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Newsletter – January 2015

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eNews – January 2015

In this month’s eNews we report on a number of issues including an update on the calculation of holiday pay, construction industry changes ahead, guidance on VAT and digital services and the latest disclosure opportunity for solicitors.

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

Changes to the Construction Industry Scheme (CIS)

VAT and digital services

1,773 ‘happy returns’ at Christmas

Holiday pay and overtime update

Tax on the diverted profits dubbed the new ‘Google tax’

Solicitors’ Tax Campaign

RTI: filing penalties and appeals

Changes to the Construction Industry Scheme (CIS)

The government has announced that it will implement a package of improvements to the CIS. The stated aim of the changes is to reduce the administrative and related cost burden on construction businesses. The measures should result in more subcontracting businesses being able to achieve and maintain gross payment status so improving their cashflow. These changes are to be implemented in stages.

From 6 April 2015 the following amendments will be made to the system:

  • The requirement for a contractor to make a return to HMRC even if the contractor has not made any payments in a tax month will be removed. Contractors may make a voluntary nil return but will no longer be obliged to do so.
  • The requirements for joint ventures to gain gross payment status will be relaxed where one member already has this status and that firm or company has a right to at least 50% of the assets or the income or holds at least 50% of the shares or the voting power in the joint venture.
  • Earlier repayments can be made to liquidators in insolvency proceedings. Currently where a subcontractor is a company, no repayment of any amount deducted and paid over to HMRC by a contractor can be made to the subcontractor until after the end of the tax year in which the deduction was made. These rules will be amended so that in certain cases where the amount deducted by the contractor is excessive, a repayment can be made during the tax year.

From 6 April 2016 further changes are proposed:

  • Mandatory online filing of CIS returns will be introduced with the offer of alternative filing arrangements for those unable to access an online channel by reason of age, disability, remote location or religious objection.
  • The directors’ self assessment filing requirements will be removed from the initial and annual compliance tests.
  • The threshold for the turnover test will be reduced to £100,000 in multiple directorship situations.

From 6 April 2017 mandatory online verification of subcontractors will be introduced.

Internet link: CIS

VAT and digital services

HMRC have issued some additional guidance for small businesses which supply digital services to consumers in other EU Member States.

The guidance advises:

  • how to comply with new VAT rules on the place of supply of digital services that came into force on 1 January 2015
  • how to register for HMRC’s VAT Mini-One Stop Shop (MOSS) and still benefit from the UK’s VAT registration threshold for sales to UK consumers.

On 1 January 2015, the VAT rules for cross-border Business to Consumer supplies of ‘digital services’ (for example broadcasting, telecoms and e-services) changed. Broadly from that date, VAT must be accounted for in the Member State where the consumer normally is, rather than where the supplier of the service is established.

HMRC have also issued more general guidance on the change to all businesses which can be found here

If you would like further information on this issue please contact us.

Internet links: News Guidance

1,773 ‘happy returns’ at Christmas

HMRC have reported that they received 1,773 online tax returns on Christmas Day, with the busiest time for online returns on 25 December between midday and 1pm, when 148 Yuletide returns were delivered electronically.

Christmas Eve, which has traditionally been a much busier day for festive filing than Christmas Day, saw 17,644 online returns successfully submitted.

In total, 24,228 online returns were received over the three-day festive period (including Boxing Day) which was a 5% increase on the 2013 total.

HMRC Director General of Personal Tax, Ruth Owen, said:

‘You can file your online return at any time of day or night – even Christmas Day, if it suits you. But don’t leave it too late. Give yourself plenty of time to resolve any problems and if you need to call us, do it now, as our phone lines get much busier as the 31 January deadline approaches.’

The deadline for sending 2013/14 tax returns to HMRC, and paying any tax owed, is 31 January 2015.

Internet link: Gov news

Holiday pay and overtime update

We have previously reported that in the judgment an Employment Appeal Tribunal (EAT) decided that holiday pay should reflect non-guaranteed overtime.

Under the Working Time Regulations 1998 most workers are entitled to paid statutory annual leave. This is 5.6 weeks (28 days) if the employee works five days a week. A worker is entitled to be paid in respect of any period of annual leave for which they are entitled, at a rate of one week’s pay for each week’s leave.

The EAT considered three cases in which employees were required to work overtime if requested by their employees. The EAT referred to this type of overtime as non-guaranteed overtime. The Tribunal decided in the context of non-guaranteed overtime:

  • overtime payments must be taken into account in the calculation of holiday pay if there is a settled pattern of work
  • if the amount of overtime varies but is regularly paid, overtime payments must also be taken into account on an average basis.

Following fears that employers may face large backdating claims the Government has taken action to reduce potential costs to employers by limiting claims by introducing regulations which will mean that claims to Employment Tribunals on this issue cannot stretch back further than two years.

Employees can still make claims under the existing arrangements for the next six months which will act as a transition period before the new rules come into force. The changes apply to claims made on or after 1 July 2015.

Employers and employees can also contact the Acas helpline for free and confidential advice.

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

Internet links: ACAS guidance Gov news

Tax on the diverted profits dubbed the new ‘Google tax’

The government has published draft tax legislation to implement the new tax on diverted profits which has been referred to as the ‘Google tax’. The introduction of a new Diverted Profits Tax which was announced in the 2014 Autumn Statement will target multinational enterprises with business activities in the UK who ‘enter into contrived arrangements to divert profits from the UK by avoiding a UK taxable presence and/or by other contrived arrangements between connected entities’.

The Diverted Profits Tax will be applied using a rate of 25% from 1 April 2015 and is expected to raise £1.4bn over the course of the next five years.

Commenting on the new measure, John Cridland, Director General of the CBI said:

‘International tax rules are in urgent need of updating but there is already an OECD process underway to do this. It is unfortunate that the UK has decided to go it alone with a Diverted Profits Tax outside this process, which will be a real concern for global businesses.’

‘The legislation will be complex to apply, and if other countries follow suit businesses will have a patchwork of uncoordinated unilateral rules to navigate, which risks undermining the whole OECD approach.’

Internet link: CBI News

Solicitors’ Tax Campaign

Solicitors are being given the chance by HMRC to bring their tax affairs up to date or face tougher penalties, as part of a new tax campaign.

The Solicitors Tax Campaign gives solicitors the opportunity to declare any undisclosed income by making a voluntary disclosure. The disclosure opportunity is available to those working within the legal profession either as a solicitor in a partnership or company, or as an individual.

Those affected have until 9 March 2015 to notify HMRC of the undisclosed income and need to complete a disclosure form and pay the outstanding liability by 9 June 2015.

Caroline Addison, Head of Campaigns, HMRC, said:

‘Information gathered by HMRC has allowed us to identify solicitors who thought they could operate without declaring income and paying the taxes that others have to pay. If you have not declared all of your income, you need to put your tax affairs in order. Take this chance to come forward and put things right in a straightforward way and on the best possible terms. It will be easier and cheaper for you to come to us than for us to come to you. Those who make a deliberate decision not to pay the taxes due could face a penalty of 100% or more of the tax due, or even a criminal prosecution.’

Internet links: Gov news1 Gov news2

RTI: filing penalties and appeals

In the latest Employer Bulletin HMRC are reminding employers that they are about to issue penalty notices to those employers who have failed to meet their RTI filing obligations.

Late filing penalties began on 6 October for employers with schemes of 50 or more employees. Those employers who have incurred these penalties will start to receive the penalty notices, which will be issued on a quarterly basis, from the beginning of February 2015.

The notice will be in the form of a ‘paper letter’, and will set out all filing penalties incurred for the third quarter of 2014/15 ( for tax months 7, 8 and 9 covering the period 6 October to 5 January 2015). The penalty notices may contain more than one penalty.

Agents are not sent a copy of this notice so if you receive one and would like guidance on whether the penalty is due or how to appeal against it please do get in touch as soon as possible. Further guidance on this issue can be found on page four of the latest Employer Bulletin.

Internet link: Employer bulletin

Newsletter – December 2014

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eNews – December 2014

In this month’s eNews we report on a number of issues including the Autumn Statement announcement of the changes to Stamp Duty Land Tax. We also include the latest advisory fuel rates and the EAT ruling on holiday pay and overtime.

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

Autumn Statement

Stamp Duty Land Tax (SDLT)

Incorporation – restriction of relief for goodwill and Entrepreneurs’ relief

Employment benefits changes ahead

Personal allowances and tax bands 2015/16

Holiday pay and overtime

Advisory Fuel rates for company cars

Do you employ anyone under the age of 21?

Gift Aid declaration to be improved – potentially saving charities billions of pounds

Helping employers identify a pension scheme for automatic enrolment

HMRC warning ‘Ten things you need to know about tax avoidance’

Autumn Statement

The Chancellor George Osborne delivered his Autumn Statement on 3 December and said:

‘…to improve the productivity of our economy, we back business and we build infrastructure and we will support growth across the whole UK.’

‘But in the end, Britain’s future lies in the hands of its people and their aspirations.

The aspiration to save, to work, and to buy a home. Today we support each one.’

We have included details of some of the major announcements.

Internet link: gov.uk

Stamp Duty Land Tax (SDLT)

One of the Autumn Statement announcements is a major reform to SDLT on residential property transactions. Historically SDLT has been charged at a single percentage of the price paid for the property, depending on the rate band within which the purchase price falls. From 4 December 2014 each new SDLT rate will only be payable on the portion of the property value which falls within each band. This will remove the distortion created by the existing system, where the amount of tax due jumps at the thresholds.

Where contracts have been exchanged but not completed on or before 3 December 2014, purchasers will have a choice of whether the old or new structure and rates apply. This measure will apply in Scotland until 1 April 2015 when SDLT is devolved to the Scottish Parliament.

The new rates and thresholds are:

Purchase price of property New rates paid on the part of the property price within each tax band
£0 – £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1,500,000 10%
£1,500,001 and above 12%

The government believes that this reform makes SDLT more efficient and fairer, and ensures that SDLT will be cut for 98% of people who pay it.

Internet link: gov.uk

Incorporation – restriction of relief for goodwill and Entrepreneurs’ relief

Corporation tax relief is given to companies when goodwill and intangible assets are recognised in the financial accounts. Relief is normally given on the cost of the asset as the expenditure is written off in accordance with Generally Accepted Accounting Practice or at a fixed 4% rate, following an election.

In the Autumn Statement an anti-avoidance measure has been announced to restrict corporation tax relief where a company acquires internally-generated goodwill and certain other intangible assets from related individuals on the incorporation of a business.

In addition, individuals will be prevented from claiming Entrepreneurs’ Relief on disposals of goodwill when they transfer the business to a related company. Capital gains tax will be payable on the gain at the normal rates of 18% or 28% rather than 10%.

These measures will apply to all transfers on or after 3 December 2014 unless made pursuant to an unconditional obligation entered into before that date.

Prior to this announcement it was possible, for example, on incorporation of a sole trader’s business to a company which is owned by the sole trader, for the company to obtain corporation tax relief on the market value of goodwill at the time of incorporation. The disposal by the sole trader would qualify for a low rate of capital gains tax.

Internet link: gov.uk

Employment benefits changes ahead

In the Autumn Statement the government announced a package of measures which will impact the treatment of employee benefits in kind and expenses.

  • From 6 April 2015 there will be a statutory exemption for trivial benefits in kind costing less than £50.
  • From 6 April 2016, the £8,500 threshold below which employees do not pay income tax on certain benefits in kind will be removed. This threshold adds unnecessary complexity to the tax system. There will be new exemptions for carers and ministers of religion.
  • There will be an exemption for certain reimbursed expenses which will replace the current system where employers apply for a dispensation to avoid having to report non-taxable expenses. The new exemption for reimbursed expenses will not be available if used in conjunction with salary sacrifice.
  • The introduction of a statutory framework for voluntary payrolling benefits in kind. Payrolling benefits instead of submitting forms P11D can offer substantial administrative savings for some employers.

Please contact us if we can help with employee benefits and expenses reporting.

Internet link: gov.uk

Personal allowances and tax bands 2015/16

For those born after 5 April 1948 the personal allowance will be increased from £10,000 to £10,600. The reduction in the personal allowance for those with ‘adjusted net income’ over £100,000 will continue. The reduction is £1 for every £2 of income above £100,000. So for 2014/15 there is no allowance when adjusted net income exceeds £120,000. In 2015/16 the allowance ceases when adjusted net income exceeds £121,200.

The basic rate of tax is currently 20%. The band of income taxable at this rate is being decreased from £31,865 to £31,785 so that the threshold at which the 40% band applies will rise from £41,865 to £42,385 for those who are entitled to the full basic personal allowance.

The additional rate of tax of 45% is payable on taxable income above £150,000.

Dividend income is taxed at 10% where it falls within the basic rate band and 32.5% were liable at the higher rate of tax. Where income exceeds £150,000, dividends are taxed at 37.5%.

Starting rate of tax for savings income

From 6 April 2015, the maximum amount of an eligible individual’s savings income that can qualify for the starting rate of tax for savings will be increased to £5,000 from £2,880, and this starting rate will be reduced from 10% to nil. These rates are not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income) exceeds the starting rate limit.

This will increase the number of savers who are not required to pay tax on savings income, such as bank or building society interest. If a saver’s taxable non-savings income will be below the total of their personal allowance plus the £5,000 starting rate limit then they can register to receive their interest gross using a form R85.

Internet link: gov.uk

Holiday pay and overtime

In the judgment an Employment Appeal Tribunal (EAT) has decided that holiday pay should reflect non-guaranteed overtime.

Under the Working Time Regulations 1998 most workers are entitled to paid statutory annual leave. This is 5.6 weeks (28 days) if the employee works five days a week. A worker is entitled to be paid in respect of any period of annual leave for which they are entitled, at a rate of one week’s pay for each week’s leave.

The EAT considered three cases in which employees were required to work overtime if requested by their employees. The EAT referred to this type of overtime as non-guaranteed overtime. The Tribunal decided in the context of non-guaranteed overtime:

  • overtime payments must be taken into account in the calculation of holiday pay if there is a settled pattern of work
  • if the amount of overtime varies but is regularly paid, overtime payments must also be taken into account on an average basis.

Vince Cable has announced the setting up of a taskforce to assess the possible impact of the Employment Appeal Tribunal ruling on holiday pay.

Business Secretary Vince Cable said:

‘Government will review the judgment in detail as a matter of urgency. To properly understand the financial exposure employers face, we have set up a taskforce of representatives from government and business to discuss how we can limit the impact on business. The group will convene shortly to discuss the judgment.

Employers and employees can also contact the Acas helpline for free and confidential advice.

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

Internet links: Acas guidance Gov News EAT

Advisory Fuel rates for company cars

New company car advisory fuel rates have been published which took effect from 1 December 2014. 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 2014 are:

Engine size Petrol
1400cc or less 13p
1401 cc – 2000cc 16p
Over 2000cc 23p

 

Engine size LPG
1400cc or less 9p
1401 cc – 2000cc 11p
Over 2000cc 16p

 

Engine size Diesel
1600cc or less 11p
1601cc – 2000cc 13p
Over 2000cc 16p

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

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

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

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

Internet link: gov.uk

Do you employ anyone under the age of 21?

From the 6 April 2015, if any of your employees are under the age of 21 you may no longer need to pay employer Class 1 secondary National Insurance contributions (NICs) on their earnings.

The rate of employer Class 1 NICs for employees under the age of 21 will be 0% up to the new ‘Upper Secondary Threshold’ (UST) which, for the tax year starting 6 April 2015, will be the same as the Upper Earnings Limit (UEL). Class

1 NICs will however continue to be payable on all earnings above this threshold. The basic rules and calculations of National Insurance including how Class 1 NICs are assessed will not be changed by this measure.

For employees who are at, or over, the age of 16 and under the age of 21 there will be a range of new NI category letters to available. From 6 April 2015, when submitting PAYE information for employees under the age of 21 employers will need to use the new category letter appropriate to the individual.

Seven new National Insurance category letters have been introduced. The most commonly used one will be category M:- Not contracted-out standard rate contributions for employees under 21.

Employers (or their agents) are responsible for ensuring they report the correct category letter. To do this, employers will need to make sure they hold the correct date of birth for employees.

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

Internet link: Employer Bulletin

Gift Aid declaration to be improved – potentially saving charities billions of pounds

The Gift Aid model declaration form is to be improved, to stop charities potentially losing out on billions of pounds of Gift Aid.

The National Audit Office estimates there are donations of around £2.3 billion where Gift Aid is not used. Although not all of these donations will be eligible for Gift Aid, the government is working with charities to boost the number of eligible donations.

One way it hopes to do this is by improving the model Gift Aid declaration form, as research has identified that many donors do not understand Gift Aid and the link between the tax they have paid and Gift Aid claimed by the charity. Possible improvements include making the language used about Gift Aid more straightforward to enable donors to decide if their donations qualify for relief.

Exchequer Secretary to the Treasury, Priti Patel said:

‘Gift Aid is an important tax relief for charities which helps to provide essential revenue to charitable causes. This research shows that there is more that government can do to boost eligible donations which is why we are simplifying the declaration forms to make sure donors understand when they’re eligible so that charities can maximise the financial donations they receive.’

Internet link: gov.uk

Helping employers identify a pension scheme for automatic enrolment

The Pensions Regulator (TPR) has opened consultation on a proposal to publish a list of pension schemes that are available to any employer, regardless of the number or workers the employer has or their levels of pay.

According to research carried out by the Department for Work and Pensions 48% of small and 79% of micro employers currently have no pension scheme and will have to choose a new one as they prepare for automatic enrolment.

TPR state they are ‘aware of 30-40 providers who offer a scheme for automatic enrolment. Of these, a much smaller number of schemes have indicated they will not reject employers on the basis of size or low value. Even fewer schemes have indicated they will accept all employers who approach them.’

To read more about this issue and the consultation visit the link below.

Internet link: thepensionsregulator.gov.uk

HMRC warning ‘Ten things you need to know about tax avoidance’

HMRC have published a list of factors to consider before buying into a ‘scheme’. The list sets out the risks of entering into a tax avoidance scheme including the possible monetary costs and reputational damage of tax avoidance, but also a potential criminal conviction.

This list is being published as HMRC writes to the first promoters who will be caught by new High-Risk Promoters rules. If they don’t change their behaviour, HMRC could name them publicly and fines might be imposed of up to £1 million.

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

‘The government has taken unprecedented steps to clamp down on the selfish minority who practise tax avoidance, because we are firmly on the side of the vast majority of taxpayers who play by the rules. As a result, tax avoidance is now very high risk.

On top of a substantial fee to join a scheme that will almost certainly fail a challenge by HMRC, tax avoiders will also have to pay the tax they dodged, plus interest and penalties.

To help protect taxpayers from unscrupulous promoters we have put in place new High-Risk Promoters rules, but people need to be aware of the dangers. So I would strongly advise anyone thinking of signing up to a scheme which they have been told will legally reduce their tax bill to carefully consider today’s list of things a promoter may not tell you.’

Internet link: Gov News

Newsletter – July 2014

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eNEWS – July 2014

In this month’s enews we report on VAT and prompt payment discounts, changes to flexible working rights, challenges to the calculation of holiday pay and new PAYE messages for employers. Please do get in touch if you would like more detail on any of the articles.

VAT and prompt payment discounts

Businesses which currently offer prompt payment discounts (PPD) to their customers need to be aware that there are some changes ahead to the rules.

Currently under UK law VAT is payable on the net amount after deducting the discount, whether or not the customer takes advantage of the PPD and pays promptly.

For example if you sell some goods for £1,000 plus VAT and offer 5% discount if the customer pays within 10 days then VAT is charged at 20% on £950 being £190, rather than 20% of £1,000 which is £200. Even if the customer takes 30 days to pay and therefore does not qualify for the PPD, the amount due will be £1,190.

This rule regarding PPD is in the process of being changed and from 1 April 2015 VAT will be due on the amount the customer actually pays. So using the above example if the customer fails to take advantage of the PPD he would need to pay the full £1,000 plus VAT of £200.

The business making the supply will have to issue a credit note to account for the PPD where this is taken up. So using the same example if the customer takes up the discount then the credit note would be for £50 plus £10 VAT.

Apparently PPD have been widely used by suppliers of telecommunications and broadcasting services and so the use of PPD to reduce VAT due has already been blocked in those sectors from 1 May 2014. This applies where the customer cannot recover the VAT charged.

If your business currently offers PPD you may need to change your invoicing procedures from 1 April 2015 and the Government are going to consult on the implementation of the change. We will keep you informed of the details of the changes as and when further detailed guidance is made available.

Internet link: VAT TIIN

Holiday pay law

The CBI are warning that employers are facing the risk of significant additional costs, potentially ‘billions of pounds’, from employment tribunals challenging the normal calculation of holiday pay under the Working Time Regulations (WTR).

In the UK holiday pay is currently calculated on the basis of a ‘week’s pay’ which is based on basic salary and excludes payments such as working allowances, expenses, overtime, commission and bonus payments as these payments relate to specific work done by an employee whilst performing their duties of employment.

A recent European Court of Justice (ECJ) judgment redefined holiday pay to include an allowance for commission, even though commission is paid on sales made and the employee would not have delivered those sales whilst on holiday.

If liabilities on holiday pay are backdated then employers may face huge liabilities for holiday pay arrears.

Katja Hall, CBI Deputy Director-General, said:

‘Backdated claims on holiday pay could lead to bills of millions of pounds for each business, and ultimately threaten their very existence.’

‘Businesses that have done the right thing and fully complied with UK law suddenly face the threat of substantial additional costs. And the companies most at risk are in vital sectors for our economy, such as manufacturing, construction and civil engineering.’

‘Moving the legal goalposts in this way is unacceptable. Although most businesses believe we are better off in a reformed EU, there is a real danger of expansive decisions being made by the European Court of Justice on the UK labour market. As part of an EU reform programme, this has to be addressed and it’s time to put a stop to back-door EU employment law being made.’

‘We need the UK Government to take a strong stand and do all it can to remove this threat. Otherwise we face the very real prospect of successful firms in this country going out of business, with the jobs they provide going too.”

Cases on commission and overtime are currently in progress and we will keep you informed of developments. Meanwhile the CBI is calling for the Government to use its powers under British law to limit the retrospective liability UK employers face.

Internet link: CBI press release

NMW consultation

The Low Pay Commission (LPC) has launched a National Minimum Wage (NMW) consultation which runs until 26 September 2014. The LPC would like to hear from individuals and organisations affected by the NMW, including employers of low-paid workers including those involved in sectors such as retail, hospitality, social care, cleaning and hairdressing and focuses on the particular impact of the NMW on young people.

To find out more on the consultation visit the link below. If you would like any advice on the payment of the NMW please do get in touch.

Internet link: NMW consultation

Extension to flexible working rights

The right to request flexible working has been extended to all employees with at least 26 weeks’ service from 30th June 2014.

Before this change in the law, only employees with children aged 16 or under (17 or under if the child is disabled) or those acting as carers had the right to request flexible working.

Employers are required to consider requests and deal with applications in a ‘reasonable manner’ as the previous statutory procedure for dealing with flexible working requests has been abolished.

Employers do not have to accept an employee’s request as there are a number of legitimate reasons for turning down a flexible working request, including the burden of additional costs to the business and an inability to recruit additional staff.

For information on how to make and deal with requests see the ACAS website guidance

Internet link: News

PAYE messages for employers

HMRC will shortly start alerting employers where their records show that they have failed to make their PAYE or Construction Industry Scheme payments in full by their due date.

HMRC review the payments after each monthly (or quarterly) payment deadline has passed. Shortly after that, HMRC will issue a late payment Generic Notification Service (GNS) message to employers and contractors if they believe they have an underpayment of £100 or more for the month or quarter.

The messages will state:

‘HM Revenue & Customs (HMRC) records show you did not make full payment on time. If you have not already done so, please bring your payments up to date and ensure future payments are made on time and in full. Paying on time and in full is important as otherwise you may be charged in-year interest and late payment penalties.’

‘If you had no PAYE payment to make because you didn’t pay any employees during this tax period, you should let HMRC know by sending an Employer Payment Summary (EPS) for this tax period.’

‘To see why HMRC have issued this notice, please check HMRC Tax Dashboard or PAYE Online which provides details of your payments and PAYE charges.’

Employers should:

  • submit an EPS as instructed, if appropriate
  • ensure that they pay their PAYE in full and on time in future.

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

Internet link: HMRC news

Zero hours contracts and exclusivity clauses

Zero hours contracts are those where the employer does not guarantee to provide the worker with any work and pays the worker only for work actually carried out. The Government estimates that some 125,000 employees are on such contracts.

Some employers argue that they are an important tool to enable a business to maintain flexibility to deal with fluctuations in demand whereas some employee groups claim that businesses use them to avoid giving workers the status of ‘employee’ and eligibility for the full range of employment rights.

The Business Secretary, Vince Cable, has announced that employers hiring workers on zero hours contracts will no longer be able to compel staff to work exclusively for them. These ‘exclusivity clauses’ will not be permitted in contracts and will therefore give workers the freedom to take employment elsewhere. The ban on exclusivity clauses will be contained in the Small Business, Enterprise and Employment Bill.

The Government considers zero hours contracts have a place in the labour market but that the use of these contracts needs tightening up to protect employees from employers who misuse the contracts.

Internet link: Government news

Newsletter – August 2012

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

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

 

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

HMRC reveals most wanted tax fugitives

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

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

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

David Gauke the Exchequer Secretary said:

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

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

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

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

Internet link: HMRC flikr

HMRC issue next round of self assessment penalties

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

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

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

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

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

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

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

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

Internet link: Press release

Advisory fuel rates for company cars

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

‘These rates apply to all journeys on or after 1 September 2012 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.’

The advisory fuel rates for journeys undertaken on or after 1 September 2012 are:

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

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

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

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

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

Internet link: HMRC advisory fuel rates

Sunday trading hours reform

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

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

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

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

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

Internet link: BBC news

Holiday pay and sickness case

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

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

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

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

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

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

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

Internet link: Court of appeal decision

Tesco faces potential fines for illegally employing foreign workers

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

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

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

A UKBA spokesman said:

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

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

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

A Tesco spokesman said:

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

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

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

For information on the legal requirements visit UK Border Agency

Internet link: Telegraph news report

Listed Places of Worship Grant Scheme

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

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

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

Internet link: Culture news

HMRC launch new P46 for employers

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

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

Internet link: HMRC forms

Coastal Communities Fund

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

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

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

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

Communities Secretary Eric Pickles said:

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

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

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

Internet link: Communities news

Employer email alerts

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

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

To register for the email alerts visit HMRC registration

Internet link: Agent Update