In this month’s enews we report on HMRC’s plans to extend their ‘tax cheats’ campaigns.
Please browse through the articles using the links below and contact us if any issues or questions arise.
HMRC extend ‘tax cheats’ campaigns
HMRC have announced that they will be launching new campaigns over the next year targeting VAT defaulters, private tutors and e-marketplaces.
HMRC will use more IT, such as ‘web robot’ software, to search the internet and find targeted information about specified people and companies. Using the software, HMRC feel that they can pinpoint more accurately people who have failed to pay the right tax. The software, used with HMRC’s Connect computer system, also helps find people who are trading without telling HMRC.
The Connect computer system alerts HMRC to previously invisible tax evasion by matching a vast amount of HMRC and third-party data. It can identify previously hidden relationships, uncovering anomalies between such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies.
HMRC announced last month that a campaign targeting VAT rule-breakers trading above the £73,000 turnover threshold but who have not registered for VAT will be launched in the summer.
Other campaigns to be launched in 2011/12 will focus on:
- those who provide private tuition and coaching
- e-marketplaces, which buy and sell goods as a trade or business
- trades, which will build on HMRC’s plumbers’ campaign and give an opportunity to another group of ‘tradespeople’ to declare unpaid tax.
Mike Wells, HMRC’s Director of Risk and Intelligence, said:
‘We want to make sure HMRC listens to as many informed views as possible for our future campaigns. We want the views and experience of people and organisations outside the department to play a fuller part in the campaigns that we design for customers.’
‘By being open about our areas of interest for the coming year we hope to maximise that exchange of information and ensure we reduce the tax gap and help customers pay what they owe.’
‘We will use the information we gather to pursue people who choose not to use the opportunities we provide for them to put their affairs in order on the best possible terms. It will be more expensive if we come and find people, so I urge them to come forward and disclose voluntarily.’
Internet link: News release
Another email scam warning from HMRC
HMRC are once again alerting taxpayers to a surge of fake ‘phishing’ emails sent out by fraudsters in the run-up to the tax credits renewal deadline.
The email informs the recipient they are due a tax rebate and provides a click-through link to a cloned replica of the HMRC website. The recipient is asked to provide their credit or debit card details. Fraudsters then try to take money from the account using the details provided.
Since the beginning of April 2011, when the first tax credits renewals forms were sent out to claimants, more than 46,000 phishing emails have been reported. During the same period of time HMRC helped shut down more than 150 scam websites.
Joan Wood, Director of HMRC Online and Digital, said:
‘We currently only ever contact customers who are due a tax refund in writing by post. We don’t use telephone calls, emails or external companies in these circumstances. If anyone receives an email claiming to be from HMRC, please send it to phishing@hmrc.gsi.gov.uk before deleting it permanently.’
HMRC strongly advises taxpayers to:
- check the advice published at http://www.hmrc.gov.uk/security/examples.htm to see if the email you have received is listed
- forward suspicious emails to HMRC at phishing@hmrc.gsi.gov.uk and then delete it from your computer/mail account
- do not click on websites, links contained in suspicious emails or open attachments.
Internet links: News Release www.hmrc.gov.uk/security/index.htm
Workplace pensions reform
The government has introduced measures aimed at encouraging greater private saving which includes workplace pension reforms. New legal obligations will require employers to automatically enrol their eligible jobholders into a qualifying pension scheme.
A new workplace pension scheme called NEST (National Employment Savings Trust) will be one of the qualifying schemes and will be open to any employer who wants to use it to meet their obligations.
The initial roll out of the scheme will be October 2012 but this will impact on employers with 120,000 employees or more. For those with a more modest workforce the start date varies; for example, those with less than 500 employees the date is 1 January 2014 and for those with less than 50 employees the earliest start date is 1 March 2014.
Employees eligible for automatic enrolment will be:
- those who are not already active members of a qualifying scheme
- are aged at least 22 years and below the State Pension age, and
- earn over £7,475 gross a year.
The qualifying scheme may be the existing employer pension scheme if it meets certain conditions or if an employer does not have a qualifying scheme, they will have to set one up or use a NEST pension scheme.
Minimum contributions levels for qualifying schemes are as follows:
| Minimum Contribution | Employee Pays | Tax Relief | Minimum Employer Contribution |
| 8% | 4% | 1% | 3% |
Employees will be able to opt out of the scheme if they so wish. However, for those employees within the scheme it is expected that the employer will have to contribute at least 3% of ‘qualifying’ earnings. These earnings are the employees’ basic salary plus commissions, bonuses and overtime between £5,035 and £33,540 a year (in 2006/07 terms but to be uprated). Pension contributions are to be phased in.
A great deal more information is starting to be released and can be viewed via The Pensions Regulator website.
Internet links: The Pensions Regulator website Basic employers guide
Consultation on residency
Over recent weeks, HMRC have issued numerous consultation documents totalling hundreds of pages.
One of these details how individuals will be judged to be resident or not resident in the UK for tax purposes.
The government proposes to introduce a statutory residence test (SRT) to take into account both the amount of time the individual spends in the UK and the other connections they have with the UK.
There are parts of the test where a distinction will be made between:
- arrivers – defined as individuals who were not UK resident in all of the previous three tax years; and
- leavers – defined as individuals who were resident in one or more of the previous three tax years.
The SRT will:
- determine tax residence for individuals but not companies
- apply for the purposes of income tax, capital gains tax and inheritance tax
- not apply for non-tax purposes (including national insurance contributions), and
- supersede all existing legislation, case law and guidance for tax years following its introduction.
The SRT will have three parts:
- Part A contains conclusive non-residence factors that would be sufficient in themselves to make an individual not resident.
- Part B contains conclusive residence factors that would be sufficient in themselves to make an individual resident.
- Part C contains other connection factors and day counting rules which will only need to be considered by those whose residence status is not determined by Part A or Part B.
The above is part of a consultation process at present. HMRC intend to implement the measures from 6 April 2012.
We will keep you informed of developments but please do contact us if you have any concerns in the meantime.
Internet link: Press release
The Bribery Act
The Bribery Act 2010 comes into force on 1 July 2011. The new Act replaces, updates and extends the existing UK law against bribery and corruption. This important new legislation:
- introduces a corporate offence of failure to prevent bribery by persons working on behalf of a business. A business can avoid conviction if it can show that it has adequate procedures in place to prevent bribery;
- makes it a criminal offence to give, promise or offer a bribe and to request, agree to receive or accept a bribe either at home or abroad. The measures cover bribery of a foreign public official; and
- increases the maximum penalty for bribery from seven to 10 years imprisonment, with an unlimited fine.
The introduction into law of the new corporate offence of failure of commercial organisations to prevent bribery is an important development that essentially requires all businesses to consider the requirements of the new Act. This new corporate offence is coupled with a defence where, if the business can show that it had ‘adequate procedures’ in place to prevent bribery, it can be protected from committing the new criminal offence.
All businesses should familiarise themselves with the statutory guidance and assess the risk of bribery occurring in the business. The extent of any further action will be dependent on the results of this risk assessment.
The Act also requires the government to produce guidance on what constitutes ‘adequate procedures’ and the Ministry of Justice has produced this. This can be found using the links below.
Internet links: Bribery Act 2010 guidance Quick start guide
Tax credits renewal deadline
Tax credits are state benefits which are generally available to lower income families. However, entitlement to the credits is significantly increased where individuals pay for childcare or suffer a drop in normal levels of income perhaps due to incurring trading losses or redundancy.
Individuals who have already claimed tax credits for 2010/11 have to finalise their provisional award, which would have originally been based on their 2009/10 income, and advise HMRC of any changes in their circumstances for 2011/12. This procedure is known as the renewals process. The deadline for the submission of tax credit renewals is generally 31 July 2011.
HMRC have been busily advertising the renewals process in the national press and on their website. Claimants need to be aware that the payment of tax credits will stop at the end of July if they have not renewed their applications by that date. There are significant changes to the income limits and claw back of entitlements for 2011/12 so you may wish to review the HMRC guidance. Alternatively if you need any help with the completion of your form or any advice on tax credits generally please do get in touch.
Internet links: HMRC tax credit deadlines HMRC Tax credit changes
Changes to the law to protect Patent and Design rights
The government has announced that it expects small and medium sized businesses to benefit from a new law which gives them easier access to justice to protect their patent and design rights. The introduction of a damages cap of £500,000 for claims made in the Patents County Court (PCC) means smaller businesses seeking damages up to that amount are less likely to have to resort to the High Court which could prove more costly.
The Patents County Court (Financial Limit) Order 2011 sets out to create a clearer definition of what disputes can be heard in the PCC and which ones should go to the High Court. Under the previous system businesses with a legal case worth less than £500,000 could face litigation in either court. This potentially exposed them to unknown levels of financial risk.
According to the press release:
‘The change in law will ensure that lower value, less complex cases, which would typically involve small businesses, will automatically fall within the jurisdiction of the lower, cheaper PCC. Therefore the risk of having costly disputes over where the case should be heard will be reduced. In the past some companies were put off protecting their rights due to the uncertainty of how much it would cost.’
Minister for Intellectual Property, Baroness Wilcox said:
‘Maintaining an effective and efficient intellectual property framework for businesses is not enough to drive innovation. We must offer businesses a more accessible justice system for them to enforce their rights. By making it easier for small firms and entrepreneurs to use the legal processes it will give them more time to concentrate on business activities.’
‘These changes will help small businesses and encourage them to innovate. It will also provide clarity over the legal processes, certainty over the risks and give small enterprises the confidence to stand on an equal footing with financially stronger companies.’
Internet link: News release
P11D deadline looming
The forms P11D, and where appropriate P9D, which report benefits and expenses for both employees and directors for the year ended 5 April 2011, are due for submission to HMRC by 6 July 2011.
Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A national insurance contributions at 12.8% (for 2010/11) on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form. For those employers who submit paper forms P11D these should all be sent to the address detailed in the link at the end of this article.
If you would like any help with the forms P11D or the calculation of the Class 1A liability please get in touch.
Internet links: HMRC P11D guidance HMRC advice HMRC new address for paper forms P11D