Newsletter – June 2011

In this month’s enews we report on HMRC’s plans to extend their ‘tax cheats’ campaigns.

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

 

 

HMRC extend ‘tax cheats’ campaigns

HMRC have announced that they will be launching new campaigns over the next year targeting VAT defaulters, private tutors and e-marketplaces.

HMRC will use more IT, such as ‘web robot’ software, to search the internet and find targeted information about specified people and companies. Using the software, HMRC feel that they can pinpoint more accurately people who have failed to pay the right tax. The software, used with HMRC’s Connect computer system, also helps find people who are trading without telling HMRC.

The Connect computer system alerts HMRC to previously invisible tax evasion by matching a vast amount of HMRC and third-party data. It can identify previously hidden relationships, uncovering anomalies between such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies.

HMRC announced last month that a campaign targeting VAT rule-breakers trading above the £73,000 turnover threshold but who have not registered for VAT will be launched in the summer.

Other campaigns to be launched in 2011/12 will focus on:

  • those who provide private tuition and coaching
  • e-marketplaces, which buy and sell goods as a trade or business
  • trades, which will build on HMRC’s plumbers’ campaign and give an opportunity to another group of ‘tradespeople’ to declare unpaid tax.

Mike Wells, HMRC’s Director of Risk and Intelligence, said:

‘We want to make sure HMRC listens to as many informed views as possible for our future campaigns. We want the views and experience of people and organisations outside the department to play a fuller part in the campaigns that we design for customers.’

‘By being open about our areas of interest for the coming year we hope to maximise that exchange of information and ensure we reduce the tax gap and help customers pay what they owe.’

‘We will use the information we gather to pursue people who choose not to use the opportunities we provide for them to put their affairs in order on the best possible terms. It will be more expensive if we come and find people, so I urge them to come forward and disclose voluntarily.’

Internet link: News release

Another email scam warning from HMRC

HMRC are once again alerting taxpayers to a surge of fake ‘phishing’ emails sent out by fraudsters in the run-up to the tax credits renewal deadline.

The email informs the recipient they are due a tax rebate and provides a click-through link to a cloned replica of the HMRC website. The recipient is asked to provide their credit or debit card details. Fraudsters then try to take money from the account using the details provided.

Since the beginning of April 2011, when the first tax credits renewals forms were sent out to claimants, more than 46,000 phishing emails have been reported. During the same period of time HMRC helped shut down more than 150 scam websites.

Joan Wood, Director of HMRC Online and Digital, said:

‘We currently only ever contact customers who are due a tax refund in writing by post. We don’t use telephone calls, emails or external companies in these circumstances. If anyone receives an email claiming to be from HMRC, please send it to phishing@hmrc.gsi.gov.uk before deleting it permanently.’

HMRC strongly advises taxpayers to:

Internet links: News Release www.hmrc.gov.uk/security/index.htm

Workplace pensions reform

The government has introduced measures aimed at encouraging greater private saving which includes workplace pension reforms. New legal obligations will require employers to automatically enrol their eligible jobholders into a qualifying pension scheme.

A new workplace pension scheme called NEST (National Employment Savings Trust) will be one of the qualifying schemes and will be open to any employer who wants to use it to meet their obligations.

The initial roll out of the scheme will be October 2012 but this will impact on employers with 120,000 employees or more. For those with a more modest workforce the start date varies; for example, those with less than 500 employees the date is 1 January 2014 and for those with less than 50 employees the earliest start date is 1 March 2014.

Employees eligible for automatic enrolment will be:

  • those who are not already active members of a qualifying scheme
  • are aged at least 22 years and below the State Pension age, and
  • earn over £7,475 gross a year.

The qualifying scheme may be the existing employer pension scheme if it meets certain conditions or if an employer does not have a qualifying scheme, they will have to set one up or use a NEST pension scheme.

Minimum contributions levels for qualifying schemes are as follows:

Minimum Contribution Employee Pays Tax Relief Minimum Employer Contribution
8% 4% 1% 3%

Employees will be able to opt out of the scheme if they so wish. However, for those employees within the scheme it is expected that the employer will have to contribute at least 3% of ‘qualifying’ earnings. These earnings are the employees’ basic salary plus commissions, bonuses and overtime between £5,035 and £33,540 a year (in 2006/07 terms but to be uprated). Pension contributions are to be phased in.

A great deal more information is starting to be released and can be viewed via The Pensions Regulator website.

Internet links: The Pensions Regulator website Basic employers guide

Consultation on residency

Over recent weeks, HMRC have issued numerous consultation documents totalling hundreds of pages.

One of these details how individuals will be judged to be resident or not resident in the UK for tax purposes.

The government proposes to introduce a statutory residence test (SRT) to take into account both the amount of time the individual spends in the UK and the other connections they have with the UK.

There are parts of the test where a distinction will be made between:

  • arrivers – defined as individuals who were not UK resident in all of the previous three tax years; and
  • leavers – defined as individuals who were resident in one or more of the previous three tax years.

The SRT will:

  • determine tax residence for individuals but not companies
  • apply for the purposes of income tax, capital gains tax and inheritance tax
  • not apply for non-tax purposes (including national insurance contributions), and
  • supersede all existing legislation, case law and guidance for tax years following its introduction.

The SRT will have three parts:

  • Part A contains conclusive non-residence factors that would be sufficient in themselves to make an individual not resident.
  • Part B contains conclusive residence factors that would be sufficient in themselves to make an individual resident.
  • Part C contains other connection factors and day counting rules which will only need to be considered by those whose residence status is not determined by Part A or Part B.

The above is part of a consultation process at present. HMRC intend to implement the measures from 6 April 2012.

We will keep you informed of developments but please do contact us if you have any concerns in the meantime.

Internet link: Press release

The Bribery Act

The Bribery Act 2010 comes into force on 1 July 2011. The new Act replaces, updates and extends the existing UK law against bribery and corruption. This important new legislation:

  • introduces a corporate offence of failure to prevent bribery by persons working on behalf of a business. A business can avoid conviction if it can show that it has adequate procedures in place to prevent bribery;
  • makes it a criminal offence to give, promise or offer a bribe and to request, agree to receive or accept a bribe either at home or abroad. The measures cover bribery of a foreign public official; and
  • increases the maximum penalty for bribery from seven to 10 years imprisonment, with an unlimited fine.

The introduction into law of the new corporate offence of failure of commercial organisations to prevent bribery is an important development that essentially requires all businesses to consider the requirements of the new Act. This new corporate offence is coupled with a defence where, if the business can show that it had ‘adequate procedures’ in place to prevent bribery, it can be protected from committing the new criminal offence.

All businesses should familiarise themselves with the statutory guidance and assess the risk of bribery occurring in the business. The extent of any further action will be dependent on the results of this risk assessment.

The Act also requires the government to produce guidance on what constitutes ‘adequate procedures’ and the Ministry of Justice has produced this. This can be found using the links below.

Internet links: Bribery Act 2010 guidance Quick start guide

Tax credits renewal deadline

Tax credits are state benefits which are generally available to lower income families. However, entitlement to the credits is significantly increased where individuals pay for childcare or suffer a drop in normal levels of income perhaps due to incurring trading losses or redundancy.

Individuals who have already claimed tax credits for 2010/11 have to finalise their provisional award, which would have originally been based on their 2009/10 income, and advise HMRC of any changes in their circumstances for 2011/12. This procedure is known as the renewals process. The deadline for the submission of tax credit renewals is generally 31 July 2011.

HMRC have been busily advertising the renewals process in the national press and on their website. Claimants need to be aware that the payment of tax credits will stop at the end of July if they have not renewed their applications by that date. There are significant changes to the income limits and claw back of entitlements for 2011/12 so you may wish to review the HMRC guidance. Alternatively if you need any help with the completion of your form or any advice on tax credits generally please do get in touch.

Internet links: HMRC tax credit deadlines HMRC Tax credit changes

Changes to the law to protect Patent and Design rights

The government has announced that it expects small and medium sized businesses to benefit from a new law which gives them easier access to justice to protect their patent and design rights. The introduction of a damages cap of £500,000 for claims made in the Patents County Court (PCC) means smaller businesses seeking damages up to that amount are less likely to have to resort to the High Court which could prove more costly.

The Patents County Court (Financial Limit) Order 2011 sets out to create a clearer definition of what disputes can be heard in the PCC and which ones should go to the High Court. Under the previous system businesses with a legal case worth less than £500,000 could face litigation in either court. This potentially exposed them to unknown levels of financial risk.

According to the press release:

‘The change in law will ensure that lower value, less complex cases, which would typically involve small businesses, will automatically fall within the jurisdiction of the lower, cheaper PCC. Therefore the risk of having costly disputes over where the case should be heard will be reduced. In the past some companies were put off protecting their rights due to the uncertainty of how much it would cost.’

Minister for Intellectual Property, Baroness Wilcox said:

‘Maintaining an effective and efficient intellectual property framework for businesses is not enough to drive innovation. We must offer businesses a more accessible justice system for them to enforce their rights. By making it easier for small firms and entrepreneurs to use the legal processes it will give them more time to concentrate on business activities.’

‘These changes will help small businesses and encourage them to innovate. It will also provide clarity over the legal processes, certainty over the risks and give small enterprises the confidence to stand on an equal footing with financially stronger companies.’

Internet link: News release

P11D deadline looming

The forms P11D, and where appropriate P9D, which report benefits and expenses for both employees and directors for the year ended 5 April 2011, are due for submission to HMRC by 6 July 2011.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A national insurance contributions at 12.8% (for 2010/11) on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form. For those employers who submit paper forms P11D these should all be sent to the address detailed in the link at the end of this article.

If you would like any help with the forms P11D or the calculation of the Class 1A liability please get in touch.

Internet links: HMRC P11D guidance HMRC advice HMRC new address for paper forms P11D

Newsletter – May 2011

In this month’s enews we report on HMRC’s plans for compliance checks and important information for employers and employees. Please do get in touch if you would like more detail.

 

Advisory fuel rates for company cars

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

‘These rates apply to all journeys on or after 1 June 2011 until further notice, allowing them to reflect fuel prices more quickly. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.’

The advisory fuel rates for journeys undertaken on or after 1 June 2011 are:

Engine size Petrol LPG
1400cc or less 15p (14p) 11p (10p)
1401cc – 2000cc 18p (16p) 13p (12p)
Over 2000cc 26p (23p) 18p (17p)
Engine size Diesel
1600cc or less 12p (13p)
1601cc – 2000cc 15p (13p)
Over 2000cc 18p (16p)

Please note that not all of the rates have been increased, so care must be taken to apply the correct rate. The rate for diesel cars up to 2000cc was previously set at 13p per mile from 1 March 2011. This band has now been split into two, 1600cc or less, and 1601cc – 2000cc. The fuel rate payable for diesel cars of 1600cc or less is reduced by 1p per mile from 13p to 12p so please take care when amending the rates payable.

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

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

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

Internet link: HMRC advisory fuel rates

HMRC trial single compliance process

HMRC have announced trials of a single compliance process for enquiries across a range of different taxes.

According to the press release they believe that:

‘By simplifying and standardising the process for compliance checks HMRC will improve customer experience and reduce costs as the check will only take as long as the risks and behaviours encountered dictate.’

‘The trials of the new process will run for six months from 1 June in 10 different locations across the UK: Reading/Slough, Newcastle, Warrington, York, Exeter, London Euston and Southampton in England; Cardiff in Wales; Belfast and Edinburgh/Dundee.’

‘The new process will be rolled out nationally from January 2012, subject to the results of the trials.’

David Gauke, Exchequer Secretary to the Treasury, said:

‘This Government is committed to relieving the burden on businesses. We know that agents, individuals and businesses find some of HMRC’s current compliance practices drawn out and costly. A single compliance process could help HMRC improve the customer experience and reduce costs.’

We will keep you informed of developments. Please do get in touch if HMRC contact you.

Internet link: Press release

CBI survey on sick days and the impact of fit notes

According to the CBI’s Absence and Workplace Health Survey fit notes have failed to deliver a reduction in sickness absence. This is the conclusion drawn from the new absence figures included in the survey.

The survey showed that the UK economy lost 190 million working days to absence last year, with each employee taking an average of 6.5 days off sick. This is an increase on 2009’s figures, which showed employee averages of 6.4 sick days, despite the introduction of fit notes in 2010.

Fit notes were introduced in April 2010 and allow GPs to advise the employer whether the employee could return to work sooner if certain changes were made. Some examples of the changes which could be made would be a temporary reduction in hours or duties (such as lifting, driving etc). See the link below regarding fit notes for more information.

According to the survey employers have been disappointed by their experience of fit notes so far. With 66% of employers saying that fit notes had not yet helped their rehabilitation policy. More than 70% ‘were not confident that GPs were using the fit note differently from the old sick note’.

Katja Hall, CBI Chief Policy Director, said:

‘The substantial costs of absence to the economy put a premium on managing longer-term absence well. The fit note is a great initiative, which could play an important role in helping people back to work and stopping them slide into long-term absence. But employers are far from convinced that the scheme is working properly and don’t think doctors are getting the necessary training.’

The government is still planning to introduce electronic fit notes and although these were originally expected in autumn 2010 this has been delayed and is now expected in autumn 2011. Katja Hall said:

‘The launch of the electronic fit note should be an ideal opportunity for the Department for Work and Pensions to extend the reach of its training programme and address GPs’ engagement. There can be no room for complacency in addressing the so-called sick note culture.’

If you would like any advice on sick pay and managing sickness absence please do get in touch.

Internet links: Press release Survey Fit Notes

HMRC warn of email rebate scam

HMRC are warning that taxpayers are being emailed stating that they are entitled to a tax rebate. These emails are being sent from a number of bogus email addresses. They inform recipients that they are entitled to a tax rebate and invite them to complete an online form to receive a rebate of tax.

HMRC are advising that taxpayers should not visit the website contained within the email or disclose any personal or payment information.

Email addresses used to distribute the tax rebate emails include:

New addresses

noreply@hmrc.gov.uk

srvcs@hmrc.gov.uk

secure@hmrc.gov.uk

message@tax.co.uk

Ref@hmrc.gov

info@hmrc.gov.uk

confidential@hmrc.gov.uk

securemail@hmrc.co.uk

refunds@hmrc.org.uk

Support@hmrc.gov

srvshm@hmrc.gov.uk

services@hmrc.gov.uk

Historical addresses

no_reply@ir-efile.gov.uk

officer.robinson@hmrc.co.uk

refunfform@hmrc.gov.uk

success@gov.co.uk

irs@egroup.com

info@hmrc.co.uk

HM_R&C@HMRC.GOV

Tax.refunds@hmrc.gov.uk

helpdesk-hm@hmrc.gov.uk

notice@hmrc.gov.uk

help-centre@hmrc.gov.uk

refunds@hmrc.gov.uk

HMRC have confirmed that they do not send out emails using these email addresses.

Internet link: HMRC scam email examples

Flexible working consultation

The government has launched a consultation on plans to introduce a new system of flexible parental leave from 2015. This is part of the government’s plans to ‘create a modern workplace for the modern economy.’

According to the press release:

‘Under the proposals, once the early weeks of maternity and paternity leave have ended, parents will be able to share the overall leave allowance between them. Unlike the current system this leave could be taken in a number of different blocks and both parents could take leave at the same time. Crucially employers would have the ability to ensure that the leave must be taken in one continuous period if agreement can not be reached. They will be able to ask staff to return for short periods to meet peaks in demand or to require that leave is taken in one continuous block, depending on business needs.’

The Modern Workplaces consultation includes the following proposals:

  • flexible parental leave
  • 18 weeks maternity leave and pay – in one continuous block around birth
  • four weeks of parental leave and pay exclusive to each parent to be taken in the first year
  • 30 weeks of additional parental leave available to either parent – of which 17 weeks would be paid and can be broken in blocks between parents
  • flexible working – extending the right to request for all workers who have been with their employer for 26 weeks

Business Secretary Vince Cable said:

‘Our proposals will encourage greater choice by giving employees and their employers the flexibility to find arrangements to suit them both. New parents should be able to choose their childcare arrangements for themselves, rather than being dictated to by rigid Government regulation as is currently the case. And employers should be encouraged to come to agreement with employees on how work and family responsibilities can be met simultaneously.’

‘These measures are fairer for fathers and maintain the existing entitlements for mothers – but crucially give parents much greater choice over how to balance their work and family commitments.’

‘Of course I’m mindful of the need to minimise the costs, bureaucracy and complexities on businesses. This has been at the forefront of my mind throughout the development of our proposals. So we will ensure that businesses will still be able to take into account their needs when agreeing how leave can be taken. But I’m also confident that we have a good case to make on the wider benefits to business – not least from a motivated and flexible workforce and we will be making this case to employers over the next few years before these changes are introduced.’

We will keep you informed of developments.

Internet links: Press release BIS consultation modern workplaces

HMRC’s new task force to tackle ‘tax dodgers’

HMRC are introducing specialist teams which will undertake intensive bursts of compliance activity in specific high risk trade sectors and locations across the UK.

HMRC state that the first task force will focus on the restaurant trade in London over the coming weeks, with the restaurant trade in Scotland and the North West later.

Mike Eland, Director General Enforcement and Compliance, said:

‘These task forces are a new approach which uses HMRC’s resources to identify and tackle rule-breakers and evaders swiftly and effectively.’

‘Only those who choose to break the rules, or deliberately evade the tax they should be paying, will be targeted. Honest businesses have absolutely nothing to worry about.’

‘But the message is clear – if you deliberately seek to evade tax HMRC can and will track you down, and you’ll face not only a heavy fine, but possibly a criminal prosecution as well.’

HMRC are planning a further nine task forces in 2011/12, with more to follow in 2012/13.

To read more about HMRC’s plans visit the link below.

Internet link: HMRC news release

Agency workers guidance

The government has published guidance to help employers and the recruitment sector prepare for the introduction of the Agency Workers Regulations.

The Regulations which implement the EU Agency Workers Directive come into force in the UK on 1 October 2011. These regulations give agency workers the right to the same basic employment and working conditions as if they had been recruited directly by the hirer. These employment rights will apply when they complete a 12 week qualifying period in a job.

As detailed in the press release the rights include key elements of pay, duration of working time, night work, rest periods and breaks, annual leave and paid time off for ante – natal appointments. The Regulations also include new entitlements for agency workers from ‘day one’ of their assignment with regards to access to facilities at the workplace and the right to be notified of any relevant vacancies.

The Directive states that rights should apply from ‘day one’ of an agency worker’s assignment. However Member States are allowed some flexibility as to how this principle is applied including the possibility of a qualifying period before the right to equal treatment arises. The UK, following agreement between the government CBI and TUC, has agreed a qualifying period of 12 weeks.

Employment Relations Minister Edward Davey said:

‘The agency sector is a key part of the UK’s flexible labour market. It provides the flexibility needed for employers to meet surges in demand, cover temporary absences or cope with seasonal fluctuations and provides a route into employment for thousands of individuals.’

‘The Agency Workers Regulations have been on the statute book since January 2010 and followed negotiations between the CBI and TUC. We looked carefully at the possibility of amending the Regulations to address employers’ concerns but were forced to conclude that we could not do so without putting the 12 week qualifying period at risk. This qualification period is something that is a key flexibility that we know is vital to business.’

‘Our focus therefore has been providing the best possible guidance to help everyone affected understand these regulations. We have collaborated with key organisations including employment agencies, employers, trade unions and representative bodies to develop this guidance and I believe the resulting document will help prepare everyone for the forthcoming changes.’

Separate guidance is to be published for the agency workers themselves.

Internet links: BIS press release Business Link Agency workers guidance Regulations

HMRC’s Basic PAYE Tools update

HMRC have released a new version of the Basic PAYE Tools which reflect the Budget 2011 changes. These tools replaced the Employers CD-ROM and give employers access to PAYE guidance. The latest version is 3.1.0.15205.

It is possible to check which version of the tools you are using by selecting the ‘Options’ icon and then the ‘Application Settings’ tab.

It is possible to sign up for automatic updates and the link gives details of how to do this.

Internet link: Business link update PAYE tools resource

HSE launch Health and Safety Made Simple

The Health and Safety Executive have launched a new microsite for businesses, Health and Safety Made Simple. The aim of the site is to make it easier for businesses to comply with the law and manage health and safety in their business. The site takes users through the steps required to ensure that they have done all that is required by the law.

Internet link: HSE website

Newsletter – January 2011

In this month’s enews we report on the latest HMRC disclosure opportunity and advise you to check any PAYE tax code you receive with care.

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

The Tax Health Plan (THP)

HMRC have obtained information from various sources, including NHS trusts, private hospitals and medical insurers and are introducing the THP as an opportunity for medical professionals with tax to pay to get their affairs up to date with the benefit of a fixed penalty.

Taxpayers must notify HMRC of the intention to make a disclosure by 31 March 2010 and must make a full disclosure of all undeclared liabilities and full payment of all outstanding taxes and duties, interest and penalties by 30 June 2010.

The penalty is fixed at 10% of the taxes/duties underpaid unless the total amount of unpaid liability being disclosed is less than £1,000, in which case there is no penalty.

.
HMRC will pursue those with undeclared tax liabilities who decide not to make a disclosure.

The THP is initially open to members of the General Medical Council but is expected to be extended to other health professionals including dentists.

If you have any concerns in this area please do get in touch.

Internet link: HMRC guidance on THP

HMRC new scam emails

HMRC have issued a warning about a new scam email which is being sent from ‘HMRC Online Services – test@test.com’ stating that the recipient has one new ALERT message and should log onto their Online Account to read the message.

The email includes a link to a fraudulent website which asks the taxpayer for their personal account information and password. HMRC are advising that the email is not from them and that anyone receiving a copy should forward it to them at phising@hmrc.gsi.gov.uk

Internet link: HMRC scam email example

Employment Rights – Statutory limits

The limit on the amount of the compensatory award for unfair dismissal is set to decrease from 1 February 2010. The current maximum of £66,200 is to reduce to £65,300, due to the decrease in the retail prices index measure of inflation. This new limit applies where the event giving rise to the entitlement to the payment arose on or after 1 February 2010.

The maximum amount of a week’s pay for the purpose of calculating the basic or additional award of compensation for unfair dismissal or redundancy payment has not been amended from the current amount of £380. This rate has been in force since 1 October 2009.

The Business Link website includes a useful calculator of statutory redundancy entitlement.

Internet links: Business link calculator Statutory instrument

Dispensations – new online application form

HMRC have introduced the facility to apply for dispensations online.

Where an employer has a dispensation they do not have to report expenses and certain benefits to HMRC on forms P9D or P11D at the end of the tax year. Where employers have a dispensation in place this can be time saving.

If you would like to discuss applying for a dispensation please do get in touch.

Internet link: HMRC guidance on dispensations

Tax codes being issued

HMRC are advising employees that between January and March 2010 they will be issuing new PAYE coding for 2010/11. The tax codes should reflect the individual’s personal circumstances and include the tax allowances and reliefs that individuals are entitled to.

HMRC are advising that this is the first time the annual coding process will take place using HMRC’s new computer system for processing PAYE, known as the National Insurance and PAYE Service (NPS). HMRC are expecting more employees than usual, approximately 25 million, to receive coding notices because of the new system.

However, it appears that there may be a problem with the new coding notices, according to the Chartered Institute of Tax President Andrew Hubbard

“Most people on PAYE are used to assuming that what the taxman sends them is correct. Many file away coding notices without even bothering to check them.”

“But this year, many of them are being given wrong information, and unless they spot it and tell HMRC, their employer will receive the wrong information too, and they could get a nasty shock when they open their April pay packet and see it is as much as a hundred pounds lighter than they are expecting.”

According to the CIOT website

‘Those affected are thought to include taxpayers who have left a job in the last few years. The HMRC database appears to have ‘lost’ the information it holds about people leaving jobs and as a result is combining taxpayers’ current employment records with old data and concluding that they have two (or more) jobs and much higher earnings than they do.

Anyone with two jobs normally has their personal allowance (the portion of your income you do not have to pay tax on) counted against the job with the highest wage. As a result of the error many people will, in effect, have their personal allowance split between two jobs or allocated to a job they no longer have, meaning their current employer will be obliged to deduct too much income tax. The personal allowance will be £6,475 for most people under 65 in 2010/11. If the whole of that personal allowance is wrongly applied that would cut a basic rate taxpayer’s pay packet by about £108 a month or £1,295 a year.’

If you receive a new tax code and are unsure whether or not it is correct please let us know so we can check it for you.

Internet links: HMRC guidance on tax codes Chartered Institute of Tax statement

Scrappage Scheme

The Vehicle Scrappage Scheme is a voluntary scheme for motor dealers under which participating dealers give buyers a £2,000 discount off the purchase price of a new car (or certain types of small van) in exchange for scrapping their old qualifying vehicle.

Funded jointly by the government and manufacturers, the scheme has proved very popular. Although the scheme is set to run until February 2010, recent figures show that approximately 80% of the available budget for the scheme has already been utilised. As the scheme enters its final stages the Department for Business will allocate order quotas to manufacturers based on brand popularity and it is hoped it will help to ensure a smooth closing of the scheme.

Lord Mandelson, Business Secretary, said:

“I’m pleased to see that the scheme has been taken up by so many people, supporting our automotive manufacturers through a very difficult time. With limited orders as we near the close of scrappage there is a risk of disappointment for car buyers. I would urge people who are still keen on taking part to put their orders in as soon as possible as time is running out.”

For general information on the £2,000 scrappage discounts and other conditions visit the scrappage website link below. For HMRC’s views on the business tax and VAT implications of the car and van scrappage scheme use the HMRC link below.

If you have any queries on the tax implications of the scheme please do get in touch.

Internet links: BIS press release Scrappage website HMRC Brief

Statutory payments

The new Statutory Payment Rates for 2010/11 have been announced. The new rates are as follows:

The current Statutory Sick Pay (SSP) weekly rate of £79.15 is being retained for 2010/11.

The Statutory Maternity Pay (SMP) standard rate will be £124.88 for payment weeks beginning on or after 4 April 2010. The current rate is £123.06.

The same weekly rate applies to Statutory Paternity and Statutory Adoption Pay.

If you would like any help with any of these statutory payments please do get in touch.

Internet link: Business link statutory payment rates

Using your own car for work

HMRC have updated their guidance on using your own vehicle for work. The guidance needs to be read in conjunction with the mileage rates which for those using their own car for work purposes are unchanged at 40 pence a mile for the first 10,000 miles dropping to 25 pence a mile thereafter.

Internet links: HMRC factsheet mileage HMRC mileage rates

Tax Payments

For those making tax and national insurance payments on 31 January 2010 HMRC are reminding that their bank details changed last year. To confirm that you are making payment to the correct bank account please visit the link below.

Internet link: HMRC bank details