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Newsletter – November 2012

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eNEWS – November 2012

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

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

 

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

Changes to VAT online services

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

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

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

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

Internet link: HMRC news

HMRC close in on ‘tax cheats’

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

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

David Gauke, Exchequer Secretary to the Treasury, said:

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

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

Internet link: HMRC press release

HMRC announce latest targets

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

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

David Gauke, the Exchequer Secretary, said:

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

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

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

Internet links:

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

Updated approach to Business Records Checks

HMRC have announced an updated approach to business records checks.

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

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

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

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

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

Internet link: HMRC BRC

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

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

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

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

As detailed in the HMRC guidance:

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

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

Internet link: VAT Brief

Parties for employees

With the season for office parties fast approaching we thought it would be a good idea to remind you of the tax implications. The good news is that, unlike entertaining customers, the costs of entertaining employees are generally allowable against the profits of the business.

But what about the tax consequences for the employees themselves? Is it a perk of their jobs and will they have to pay tax on a benefit?

Generally, as long as the total costs of all employee annual functions in a tax year are less than £150 per attendee (VAT inclusive) there will be no tax implications for the employees themselves. In considering this limit make sure you have included all the costs, which may include not only the meal itself but also any drinks, entertainment, transport and accommodation that you provide.

If the costs are above the £150 limit then the full cost will be taxable on the employee. In that case do get in touch so we can advise you how best to deal with them.

Internet link: HMRC guidance

Simpler health and safety guidance

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

Employment Minister Mark Hoban said:

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

Internet links: Press release HSE website

More flexibility in the leave available to parents

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

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

Nick Clegg said:

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

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

Internet link: BIS top stories

Payroll RTI system ‘unrealistic’

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

Frank Haskew, head of ICAEW Tax Faculty, said:

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

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

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

RTI is compulsory for most employers from April 2013.

We will keep you informed of developments.

Internet link: ICAEW press release

Improving gender diversity in boardrooms

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

Katja Hall, CBI Chief Policy Director, said:

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

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

Internet links: CBI press release Europa press release

Proposal to remove red tape on building extensions

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

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

Internet link: News

Newsletter – November 2011

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In this month’s enews we report on various issues including the Chancellor’s Autumn Statement and HMRC’s latest targets. Please contact us if you would like any further details on any of the issues covered.

 

eNEWS quicklinks
Autumn Statement New HMRC Taskforces
VAT and duty on shopping Parties for employees
Consultation – have your say Fighting Customs and Excise fraud and tax evasion
Unemployment rises to 2.62 million EU VAT registration letter scam

 

Autumn Statement

On Tuesday 29 November the Office for Budget Responsibility (OBR) published its updated forecast for the UK economy. Chancellor George Osborne responded to that forecast in a statement to the House of Commons later on that day.

The Chancellor emphasised that the OBR does not predict a recession in Britain but they have revised down their short term growth prospects for the country. He also made clear that the OBR central forecast assumes ‘the euro finds a way through the current crisis’.

The Autumn Statement sets out the actions the government will take in two main areas:

  • protecting the economy and
  • building a stronger economy for the future.

In order to maintain economic stability and meet its fiscal rules, the government will:

  • set plans for public spending in 2015/16 and 2016/17 in line with the spending reductions over the Spending Review 2010 period
  • raise the State Pension age to 67 between April 2026 and April 2028
  • set public sector pay awards at an average of 1% for each of the two years after the current pay freeze comes to an end.

The growth plans include the publication of a National Infrastructure Plan 2011. The plan sets out a pipeline of over 500 infrastructure projects.

Other announcements include:

Credit easing

In order to free up lending to business, the government is launching a package of measures worth up to £21 billion to ease the flow of credit to businesses. This includes up to £20 billion for the National Loan Guarantee Scheme and £1 billion for the Business Finance Partnership.

Small business rate relief holiday

The government will extend the current small business rate relief holiday for a further six months from 1 October 2012 and also give businesses the opportunity to defer 60% of the increase in their 2012/13 business rate bills.

Employment regulations

In an attempt to make it easier to ‘hire and fire’, the government intends to:

  • look for ways to provide a quicker and cheaper alternative to a tribunal hearing in simple cases by introducing a ‘Rapid Resolution’ scheme
  • complete a call for evidence on the impact of reducing the collective redundancy process for redundancies of 100 or more staff from the current 90 days to 60, 45 or 30 days.

Youth Contract

A number of measures under the heading of a ‘Youth Contract’ will be introduced including government funding of:

  • wage incentives for 160,000 young people to make it easier for private sector employers to take them on
  • at least 40,000 incentive payments for small firms to take on young apprentices.

Seed Enterprise Investment Scheme (SEIS)

This is a new tax relief which will be introduced from 6 April 2012. It will provide income tax relief at 50% in respect of investment in a small company whose total assets before the investment are less than £200,000. The relief will be limited to investments of up to £150,000 in each company and a maximum of £100,000 investment for an individual. In addition an individual who makes a capital gain in 2012/13 and reinvests some or all of the gain in a SEIS company in the same year will obtain exemption from capital gains tax for the sum invested.

Tax treatment of asset-backed pension contributions

Rules are to be introduced from 29 November 2011 to limit tax relief for employers who enter into arrangements to make asset-backed contributions into their pension schemes. The new rules will ensure that the tax relief obtained more accurately reflects the actual costs to the employer.

Further announcements expected

It is also expected that large amounts of draft legislation for the Finance Bill 2012 will be issued for consultation on 6 December 2011.

We will update you on significant announcements in next month’s enews.

Internet link: Treasury website

New HMRC Taskforces

Five new taskforces have been set up to tackle tax evasion in different areas of the country. The new HMRC taskforces will target:

  • scrap metal dealers in Scotland
  • construction traders who are self employed or run their own company who suppress sales or over-claim expenses in the North West and North Wales
  • taxpayers not submitting their statutory returns across Corporation Tax, Income Tax Self Assessment, PAYE and VAT in the South East
  • fast food outlets deliberately falsifying their records and mis-declaring their true sales levels to avoid paying the correct taxes in Scotland, and
  • landlords – owning or renting three or more properties – evading their tax responsibilities in North West and North Wales.

Internet link: Press release

VAT and duty on shopping

Angela Shephard, Head of Customs Policy, HMRC is warning individuals not to get caught out by ‘unexpected charges when you are shopping for Christmas bargains this year’.

‘If you are going abroad to do Christmas shopping, or buying goods online from non-EU countries, you need to know how much you can buy before you have to pay import duty or VAT.’

‘We know many people like to go abroad at this time to buy their Christmas gifts, or buy online from non-EU countries, and think that the ‘cheaper’ price they see is always the price they finally pay. HMRC is keen to remind the general public how much they can actually bring back from abroad or buy from an online overseas seller without having to pay import duty or VAT.’

‘You don’t want to be faced with unexpected extra charges, when you thought you had found a bargain.’

HMRC advise that:

  • Arriving in the UK by commercial sea or air transport from a non-EU country, you can bring in up to £390 worth of goods for personal use without paying customs duty or VAT (excluding tobacco and alcohol, which have separate allowances, and fuel). Detailed information on the non-EU limits can be found at http://www.hmrc.gov.uk/customs/arriving/arrivingnoneu.htm
  • Should you buy goods over the internet or by mail order from outside the EU, you will have to pay VAT if the value of the package is over £15.
  • If the goods are over £135 in value, customs duty may also be due, although this will depend on what they are and where they have been sent from. Where, however, the actual amount of duty due is less than £9, this will not be charged.
  • If someone sends you a gift from outside the EU, import VAT will only be due if the package is valued at over £40. To qualify as a gift, the item must be sent from one private individual to another, with no money changing hands.
  • Please note that excise duty is always due on all alcohol and tobacco products purchased online or by mail order.
  • The spirits or tobacco products, there are no limits on the amounts of duty and tax paid goods you can bring back personally from another EU country, as long as they are for your own use.

Internet link: Press release

Parties for employees

With the season for office parties fast approaching we thought it would be a good idea to remind you of the tax implications. The good news is that, unlike entertaining customers, the costs of entertaining employees are generally allowable against the profits of the business.

But what about the tax consequences for the employees themselves? Is it a perk of their jobs and will they have to pay tax on a benefit?

Generally, as long as the total costs of all employee annual functions in a tax year are less than £150 per attendee (VAT inclusive) there will be no tax implications for the employees themselves. In considering this limit make sure you have included all the costs, which may include not only the meal itself but also any drinks, entertainment, transport and accommodation that you provide.

If the costs are above the £150 limit then the full cost will be taxable on the employee. In that case do get in touch so we can advise you how best to deal with them.

Internet link: HMRC guidance

Consultation – have your say

The government has launched a consultation, ‘Modernising the administration of the personal tax system’. They would like to hear interested parties views on a number of issues regarding the personal tax system.

‘This consultation seeks feedback and ideas for how the administration of the personal tax system could be improved to achieve better understanding and make it easier for taxpayer to deal with it.’

To have your say visit the link below.

Internet link: HMRC consultation

Fighting Customs and Excise fraud and tax evasion

HMRC are asking for information to help them tackle Customs and Excise fraud and tax evasion.

The HMRC guide explains ‘how you can help HMRC by either telling them about your suspicions, or give information that will help stop people committing fraud, bringing goods into the UK that they shouldn’t or deliberately not paying tax’.

For more information visit the link below.

Internet link: HMRC reporting fraud

Unemployment rises to 2.62 million

The CBI commented on official data showing unemployment rose by 129,000 to 2.62 million in the three months to September 2011, including a rise in youth unemployment to over a million.

John Cridland, CBI Director-General, said:

‘These figures underline why we need urgent action to help our young people take their first steps in the labour market. A generation risks being scarred by the devastating effects of long-term unemployment.

We are calling for action for jobs now, with a clear plan to get the UK working, focusing on our young people.’

Internet links: BBC news CBI press release

EU VAT registration letter scam

HMRC are warning of a new scam letter which is being sent to businesses. The letter requests payment of a fixed fee by credit card and provides a website address to activate VAT registration.

HMRC are advising that these letters are not issued by HMRC and the registration should not be completed or payment made.

Internet links: HMRC security examples Copy scam letter