Although the change applies from January 2013 the calculation to decide whether or not a household is affected by the reform includes the full income for 2012/13.

The legislation imposes a new charge (the High Income Child Benefit Charge) on a taxpayer who has adjusted net income over £50,000 in a tax year where either they or their partner, if they have one, are in receipt of Child Benefit for the year. Where there is a partner and both partners have adjusted net income in excess of £50,000 the charge will apply to the partner with the higher income.

An income tax charge will apply at a rate of 1% of the full Child Benefit award for each £100 of income between £50,000 and £60,000, rounded down to the nearest pound. The charge on taxpayers with income above £60,000 will be equal to the amount of Child Benefit paid.

Further information on the changes and what steps those affected should take can be found at http://www.hmrc.gov.uk/childbenefitcharge.

Please contact us if you would like any advice in this area.

Internet link: Press release

Too late for ‘paper’ self assessment tax returns

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2011/12 return was 31 October 2012. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.

If you would like any help with the completion of your return please do get in touch.

Internet link: HMRC press release

Plans for a new type of Employment contract

Chancellor George Osborne has announced a new type of employment contract to be known as an employee-owner. Under the new contract employees will be able exchange some of their UK employment rights for shares in the business they work for. Gains on the disposal of the shares will be exempt from capital gains tax.

Companies of any size will be able to use this new kind of contract and employees will be given between £2,000 and £50,000 of shares. In exchange, they will give up their UK rights on unfair dismissal, redundancy, the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave.

Employee-owner status will be optional and legislation to bring in the new contract is expected to be introduced later this year so that companies can use the new type of contract from April 2013.

Internet link: Press release

RTI – Closing payroll schemes

HMRC are about to write to employers who they believe have a payroll scheme which is not being used. The letters are being sent in preparation for the introduction of RTI as HMRC are planning to close any payroll schemes which they believe are no longer needed.

If you receive a letter regarding a payroll scheme which you believe will be used in the future please do get in touch so that we can advise HMRC accordingly.

Internet link: Employer Bulletin

Guidance on reclaiming National Insurance contributions paid in error

HMRC have issued guidance to cover the situation where vocational or recreational trainers may be entitled to claim a refund of National Insurance contributions. The refunds are due following a change in guidance on charging national insurance contributions.

HMRC’s briefing states:

‘Refunds may be made by trainers or instructors, or those who engaged them, and where amounts of NICs were paid in error following HMRC’s guidance. This is primarily going to affect those engaged in the provision of vocational or recreational training as set out in HMRC’s guidance prior to repeal of the relevant provisions of the Regulations.’

‘Refunds are not due where educational training providers applied the Regulations. This is because there is no dispute or doubt that the Regulations prior to 6 April 2012 applied to the providers of educational training. In this context educational training provider means a school, college, university or any such similar educational establishment.’

‘Refunds are also not due where any trainer or instructor was engaged under an employment contract and Income Tax (PAYE) and Class 1 NICs were correctly accounted for.’

Please get in touch if you would like any help in this area.

Internet link: HMRC brief

Health and Safety Executive Fee for Intervention

The Health and Safety Executive has announced that it has implemented a Fee for Intervention (FFI) cost recovery scheme, which came into effect on 1 October 2012.

Under The Health and Safety (Fees) Regulations 2012, those who break health and safety laws are liable for recovery of HSE’s related costs, including inspection, investigation and taking enforcement action.

The HSE website advises:

‘The Fee for Intervention hourly rate for 2012/13 is £124. The many businesses that comply with their legal obligations will continue to pay nothing.’

For more information on how the new scheme works visit the link below.

Internet link: HSE website

Retirement funds set to fall

According to a report issued by the Saga Foundation, millions of Britons due to retire over the next few years risk seeing £11.5 billion wiped off their retirement funds.

The report factors in tax and benefit changes, which include the freezing of age related personal allowances from April 2013 and reduction in winter fuel payments, together with low interest rates.

Compiled by experts from the Centre for Economics and Business Research, the report comes to the conclusion that the changes will cost pensioners an average of £1,318 each by 5 April 2014.

Dr Ros Altmann, Director General of Saga, said:

‘Pensioners are being hammered. They didn’t cause our economic meltdown yet they have been paying a heavy price as we try to fix it and they face an even tighter financial squeeze in future.’

Internet link: Saga press release

HMRC checklist for EC VAT registration numbers

HMRC have issued a revised Notice 725, The Single Market, which includes a useful checklist (see section 16.19) to enable businesses to help spot incorrect VAT registration numbers at a glance.

Customer’s VAT registration numbers can be verified using the Europa website VIES http://ec.europa.eu/taxation_customs/vies/ or by contacting the VAT Helpline on 0845 010 9000.

Internet link: VAT Notice 725

Newsletter – September 2012

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In this month’s enews we report on HMRC’s guidance on a number of issues including those relevant to businesses, employers and individuals.

Please browse through the articles and get in touch if you have any further queries or would like more information.

 

eNEWS quicklinks
Autumn Statement 2012 Check your National Insurance Number
What is a car, commercial vehicle or motor home for VAT? VAT guidance
Seed Enterprise Investment Scheme guide National Minimum Wage Rates
Get paid: A guide for owners and managers of small businesses HMRC launch tracker – Where’s my reply?
Does your business still need an audit? New proposals to streamline employment law

Autumn Statement 2012

The government has announced that the Autumn Statement will be made by the Chancellor of the Exchequer, George Osborne, on Wednesday 5 December at 12.30pm.

The Statement provides an update on the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility.

We will let you have details of pertinent announcements following the Chancellor’s statement to Parliament.

Internet link: Treasury website

Check your National Insurance Number

HMRC have announced a new procedure whereby individuals can email them for written confirmation of their National Insurance number using form CA5403.

HMRC advise:

‘If you’ve lost or can’t remember your National Insurance number or can’t find it on official paperwork you can email HM Revenue & Customs (HMRC) for written confirmation of your number. You can also use this service to let HMRC know that you’ve changed your name or address.’

‘National Insurance cards are no longer issued and your National Insurance number is not proof of your identity.’

Internet links: Press release Form CA5403

What is a car, commercial vehicle or motor home for VAT?

HMRC have updated their guidance on the classification of vehicles.

For VAT purposes it is vital to know the difference between cars and other vehicles. This is because in most cases, VAT registered businesses cannot reclaim the input VAT incurred when they purchase a car. Generally businesses are able to reclaim the input VAT when they buy a commercial vehicle.

The HMRC guide explains the difference between a car, motorcycle, a motor home and a commercial vehicle for VAT purposes.

The link also gives access to the current list of ‘Car derived vans and combi vans’. This updated useful list considers the treatment of some borderline vehicles.

Internet link: HMRC VAT motor vehicle guidance

VAT guidance

HMRC have announced the publication of guidance covering the changes to address VAT borderline anomalies announced at Budget 2012.

The majority of the changes take effect from 1 October 2012. The changes which relate to caravans will however take effect from 6 April 2013.

Seven information sheets are available which cover the following areas:

  • Hot food and premises
  • Caravans
  • Sports nutrition drinks
  • Listed buildings
  • Hairdressers’ chairs
  • Self storage and
  • Anti-forestalling (in relation to the listed building and self storage changes)

HMRC have confirmed in their press release:

‘Information sheets are being published to explain how each of the changes will work. These will be incorporated into HMRC’s books of guidance as soon as possible.’

If you would like any guidance in any of these areas please do get in touch.

Internet link: HMRC VAT briefs

Seed Enterprise Investment Scheme guide

The Enterprise Investment Scheme (EIS) has been in place for a number of years and provides tax relief for individuals prepared to invest in new and growing companies. Investors can obtain generous income tax and capital gains tax reliefs for their investment and companies can use the relief to attract additional investment to develop their business.

A junior version of EIS known as Seed Enterprise Investment Scheme (SEIS) was introduced from 6 April 2012.

HMRC have issued guidance for both companies and investors on the operation of SEIS.

Please do contact us if you would like advice on SEIS or EIS.

Internet link: HMRC SEIS guidance

National Minimum Wage Rates

The National Minimum Wage (NMW) rates from 1 October 2012 are as follows:

  • the adult minimum wage rate will increase from £6.08 to £6.19 an hour
  • the rate for 18 – 20 year olds will remain at £4.98 an hour
  • the rate for 16 -17 year olds will remain at £3.68 an hour and
  • the apprentice rate will increase from £2.60 to £2.65 an hour.

HMRC are able to charge penalties to those employers found to be in breach of the NMW rules. Details of the calculation of arrears and potential penalties can be found on the BIS website.

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

Internet links: Directgov website BIS website

Get paid: A guide for owners and managers of small businesses

The CBI is backing a new guide which encourages good practice among suppliers and customers. The guide offers advice to businesses to ensure that they get paid by their customers and also pay their suppliers on time.

To read the guidance please visit the link below.

Internet links: Press release Get paid guide

HMRC launch tracker – Where’s my reply?

HMRC have announced the introduction of a new tracker service.

Agents, employees and those paying tax on company pensions through PAYE can use a new tracker to find out when to expect to receive a reply to their enquiry from HMRC.

HMRC advise:

‘If you’re an employee or you pay tax on a company pension through PAYE (Pay As You Earn – the system used by employers and pension providers to deduct tax from your wages or pension), you can use the tracker to check how long it will take HMRC to:

  • pay your income tax refund
  • reply to your general income tax enquiry
  • provide a copy of individual information, such as your tax code or pay and tax details
  • send you HMRC forms or stationery.’

‘If you’re an agent, you can also check how long it will take HMRC to:

  • register you as an agent to use HMRC Online Services
  • process an application for authority to act on behalf of a client
  • amend your agent details.’

Internet link: HMRC Where’s my reply?

Does your business still need an audit?

The government has announced key changes to company and LLP audit and reporting requirements. The changes remove the need for many more companies and LLPs to have an audit and apply to financial years ending on or after 1 October 2012.

The government has announced that:

  • for small companies the audit thresholds will be aligned with small company accounting thresholds
  • for qualifying parent companies and their subsidiaries that an option will be available to not have subsidiaries audited and instead for the parent to provide a statutory guarantee over their subsidiaries’ liabilities, and
  • dormant subsidiaries will be exempt from the requirement to prepare and file accounts.

Whilst the changes have been marketed by the government as saving businesses millions in reporting and accountancy fees, there are, of course, a number of factors to consider in making a decision as to how to proceed.

Please contact us for guidance in this area.

Internet link: BIS response

New proposals to streamline employment law

Vince Cable has announced measures to give employers more flexibility in managing their workforce by reducing employment law red tape.

According to the press release:

‘The government has given details of:

  • Its support for settlement agreements to help end employment relationships in a fair and consensual way.
  • A consultation on how best to make this work in practice starts today and Acas has agreed to provide a new code of practice.
  • How it might reduce the cap on compensation for unfair dismissal claims.
  • Proposals to streamline employment tribunals by making it easier for judges to dismiss weak cases
  • Responses to its call for evidence on the TUPE rules, when staff transfer to a new employer. Government has heard that businesses want this to be more efficient, and will consult on specific proposals before the end of the year.
  • Recommendations on how to improve guidance for small businesses on the Acas code of practice on discipline and grievance.’

Internet link: BIS news

Newsletter – August 2012

Posted on by

In this month’s enews we report that HMRC have revealed their most wanted tax fugitives.

Please do get in touch if you would like more information on any of the articles.

 

eNEWS quicklinks
HMRC reveals most wanted tax fugitives HMRC issue next round of self assessment penalties
Advisory fuel rates for company cars Sunday trading hours reform
Holiday pay and sickness case Tesco faces potential fines for illegally employing foreign workers
Listed Places of Worship Grant Scheme HMRC launch new P46 for employers
Coastal Communities Fund Employer email alerts

HMRC reveals most wanted tax fugitives

HMRC have published the photos and biographies of people they consider to be the top 20 tax fugitives in the UK, responsible for £765 million of tax evasion and fraud.

HMRC are asking the public to help track down the individuals by contacting Crimestoppers. Most of the individuals are however now thought to be living outside the UK.

The ‘mugshots’ are of ‘tax criminals who have absconded after being charged with a crime or during trial’ for fraud, money laundering and smuggling.

David Gauke the Exchequer Secretary said:

‘The government is absolutely committed to tackling tax evasion and fraud.’

‘These criminals have collectively cost the taxpayer over £765 million and HMRC will pursue them relentlessly. We hope that publishing their pictures in this way will enable members of the public to contribute to the effort to catch them.’

The photos have been published on HMRC’s Flickr page and can be viewed using the link below.

People can report leads on the Most Wanted fugitives via HMRC’s Customs, Excise and VAT fraud reporting hotline on 0800 595 000, or through the Crimestoppers website www.crimestoppers-uk.org

Internet link: HMRC flikr

HMRC issue next round of self assessment penalties

According to HMRC approximately half a million people still have not submitted their 2010/11 tax returns. HMRC have started to issue additional penalty letters to these individuals.

HMRC have advised that the number of outstanding returns has almost halved in 2012, down to 5.9%, compared to 10.7% in 2011. This means 518,000 fewer penalties are being issued.

The penalties being issued will be for a minimum £1,200, comprising:

  • the maximum £900 in daily penalties for non-filing
  • a further late filing penalty of £300 or 5% of the tax due (whichever is higher).

People who receive a late filing penalty can appeal against it if they think they have a reasonable excuse for not sending in their tax return.

Also anyone receiving a late filing penalty and who has not sent in a return, but thinks they do not need to be in self assessment, can still potentially apply to be taken out of self assessment. If HMRC agrees, the return and any penalties issued will be cancelled.

HMRC has confirmed that they have taken 273,000 people out of self assessment this year.

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

Internet link: Press release

Advisory fuel rates for company cars

New company car advisory fuel rates have been published to take effect from 1 September 2012. HMRC’s website states:

‘These rates apply to all journeys on or after 1 September 2012 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 2012 are:

Engine size Petrol LPG
1400cc or less 15p 10p
1401cc – 2000cc 18p 12p
Over 2000cc 26p 17p
Engine size Diesel
1600cc or less 12p
1601cc – 2000cc 15p
Over 2000cc 18p

Please note that not all of the rates have been amended and care must be taken to apply the correct rate.

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

Sunday trading hours reform

Currently shops over 280m² are only permitted to open for a maximum of six hours on a Sunday, between 10am and 6pm, although this restriction has been temporarily lifted, throughout the six week duration of the Olympics and Paralympics.

In response to this trial period there have been calls to change the laws, including support from the Institute of Directors, whose spokesman, Mark Wallace said:

‘We know there are people out of work or underemployed who desperately want more opportunities and we know there is an appetite among consumers to shop during normal hours on Sundays, so it is silly to have a rule that holds both groups back.’

However, despite standing to gain financially from such a move, Justin King (CEO of J Sainsbury plc) said in a letter to the Telegraph:

‘Maintaining Sunday’s special status has great merit for our customers and our colleagues, and relaxing Sunday Trading laws is certainly not a magic answer to economic regeneration. Sainsbury’s has put in place extended hours at only 30 of its 1,000 stores during the Games period.’

Internet link: BBC news

Holiday pay and sickness case

The Court of Appeal has clarified the law regarding holidays and sickness.

Under current law employees may take their annual leave while they are off sick but they can also choose not to and must be allowed to carry over their leave so as not to lose their entitlement. However, following conflicting Employment Tribunal decisions employers were unsure as to whether they only had to permit ‘carry over’ where a worker had requested the ‘carry over’ of the leave during the leave year.

The appeal in the case of Larner was heard by the Court of Appeal in March and the decision has just been reported.

The Court of Appeal dismissed the appeal and held that the employee did not need to have requested leave during the leave year in order for it to be automatically carried over to the next year. This could mean that the untaken leave would be payable on termination of the employment. The Working Time Regulations could be interpreted in line with this so that all employers should comply with this rule.

This means that employees off sick for long periods will accrue holiday which will either be available to be taken if they return to work or will need to be paid should their employment be terminated.

Employers should manage cases of sickness absence as proactively as possible and may also wish to review the position and perhaps set time limits on the utilisation of carried over holiday as part of the contract. Unused leave would only remain available for a limited time (say a year).

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

Internet link: Court of appeal decision

Tesco faces potential fines for illegally employing foreign workers

According to the Telegraph, Tesco is facing a fine of up to £200,000 for illegally employing foreign workers. According to the report:

‘Twenty foreign students of primarily Bangladeshi and Indian origin were arrested for working longer hours than their visas permitted, seven of whom have since been deported. Although the workers had the right to work in the UK, their visas were only valid for up to 20 hours a week during term time, and the students had worked between 50 and 70 hours. A further 15 students are undergoing investigation during the Home office crackdown on ‘visa abuse’ to which Tesco is said to be ‘cooperating fully’ with the UKBA.’

The UK Border Agency will now decide whether to issue the supermarket with a notification of liability and a fine of up to £10,000 per illegal worker.

A UKBA spokesman said:

‘We received information that some staff members were working in the UK illegally at Tesco.com on Factory Lane, Croydon. In response officers carried out an operation in full cooperation with the company shortly after 3am on Saturday 21 July 2012. Twenty individuals have been arrested and now face removal from the UK.’

‘The operation was part of an ongoing campaign to tackle visa abuse which has seen over 2,000 offenders removed since the beginning of May.’

‘The employer now needs to provide evidence that it was carrying out the legally required checks to avoid a fine.’

A Tesco spokesman said:

‘In cooperation with Tesco, the UK Border Agency visited our dotcom store in Croydon in July. As a result of this visit, a small number of staff were found to have breached the terms of their working visas.’

‘We continue to cooperate fully with the UK Border Agency as they look into this issue.’

‘We take our responsibilities as an employer very seriously and do not condone illegal working of any kind. We have a comprehensive system for ensuring all the correct procedures are followed in this area which has been externally audited and generally works well. We have now taken additional steps to ensure an incident of this nature does not happen again.’

For information on the legal requirements visit UK Border Agency

Internet link: Telegraph news report

Listed Places of Worship Grant Scheme

The government announced in the Budget 2012 that the zero rate of VAT for approved alterations to listed buildings would be withdrawn, with effect from 1 October 2012. However, at the same time it was announced that the Listed Places of Worship (LWP) grant scheme would be extended to cover approved alterations to listed places of worship.

The extended scheme will come into effect on 1 October 2012. The Department for Culture Media and Sport has confirmed that detailed guidance and new application forms will be available on the LPW scheme website in late September 2012.

If you would like any further information please do get in touch.

Internet link: Culture news

HMRC launch new P46 for employers

HMRC have created a single page version of form P46 called P46 (Short) which enables employers to collect necessary information from new employees who do not have a form P45.

Employers are required to submit the details electronically to HMRC so the form is used to gather the necessary information in order to make the online submission.

Internet link: HMRC forms

Coastal Communities Fund

Communities Secretary Eric Pickles has announced that six seaside projects are the first to receive government backing to help their coastal towns to prosper. The funds should help create new jobs and boost local enterprises.

The £24 million Coastal Communities Fund was launched earlier this year to provide coastal towns with funds to help finance projects that can transform and diversify seaside economies.

The grants awarded are of up to £2 million each and can be used on projects that create local jobs, supports coastal tourism and development and that boost the inshore fisheries industry.

Next year the Coastal Communities Fund will be increased by £4 million to £28 million and is open to coastal towns across the United Kingdom and is funded by the Exchequer.

Communities Secretary Eric Pickles said:

‘There is huge potential in our coastal towns that goes way beyond them only being places we visit for seaside day trips and holidays. We are seeing opportunities being developed all the time by new industries and the Government is determined to help our coastal towns make the most of them.’

‘This money will help those towns tap into these enterprises and create the skills and jobs that will benefit the whole community. We cannot afford to waste this chance which is why the Government is committed to increasing the fund next year.’

‘The successful projects in this first round have enormous potential to make a real difference to their communities that will be far reaching. And this is just the beginning with our fund set to help many more coastal towns in the months to come.’

Internet link: Communities news

Employer email alerts

HMRC are reminding employers that they offer a free registration facility which enables employers to receive an email alert detailing changes in payroll procedures rather than a paper copy.

HMRC will issue the alerts three times a year when their web pages are updated. HMRC have confirmed that of the 1.3 million employers that they used to write to, over 470,000 employers have now registered for the alerts.

To register for the email alerts visit HMRC registration

Internet link: Agent Update

Newsletter – July 2012

Posted on by

In this month’s enews we update you on the changes to payroll reporting procedures for Real Time Information.

Please do get in touch if you would like more information on any of the articles.

 

eNEWS quicklinks
The Tax Return Initiative Pensions Auto Enrolment
Real Time Information Guide to importing and exporting
Online starting in business tax guide Olympics and business
Fuel Duty HMRC announce new taskforces

The Tax Return Initiative

Higher rate taxpayers who have failed to submit tax returns are being offered the opportunity to come forward and pay up under a time limited HMRC campaign. The Tax Return Initiative is aimed specifically at people liable to pay higher rate tax that have been told to submit a self assessment tax return for 2009/10 or earlier, but have failed to do so. The Tax Return Initiative is also open to any individual who has tax returns to submit to HMRC for these years.

Individuals have until 2 October 2012 to:

  • let HMRC know that they want to take part,
  • submit completed returns, and
  • pay the tax and National Insurance Contributions (NICs) that they owe.

By coming forward voluntarily through the initiative, taxpayers will receive better terms and any penalty they pay will be lower than if HMRC comes to them first.

Where taxpayers fail to take advantage of the initiative, HMRC will use its powers to pursue outstanding returns and any unpaid tax and NIC together with significant penalties of up to 100% of tax due.

Marian Wilson, head of HMRC Campaigns, said:

‘This campaign is part of a wider HMRC initiative to provide support and guidance to the public on tax obligations and is aimed at people who fail to submit their tax returns on time and pay what they owe.’

‘The campaign provides a three-month opportunity for those who want to get their tax affairs up to date to come forward. Our aim is to make it easy for them to contact us and send in completed tax returns, putting their affairs in order. Penalties will be higher if we come and find people after the opportunity and some could face a criminal investigation. I urge people to come forward and disclose unpaid tax voluntarily.’

Internet links: Press release Tax Return Initiative Campaign

Pensions Auto Enrolment

From October 2012 the largest employers will have to comply with Pensions Auto Enrolment. Employers will have to identify eligible jobholders and advise them of the employer’s obligations under the legislation. The staging date for those with more modest workforces may be some years off. Staging dates for all employers can be found by visiting the link below.

The Pensions Regulator together with the Department for Work and Pensions have developed a set of template letters which include all the details employers are required to communicate with their employees.

The comprehensive letters can be tailored to suit an organisation and employees’ circumstances.

If you would like more information on your obligation as an employer please do get in touch.

Internet links: Pensions Regulator News Staging dates

Real Time Information

HMRC are advising that over 1,300 employers will join the Real Time Information (RTI) pilot between now and September 2012.

Stephen Banyard, Acting Director General for Personal Tax, said:

‘RTI is on track and the pilot is going very well. We started in April with just 10 employers and now we’ve successfully received over 1.7 million individual records from 338 PAYE schemes.’

‘Following the success of the first pilot stage, more PAYE schemes will join the RTI pilot, as planned, and by the end of September up to 1,300 employer schemes will be reporting PAYE in real time.’

‘We are also seeing external confidence in the pilot and we’ve responded to that by offering more large employers, payroll bureaux, new employers and software developers the opportunity to join the RTI pilot or to expand existing involvement in advance of the launch date in April 2013.’

HMRC expect most employers to begin RTI reporting in April 2013. All employers will be routinely reporting PAYE in real time by October 2013, in time for the introduction of Universal Credit.

HMRC have updated their frequently asked questions on RTI and also published information on RTI for payrolls involving ‘expat’ employees.

Internet links: Press release RTI FAQs RTI expats

Guide to importing and exporting

HMRC have updated their information pack ‘Guide to importing and exporting: Breaking down the barriers’.

The information pack is a guide for those importing or exporting goods. It acts as a guide to help anyone getting started with importing / exporting and gives details of the procedures involved in these activities.

If you would like any help in this area please do get in touch.

Internet link: HMRC information

Online starting in business tax guide

HMRC have been working with interested parties to produce a ‘Starting your own Business’e learning tutorial.

To access the tutorial, visit the link below.

Internet link: HMRC e learning tutorial

Olympics and business

With the Olympics upon us, Acas are advising employers to be aware of a number of issues the most likely of which is employees requesting more flexible working arrangements. Employers need to consider how they are going to minimise potential disruption so that businesses run smoothly whilst managing employee expectations.

Acas expect employees to fall mainly into two groups:

  • those planning to take time off during the Games because they are spectators or volunteers.
  • those not planning to take time offbut who:
    • hope to watch on the television or via the internet whilst at work – wanting flexible working arrangements
    • get fed up with all the fuss and any perceived favouritism shown to those with sporting interests and want to take annual leave during the school holidays.

Acas has published guidance to help you plan ahead and ensure your business runs smoothly. The guidance considers such issues as:

  • managing attendance
  • working flexibly
  • dealing with performance issues, and
  • understanding the legal rights of volunteers.

Sunday Trading

Sunday Trading restrictions are suspended during the Olympic and Paralympics Games. These rules limit Sunday opening hours for some shops to six continuous hours between the hours of 10am and 6pm and are to be suspended during the Games.

The suspension is for eight consecutive Sundays commenced on 22 July and runs until 9 September 2012. This is a temporary measure and applies to England and Wales. No Sunday trading restrictions apply in Scotland.

For more details about Olympic events visit the London 2012 website.

Internet links: Acas article Acas quick tips www.london2012.com

Fuel duty

The government has announced that the 3.02 pence per litre (ppl) fuel duty increase that was due to take effect on 1 August 2012 will be deferred to 1 January 2013.

‘In the Autumn Statement 2011 it was announced that the 3.02ppl fuel duty increase that was due to take effect on 1 January 2012 would be deferred to 1 August 2012, and the inflation increase that was originally planned for 1 August 2012 would be cancelled.’

The effect will be to maintain the duty liability on all fuels at current levels until 1 January 2013.

Internet link: HMRC fuel duty

HMRC announce new taskforces

HMRC expect the new taskforces they have launched to recover over £30m from tax dodgers.

The latest round of taskforces to be announced will target traders who do not pay the right amount of tax in:

  • Scottish pubs and nightclubs
  • hair and beauty businesses in Northern Ireland
  • the motor trade in South Wales, South West, Yorkshire, Nottinghamshire and the North East
  • restaurants in South Wales and South West.

The taskforces are specialist teams that undertake intensive bursts of activity in specific high risk trade sectors and locations in the UK. The teams will visit traders to examine their records and carry out other investigations.

The Exchequer Secretary to the Treasury, David Gauke, said:

‘At a time when we are trying to rebalance the public finances and most hard-working people are making a contribution by paying the right tax, it is just not fair that a small minority try to dodge their responsibilities.’

‘These new taskforces are funded by the Government’s investment in HMRC of over £900m to crack down on avoidance and evasion. Their dedicated teams are on track to collect more than £50m from tax avoiders and evaders through the taskforces launched last year and expect to collect £30m in unpaid taxes through those launched today.’

 

Internet link: Press release

Newsletter – June 2012

Posted on by

In this month’s enews we update you on the changes to payroll reporting procedures for Real Time Information.

Please do get in touch if you would like more information on any of the articles.

 

eNEWS quicklinks
Real Time Information – get ready Six new taskforces launched by HMRC
Working beyond state pension age End of Employment Settlement
P11D deadline looming – avoid rejections No cap on reliefs for charitable giving
No VAT increase on pasties

Real Time Information – get ready

In April 2013 HMRC are introducing a new way of reporting PAYE information, known as Real Time Information (RTI).

‘Real Time Information’ means that employers, or their agents, will tell HMRC about employees’ pay and deductions on or before the time they are paid to the employees as part of their payroll process. Payroll software will be used to collect the necessary information and send it to HMRC electronically.

It had previously been announced that most employers will be legally required to report payroll information in ‘real time’ from April 2013, with all employers doing so before October 2013. HMRC will advise employers when they need to start reporting under RTI.

HMRC are currently trialling the RTI using a pilot scheme for a small number of employers. According to the latest press release:

The pilot is….. ‘on track and going well. It is early days and we are cautiously optimistic.’

‘HMRC also remain on track for all micro, small and medium-sized employers and most large employers and payroll bureaux to begin sending payroll information to HMRC in real time in April 2013, and for all employers to be routinely reporting PAYE in real time from October 2013.’

‘HMRC will be contacting some of the largest employers and payroll bureau shortly to discuss opportunities for them to start reporting PAYE in real time early to avoid end-of-year reporting for 2012/13.’

It appears that many employers will need to be ready for RTI from April 2013. If you would like any further information regarding RTI or would like help with your payroll please do get in touch.

Internet link: HMRC RTI news

Six new taskforces launched by HMRC

HMRC have announced that they have launched six new taskforces which will target traders who do not pay the right amount of tax. The taskforces will tackle:

  • Indoor and outdoor markets in London
  • Taxi firms in Yorkshire and East Midlands
  • Property rentals in East Anglia, London, Yorkshire and the North East
  • Restaurants in the Midlands

HMRC Taskforces are specialist teams which look into specific high risk trade sectors in targeted areas of the UK. The teams will visit businesses and examine their records and carry out other checks and investigations.

David Gauke, the Exchequer Secretary, said:

‘HMRC is on target to collect more than £50m as a result of the taskforces launched in 2011/12.’

‘We have made it clear that we will not tolerate tax evasion – everyone needs to pay the taxes they owe in full. We are determined to crack down on the minority who choose to break the rules. It is not fair that at a time when most hard-working people are paying the right tax, others are trying to get out of paying what they should.’

HMRC’s Mike Eland, Director General Enforcement and Compliance, said:

‘These six new taskforces will bring together specialists from across HMRC to tackle tax dodgers. If you have paid all your taxes you have nothing to worry about. But deliberately evading tax you should be paying can land you with not only a heavy fine but possibly a criminal prosecution as well.’

‘This is not an empty threat – HMRC can and will track you down if you choose to break the rules.’

Internet link: Press release

Working beyond state pension age

The Office for National Statistics has published a report looking at those working beyond state pension age. The report, ‘Older Workers in the Labour Market – 2012’ includes some interesting statistics:

  • The number of people of state pension age and above in employment has nearly doubled over the past two decades, from 753,000 in 1993 to 1.4 million in 2011.
  • Older workers are far more likely to be self-employed than their younger counterparts: 32% compared with 13%.
  • Around two-thirds of the older workers are part-time but they are generally doing this shorter role with the same employer. Eight in every 10 of older workers have been with their employer for five years or more.
  • Men working later in life tend to stay on in higher skill roles while women tend to stay on in lower skill roles.
  • Just over a half (51%) of older workers are in small organisations of fewer than 25 employees.

To read more access the link below.

Internet link: Office for National Statistics

End of Employment Settlement

The CBI have commented on the Business Secretary, Vince Cable’s plans to introduce simplified settlement agreements, designed to enable employers and employees to agree mutually acceptable terms for ending employment.

Neil Carberry, CBI Director for Employment & Skills, said:

‘Today’s announcement will simplify the process of ending an employment relationship in a way which is acceptable to both sides.’

‘Simplified settlement agreements will give firms the confidence to have a frank conversation about ending employment on fair terms, without the fear of a drawn-out and costly tribunal claim.’

‘The CBI has long taken the view that simpler and more legally certain settlement agreements would be more effective for employees and businesses, especially smaller firms.’

Internet link: Press release

P11D deadline looming – avoid rejections

HMRC are reminding employers that the forms P11D, P9D and P11D(b) which detail expenses and benefits provided to employees for the tax year 2011/12 are due for submission to HMRC by 6 July 2012.

HMRC are warning employers to ensure the forms meet their quality standards.

HMRC are advising:

‘HMRC will reject P11Ds that don’t meet the standard. This means:

  • for online submissions you’ll need to correct any problems before being able to file successfully
  • for paper forms we’ll return the forms to you and you’ll need to correct and re-send them.’

‘If you have already told us you don’t need to complete P11D, P11D(b) or P9D then you don’t need to take any further action.’

‘If you have already made a nil P35 return but ticked the ‘P11D(b) to follow’ box you should file it now.’

‘If you need to make an adjustment to the Class 1A National Insurance contributions on the P11D(b), remember not to complete Box C. You should tick the checkbox and then complete Section 4 of the form P11D(b).’

For further guidance on the correct completion of the forms and how to avoid rejections please use the links below.

Please do contact us if you require any help with the completion of the forms.

Internet links: HMRC P11D quality standard HMRC guidance on completing form P11D(b)

No cap on reliefs for charitable giving

Following representation from interested parties the government has announced that it no longer intends to proceed with the proposed capping of some tax reliefs including charitable giving.

Plans to cap tax relief on charitable donations have been scrapped by Chancellor George Osborne in a reversal of one of the measures announced in the Budget.

The cap, which was designed to limit relief at £50,000 or 25% of income, was proposed in the Budget but resulted in protests from charities who were concerned that they could lose a significant proportion of their income.

The government has confirmed that it will be pressing ahead with the cap on income tax reliefs for wealthy people which do not relate to charitable donations.

Since the Budget announcement, the Treasury has been holding discussions with charities and major donors to discuss the scale of impact which they believed the cap could have on charitable giving.

John Low, Chief Executive of the Charities Aid Foundation, said:

‘We are delighted that the Government has responded to the challenging calls from philanthropists and charities across the country and taken the bold decision to exempt charitable donations from the cap on tax relief.’

‘We realise the Government is responding to truly exceptional financial circumstances and is having to make tough decisions about public finances. We acknowledge and welcome the Chancellor’s decision to do the right thing and exempt charity donations from the cap. We thank Ministers for the support they have shown to charities large and small, which are so vital to the health of our country.’

Internet links: BBC news CAF press release

No VAT increase on pasties

In the Budget it was announced that the government proposed to charge standard rated VAT on certain hot food items such as pasties.

After campaigns by interested parties the government has now decided not to proceed with this change. The letter from David Gauke, the Exchequer Secretary, details the government’s revised approach.

The letter also details the government’s proposal to charge 5% VAT on static caravans rather than the original intention of 20% standard rated VAT.

VAT is a complex issue, if you would like any help in this area please do get in touch.

Internet link: Letter

Newsletter – May 2012

Posted on by

In this month’s enews we report on some issues pertinent to employers and employees.

Please contact us if you would like any further information.

 

eNEWS quicklinks
P11D deadline looming Rising employment statistics
Employer end of year forms Outstanding self assessment tax returns
HMRC issue guidance on RTI to employers VAT on hot food
Charitable giving – cap on tax relief

 

P11D deadline looming

The forms P11D, and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2012, are due for submission to HMRC by 6 July 2012. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.

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 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.

HMRC have issued some guidance as to common errors on the forms in the latest Employer Bulletin. These include the following:

  • Not ticking the director box if the employee is a director
  • Not including a description or abbreviation where amounts are included in box A, B, L, M or N of the form
  • Leaving the cash equivalent box empty
  • Failing to report the full gross value of the benefit where it is provided for mixed business and private use
  • Not reporting a fuel benefit where one is due.

Correct completion of forms P11D can be a complex issue. If you would like any help with the forms P11D or the calculation of the associated Class 1A National Insurance liability please get in touch.

Internet links: HMRC P11D guidance Employer Bulletin

Rising employment statistics

According to the latest statistics issued by the Office of National Statistics:

‘The unemployment rate was 8.3% of the economically active population, down 0.1 on the quarter. There were 2.65 million unemployed people, down 35,000 on the quarter. This is the first quarterly fall in unemployment since the three months to May 2011.’

Dr Neil Bentley, CBI Deputy Director-General, said:

‘It’s good news that 53,000 more people are in work now than three months ago, which shows that the private sector is gradually regaining confidence to hire.’

‘While this is the best jobs news we’ve had in a year, the Government must step up its welfare reform programme. Worryingly, over a third of those unemployed have been out of work for more than 12 months.’

‘With youth jobless numbers still stubbornly high, helping young people find jobs must remain a joint priority for businesses and government.’

Internet links: CBI press release ONS Bulletin

Employer end of year forms

HMRC are reminding employers that in order to avoid penalties they must file the Employer Annual Return (P35 and P14s) online and on time. The vast majority of employers must file electronically and the deadline for submission of the forms is 19 May 2012, which this year falls on a Saturday.

Where employers do not file their annual return by 19 May they incur a penalty of £100 per 50 (or fewer) employees for every month (or part month) that their return is late.

HMRC have been criticised for failing to make employers aware that they were incurring penalties on a timely basis. In a change to procedure HMRC will now issue employers, who they believe have yet to make a return, with an ‘Employer Annual Return Reminder’ from the end of April.

From the end of May HMRC will issue ‘P35 Interim Penalty Letters’ to relevant employers.

If you are unsure whether you need to complete a return this year please do get in touch.

Internet links: HMRC end of year guidance Employer Bulletin

Outstanding self assessment tax returns

HMRC are urging anyone who has still not completed their 2010/11 self assessment tax return to send it online before the end of April, or be charged daily penalties from 1 May.

Anyone whose return is more than three months late will be charged a further £10 penalty for each day it remains outstanding, up to a maximum of 90 days. This penalty is in addition to the £100 late filing penalty they have already received.

HMRC are advising that if an individual receives a late filing penalty but does not think that they need to complete a return, they should call HMRC on 0845 900 0444. Alternatively contact us so that we can help, as it may be possible to cancel the penalty if HMRC agree that the return is not due.

HMRC’s Stephen Banyard said:

‘We want the returns and not penalties. So, if you haven’t sent us your 2010/11 return, you need to do one of two things urgently – either send it online by 30 April, or call us if you think you shouldn’t have to complete one.’

Internet link: Press release

HMRC issue guidance on RTI to employers

HMRC have updated their guidance on Real Time Information (RTI). This new system of monthly PAYE returns is to be piloted from April 2012 and is expected to be compulsory for all employers from October 2013.

If you would like to read more about the new system please follow the link below. If you would like help with payroll matters please do get in touch.

Internet link: HMRC FAQs

VAT on hot food

HMRC are consulting on changing the rules on hot takeaway food to ensure that all food (with the exception of freshly baked bread) that is above ambient air temperature when provided to the customer is standard rated.

Currently the rules are complex as if food is hot because it has just been cooked, such as freshly baked pies or roasted chicken, these items may in certain circumstances be zero rated for VAT purposes.

We will let you know the outcome of the consultation.

Internet link: HMRC consultation

Charitable giving – cap on tax relief

The government is proposing to restrict tax reliefs available to individuals such as charitable giving.

Currently individuals can offset their entire income against income tax reliefs, and as a result may pay no income tax at all. It was announced in the Budget 2012 that from 6 April 2013 there will be limits to the amount of income tax relief individuals can claim.

This cap will apply only to reliefs which are currently unlimited. This cap will be set at 25% of income (or £50,000, whichever is greater).

HMRC propose to issue a consultation document on the detail of the policy, including the implications for philanthropic giving, in the summer. We will keep you informed of developments.

Internet link: HMRC press release