Tag Archives: advisory fuel rates

Newsletter – August 2012

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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 – March 2012

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eNEWS – March 2012

In this month’s enews we report on the Budget. You may have already read some information following Budget Day but we have included details of the key announcements.

Please contact us if you would like any further information.

 

eNEWS quicklinks
Budget 2012 Increased personal allowance for 2012/13
Age allowances Child Benefit
Corporation tax rates Stamp duty land tax (SDLT)
Employer end of year forms Reimbursing additional household expenses
Advisory fuel rates for company cars Updated guidance on Gift Aid and new declarations
National Minimum Wage rates National Loan Guarantee Scheme

 

Budget 2012

George Osborne presented his third Budget on Wednesday 21 March 2012.

The Chancellor started by reaffirming the need for stability in the UK economy and finished in Churchillian style with phrases such as:

‘No people will strive as the British will strive.’

‘No country will adapt as the British will adapt.’

‘This country borrowed its way into trouble. Now we’re going to earn our way out.’

The main Budget proposals announced are:

  • A further increase in the personal allowance but with a reduction in the basic rate band from April 2013.
  • A reduction in the additional rate of income tax from 50% to 45% from April 2013.
  • A phasing out of the age related personal allowances.
  • Details of how Child Benefit will be taxed on those with income in excess of £50,000.
  • An additional 1% cut in the main rate of corporation tax to 24% from April 2012.
  • Increased Stamp Duty Land Tax on high value residential properties.

Details of the announcements and supporting documentation can be found on the Treasury website using the link below.

Internet link: Treasury Website Budget page

Increased 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 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. So for 2012/13, the allowance ceases at adjusted net income in excess of £116,210.

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% higher rate of tax applies will remain at £42,475.

The 50% additional rate of tax 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.

Changes for 2013/14

The personal allowance is to increase to £9,205. The band of income taxable at this rate is being reduced to £32,245 so that the threshold at which the 40% band applies will reduce to £41,450.

For 2013/14 the 20% basic rate and 40% higher tax rates remain unchanged. However the 50% additional rate tax will be reduced to 45%. A rate of 37.5% will be payable on dividends liable to the additional rate of tax.

There had been widespread speculation that the 50% top rate of tax would be abolished.

Internet link: HMRC Budget information

Age allowances

It was announced in the Budget that from 2013/14 the higher age related personal allowances will not be increased and their availability will be restricted to people born on or before:

  • 5 April 1948 for the £10,500 allowance
  • 5 April 1938 for the £10,660 allowance.

This has been labelled the ‘granny tax’ by many as the increased allowances will no longer be available to those reaching age 65 and 75 respectively.

Internet link: HMRC Budget information

Child Benefit

Legislation will be introduced to impose a new charge on a taxpayer who has adjusted net income over £50,000 in a tax year where either they or their partner are in receipt of Child Benefit for the year. Where both partners have adjusted net income in excess of £50,000 the charge will apply to the partner with the higher income.

The 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. The charge on taxpayers with income above £60,000 will be equal to the amount of Child Benefit paid.

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

This charge will have effect from 7 January 2013 and for 2012/13 will apply to the Child Benefit paid from that date to the end of the tax year. The income taken into account will be the full income for 2012/13.

The removal of Child Benefit from households containing a higher rate taxpayer had been announced previously. However the detail of the way in which the restriction would apply had been subject to speculation. The following HMRC example shows how the charge will be calculated:

The Child Benefit for two children amounts to £1,752 and the taxpayer’s adjusted net income is £54,000.

The income tax charge will be £700.80 which is calculated as £17.52 for every £100 above £50,000.

For a taxpayer with adjusted net income of £60,000 or above the income tax charge will equal the Child Benefit.

Internet link: HMRC Budget information

Corporation tax rates

A further reduction in the main rate of corporation tax has been announced. The planned 1% decrease announced to take effect from 1 April 2012 is now to be a 2% decrease with the rate moving from 26% to 24%. Further 1% reductions to 23% and 22% are to take place from 1 April 2013 and 1 April 2014 respectively. The small company rate will remain at 20%.

Internet link: HMRC Budget information

Stamp duty land tax (SDLT)

A new rate of 7% will be introduced where the chargeable consideration for a residential property is more than £2 million. This will have effect where the effective date (normally the date of completion) is on or after 22 March 2012, unless the contract was entered into before that date.

An even higher rate of 15% will apply to such residential properties if the purchaser is a ‘non natural person’, for example a company. This will have effect where the effective date of the transaction is on or after 21 March 2012.

In addition the government will consult on the introduction of:

  • a SDLT annual charge where properties over £2 million are owned by non natural persons
  • a CGT charge on residential property owned by non resident, non natural persons.

Both these measures will apply from April 2013.

The intention of the 15% charge is to stop or reduce the number of schemes which claim to allow a property to be transferred without SDLT. The charges to be introduced in 2013 are aimed at charging properties already in companies which are used as residential accommodation.

Internet link: HMRC SDLT Budget changes

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.

To avoid unnecessary late filing penalty notices being issued, where no return is necessary, it is important to advise HMRC that no return is due. This can be done using the link below.

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

Internet links: HMRC guidance No P35 online form

Reimbursing additional household expenses

From 6 April 2012 HMRC are increasing the guideline rate which employers can use to reimburse employees for additional household expenses incurred because they have to work from home to £4 per week (currently £3 a week). To find out more about the circumstances when these expenses can be reimbursed please do get in touch.

Internet link: HMRC expenses and benefits

Advisory fuel rates for company cars

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

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

Engine size Petrol Diesel LPG
1400cc or less 15p   10p
1401cc – 2000cc 18p   12p
Over 2000cc 26p   18p
1600cc or less   13p*  
1601cc – 2000cc   15p  
Over 2000cc   19p*  

Please note that only two of the diesel rates have changed. These two rates marked * have both increased by one pence per mile.

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 fuel advisory rates

Updated guidance on Gift Aid and new declarations

HMRC have updated their guidance on Gift Aid declarations and provided new model declarations. They have also developed a new checklist of the minimum information to be included in a declaration if a charity decides to create and use its own declaration form.

Internet link: HMRC Charities Gift Aid

National Minimum Wage rates

The government has accepted the Low Pay Commission’s recommendations for National Minimum Wage rates from 1 October 2012.

From 1 October 2012:

  • the adult minimum wage rate will increase from £6.08 to £6.19 an hour
  • the youth development rate will remain at £4.98 an hour
  • the 16-17 year old rate will remain at £3.68 an hour and
  • the apprentice rate will increase from £2.60 to £2.65 an hour.

The Chair of the Low Pay Commission David Norgrove said:

‘Our recommendations this year are, as ever, based on extensive economic evidence and take account of the prospects for the UK economy. Although the economy is forecast to grow through 2012 and 2013, the expected pace of growth is uncertain and is likely to be low. We believe our recommendations for October 2012 balance the needs of low-paid workers against the challenges facing businesses, particularly small businesses.’

Internet link: Press release

National Loan Guarantee Scheme

The Chancellor George Osborne has launched the National Loan Guarantee Scheme (NLGS), which is designed to help ‘smaller businesses’ across the UK access cheaper finance. The loans will be available to businesses with an annual group turnover of up to £50 million.

According to the press release:

‘The government is using the UK’s budget credibility in financial markets to provide up to £20 billion of government guarantees on unsecured borrowing by banks, enabling them to borrow at a cheaper rate. Around £5 billion in guarantees will be made available in the first tranche.’

Businesses that take out an NLGS loan will receive a discount of 1% compared to the interest rate that they would otherwise have received from that bank outside the scheme.

George Osborne said:

‘The government promised to help small businesses get access to lower interest rates. Today, we deliver on that promise with a nationwide scheme. It’s only because we’ve earned credibility with our deficit reduction plan that we have low interest rates, and it’s only because of this scheme that we can pass the benefits of those low rates onto businesses.’

Internet link: Press release

Newsletter – December 2011

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eNEWS – December 2011

In this month’s enews we report on some further announcements made following the Autumn Statement.

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

With best wishes for 2012.

 

eNEWS quicklinks
Pensions Auto Enrolment Advisory fuel rates for company cars
Capital allowances in Enterprise Zones Seed Enterprise Investment Scheme
Statutory Residence Test Self assessment deadline fast approaching
The Portas Review HMRC to accept Faster Payments
2012/13 Statutory Payments

 

Pensions Auto Enrolment

The Government has confirmed that pensions auto enrolment will commence in Autumn 2012 and all employers will remain within the scope of the rules.

However small businesses, those with less than 50 employees, will be given additional time to prepare for the implementation. The government have confirmed that no small employers are affected by the reforms before the end of this Parliament.

Minister for Pensions Steve Webb said:

‘Our society and economy needs to be based on a foundation of saving, not debt. Automatic enrolment will help millions save, and to not act will leave people poorer in retirement. That is why I am confirming today that automatic enrolment will start on time and all employers will be part of it.

We recognise that small businesses are operating in tough economic times so we are softening the timetable for implementation to give them some additional breathing space. This is a sensible step that ensures long term pension issues are addressed while meeting the short and medium term needs of small business.

We are committed to ensuring the employees of these small businesses get the chance to save and that is why no one will miss out.

Under the revised timeline, small business would begin automatically enrolling their staff in May 2015, instead of the current timing of April 2014. Half of all workers will still be automatically enrolled before the end of this Parliament.’

It is expected that further details will be announced in January 2012 and we will keep you informed of developments.

Internet link: DWP press release

Advisory fuel rates for company cars

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

‘These rates apply to all journeys on or after 1 December 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 December 2011 are:

Engine size

Petrol

Diesel

LPG

1400cc or less

15p (15p)

10p (11p)

1401cc – 2000cc

18p (18p)

12p (12p)

Over 2000cc

26p (26p)

18p (18p)

1600cc or less

12p (12p)

1601cc – 2000cc

15p (15p)

Over 2000cc

18p (18p)

Please note that most rates have not changed. However the rate for LPG cars has reduced for those with an engine size of 1400cc or less.

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

Capital allowances in Enterprise Zones

Following the Autumn Statement at the end of November 2011, more information is now available in respect of the proposal to give 100% first year allowances on plant and machinery expenditure for use in some Enterprise Zone areas.

  • The relief will only be available to trading companies.
  • The plant must be new and represent an investment not a replacement of existing plant.
  • The plant must be used primarily in designated assisted areas within Enterprise Zones.
  • The allowance will apply for purchases made from 1 April 2012 up to 31 March 2017.
  • Some businesses and some types of expenditure are specifically excluded from the provisions.

Internet link: Draft rules CA Enterprise Zones

Seed Enterprise Investment Scheme

The government has released more information on the new Seed Enterprise Investment Scheme (SEIS) aimed at smaller companies. The proposals include the following:

  • The relief will initially run from 6 April 2012 until 5 April 2017 but may continue after that date.
  • Income tax relief on a qualifying investment will be 50%.The relief is available to be set against any income tax liability that is due, whether at basic, higher or additional rate.
  • Income tax relief will be withdrawn in certain circumstances including a disposal of the shares within three years.
  • There will be an annual limit of £100,000 investment by an individual.
  • A director may make a qualifying investment but not an employee or an associate of an employee.
  • An individual may not hold more than 30% of the shares in the company.
  • The issuing company must have been incorporated within two years of the date on which the qualifying shares are issued.
  • The company must exist to carry on a qualifying trade.
  • The gross assets of the company (including a proportion of assets of companies which hold at least 25% of the shares in the issuing company) must not exceed £200,000 immediately before the shares are issued.
  • The issuing company must not have more than the equivalent of 25 full-time employees immediately before the shares are issued.
  • The maximum amount which can be raised by a company through SEIS is £150,000 and this is an overall total not an annual limit.
  • Subject to conditions, the disposal of SEIS shares will be exempt from CGT.
  • Where an individual makes a capital gain in 2012/13 and invests an amount which is at least equal to the gain in qualifying SEIS shares before 6 April 2013 then the gain will be exempt from CGT. If the shares fail to meet the qualifications for SEIS for three years then the exemption will be withdrawn.

If you are interested in this new relief and wonder if it may be relevant to you or your business please do get in touch.

Internet link: Treasury SEIS

Statutory Residence Test

The government has been consulting on introducing a Statutory Residence Test (SRT). The test which was expected to be introduced from 2012 has been delayed until 6 April 2013. More details are expected to be announced in the 2012 Budget.

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 SRT is expected to be 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.

Part B – satisfy any one of three conditions and the individual is conclusively resident for the year.

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.

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.

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

Internet link: Treasury consultation on residence

Self assessment deadline fast approaching

HMRC are reminding taxpayers that the deadline for filing self assessment tax returns is fast approaching. According to their website:

‘You must send your online tax return by midnight on Tuesday 31 January 2012.

The deadline is only later than this if you received your tax return, or the letter telling you to complete a tax return, after 31 October 2011. In this case you’ll have three months from the date you received that letter.

If your online tax return is late, you’ll have to pay a penalty. This applies even if you have no tax to pay or if you pay all the tax you owe on time.’

The following illustrates that missing the deadline and failing to submit the return online may result in significant penalties.

‘What happens if you miss the deadline?

If you miss the 31 January deadline for online tax returns, you will have to pay a penalty.

The penalty is £100. You’ll still have to pay this even if

  • your return is just a day late
  • you have no tax to pay
  • you pay all the tax you owe before 31 January 2012.

The longer you delay, the more you’ll have to pay. If your tax return is three months late, you’ll have to pay a penalty for each additional day it is late. If it’s six months late, you’ll have to pay a further penalty and another final penalty if it’s 12 months late. Together these could add up to a penalty of £1,600 or more.

Don’t send a paper tax return now – the deadline was 31 October 2011. You’ll have to pay a £100 penalty straight away if you do and the daily penalties above will start even earlier. Send it online instead.’

If you require any help with your tax return please do get in touch.

Internet link: HMRC news

The Portas Review

The CBI commented on a report by Mary Portas on the future of the high street.

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

‘Retail represents about 10% of our economy, and the high street is a vital part of this.

The Portas Review makes some sensible suggestions about how we can inject life back into town centres, including increased use of Business Improvement Districts and relaxing planning restrictions on the high street, in particular on change of use.

More importantly, she recognises the growing burden business rates are placing on companies right across the country at a critical time.

We need to make sure the UK remains attractive to investors, as it’s their decisions that will ultimately lead to regeneration of our town centres. Any changes to the planning and business rate regimes must therefore encourage investment in the broadest sense, and not just rob Peter to pay Paul.’

Internet links: BIS press release with access to report CBI press release

HMRC to accept Faster Payments

HMRC have announced that they will now accept payments made using the Faster Payments Service. This will allow taxpayers to make faster electronic payments, typically via internet or telephone banking, enabling them to be processed on the same or next day.

HMRC advise that if you want make payments using this method you should contact your bank or building society to confirm the following:

  • the services available to you
  • whether there are any single transaction or daily limits on the amount you can pay
  • their latest cut off times for making a payment.

They are also stressing that when making a payment to HMRC it is important to ensure that you are using the correct bank account details and reference number.

Internet link: HMRC news

2012/13 Statutory Payments

HMRC have announced the following statutory payment rates which are due to take affect for 2012/13. These rates are still subject to Parliamentary approval and HMRC will confirm the rates before 1 April 2012.

Statutory Maternity Pay (SMP) £135.45 per week

Ordinary Statutory Paternity Pay £135.45 per week

Additional Statutory Paternity Pay £135.45 per week

Statutory Adoption Pay (SAP) £135.45 per week

Statutory Sick Pay (SSP) £85.85 per week

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

Internet link: HMRC statutory payment rates

Newsletter – September 2011

Posted on by

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 – 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