HMRC Launches new Tax Task Forces

HMRC have followed a recognisable strategy in building specialist teams or "Task Forces" to tackle tax avoidance and evasion in key areas of the country and certain trade sectors.

This month, HMRC have announced the creation of Task Forces to deal with

• Tax avoidance in the Construction Industry
• Tax evasion by property landlords in north west England and north Wales
• Tax avoidance generally in Scotland
• Tax avoidance in the south east of England due to non submission of Self Assessment Returns

Walker Thompson's View:  This is the tip of a very large iceberg whereby greater rewards can be obtained through the penalties arrangement than might be gathered in tax in the first place.

Special Notice about Electronic PAYE payment dates

To avoid paying late you must make sure HM Revenue & Customs (HMRC) have cleared funds by the due date.  If you pay electronically this is the 22nd of each month.  However, when the 22nd falls on a non banking day, (weekend or bank holiday), HMRC must have cleared funds by the last bank working day before the 22nd.

For example:  2011-12 PAYE month 6 for the period ended 5 October 2011. 

The due date of 22 October 2011 fell on a Saturday - a non banking day - if paying electronically, your PAYE payment must have cleared HMRC's bank account by Friday 21 October 2011.

You may therefore need to change any automatic payment dates to ensure you pay on time.  If you do not do so, you will be noted by HMRC as paying late, and late payments for this tax year may result in a penalty being charged.

For further details go to:  Late Payments

Construction Industry Returns & Penalties

If you're a contractor under the Construction Industry Scheme (CIS) you'll need to send HM Revenue & Customs (HMRC) a return each month. Your monthly returns tell them about any payments you've made to your subcontractors during the last tax month.

HMRC have prepared a new guide explaining what will happen if you send a return in late. The guide is available here. Follow link

In short the penalties are as follows

Length of delay	Penalty you will have to pay
1 day late	A fixed penalty of £100. This applies even if your return has no subcontractors on it - a nil return.
2 months late	A fixed penalty of £200. This applies even if your return has no subcontractors on it - a nil return.
6 months late	£300 or 5% of the CIS deductions shown on the return, whichever is the higher. This is as well as the penalties above.
12 months late	£300 or 5% of the CIS deductions shown on the return, whichever is the higher.

In serious cases you may be asked to pay up to £3,000 or 100% of the CIS deductions shown on the return, whichever is the higher.

These are as well as the penalties above.

The advice from Walker Thompson is to diarise forward all due dates and to use online facilities to complete the returns. A Nil Return still has to be sent when nothing is due otherwise the penalties will still apply.

Investor in Excellence

On 15 December 2011 Walker Thompson were successfully re-assessed against the 9 principles and 31 indicators within the IIE Standard which we first achieved in 2007 and again in 2009.

The process covers a rigorous process consisting of a documentary submission, desktop review and an on site assessment by external assessors.

The IIE Standard applies to the practice as a whole business and includes areas such as policy and management, people and processes and most importantly results.  Working within the IIE framework has become an invisible part of the way we work at Walker Thompson and we are delighted with the outcome from this latest assessment.

The assessment highlighted the following within the firm:

• "A genuine commitment to quality and high standards of performance"
• "People development has a high profile"
• The firm welcomes external perspectives and is committed to continuous improvement"

Contact us at clientcare@walkerthompson.co.uk or find out more at Investors in Excellence

Winding up a Small Company

In the case of small companies, it is often the case that without any family succession in place and with no prospect of sale to someone, the only thing left is for the shareholders to stop trading, collect in any debts, pay off all creditors and end up with money in the bank account.  Of course, the shareholders then need to extract this cash in a tax efficient manner.  Historically HMRC have provided a route for taking any cash as a capital distribution rather than a dividend thereby providing, by an Extra Statutory Concession ESC-C16, an opportunity to extract cash tax free up to £10,600 this year and then at 10% rather than taking a dividend subject to tax, probably at 40%.

Revisions in tax law to remove the ESC's, of which there were many, and embody them into tax law, led HMRC to consider the potential tax loss to the Treasury of C16 concession and it was argued that because very small companies could be dissolved rather than appointing a liquidator costing say £4,000, that the capital distribution should be restricted to this sum.

After much debate on the topic HMRC have announced that a limit of £25,000 in total will apply from 1 March 2012.  Any excess over £25,000 will be treated as dividends in the hands of the recipients.

Walker Thompson's view:  In managing a wind down of a small company try to keep the final cash sum left below the £25,000 level.  Consider lump sum payments to say a small pension scheme for the benefit of Director Shareholders especially where they may be 40% tax payers.  For further advice call us on 024 7663 5522.

Goldman Sachs deal costs the Exchequer

The Goldman Sachs deal cost the Exchequer £20m, twice the amount previously estimated, a former HM Revenue & Customs solicitor has claimed.


The Public Accounts Committee, which is investigating the deal was told, that the interest payments unpaid to HMRC were "£20m in rough figures". It is claimed that evidence submitted to the committee was "significant, inaccurate and misleading". The committee has repeatedly questioned Dave Hartnett, permanent secretary for tax, about the deal.

The deal concerned National Insurance contributions on employees' bonuses. In 2005, 21 companies paid the full amount owed from the use of employee benefit trusts, offshore vehicles designed to avoid NI contributions, but Goldman Sachs refused. The bank was warned that it would have to pay interest when the bill was finally settled, but when Goldman Sachs paid up in 2011, no interest was charged.

Richard Bacon, a member of the PAC, apparently was quoted as saying: "Given that Hartnett did not even know, until I told him, that HMRC had warned Goldman it would be liable for interest accruing if it refused to settle, I am not prepared to say Hartnett deliberately misled the committee. It seems to me just as likely he did not know what was going on." Is this therefore someone extremely competent at deception or someone totally incompetent at their job?

Question – will it result in a nice pension & an invitation to the palace to collect an honour for public service?

HMRC wired up for an Electricians Amnesty

HM Revenue & Customs has announced that electricians will be the next group of trades targeted as part of its crackdown on tax evasion.

The Electrician's Tax Safe Plan will be launched in February 2012 and will offer favourable terms for electricians to come forward and declare any unpaid tax. Following this, HM Revenue & Customs will target those in the trade who have not come forward.

This campaign follows the Plumber's Tax Safe Plan launched this year. Around 600 voluntary disclosures during the campaign brought in £328,000 to the Treasury. That must be considered a nice little earner for HMRC who had little to do except wait for the disclosures to come in, assess the tax & send out the bill. The second stage of the campaign involving targetting those who did not voluntarily come forward resulted in five arrests and investigations opened into a further 600 people.

Our view : If you are an Electrician and believe that you have underpaid tax by not fully declaring income then use the amnesty opportunity:  we will see the Revenue making greater use of Section 16 notices over the coming months, to obtain third party information before the amnesty begins in February.

Newsletter 50

Please follow the links below for more information about each topic.

AUTUMN STATEMENT

On Tuesday 29 November the Office for Budget Responsibility (OBR) published its updated forecast for the UK economy.

NEW HMRC TASKFORCES

Five new taskforces have been set up to tackle tax evasion in different areas of the country.

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'.

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.

CONSULTATION - HAVE YOUR SAY

The government has launched a consultation, 'Modernising the administration of the personal tax system'.

FIGHTING CUSTOMS AND EXCISE FRAUD AND TAX EVASION

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

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.

EU VAT REGISTRATION LETTER SCAM

HMRC are warning of a new scam letter which is being sent to businesses.