Tag Archives: HMRC Phishing

Newsletter – November 2019

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Enews November 2019

In this month’s Enews we report on an IR35 appeal, HMRC’s clampdown on enablers of tax avoidance schemes and an update on probate fees. With a Charity Commission report on fraud protection, the latest guidance for employers and a reminder to complete your self assessment tax return there is a lot to consider.

Budget will not now take place on 6 November

On 25 October 2019 the Chancellor of the Exchequer Sajid Javid wrote to the Treasury Select Committee to confirm that the Budget will not now take place on 6 November 2019 as originally planned. You can read that letter here.

We will keep you informed of developments.

Internet link: GOV.UK Budget

Christa Ackroyd loses IR35 appeal

Former BBC presenter Christa Ackroyd has lost her appeal against a ruling that she was an employee, not a freelance contractor, when she worked for the BBC via a personal service company.

The IR35 rules in broad terms mean that those working via a personal service company have to consider whether, if the services were provided by the individual contractor directly to the client, there would be a contract of employment.

Judges in the Upper Tier Tribunal upheld last year’s First Tier Tribunal ruling that she was a BBC employee when she presented Look North in Yorkshire and was therefore liable to pay income tax and national insurance contributions.

The case related to the tax years 2006/07 to 2012/13, while she worked for the public broadcaster through her personal service company, Christa Ackroyd Media (CAM).

HMRC argued that she owed almost £420,000 in income tax and national insurance contributions, before corporation tax deductions. An HMRC spokesperson said they welcomed the judgment that the presenter was within the intermediary rules.

‘Employment status is never a matter of choice; it is always dictated by the facts and when the wrong tax is being paid, we put things right.

It is right that an individual who works through a company, but would have been an employee if they were taken on directly, pays broadly the same amount of tax and national insurance contributions as employees.’

The IR35 rules were amended for Public Bodies (including the BBC) from April 2017 and the government will make similar changes for the private sector from April 2020.

Internet links: ICAEW news BAILII cases

Clamp down on enablers of tax avoidance schemes

HMRC says it is clamping down on the promoters and enablers of tax avoidance schemes in the wake of the loan charge controversy.

Penny Ciniewicz, Director General of Customer Compliance at HMRC, told the Treasury Select Committee that HMRC is ‘doubling the resources’ to tackle those in the ‘avoidance supply chain’.

In response to questions about the loan charge, Ms Ciniewicz said:

‘We have more than 100 current investigations into promoters [and enablers], and we’re keeping a very close eye on the market for avoidance. We are spotting schemes as they emerge and we’re tackling them.’

The loan charge policy is currently subject to an independent review. It came into effect on 6 April this year, and applies to anyone who used ‘disguised remuneration’ schemes. The legislation added a 45% non-refundable charge on all loans advanced through the schemes, unless the individual had agreed with HMRC to settle their tax affairs.

Internet link: ICAEW news

Increase in probate fees abandoned

The government has abandoned its planned increase in probate fees. The increase in fees was originally expected to take effect from 1 April 2019. However, in March 2019 HMRC postponed the introduction of the increase, attributing the delay to pressure on Parliamentary time.

As part of the government’s plans, estates that are valued between £50,000 and £300,000 would have been subject to a probate fee of £250. Fees were to rise thereafter to reach £6,000 for estates with a value above £2 million.

Currently, for estates valued at over £5,000, a grant application made by a solicitor is subject to a flat fee of £155. A grant application made by an individual is subject to a fee of £215.

The increase was included in a statutory instrument (SI) however the SI fell away on the prorogation of Parliament in September, but was reinstated when the prorogation was declared illegal.

The government has now announced that the planned increase will not take place. Instead there will be a review of court costs and how they can be covered by the actual service required.

Probate fees apply in in England and Wales.

Internet link: ICAEW post

Charities fraud protection failures

According to a report published by the Charity Commision, the majority of UK charities admit fraud is a major risk, but are still failing to carry out basic tasks in order to protect themselves.

More than 3,300 charities took part in the Charity Commission’s survey into fraud awareness, resilience and cyber security in the sector. Over two thirds of charities agree that fraud is a significant risk. Insider fraud is recognised as one of the biggest threats, the report stated.

The survey found that 85% of charities think they are doing everything they can to prevent fraud, but almost half do not have robust protections in place.

The Commission recommended some simple steps that charities could take to protect their funds, including introducing and enforcing basic financial controls. They should also make sure no single individual has oversight or control of financial arrangements, as effective segregation of duties is a crucial method of preventing and detecting fraud.

The Commission also recommends that employees, volunteers and trustees should be encouraged to speak out when they see something they feel uncomfortable about.

Internet link: GOV.UK news

Guidance for employers

HMRC has published the October 2019 issue of the Employer Bulletin which contains guidance on a number of issues relevant for employers. Topics in this edition include:

  • Changes for UK employers sending workers to the EU, the EEA or Switzerland
  • PAYE Settlement Agreements and Welsh rate of Income Tax
  • Guidance for employers on reporting PAYE information in real time when payments are made early at Christmas
  • Disguised Remuneration
  • Termination payments: Post Employment Notice Pay for employees paid by equal monthly instalments
  • Do your employees have the right tax code?
  • Employment Allowance reform – eligibility rules for the Employment Allowance are changing from April 2020
  • Do you claim the Apprenticeship Levy Allowance or Employment Allowance?
  • Changes to company car tax regime
  • Student and Postgraduate Loans
  • Childcare vouchers
  • Trivial Benefits in kind
  • Paying for fitness equipment

If you would like help with payroll matters please contact us.

Internet link: GOV.UK employer-bulletin-october-2019

HMRC countdown: file your tax return

With less than 100 days until the self assessment tax return deadline of 31 January 2020, HMRC is urging taxpayers to complete their tax returns early, in order to avoid the last minute rush.

HMRC report that last year more than 2,000 people submitted their tax returns on Christmas Day. Taxpayers should consider submitting their returns early to avoid the stress of a last minute rush.

Angela MacDonald, HMRC’s Director General for Customer Services, said:

‘The deadline for completing Self Assessment tax returns is only 100 days away, yet, so many of us wait until January to start the process. Avoid the last minute rush by completing your tax returns on time and then enjoy the upcoming festive period.

We want to help people get their tax returns right – starting the process early and giving yourself time to gather all the information you need will help avoid that stressful, late rush to file.’

Not all taxpayers need to complete a tax return as tax is automatically deducted from the majority of UK taxpayers’ wages, pensions or savings. For people or businesses where tax is not automatically deducted, or when they may have earned additional untaxed income, they are required to complete a Self Assessment tax return each year.

HMRC is also reminding people who are liable for the High Income Child Benefit Charge that they may need to file a tax return before the deadline. Those with income over £50,000 who receive child benefit, or those whose partner gets it, are liable for the charge. Taxpayers can check their annual income via their P60 or Personal Tax Account, and use HMRC’s child benefit tax calculator.

The deadline for filing paper tax returns was 31 October 2019 and the deadline for online tax returns and paying any tax owed is 31 January 2020. If taxpayers miss the deadline, they face a minimum £100 penalty for late submission.

Contact us for help with your self assessment tax return.

Internet link: GOV.UK news

Genuine HMRC contact and recognising phishing emails and texts

HMRC has updated their guidance on how to recognise when contact from HMRC is genuine and how to recognise phishing or bogus emails and text messages.

Internet link: GOV.UK recognising phishing emails

Newsletter – December 2018

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Enews – December 2018

In this month’s Enews we report on Making Tax Digital for VAT and the latest government Brexit documentation. We also include updated advisory fuel rates for company car drivers and advice on tax-free gifts to employees. With a warning about the latest HMRC phishing emails scam, SDLT statistics for first-time buyers and a review calling for a simplification of inheritance tax, there is lots to update you on.

Committee warns small businesses ‘could pay heavy price’ for MTD and latest ‘encouragement letters’

The Economic Affairs Committee has warned HMRC that small businesses ‘could pay a heavy price’ for Making Tax Digital for VAT (MTDfV).

The Committee stated that HMRC has ‘failed to adequately support small businesses’ ahead of the introduction of MTDfV.

MTDfV is generally set to come into effect for the from 1 April 2019 for businesses which have a taxable turnover above the current VAT registration threshold of £85,000. Under MTDfV, businesses must keep some records digitally and submit their VAT returns via an Application Programming Interface (API).

The Committee has urged HMRC and the government to ‘start listening’ to small businesses MTDfV concerns.

HMRC recently sent businesses within the scope of MTDfV so-called ‘encouragement letters’. These letters were sent to 200,000 businesses which are eligible to join the pilot scheme.

Please contact us for help with MTDfV.

Internet links: Parliament.uk/news tax.org.uk/news

Leaving the EU with no deal

The government has published a collection of documents in preparation for the scenario of the UK leaving the EU without a Withdrawal Agreement a so called ‘no deal’ Brexit.

The guidance states:

‘The government does not want or expect a no deal scenario. However, it is the duty of a responsible government to prepare for a range of potential outcomes, including the unlikely event of no deal. In the event of leaving the EU without a deal, legislation will be necessary to ensure the UK’s Customs, VAT and Excise regimes function as intended after the UK leaves the EU and so, on a contingency basis, HM Treasury and HM Revenue and Customs will lay a number of Statutory Instruments (SIs) under the Taxation (Cross-border Trade) Act 2018 (TCTA) and the EU Withdrawal Act 2018 (EUWA).’

We will keep you informed of developments.

Internet link: GOV.UK no deal brexit collection

180,500 new homeowners benefit from stamp duty tax relief

According to statistics published by HMRC more than 180,500 first-time buyers have benefitted from First Time Buyers Relief (FTBR). The relief introduced in November 2017 has saved eligible first-time buyers an estimated total amount of more than £426 million.

Mel Stride MP, Financial Secretary to the Treasury, said:

‘These statistics show that the government was right to offer a helping hand to first time buyers. Without this investment more than 180,500 new homeowners may have struggled in getting onto the property ladder. Maintaining the status quo was not an option.’

FTBR is a Stamp Duty Land Tax relief for eligible first-time buyers. The tax relief can be used when buying a residential property where the purchase price is no more than £500,000 in England and Northern Ireland. Land and Buildings Transaction Tax and Land Transaction Tax apply to property in Scotland and Wales.

The press release goes on to state:

‘The amount of relief reported should not be used to infer average house prices for first time buyers; first-time buyer purchases below £125k and above £500k are not included in the statistics as they are below the lower SDLT threshold (£125k) or ineligible for the relief (above £500k).For purchases up to £300,000 no SDLT is payable. Where the purchase price is between £300,000 and £500,000 SDLT at 5% is due on the amount above £300,000. For example, a property purchased for £450,000 would pay £7,500 SDLT (5% of £150,000). This gives a saving of up to £5,000 for each first-time buyer.’

Extension of FTBR

It was announced in the Autumn Budget 2018 that the relief for first-time buyers will be extended to purchasers of qualifying shared ownership properties who do not elect to pay SDLT on the market value of the whole property when they purchase their first share. Relief will be applied to the first share purchased, where the market value of the shared ownership property is £500,000 or less. This relief will apply retrospectively from 22 November 2017, meaning that a refund of tax will be payable for those who have paid SDLT after 22 November 2017 in circumstances which now qualify for FTBR.

Internet link: HMRC press release

Tax-free gifts to employees

Some employers may wish to give a small gift to their employees. As long as the employer meets the relevant conditions, no tax charge will arise on the employee.

A tax exemption is available which should help employers ensure that the benefits provided are exempt and do not result in a reportable employee benefit in kind. In order for the benefit to be exempt it must satisfy the following conditions:

  • the cost of providing the benefit does not exceed £50 per employee (or on average when gifts made to multiple employees)
  • the benefit is not cash or a cash voucher
  • the employee is not entitled to the benefit as part of a contractual arrangement (including salary sacrifice)
  • the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
  • where the employer is a ‘close’ company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.

If any of these conditions are not met then the benefit will be taxed in the normal way subject to any other exemptions or allowable deductions.

No more than £50

One of the main conditions is that the cost of the benefit does not exceed £50. If the cost is above £50 the full amount is taxable, not just the excess over £50.The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial. Where the individual cost for each employee cannot be established, an average could be used. Some HMRC examples consider gifts of turkeys, a bottle of wine or alternatively a gift voucher.

Further details on how the exemption will work, including family member situations, are contained in the HMRC manual.

However if you are unsure please do get in touch before assuming the gift you are about to provide is covered by the exemption.

Internet link: HMRC manual

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which took effect from 1 December 2018. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 December 2018 are:

Engine size Petrol
1400cc or less 12p
1401cc – 2000cc 15p
Over 2000cc 22p
Engine size LPG
1400cc or less 8p
1401cc – 2000cc 10p
Over 2000cc 15p
Engine size Diesel
1600cc or less 10p
1601cc – 2000cc 12p
Over 2000cc 14p

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.

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

Internet link: GOV.UK AFR

Phishing tax refund email targets university students

HMRC has warned that university students are being bombarded with fake tax refund emails. The scammers have targeted university students in an attempt to steal their banking and personal details using.ac.uk email addresses that look genuine, in order to avoid detection.

Mel Stride, Financial Secretary to the Treasury said:

‘Although HMRC is cracking down hard on internet scams, criminals will stop at nothing to steal personal information.

‘I’d encourage all students to become phishing-aware – it could save you a lot of money.’

In common with other tax scams, fraudsters send a message, including HMRC, GOV.UK or credit card branding, supposedly advising the recipient about a tax refund. Those taken in by the fake email are asked to click on a link and enter their banking and personal details. Fraudsters can use this information to steal money from bank accounts or to sell on to other criminals.

Internet link: GOV.UK press release

Inheritance Tax Review by Office of Tax Simplification

The Office of Tax Simplification (OTS) has published the first of two reports on inheritance tax.

The first report sets out an explanation of the issues and complexities of IHT, gives an overview of concerns raised by the public and professional advisors during the review and then makes recommendations. This first report examines the administrative issues that people complain about and which were raised in the responses. The second report covering other wider areas of concern to people will follow in Spring 2019.

The first report highlights the benefits of:

  • reducing or removing the requirement to submit forms for smaller or simpler estates, especially where there is no tax to pay
  • simplifying the administration and guidance
  • the advantages of banks and other financial institutions having standardised requirements
  • automating the whole system by bringing it online

Angela Knight CBE, OTS Chairman, said:

‘Inheritance tax is both unpopular and complicated. The basic design of the tax itself is for government, but at the OTS we can address that most frequent of all comments “at least make it easier for the families to fill in the forms”. The OTS has worked on ways to address these practical complexities, which have come through loud and clear.’

‘The recommendations in this report will make it easier for the majority, and would mean that in future, many may not have to do the forms at all. Improving the administration of this tax in these ways is important as having to deal with the current process can seem overwhelming to people at a time when they are both preoccupied and distressed.’

Internet link: GOV.UK OTS IHT report

Newsletter – October 2018

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Enews October 2018

In this month’s Enews we report that the government has announced the UK Budget date and that Class 2 National Insurance Contributions will no longer be scrapped. The government has also published lots of guidance on a ‘no deal Brexit’. With information on deliberate tax defaulters and the latest minimum wage statistics, there is lots to update you on.

UK Budget date announced: Monday 29 October

The Chancellor of the Exchequer, Philip Hammond, has announced that the Budget will take place on Monday 29 October.

Breaking with the tradition of a Wednesday in November, perhaps in a bid to avoid the ongoing Brexit negotiations, the government is expected to set out its plans ‘to build a stronger, more prosperous economy, building on the recent Spring Statement and last year’s Budget’.

The government announcements are expected to include updates on draft legislation and consultations, and proposed tax rates and reliefs.

Internet link: GOV.UK news

Self-employed Class 2 National Insurance will not be scrapped

The government has decided not to proceed with plans to abolish Class 2 National Insurance Contributions (NICs) from April 2019.

Class 2 NICs are currently paid at a rate of £2.95 per week by self-employed individuals with profits of £6,205 or more per year. The government had planned to scrap the Class 2 contribution and had been investigating ways in which self-employed individuals with low profits, could maintain their State Pension entitlement if this inexpensive contribution had been abolished.

In a written statement to MPs, Robert Jenrick, Exchequer Secretary to the Treasury, stated that:

‘This change was originally intended to simplify the tax system for the self-employed. We delayed the implementation of this policy in November to consider concerns relating to the impact on self-employed individuals with low profits. We have since engaged with interested parties to explore the issue and further options for addressing any unintended consequences.’

‘A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the State Pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society.’

Internet link: Parliament written statement

‘No deal’ Brexit guidance and small business survey

Following the issue of some ‘no deal’ Brexit technical notices, in August, the government has issued further notices with the aim of helping both businesses and individuals to prepare in the event of a UK-EU agreement not being realised.

The second and third batches of notices cover topics such as passports, driving licences together with data protection and mobile phone roaming charges amongst other topics. The full list and access to the collection of technical notices can be viewed by visiting the link at the end of this article. The government has confirmed they plan to issue further technical notices.

Although reaching a deal remains the ‘overriding priority’ unless a Withdrawal Agreement is ratified by the UK and European Parliaments, the possibility of the UK leaving the EU without a deal on 29 March 2019 remains.

Meanwhile, a survey by the Federation of Small Businesses (FSB) has revealed that:

  • Only 14% of small businesses have started planning for a no deal Brexit.
  • A further 41% believe that a no deal Brexit will have an impact on their business but have not yet started planning for the possibility.
  • 10% believe that a no deal Brexit will have a positive impact on their ability to do business whilst 48% believe that a no deal Brexit will have a negative effect on their ability to do business. This figure rises sharply to 66% for those small firms that trade with the EU and to 61% for those that employ a staff member from the EU.

FSB National Chairman, Mike Cherry, said:

‘Looking at this research it is obvious that our small firms are not prepared or ready for a chaotic no deal Brexit and the impact that it will have on their businesses. If you sell your products to the EU, buy goods from the EU or if your business relies on staff from the EU, you now see this outcome as a clear and present threat to your business.’

We will keep you informed of developments.

Internet links: GOV.UK no deal brexit collection FSB press release

Deadline for ‘paper’ self assessment tax returns

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2017/18 return is 31 October 2018. 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: GOV.UK deadline

HMRC has published an updated list of deliberate tax defaulters

HMRC has published an updated list of deliberate tax defaulters. The list includes details of taxpayers who have incurred a penalty because they have either:

  • deliberately provided one or more inaccurate documents to HMRC
  • deliberately failed to comply with an HMRC obligation
  • committed a VAT or excise wrongdoing.

HMRC’s criteria for publishing this information also states that ‘These deliberate acts have resulted in HMRC establishing an additional amount of tax of more than £25,000. HMRC only publish the details where the taxpayer has not made a full and immediate disclosure when HMRC started to investigate or prior to any investigation.’

Internet link: GOV.UK/deliberate tax defaulters

Genuine HMRC contact and recognising phishing emails and texts

HMRC has updated their guidance on how to recognise when contact from HMRC is genuine and how to recognise phishing or bogus emails and text messages.

Internet link: GOV.UK recognising phishing emails

HMRC identify record £15.6 million minimum wage underpayments

HMRC has announced that they achieved record enforcement results this year, identifying £15.6million of minimum wage underpayments.

The number of workers identified as underpaid was double that in 2016/17 and the highest number since the National Minimum Wage came into force.

The figures reveal:

  • a record £15.6 million of underpayment identified for more than 200,000 workers
  • employers fined £14 million for not meeting legal obligations
  • more than 600 employers named in 2017/18 as part of ‘naming’ rounds.

Business Minister Kelly Tolhurst, said:

‘We are dedicated to stopping underpayment of the minimum wage. Employers must recognise their responsibilities and pay their workers the money they are entitled to.’

‘The UK’s lowest paid workers have had the fastest wage growth in 20 years thanks to the National Living Wage and today’s figures serve as a reminder to all employers to check they are getting their workers’ pay right.’

HMRC has prioritised the social care, retail, commercial warehousing and gig economy sectors for enforcement of the minimum wage. This is alongside employment agencies, apprentices and migrant workers. These are the sectors where HMRC believes non-compliance with National Minimum Wage is more widespread.

For advice on payroll please contact us.

Internet links: GOV.UK news GOV.UK naming

Newsletter – October 2017

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Enews – October 2017

In this month’s eNews we update you on the latest government announcements on Making Tax Digital for Business (MTDfB). We also include the announcement of the Budget dates by Philip Hammond and Derek Mackay. With HMRC offering a new support service for growing businesses, a new Trusts Registration Service, updated phishing guidance and the ‘paper’ tax return deadline looming, there is lots to consider.

Making Tax Digital for VAT

The government have issued information on how Making Tax Digital for Business (MTDfB) is expected to work for VAT once the rules are introduced in April 2019.

Under the proposed rules, which have been issued subject to consultation, VAT registered businesses with turnover over the VAT registration threshold will be required to submit their VAT return digitally using software. Businesses with a turnover above the VAT threshold (currently £85,000) will have to:

  • keep their records digitally (for VAT purposes only) and
  • provide their VAT return information to HMRC through Making Tax Digital (MTD) functional compatible software.

This software will either be a software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API). The functions of the compatible software include:

  • keeping records in a specified digital form
  • preserving digital records in a specified digital form
  • creating a VAT return from the digital records and providing HMRC with this information digitally
  • providing HMRC with VAT data on a voluntary basis and
  • receiving information from HMRC via the API platform that the business has complied.

Businesses will need to preserve digital records in the software for up to six years. Further information on the required information can be found in Annex 1

The government will make the final detailed requirements available to the software providers by April 2018 to allow time for the software to be developed and tested prior to the rules coming into effect from April 2019.

VAT is the first tax to be reportable under MTD and businesses within the scope of MTD will need to keep their records digitally, using approved MTD functional compatible software, from 1 April 2019. The software will create the return from the digital records and this will need to be submitted under MTD for return periods starting on or after 1 April 2019.

We will keep you informed of developments in this area and ensure we are ready to deal with the new requirements. Please contact us for more information.

Internet link: GOV.UK MTD VAT legislation overview

Budget on Wednesday 22 November and 14 December

Chancellor Philip Hammond has announced that he will deliver the Autumn Budget on Wednesday 22 November.

The Autumn Budget will be the second Budget to be delivered this year, and will outline the government’s proposed tax changes and spending plans in response to forecasts from the Office for Budget Responsibility (OBR). The 2017 Autumn Budget will be the first of its kind under the government’s new fiscal timetable. During the 2016 Autumn Statement, the Chancellor announced that the annual Budget will now take place in the Autumn, as opposed to Spring.

Going forward Philip Hammond will make a Spring Statement each year, responding to a forecast produced by the OBR. The first Spring Statement will be delivered in 2018.

Meanwhile Finance Secretary Derek Mackay has confirmed the Scottish Draft Budget 2018/19 will be published on 14 December, three weeks after the Budget for the rest of the United Kingdom.

We will update you on pertinent announcements from the Autumn Budget and Scottish Budget in due course.

Internet links: GOV.UK News GOV.SCOT News

Deadline for ‘paper’ self assessment tax returns

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2016/17 return is 31 October 2017. 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: GOV.UK deadline

HMRC offer tax support to growing businesses

HMRC have announced the introduction of a new service to directly help mid-sized businesses as they expand and grow. This is to be known as the Growth Support Service.

According to HMRC there are approximately 170,000 mid-sized businesses registered in the UK. The businesses with either a turnover of more than £10 million or more than 20 employees, that are undergoing significant growth, can now seek help from HMRC to access the services they need.

The Financial Secretary to the Treasury Mel Stride said:

‘Mid-sized businesses make vital contribution to the UK economy and I want to see them grow, succeed and prosper.

The Growth Support Service will help these expanding businesses access tailored tax assistance so that tax administration doesn’t stand in the way of their growth and ensures businesses can focus on finding new opportunities.

Businesses who meet the eligibility requirements can apply online; they will then be contacted by their dedicated growth support specialist at HMRC, to discuss their requirements. The bespoke service will generally last between three to six months.’

Smaller business can access the Small Business Online Forum.

Please do contact us for help and support.

Internet link: GOV.UK news

Trusts Registration Service

HMRC have launched a new Trusts Registration Service (TRS), so that trustees can register their trust online and provide information on the beneficial owners of the trust. The new service launched in early July for trustees and replaces the 41G (Trust) paper form, which was withdrawn at the end of April.

Under the existing self assessment rules, the trustees (or their agents) must register details of a trust with HMRC by 5 October of the year after a liability to Income Tax or Capital Gains Tax (CGT) first arises. The registration process, which will need completing via TRS, includes providing information about the beneficial owners of the trust.

In subsequent years, or where the trust is already registered for self assessment, the trustees (or their agent) of either a UK or non-UK trust that incurs a UK tax liability are required to provide beneficial ownership information about the trust, using the TRS, by 31 January following the end of the tax year.

The new service is not currently available to agents. HMRC have advised that agents will be able to register on behalf of trustees from October 2017 and agents and lead trustees can enter updates for changes of circumstances from early 2018.

HMRC have also confirmed that in this first year of TRS there will be no penalty imposed where registration is completed after 5 October but before 5 December 2017.

A Self Assessment Trust and Estate Tax Return (SA900) must still be submitted after the end of each tax year, reporting any income and gains.

If you would like help or guidance on trusts please contact us.

Internet link: GOV.UK trusts-and-estates

HMRC phishing and scam advice

HMRC have updated their list of examples of websites, emails, letters, text messages and phone calls used by scammers and fraudsters to obtain individual’s personal information.
The guidance can be used to help you decide if a contact from HMRC is genuine, this guidance provides examples of the different methods that fraudsters use to get individuals to disclose personal information.

You can also read about how to recognise genuine contact from HMRC, and how to tell when an email is phishing/bogus.

Internet link: GOV.UK phishing-and-bogus-emails-HMRC

Newsletter – August 2017

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Enews – August 2017

In this month’s eNews we update you on the latest developments in Making Tax Digital together with an update on the Taylor Review and the latest employment and pensions auto enrolment statistics. We also report on the new Fundraising Preference Service and how to spot scam HMRC emails.

New timetable for Making Tax Digital

The government has announced a revised timetable for the introduction of Making Tax Digital for Business (MTDfB).

MTDfB introduces extensive changes to how taxpayers record and report income to HMRC. Unincorporated businesses, including landlords, were expected to be the first to see significant changes in the recording and submission of business transactions but the government has announced a delay to the implementation of the new rules and some exceptions for smaller businesses.

The government had decided how the general principles of MTDfB will operate after receiving responses to their original ideas first published in August 2016. Some legislation was published in Finance Bill 2017 but this was removed due to the General Election.

Under MTDfB, businesses will be required to:

  • maintain their records digitally, through software or apps
  • report summary information to HMRC quarterly through their ‘digital tax accounts’ (DTAs)
  • submit an ‘End of Year’ statement through their DTAs.

The new timetable is being introduced following concerns raised by the Treasury Select Committee, businesses and professional bodies about the implementation of the new rules and to hopefully ensure a smooth transition to a digital tax system.

Mel Stride, Financial Secretary to the Treasury and Paymaster General said:

‘Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms.

We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.’

The government has confirmed that under the new timetable:

  • only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
  • they will only need to do so from 2019
  • businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.

This means that businesses and landlords with a turnover below the VAT threshold will not have to move to the new digital system.

Ministers have also confirmed that the Finance Bill will be introduced as soon as possible after the summer recess and that all policies originally announced to start from April 2017 will be effective from that date.

The government has also confirmed that the proposed changes to VAT reporting will come into effect from April 2019. From that date, businesses trading above the VAT threshold will have to provide their VAT information to HMRC through Making Tax Digital software.

Internet link: GOV news

Taylor Review of employment practices

The long awaited Taylor Review of employment practices suggests that a national strategy is needed to help provide security in such areas as wages, quality of employment, education and training, working conditions, work life balance and the ability to progress at work.

One of the areas of focus relates to the ‘gig’ economy, with the report recommending the creation of a new category of worker, known as a ‘dependent contractor’, to provide additional rights and benefits for those who are currently classed as self-employed, but who work for businesses which have a ‘controlling and supervisory’ relationship with their workers.

The additional benefits would include sick pay, holiday entitlement and the minimum wage, and the new employment status would also oblige these businesses to pay national insurance contributions for these workers.

Business groups have given mixed reactions to the report’s findings, with many welcoming the focus on labour market flexibility, but also warning that some areas, including the plans to rewrite employment status tests, are a cause for concern.

However, the TUC warned that the review ‘is not the game-changer needed to end insecurity and exploitation at work’

Internet link: Taylor Review

Automatic enrolment reaches 8 million

The Pensions Regulator (TPR) has confirmed than eight million employees have signed up for a workplace pension since the launch of automatic enrolment.

The introduction of automatic enrolment was expected to lead to around eight million workers saving more for their retirement and this milestone has already been reached with hundreds of thousands more employers still to enrol staff over the coming months.

Minister for Pensions and Financial Inclusion Guy Opperman said:

‘Reaching this eight million figure is a formidable achievement and represents a huge number of people on the path to a more financially secure retirement.’

‘But we cannot be complacent and as contribution rates rise we know there is more to be done. That’s why our automatic enrolment review, which will report back later this year, is so vital to the future of this life-changing policy.’

TPR’s report shows that at the end of June 2017, 8,165,000 workers were enrolled in workplace pensions. Darren Ryder, TPR’s Director of Automatic Enrolment, said:

‘Tens of thousands more people every week are signing up to a new workplace pension through automatic enrolment. Employers are continuing to become compliant and to remain so, allowing their staff to get the pensions they are entitled to.’

‘There are more than 500,000 more employers whose duties are still to begin over the coming months. I would urge each and every one of them to check today that they know what they need to do and when they need to do it so they can seek our help if they need it.’

If you would like help or advice on complying with your Auto Enrolment duties please do get in touch.

Internet links: Press release Report

Latest labour market statistics

The latest labour market statistics for the period March to May 2017 showed a 175,000 rise in employment and 64,000 fall in unemployment.

Estimates from the Labour Force Survey show that, between December 2016 to February 2017 and March to May 2017, the number of people in work increased, the number of unemployed people fell, and the number of people aged from 16 to 64 not working and not seeking or available to work (economically inactive) also fell.

Some of the findings were:

  • There were 32.01 million people in work, 175,000 more than the previous quarter.
  • The employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.9%, the highest since comparable records began in 1971.
  • Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 1.8% including bonuses, and by 2.0% excluding bonuses, compared with a year earlier.
  • Latest estimates show that average weekly earnings for employees in real terms (adjusted for price inflation) fell by 0.7% including bonuses, and fell by 0.5% excluding bonuses, compared with a year earlier.

For more details visit the link below.

Anna Leach, CBI Head of Economic Intelligence, said:

‘These figures underline the strength of the UK’s flexible labour market, which was recognised in …. Taylor Review. But declining real pay and productivity remain concerning, reinforcing the imperative that any changes following the review support the economy’s ability to create great jobs.’

‘Making real progress on productivity growth requires a modern industrial strategy, with real change on the ground on skills, infrastructure and innovation.’

Internet links: ONS employment statistics CBI news

HMRC genuine and phishing/bogus emails and calls

HMRC have issued an update of their guidance on how to recognise genuine HMRC contact be it via email or text.

HMRC also provide advice on what to do if you have received a phishing/bogus email related to HMRC, or you are not sure if it is genuine, you can read about how to report internet scams and phishing to HMRC.

Internet link: HMRC guidance

Charities bound by new Fundraising Preference Service

A new service is now available for individuals who want to limit the contact they receive from charities. The Fundraising Preference Service (FPS) should give individuals greater control over how and when charities can contact them. The FPS, which launched on 6 July, allows individuals to select charities that they no longer want to receive communications from.

Under the FPS, where an individual opts out from a specified charity, this will apply to all forms of communication with a named individual including email, text, phone and addressed mail.

Although the FPS is primarily an online service a phone service is available to support those who are vulnerable or without IT. The Fundraising Regulator will notify specified charities of suppression (those people opting out) and monitor compliance. Charities need to ensure they comply with these new rules.

Internet link: FPS

Newsletter – November 2016

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Enews – November 2016

In this month’s eNews we report on recent developments including the announcement that the plans to introduce a secondary market for annuities have been scrapped together with advice for employers on late filing penalties, avoiding incorrect RTI returns and the provision of childcare voucher provision and how to avoid incorrect RTI returns.

We also consider the latest tax gap statistics, updated phishing guidance from HMRC and a new website to help charities tackle fraud.

Please do get in touch if you would like any further guidance on any of the areas covered.

PAYE late filing penalties

HMRC have published the latest issue of the Employer Bulletin with articles on a variety of topics relevant to employers.

One article advises that HMRC have issued the Quarter 1 late filing penalty notices, which cover the period 6 April to 5 July 2016 and have confirmed that these penalties will continue to be issued on a risk assessed basis.

HMRC have confirmed that a late filing penalty will generally not be charged for delays of up to three days after the statutory filing date, but that they may contact employers who persistently file after the statutory filing date but within three days, and they risk being considered for a penalty.

The Bulletin includes advice on how to appeal against a penalty online and states:

‘If you receive a penalty notice which includes multiple penalty defaults and you believe you had a reasonable excuse for each, make sure you appeal against all of the defaults shown on your penalty notice, including any default with a zero charge. If your appeal is accepted, the un-penalised default can then be applied to a later month, reducing the value of any future penalty charges you might incur.’

Please contact us if you would like help with payroll matters.

Internet link: Employer Bulletin

Latest guidance for employers

Statutory Maternity Leave and Childcare Vouchers

Following the decision of an Employment Appeal Tribunal (Peninsula Business services v Donaldson) regarding Childcare Vouchers (CCVs), salary sacrifice and maternity leave, HMRC are considering what guidance is needed. In the interim they have confirmed:

If CCVs are provided under an employment contract, outside the scope of a salary sacrifice scheme, then the vouchers must continue to be provided during maternity leave and other periods of family leave (other than unpaid parental leave). There is legal authority that whether an employer must provide CCVs to a person participating in a salary sacrifice scheme in respect of a period when they are on family leave, depends on the terms of the contract of employment. In the Peninsula case, the contract said that an employee on maternity leave would not continue to receive CCVs. The judgment is only of direct relevance in dealing with similar contractual exclusions. Employers are free to continue making payments into a salary sacrifice scheme to buy CCVs on behalf of an employee on family leave if they wish. Use of CCVs that employees already have is not affected by the judgment.

Avoiding errors when reporting PAYE information to HMRC

This article is particularly concerned with incorrect reporting of CIS and statutory payments.

Please contact us if you would like help with payroll matters.

Internet link: Employer Bulletin

Tax gap falls to 6.5%

The Office for National Statistics has announced that the UK tax gap fell in 2014/15 to its lowest ever level of 6.5%.

The press release confirms that the UK tax gap, the difference between the amount of tax due and the amount collected, is one of the lowest in the world.

HMRC have reduced the tax gap from 8.3% in 2005/06. If the tax gap had remained at the 2005 to 2006 level of 8.3%, it would have grown to £47 billion and the country would have been £11 billion a year poorer.

HMRC believe that the tax gap has fallen, in part, due to digital reporting. In particular Real Time Information reporting for the PAYE system has led to more accurate recording of information on payroll taxes, and the shift to VAT online has helped bring the VAT gap in 2014/15 to its lowest level of 10.3% (£12.7 billion).

The Financial Secretary to the Treasury, Jane Ellison said:

This government is committed to tackling tax evasion and avoidance wherever it occurs.

The UK has one of the lowest tax gaps in the world. By investing £1.8 billion since 2010 in boosting HMRC compliance capabilities, we’ve brought our tax gap down to its lowest ever level. And to make it even easier for people to pay the right tax in the future, we’ve invested £1.3 billion in new digital tools.

Internet link: GOV.UK

HMRC update phishing guidance

HMRC have updated their guidance to taxpayers on how to spot phishing scam emails.

Phishing is the fraudulent act of emailing a person in order to obtain their personal/financial information such as passwords and credit card or bank account details. These emails often include a link to a bogus website designed to encourage the unwary to enter their personal details.

The HMRC guidance is designed to help taxpayers to recognise genuine contact from HMRC, and how to tell when an email/text message is phishing/bogus.

Internet link: GOV.UK recognising phishing emails

New website to help charities tackle fraud

The Charity Commission for England and Wales, together with members of the Charity Sector Counter Fraud Group, have launched a new website to help charities tackle fraud. The website is designed to provide guidance for trustees, staff and volunteers who want more information on tackling fraud in their charity, and includes guidance, tips and case studies, together with links to other organisations tackling charity fraud.

The new website has been launched to mark the start of Charity Fraud Awareness Week (24-28 October). The campaign reminds charities how to limit their fraud risk and aims to ensure that trustees and charity staff can recognise the warning signs of fraud and offers advice on an effective and proportionate response.

David Kirk, Chairman of the Fraud Advisory Panel, commented:

‘Fraud presents a serious threat to every organisation but unfortunately charities can be particularly vulnerable due to the high number of financial transactions they undertake. Fraud can manifest itself in many different forms and is constantly evolving – which is why we are urging everyone working with charities and not-for-profit organisations to join together and stop fraud against charities. Charity staff and trustees must stay alert to the risks and understand how to manage them.’

Internet links: www.charitiesagainstfraud.org.uk GOV.UK news

Plans to allow pensioners to sell annuities abandoned

The government has announced that it is shelving plans to allow pensioners to sell their annuities for a lump sum.

Many experts had predicted that those who sold their annuities would be likely to get a poor deal and the government has decided not to take forward the plans to introduce a secondary annuities market because the consumer protections required could undermine the market’s development.

It has become clear that creating the conditions to allow a competitive market to emerge could not be balanced with sufficient consumer protections.

The Economic Secretary to the Treasury, Simon Kirby, said:

‘Allowing consumers to sell on their annuity income was always dependent on balancing the creation of an effective market with making sure consumers are properly protected.

It has become clear that we cannot guarantee consumers will get good value for money in a market that is likely to be small and limited.

Pursuing this policy in these circumstances would put consumers at risk – this is something that I am not prepared to do.

The government has always been clear that for the majority of people keeping their annuity incomes will be their best option, estimating that only 5% of people who currently hold an annuity would take advantage of this reform.’

Internet link: GOV.UK news

Newsletter – September 2016

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Enews – September 2016

In this month’s eNews we report on recent developments including HMRC consultations on Making Tax Digital and new sanctions for tax avoidance as well as guidance on the implications of new UK GAAP.

We also report on HMRC’s advice on spotting scams, how to complain online and industry concerns about the introduction of the new Lifetime ISA.

We also include guidance for employers and employees including the new advisory fuel rates and the latest Employer Bulletin.

Please do get in touch if you would like any further guidance on any of the areas covered.

HMRC outline Making Tax Digital plans

HMRC have issued a series of consultation documents outlining further plans for the government’s Making Tax Digital (MTD) initiative.

HMRC have published six consultation documents on MTD. The six consultations set out detailed plans on how HMRC propose to make tax digital and to simplify the tax system. The consultations look at the following areas:

  • How digital record keeping and regular updates will operate – this considers compulsory digital record-keeping and quarterly ‘updates’ to HMRC and an End of Year declaration within nine months of the end of the period of account.
  • Options to simplify tax for unincorporated businesses, including changes to basis periods, extending cash basis accounting and reducing reporting requirements for unincorporated businesses.
  • Extending cash basis accounting to unincorporated property businesses.
  • Voluntary pay as you go arrangements, where taxpayers can pay what they want when they want, subject to the normal payment on account rules. Regular direct debit arrangements and quarterly payments on account are also being considered.
  • Changes to tax administration, including changes to the enquiry regime, penalties for late submission of quarterly updates and End of Year declarations and also the late payment of tax.
  • How HMRC will make better use of the information which they currently receive from third parties, including updating of PAYE codes more regularly and coding out of bank interest via PAYE.

Commenting on the plans, Jane Ellison Financial Secretary to the Treasury said:

‘This new system will make the UK’s tax administration more efficient and straightforward and will offer businesses greater clarity when it comes to paying their tax bills.’

However professional bodies have expressed their concerns about HMRC’s proposals. Frank Haskew, Head of the Tax Faculty at the Institute of Chartered Accountants in England and Wales, said:

‘This is not the time to be rushing through fundamental changes to business processes that are likely to result in major upheaval and extra costs, especially when the business benefit to the UK has not been clearly demonstrated.’

Under the Government’s plans, the changes to the tax system will be introduced gradually between 2018 and 2020. We will keep you informed of developments.

Internet link: GOV.UK MTD

Government propose new sanctions for tax avoidance

The government has announced new proposals for sanctions for ‘enablers and users of tax avoidance which is defeated by HMRC’.

The consultation proposes a new penalty for those who enable tax avoidance and changes to the existing penalty legislation which applies to those who use avoidance.

The proposals are to introduce ‘sanctions for those who design, market or facilitate the use of tax avoidance arrangements which are defeated by HMRC and to change the way the existing penalty regime works for those whose tax returns are found to be inaccurate as a result of using such arrangements.’

The government is seeking views on proposals for sanctions against those who enable or use tax avoidance arrangements which are later defeated.

Internet link: GOV.UK consultation

Accounting standards and the tax implications of new UK GAAP

HMRC have updated their guidance on the tax implications of changes to the ‘generally accepted accounting practice’ used to prepare financial statements as many UK companies will be required to apply one of the EU-endorsed IFRS, FRS 101 or FRS 102 over the next few years.

HMRC have stated that the purpose of these two papers is to assist companies who are thinking of choosing or have already chosen to apply either FRS 101 or FRS 102. The guidance includes an overview of the key accounting changes and key tax considerations that arise.

Please contact us if you would like information on how these changes will affect you and your business.

Internet link: GOV.UK accounting standards

HMRC genuine and phishing/bogus emails and calls

HMRC have issued an update of their guidance on how to recognise genuine HMRC contact be it via email or text.

They have also issued a warning regarding two telephone scams that they are aware of.

The details of the two phone scams are as follows:

  • Taxpayers receive telephone calls claiming to be from HMRC requesting personal information in order to receive a tax refund, or to demand money for an unpaid tax bill.
  • A recorded message is left, allegedly from HMRC, advising ‘that HMRC are bringing a lawsuit against the individual and is going to sue them. The recipient is asked to phone 0161 8508494 and press “1” to speak to the officer dealing with the case.

HMRC are advising that taxpayers should not reply to the message and should report this to Action Fraud, or you can call Action Fraud on 0300 123 2050.

Internet links: HMRC guidance Employer Bulletin

Complain to HMRC – online

HMRC have always had complaints procedures and have extended these to now include an online form which can be used to make complaints about your self-assessment and PAYE. The guidance also includes other ways to complain.

If you would like help with PAYE or self assessment issues please contact us.

Internet link: GOV.UK guidance

Government urged to delay the launch of Lifetime ISA

The government is being urged by both pension providers and banks to delay the April 2017 launch of the new Lifetime ISA as they are warning that they will not be ready to offer the savings product by this time.

A new Lifetime ISA introduces a new type of savings account for adults under the age of 40. Individuals will be able to contribute up to £4,000 per year and receive a 25% bonus from the government. Funds, including the government bonus, can be used to buy a first home at any time from 12 months after opening the account, and can be withdrawn from age 60 completely tax-free.

Further details of the new account, which is expected to be available from 2017, are as follows:

  • Any savings an individual puts into the account before their 50th birthday will receive an added 25% bonus from the government.
  • There is no maximum monthly contribution and up to £4,000 a year can be saved into a Lifetime ISA.
  • The savings and bonus can be used towards a deposit on a first home worth up to £450,000 across the country.
  • Accounts are limited to one per person rather than one per home, so two first time buyers can both receive a bonus when buying together.
  • Where an individual already has a Help to Buy ISA they will be able to transfer those savings into the Lifetime ISA in 2017, or continue saving into both. However only the bonus from one account can be used to buy a house.
  • Where the funds are withdrawn at any time before the account holder is aged 60 they will lose the government bonus (and any interest or growth on this) and will also have to pay a 5% charge.
  • After the account holder’s 60th birthday they will be able to take all the savings tax-free.

In the article published by This is Money pension providers Aegon and Standard Life have stated that they have delayed their plans until final details regarding the Lifetime ISA are released.

The Financial Conduct Authority (FCA) is yet to consult on the initiative. Steven Cameron, Pensions Director at Aegon, stated that a consultation is ‘likely to take three months’ to carry out.

Meanwhile, a spokesperson for Standard Life said: ‘As we want the Lifetime ISA to be a success, we would prefer that its launch is delayed until providers receive more detail on the product and how it is to be implemented.’

The Treasury is expected to confirm full details in the autumn.

Internet link: Article

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which take effect from 1 September 2016. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 September 2016 are:

Engine size Petrol
1400cc or less 11p
1401cc – 2000cc 13p
Over 2000cc 20p
Engine size LPG
1400cc or less 7p
1401cc – 2000cc 9p
Over 2000cc 13p
Engine size Diesel
1600cc or less 9p
1601cc – 2000cc 11p
Over 2000cc 13p

The guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.

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

Internet link: GOV.UK AFR

Guidance for employers

HMRC have issued their latest guidance to employers in the August edition of the Employer Bulletin. This publication, which is issued every two months, includes articles on:

  • expenses and benefits in kind consultations
  • HMRC Toolkits – helping to reduce errors
  • Automatic penalties for late intermediary returns
  • the Apprenticeship Levy and apprentices
  • guidance on paying HMRC
  • student loan deductions
  • Automatic enrolment update
  • National insurance contributions for employees over State Pension age
  • Basic PAYE tools usage
  • the impact on tax codes of the Personal Savings Allowance.

For help with your payroll contact us.

Internet link: Employer Bulletin

Newsletter – June 2016

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Advisory fuel rates for company cars

New company car advisory fuel rates have been published which took effect from 1 June 2016. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 June 2016 are:

Engine size Petrol
1400cc or less 10p
1401cc – 2000cc 13p
Over 2000cc 20p
Engine size LPG
1400cc or less 7p
1401cc – 2000cc 9p
Over 2000cc 13p
Engine size Diesel
1600cc or less 9p
1601cc – 2000cc 10p
Over 2000cc 12p

The guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.

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

Internet link: GOV.UK AFR

PAYE 3 days grace and risk based penalties to continue

HMRC have confirmed, in their updated guidance, that the three day easement and risk assessed approach to issuing penalties will continue to apply for 2016/17. As a result employers will not incur penalties for delays of up to three days in filing PAYE information during the 2016/17 tax year.

Late filing penalties will continue to be reviewed on a risk-assessed basis rather than be issued automatically.

Employers are required to file a Full Payment Submission (FPS) on or before each payment of wages is made to employees. Limited exceptions apply to this deadline which are set out at https://www.gov.uk/running-payroll/fps-after-payday’.

HMRC will not charge a late filing penalty for delays of up to three days after the statutory filing date, however employers who persistently file late, will be monitored and may be contacted or considered for a penalty.

If you would like help with payroll matters please do get in touch.

Internet link: GOV.UK Penalties

VAT Flat Rate Scheme guidance updated

HMRC have issued updated guidance on the operation of the VAT Flat Rate Scheme which allows taxpayers to calculate the VAT payable by applying a flat rate percentage to their VAT inclusive turnover, rather than netting off output and input VAT due on sales and purchases.

The revision in the guidance follows a number of unsuccessful visits to the First Tier Tribunal (FTT). HMRC has issued a revised version of VAT notice 733 Flat Rate Scheme to update their guidance in accordance with the FTT decisions.

The previous version of the notice listed a number of trades and professions (at paragraph 4.4 of the guidance) and indicated the relevant sectors and percentages that these types of business should choose. These had a higher percentage than the 12% rate which applies to ‘business services not listed elsewhere’.

The FTT was critical of HMRC in their rigid interpretation of their own guidance. Although this section of the guidance has not been removed, taxpayers are now advised to ‘use ordinary English’ and choose the sector which ‘most closely describes what your business will be doing in the coming year’. The new guidance confirms that HMRC will not change a business’s choice of sector retrospectively as long as the choice was reasonable.

Please contact us if you would like any advice on VAT matters.

Internet link: VAT Notice 733

NAO report says HMRC’s customer service quality ‘collapsed’

According to a report by the National Audit Office (NAO) the quality of service at HMRC ‘collapsed’ over an 18 month period between 2014 and 2015.

The report found that average call waiting times tripled in 2014/15 and in the first seven months of 2015/16. Call waiting times for self assessment tax returns peaked at 47 minutes last autumn, which resulted in HMRC having to bring in 2,400 extra staff for their tax helpline.

Using HMRC’s own criteria, the NAO valued people’s time at an average of £17 an hour, and, as a result, calculated that callers would have wasted a total of £66 million while waiting on the phone, £21 million while actually talking to HMRC and £10 million on the cost of the call itself.

The NAO report blames the poor performance on HMRC’s decision to cut 11,000 staff between 2010 and 2014 in the move to persuade more people to complete their tax returns online. The report claims that HMRC ‘misjudged the cumulative impact of its complex transition and released too many customer service staff before completing service changes’.

In other words, it greatly underestimated how many call centre staff would still be required to help taxpayers with self assessment queries.

Amyas Morse, head of the NAO, said:

‘HMRC’s overall strategy of using digitally enabled information to improve efficiency and deliver service in new ways make sense to the NAO. This does not change the fact that they got their timing badly wrong in 2014, letting significant numbers of call handling staff go before their new approach was working reliably.

This led to a collapse in service quality and forced a rapid expansion of headcount. HMRC needs to move forward carefully and get their strategy back on track while maintaining, and hopefully improving, service standards.’

HMRC said its service levels had improved since the period analysed in the NAO report, and that, over the last six months, call waiting times had averaged six minutes.

Ruth Owen, HMRC’s director general for customer services, said:

‘We recognise that early in 2015 we didn’t provide the standard of service that people are entitled to expect and we apologised at the time. We have since fully recovered and are now offering our best service levels in years.’

Internet links: NAO press release HMRC news

HMRC update phishing scam advice

HMRC have updated their guidance to taxpayers on how to spot phishing scam emails.

Phishing is the fraudulent act of emailing a person in order to obtain their personal/financial information such as passwords and credit card or bank account details. These emails often include a link to a bogus website designed to encourage the unwary to enter their personal details.

The HMRC guidance is designed to help taxpayers to recognise genuine contact from HMRC, and how to tell when an email/text message is phishing/bogus.

Internet link: HMRC guidance

HMRC urges claimants to renew tax credits online

HMRC are urging people to renew their tax credits claim well before the 31 July deadline.

HMRC have made improvements to the online renewal service and recommend claimants renew their claim online once they receive their renewal pack which is issued between April and June. The online service can now accommodate all changes in circumstances (working hours, childcare costs or income) which affect the amount of someone’s entitlement.

Nick Lodge, HMRC’s Director General, Benefits and Credits, said:

‘Our online service means that you can renew at any time of the day or night, and on any device, without having to call us. Online help can also answer most queries you may have and a web chat facility will be available to support people renewing online. We urge everyone who can to go online.

Our customers should check their details and renew early to ensure they get the right money. The sooner people renew their claim, the sooner we can check payments are correct, meaning we avoid paying too little money, or too much, which claimants then have to pay back.’

This year, claimants renewing online will be able to access further information, including viewing their next payment, through their own online Personal Tax Account.

Internet link: Press release

P11D deadline approaching

The forms P11D, and where appropriate P9D, which report details of expenses and benefits provided to employees and directors for the year ended 5 April 2016, are due for submission to HMRC by 6 July 2016. 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. The deadline for payment of the Class 1A NIC is 19th July (22nd for cleared electronic payment).

HMRC produce an expenses and benefits toolkit. The toolkit consists of a checklist which may be used by advisers or employers to check they are completing the forms correctly.

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

Internet links: HMRC guidance Toolkit

Newsletter – July 2015

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eNews – July 2015

In this month’s eNews we report on highlights of the Summer Budget. We also include an update on PAYE penalties, the latest jobs market statistics and the latest information on claiming the marriage allowance.

Please do contact us for further advice.

Budget announcements

Changes for ‘Buy to Let’ Landlords

Annual Investment Allowance certainty

The family home and IHT

National Living Wage

PAYE late filing penalties

Claiming the marriage allowance

Phishing emails HMRC examples

HMRC checking employees have paid the correct amount of tax on their pay

Statistics show employment rise in 2015

Budget announcements

George Osborne delivered his second budget of the year on 8 July 2015. Following the general election in May this was the first full Conservative budget since 1996. The budget focussed on reducing the budget deficit and moving from a ‘low wage, high tax, high welfare economy’ to a ‘higher wage, lower tax, lower welfare country.’ Brief details of some of the more significant proposals are set out below. Please contact us if you would like any further information on any of the issues.

Internet link: GOV Summer Budget

Changes for ‘Buy to Let’ Landlords

It was announced in the Budget that the government will restrict the amount of income tax relief landlords can claim on residential property mortgage interest costs to the basic rate of income tax.

This means that landlords will no longer be able to deduct all of their finance costs from their property income. They will instead be restricted to the basic rate. To give landlords time to adjust, the government will introduce this change gradually from April 2017, over four years.

This restriction will not apply to landlords of furnished holiday lettings and will not impact on basic rate tax paying landlords.

From April 2016 the government will replace the Wear and Tear Allowance with a new relief that allows all residential landlords to deduct the actual costs of replacing furnishings.

Internet link: TIIN landlords

Annual Investment Allowance certainty

The Chancellor announced that Annual Investment Allowance will be set permanently at £200,000 from 1 January 2016 providing certainty for businesses. The AIA provides a 100% deduction for the cost of most plant and machinery (not cars) purchased by a business, up to an annual limit and is available to most businesses.

The AIA was increased to £500,000 from 1 April 2014 for companies or 6 April 2014 for unincorporated businesses until 31 December 2015. However it was due to reduce to £25,000 after this date. The level of the maximum AIA will now be set permanently at £200,000 for all qualifying investment in plant and machinery made on or after 1 January 2016.

Where a business has a chargeable period which spans 1 January 2016 there are transitional rules for calculating the maximum AIA for that period and there will be two important elements to the calculations:

  • a calculation which sets the maximum AIA available to a business in an accounting period which straddles 1 January 2016
  • a further calculation which limits the maximum AIA relief that will be available for expenditure incurred from 1 January 2016 to the end of that accounting period.

It is the second figure that can catch a business out as demonstrated by the following example:

If a company has a 31 March year end then the maximum AIA in the accounting periods to 31 March 2016 will be:

9 months to December 2015 three quarters of £500,000 £375,000
3 months from January 2016 one quarter of £200,000 £50,000
Total annual AIA using first calculation £425,000

This is still a generous figure. However if expenditure is incurred between 1 January and 31 March 2016 the maximum amount of relief for will only be £50,000. This is because of the restrictive nature of the second calculation. Alternatively, the business could defer its expenditure until after 31 March 2016. In the accounting period to 31 March 2017, AIA will be £200,000. However tax relief will have been deferred for a full year.

Please contact us for specific advice for your business.

Internet link: TIIN AIA

The family home and IHT

The government has announced the introduction of a new transferrable nil rate band for the family home. The additional band will apply where a residence is passed on death to direct descendants such as a child or a grandchild. This will initially be £100,000 in 2017/18, rising to £125,000 in 2018/19, £150,000 in 2019/20, and £175,000 in 2020/21. The additional band can only be used in respect of one residential property which has, at some point, been a residence of the deceased.

The allowance is in addition to the inheritance tax nil rate band which is currently set at £325,000. By 2020/21 the total individual nil rate band will therefore total £500,000.

Any unused nil rate band may be transferred to a surviving spouse or civil partner. It will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil rate band, are passed on death to direct descendants. This element will be the subject of a technical consultation and will be legislated for in Finance Bill 2016.

There will also be a tapered withdrawal of the additional nil rate band for estates with a net value (after deducting any liabilities but before reliefs and exemptions) of more than £2 million. This will be at a withdrawal rate of £1 for every £2 over this threshold.

The IHT nil rate band is currently frozen at £325,000 until April 2018. This is to remain frozen until April 2021.

Internet link: TIIN IHT

National Living Wage

The government has announced the introduction of a new National Living Wage (NLW) for working people aged 25 years and above. The NLW will introduce a premium on top of the national minimum wage (NMW). Initially the premium is set at 70p above the current NMW although this will fall to a premium of 50p when the NMW increase comes into effect in October 2015. Further increases are to be recommended by the Low Pay Commission in order to achieve the government’s objective of reaching 60% of median earnings by 2020.

John Cridland, Director-General of the CBI, commented:

‘Small shops, hospitality firms and care providers are the businesses that will face real challenges in affording the National Living Wage.’

‘Delivering higher wages can only be done sustainably by boosting productivity. Bringing politics into the Low Pay Commission is a bad idea.’

Internet link: CBI press release

PAYE late filing penalties

HMRC have now issued the first in-year penalties notices to employers with fewer than 50 employees who missed the deadline for sending PAYE information to HMRC.

Rather than issue late filing penalties automatically when a deadline is missed, HMRC have announced that they will ‘take a more proportionate approach and concentrate on the more serious defaults on a risk-assessed basis.’

This approach is in line with the likely direction of HMRC’s general approach to penalties, outlined in the HMRC penalties: a discussion document which they issued earlier this year. HMRC have confirmed that this ‘risk-based’ approach will apply to submissions that were late from:

  • 6 March 2015 for employers with fewer than 50 employees; and
  • 6 January 2015 for employers with 50 or more employees.

Penalties for 2015/16 will also continue to be risk-based.

HMRC had previously announced that they will not be penalising minor delays of up to three days.

HMRC are reminding employers:

‘Even if employers do not get a penalty, they are required by law to file on time and if they do not may be charged a penalty on a future occasion. The deadlines for sending PAYE information stay the same, including the requirement to send PAYE information on or before the time that employees are actually paid or due to be paid.’

HMRC have confirmed the process employers should use to appeal a penalty using the using the Penalties and Appeals System (PAS) on HMRC Online. Employers who receive a late filing penalty notice for tax year 2014/15 quarter 4 but who filed within three days of the reporting deadline may appeal and should use reason code A as set out in the What happens if you don’t report payroll information on time guidance.

Please contact us if you would like help with your payroll.

Internet link: GOV news

Claiming the marriage allowance

The Low Incomes Tax Reform Group published updated their guidance on how to apply for the new transferable personal allowance, known as the marriage allowance, for married couples and civil partners which came into effect on 6 April 2015.

The transfer of part of the personal allowance between spouses (or civil partners) allows eligible couples to save up to £212 tax in a year.

The marriage allowance enables an individual whose income does not allow them to make use of their full personal allowance, currently £10,600, to transfer 10% (£1,060) of this allowance to their partner. Their spouse or civil partner is then able to set their own personal allowance, plus the transferred part of their partner’s allowance, against their own income. This increase in usable allowances should result in a tax saving of up to £212 in a year for a couple (20% of £1,060).

The transfer can only be made if the spouse or civil partner who receives the transferred allowance is not a higher-rate taxpayer (meaning that in 2015/16 they have an income of more than £42,385.

Currently an individual can only claim to transfer the marriage allowance to their partner by registering online via GOV.UK. The individual will then be prompted to use GOV.UK’s Verify procedure to confirm their identity which requires the individual to have a UK passport or driving licence. A phone option is also available If the individual is unable to confirm their identity using Verify they will be advised to call HMRC’s PAYE helpline on 0300 200 3300.

Internet link: News

Phishing emails HMRC examples

HMRC have updated their list of examples of emails, letters, text messages and bogus calls used by ‘scammers’ and fraudsters to get taxpayers personal information.

This guidance provides examples of the different methods that fraudsters use to obtain personal information.

Internet links: Examples GOV news

HMRC checking employees have paid the correct amount of tax on their pay

HMRC have started to check that people have paid the right amount of tax in 2014/15, a process they refer to as the annual End of Year Reconciliation process.

They will be sending out forms P800 first which show details of the calculation showing the under or over payment. However, where an overpayment of PAYE has been made they should issue the cheque approximately two weeks later. For those who have underpaid tax for the year the P800 will detail how this tax will be collected, generally by adjustment of the PAYE tax code for 2016/17.

HMRC’s press release states:

‘This automated process ensures those who have had a change in circumstances during the last tax year (2014/15) that was not captured in their tax code have paid no more or less than they should. Any discrepancy could be because the taxpayer changed jobs, had more than one job for a time, a change of company car or received investment income that was not reported during the year.’

Where HMRC’s calculations show that the correct amount of tax has been paid for the year HMRC will not contact the individuals concerned. HMRC expect that the vast majority of PAYE taxpayers will have paid the right amount of tax for the year.

If you would like help reconciling your tax position please do get in touch.

Internet links: GOV news Understanding and checking your P800 Tax Calculation

Statistics show employment rise in 2015

The Office for National Statistics (ONS) has released figures showing that UK employment rates were up between February and April compared to the three months to January 2015. As detailed in the press release the figures show:

  • ‘There were 31.05 million people in work, 114,000 more than for the 3 months to January 2015 and 424,000 more than for a year earlier.
  • There were 22.74 million people working full-time, 362,000 more than for a year earlier. There were 8.31 million people working part-time, 63,000 more than for a year earlier.
  • The proportion of people aged from 16 to 64 in work (the employment rate) was 73.4%, up slightly from the 3 months to January 2015 (73.3%) and higher than for a year earlier (72.7%).
  • There were 1.81 million unemployed people. This was 43,000 fewer than for the 3 months to January 2015 and 349,000 fewer than for a year earlier.
  • Comparing February to April 2015 with a year earlier, pay for employees in Great Britain increased by 2.7% both including and excluding bonuses.’

Employment Minister Priti Patel said: ‘Today’s figures confirm that our long-term economic plan is already starting to deliver a better, more prosperous future for the whole of the country, with wages rising, more people finding jobs and more women in work than ever before’.

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

‘These figures provide more evidence that the wage squeeze has eased, with private sector pay increasing almost as fast as it was before the crisis. At the same time, firms are creating more jobs.’

‘If we are to deliver sustainable higher wage growth, we need to see a rise in productivity. That means businesses investing in skills, and the Government helping firms innovate by supporting investment in next month’s Budget.’

‘These figures are testament to the strength of our flexible labour market, which has helped British firms create a strong number of permanent full-time jobs.’

Internet links: ONS bulletin Press release

Newsletter – February 2015

Posted on by

eNews – February 2015

This month we report on changes to auto enrolment limits, the launch of Pension wise and the Fit for Work service. We also update you on the latest HMRC phishing scam emails and the success of Accelerated Payment Notices. Please contact us if you would like any further information on these or any other issues.

Government publishes guidance on new ‘Fit for Work’ service

Accelerated Payment notices

HMRC warn of phishing email scam

Auto enrolment letters and updated thresholds

Government wants suggestions for Budget 2015

Pension wise

Strong demand for National Savings ‘pensioner bonds’

Government publishes guidance on new ‘Fit for Work’ service

The Government has published guidance on its new Fit for Work service, which aims to help tackle the problem of long-term sickness absence.

The service is being introduced to facilitate the return to work of employees who have been off sick for a period of four weeks or more. The new service will enable employers to refer their employees, with the employee’s consent, for an occupational health assessment. Following the assessment, a return to work plan will be created, including recommendations for employers on how to assist the employee with getting back to work.

A benefit in kind tax exemption of up to £500 per year per employee will be available for employer spending on medical treatments recommended by the assessment which help employees to return to work.

The Department for Work and Pensions is advising employers to update their sickness policies to reflect the existence of the new service.

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

Internet link: fit-for-work-employers-guide

Accelerated Payment notices

HMRC have announced that they have secured almost all of the disputed tax due from the first group of tax avoidance scheme users to receive Accelerated Payment notices (APNs). An APN forces the taxpayer to make payment to HMRC of tax currently under dispute within 90 days of being issued with a notice. APNs are being introduced to counteract the perceived cash flow advantage for the taxpayer of holding onto the disputed tax during an avoidance dispute.

Approximately 30 scheme users were advised in August 2014 that they had 90 days to pay a total of around £29 million of disputed tax upfront under the new Accelerated Payments regime.

HMRC have announced that over 99% of this money was paid within the deadline, with several payment arrangements also in place. HMRC have received £32 million in disputed tax to date.

Financial Secretary to the Treasury David Gauke said:

‘The high success rate for the first set of Accelerated Payments notices shows avoidance scheme users are having to face up to the reality that they should pay their tax upfront, like the vast majority of taxpayers.

As we move into 2015 and HMRC ramps up the number of notices it sends out, thousands more will get the message that Accelerated Payments has changed the economics of tax avoidance.’

Jennie Granger, Director General for Enforcement and Compliance, HMRC, said:

‘These results show HMRC is making good progress in tackling marketed tax avoidance. If anyone is concerned about being able to pay an Accelerated Payment notice, they should contact us as soon as possible to discuss their options.’

Internet link: Gov news

HMRC warn of phishing email scam

HMRC are warning taxpayers to be wary of the latest in a long line of email phishing scams that claims taxpayers have ‘made mistakes while completing their last tax form application’.

HMRC have updated their list of phishing email scams to include the latest bogus email being circulated. According to HMRC:

‘the email contains a link which should not be clicked as it may direct you to a phishing site or contain malware. Do not respond to this email. Forward it to phishing@hmrc.gsi.gov.uk then delete it.’

Internet link: HMRC examples

Auto enrolment letters and updated thresholds

The Pensions Regulator (TPR) is to write to all small and micro businesses in the coming months as part of a new campaign to give them key information on auto enrolment, including when the duties affect their businesses.

In addition the auto enrolment qualifying earnings bands and earning thresholds have been announced for 2015/16. These thresholds are relevant to employers complying with their automatic enrolment obligations to enrol and then make pension contributions for eligible employees. Employers must meet their obligations from their staging date which can be found by using TPR Website tool.

The revisions in the limits take effect from 6 April 2015 and follow the recommendations from consultation with interested parties.

TPR proposes to revise the limits to the following amounts:

  • £5,824 for the lower limit of the qualifying earnings band
  • £42,385 for the upper limit of the qualifying earnings band

These limits are used by employers to calculate how much pension contributions are due where band earnings are the basis of calculation.

The amount someone must earn to be automatically enrolled into a workplace pension (the earnings trigger) will remain at £10,000 per annum instead of being aligned with the personal allowance as it has been for previous years following concerns that low paid workers will miss out on pension contributions.

If you would like help with auto enrolment please do get in touch.

Internet links: Gov Press release

Government wants suggestions for Budget 2015

HM Treasury is encouraging groups, individuals and representative bodies to submit their ideas for consideration in advance of Budget 2015.

HM Treasury has also published guidance on the correct procedure for making a representation, which advises that ‘representations should contain policy suggestions for the upcoming fiscal event and explain the policy rationale, costs, benefits and deliverability of proposals’.

‘It should also be evidence based, providing clear arguments on how it contributes to the aims of the Budget.’

Written representations for the 2015 Budget can be submitted until Friday 13 February, via an online survey or by emailing budget.representations@hmtreasury.gsi.gov.uk.

Chancellor George Osborne will present Budget 2015 on Wednesday 18 March.

Internet link: News

Pension wise

The government has announced the launch of ‘Pension wise’ which will offer free and impartial guidance to people on the new pension freedoms which comes into effect in April.

Economic Secretary to the Treasury Andrea Leadsom has unveiled the name and logo of the new pensions guidance service.

Pension wise will offer free and impartial information and guidance to people with a defined contribution pension approaching retirement and will be available from April 2015 for individuals approaching retirement.

Economic Secretary to the Treasury Andrea Leadsom said:

‘People who have worked hard and saved all their lives will be free to choose what they do with their money from next April.

We want people to be empowered to make informed and confident choices and I’m delighted to announce Pension wise: Your money. Your choice as the brand name for the impartial guidance service we are building.

Pension wise will be a first port of call for people with a defined contribution pension who are approaching retirement. It is a distinctive brand, making it easy for consumers to know where to go for help and guidance.’

Internet link: News

Strong demand for National Savings ‘pensioner bonds’

The National Savings & Investments website and helpline are experiencing a high volume of enquiries following the launch of their 65+ Guaranteed Growth Bonds which are being referred to as ‘pensioner bonds’.

The bonds are available for a period of one or three years. The taxable bonds offer savers interest of 2.8% over one year and a fixed annual interest rate of 4% over three years with a minimum investment of £500. Investors are restricted to a maximum investment of £10,000 in each of the two products offered.

The new bonds cannot be held within a New Individual Savings Account (NISA) and only pay interest at the end of the savings term. Where investors cash in their investment early, a penalty equivalent to 90 days’ interest will be applied.

Internet link: NS&I bonds