The Government has just taken out advertising with Independent Television channels to promote the soon to be launched Pension Schemes where employees have an auto enrolment or an opt out.
The adverts are causing many employees to bombard their employers with questions.
Walker Thompson in collaboration with a leading firm of financial advisors have produced a simple guide for employees which can be found here
Monday, 15 October 2012
Thursday, 11 October 2012
Companies House launches mobile app
Companies House has recently launched a free mobile phone app which enables users to view thousands of basic UK company details. The app is currently available as an Apple download but an android version is due to be launched shortly.
Friday, 13 July 2012
French to tax foreign second-home owners
UK citizens who own homes in France may have to pay substantially more in tax in that country, under proposals announced last week.
Capital gains tax, and income tax on rental income, will rise substantially for foreigners, to levels paid by French citizens.
Several hundred thousand UK citizens own, and let, homes in France.
At the moment, French capital gains tax is levied on the sale of a home at 19%, plus 15.5% as a "social charge" to pay for state benefits.
Likewise, tax on rental income is levied at 20% plus 15.5% social charge.
The social charges are not currently paid by foreigners who own homes in France, but under latest plans, they will be.
The extra taxes have been outlined in a supplementary budget which should become law by the end of July, and which will apply immediately.
It is possible the extra taxes to be paid by foreigners may be challenged legally.
Nevertheless, it is thought that the moves will inevitably make second homes and rental properties in France far less attractive to UK residents.
Capital gains tax, and income tax on rental income, will rise substantially for foreigners, to levels paid by French citizens.
Several hundred thousand UK citizens own, and let, homes in France.
At the moment, French capital gains tax is levied on the sale of a home at 19%, plus 15.5% as a "social charge" to pay for state benefits.
Likewise, tax on rental income is levied at 20% plus 15.5% social charge.
The social charges are not currently paid by foreigners who own homes in France, but under latest plans, they will be.
The extra taxes have been outlined in a supplementary budget which should become law by the end of July, and which will apply immediately.
It is possible the extra taxes to be paid by foreigners may be challenged legally.
Nevertheless, it is thought that the moves will inevitably make second homes and rental properties in France far less attractive to UK residents.
Thursday, 12 April 2012
2012 Budget - The Aftermath
The facts below are extracts taken from a wide variety of professional & trade press articles following the Budget of Chancellor George Osborne. The proposals set out within the Budget speech will be ratified in due course through The Finance Act 2012 although some measures were introduced as part of the previous announcements.
In most peoples opinions it is probably fair to say that when the cosmetic appearance was stripped away, the 2012 Budget was somewhat neutral overall. There are certain areas which have caused controversy and others which have caused comedy. 2012 will in our view always be remembered as the Pasty, Pie & Pensioners Budget.
When the country is looking to emerge from an economic recession, are we really employing civil servants with the sole aim of further complicating already complex VAT legislation against a background of a Parliament keen to reduce red tape & encourage business entrepreneurship? Moreover are we concerned whether Mr Osborne has ever eaten a sausage roll from Greggs?
Income Tax rates were almost a non event as they were announced in 2011. A 5% drop in the higher 50% rate was announced but only effective from April 2013.
For Inheritance Tax purposes there was no change in limits but a 4% tax discount will be applied if the estate is over £325,000 & over 10% is left to a registered charity. A nice idea given that charitable donations have been hit by the recession but for higher rate tax payers who are minded to give to charity anyway, a lifetime donation would seem to have more benefit.
Various Benefits including State Pension & Jobseekers Allowance are increased in line with the Consumer Price Index set in September 2011 at 5.2%. Pensioners however are still mainly affected by the low rates of investment returns which affect their day to day lives and were planned to top up pensions through retirement.
The most controversial change in this area was in respect of Working Tax Credit where couples with children must work 24 hours per week instead of 16 hours and that one person must work at least 16 hours. We believe that this will have a short term impact upon businesses who have arranged part time staffing around the original rules and may now face employee requests to change their hours. Failure of an SME employer to be able to respond could see increasing movement of employees with the consequent associated costs.
On the periphery of the Budget, businesses are still struggling to obtain finance from a banking system which claims to be releasing credit in line with expectations. Whose expectations these are we cannot say as in the SME sector it is fairly clear that banks are only lending where the level of security available not only from the business but from owners personal guarantees is up to 4x the amount of borrowings. Suffice to say that Government statistics announced on 11 April showed that British firms were not investing in capital which would enable them to pull clear of recession & that they might struggle to do so. – If they cannot borrow to invest then perhaps the idea of a nationally owned business bank is the way forward? We still see banks visiting businesses, not to lend money but to sell Life Assurance & Pensions.
Finally it is worth commending our Chancellor on his astute awareness of the tax system over which he has stewardship. As recorded in an interview with the Daily Telegraph:
“Chancellor George Osborne has expressed shock after looking at 20 anonymised tax returns of multi-millionaires which demonstrated they have exploited tax loopholes to legally reduce their tax bills.”
In most peoples opinions it is probably fair to say that when the cosmetic appearance was stripped away, the 2012 Budget was somewhat neutral overall. There are certain areas which have caused controversy and others which have caused comedy. 2012 will in our view always be remembered as the Pasty, Pie & Pensioners Budget.
When the country is looking to emerge from an economic recession, are we really employing civil servants with the sole aim of further complicating already complex VAT legislation against a background of a Parliament keen to reduce red tape & encourage business entrepreneurship? Moreover are we concerned whether Mr Osborne has ever eaten a sausage roll from Greggs?
Income Tax rates were almost a non event as they were announced in 2011. A 5% drop in the higher 50% rate was announced but only effective from April 2013.
For Inheritance Tax purposes there was no change in limits but a 4% tax discount will be applied if the estate is over £325,000 & over 10% is left to a registered charity. A nice idea given that charitable donations have been hit by the recession but for higher rate tax payers who are minded to give to charity anyway, a lifetime donation would seem to have more benefit.
Various Benefits including State Pension & Jobseekers Allowance are increased in line with the Consumer Price Index set in September 2011 at 5.2%. Pensioners however are still mainly affected by the low rates of investment returns which affect their day to day lives and were planned to top up pensions through retirement.
The most controversial change in this area was in respect of Working Tax Credit where couples with children must work 24 hours per week instead of 16 hours and that one person must work at least 16 hours. We believe that this will have a short term impact upon businesses who have arranged part time staffing around the original rules and may now face employee requests to change their hours. Failure of an SME employer to be able to respond could see increasing movement of employees with the consequent associated costs.
On the periphery of the Budget, businesses are still struggling to obtain finance from a banking system which claims to be releasing credit in line with expectations. Whose expectations these are we cannot say as in the SME sector it is fairly clear that banks are only lending where the level of security available not only from the business but from owners personal guarantees is up to 4x the amount of borrowings. Suffice to say that Government statistics announced on 11 April showed that British firms were not investing in capital which would enable them to pull clear of recession & that they might struggle to do so. – If they cannot borrow to invest then perhaps the idea of a nationally owned business bank is the way forward? We still see banks visiting businesses, not to lend money but to sell Life Assurance & Pensions.
Finally it is worth commending our Chancellor on his astute awareness of the tax system over which he has stewardship. As recorded in an interview with the Daily Telegraph:
“Chancellor George Osborne has expressed shock after looking at 20 anonymised tax returns of multi-millionaires which demonstrated they have exploited tax loopholes to legally reduce their tax bills.”
Wednesday, 21 March 2012
HMRC Relents on Multiple P35 Penalties
HMRC has agreed a new approach to PAYE late filing penalties with professional tax bodies to lessen the number of companies receiving notices for £400+ fines in September each year.
As part of its initiative to improve service standards, the tax department worked with the bodies to tackle some of the most aggravating issues, one of which was the way companies were hit by hefty fines out of the blue.
The issue has become increasingly sensitive as tribunals have taken to dismissing penalty levies where the judge thinks HMRC's approach amounts to revenue-raising rather than enforcing the deadline, as documented during the past year in AccountingWEB's Reasonable Excuse scorecard.
To encourage employers to comply with the 19th May PAYE filing deadline, Taxation reported a statement from HMRC and the tax bodies which said it will undertake to:
As part of its initiative to improve service standards, the tax department worked with the bodies to tackle some of the most aggravating issues, one of which was the way companies were hit by hefty fines out of the blue.
The issue has become increasingly sensitive as tribunals have taken to dismissing penalty levies where the judge thinks HMRC's approach amounts to revenue-raising rather than enforcing the deadline, as documented during the past year in AccountingWEB's Reasonable Excuse scorecard.
To encourage employers to comply with the 19th May PAYE filing deadline, Taxation reported a statement from HMRC and the tax bodies which said it will undertake to:
- Change the notification date for 2011/12 P35 annual returns from mid-February to mid-March 2012, so that employers will receive it much nearer to the end of the tax year.
- Annual return reminders will be sent out from 28th April 2012, where HMRC thinks there are outstanding P35s for the year.
- From 31st May 2012, HMRC will introduce a "P35 Interim Penalty Letter" that will go to employers within a month of the filing deadline. The letter will tell employers they have incurred a late return penalty and explain what to do to avoid it increasing.
- Improve online guidance for submitting P35s online, including specific advice about the test-in-live service to reduce the number of employers who believe their test submission is the live submission. "The on-screen messages within the HMRC online product will also make it much clearer that even when a successful test transmission has been made, a live transmission is still required.
- Instruct Employer Helpline staff to tell employers about filing dates when setting up new employer schemes, to help them avoid a penalty.
- For next year, improve the information on the P35 and the reminders to include a warning that the first penalty notice will cover four months.
Monday, 19 March 2012
VAT and the Channel Islands
Attempts to stop the introduction of more stringent VAT rules on low value goods sent from the Channel Islands have been averted.
The Chancellor had announced last November the removal of the Low Value Consignment Relief (LVCR), which had allowed goods shipped from the Channel Islands worth less than £15 to ship VAT free.
Its abolition, from 1st April, was challenged by the Jersey and Guernsey governments, which said the move was discriminatory and illegal.
However, Law Lord Mr Justice Manning said the Treasury was within its rights to end the relief.
"This is a victory for common sense in what has become something of a case of David v Goliath," said Forum of Private Business senior policy adviser, Phil McCabe. "But the judiciary has today reaffirmed what George Osborne said in November, that LVCR is tax abuse and avoidance, plain and simple, and has to stop."
"Unfortunately it is too late for countless small firms which went to the wall, unable to compete with giants such as Amazon and Tesco, who have been able to unfairly use this loophole to avoid paying billions in tax and undercut their small rivals by significant margins."
"Had the government's decision been overturned there would have been serious consequences for high streets across the UK."
The real question is now whether the big companies will put up their prices by 20% or whether they will absorb the cost in the short term.
The Chancellor had announced last November the removal of the Low Value Consignment Relief (LVCR), which had allowed goods shipped from the Channel Islands worth less than £15 to ship VAT free.
Its abolition, from 1st April, was challenged by the Jersey and Guernsey governments, which said the move was discriminatory and illegal.
However, Law Lord Mr Justice Manning said the Treasury was within its rights to end the relief.
"This is a victory for common sense in what has become something of a case of David v Goliath," said Forum of Private Business senior policy adviser, Phil McCabe. "But the judiciary has today reaffirmed what George Osborne said in November, that LVCR is tax abuse and avoidance, plain and simple, and has to stop."
"Unfortunately it is too late for countless small firms which went to the wall, unable to compete with giants such as Amazon and Tesco, who have been able to unfairly use this loophole to avoid paying billions in tax and undercut their small rivals by significant margins."
"Had the government's decision been overturned there would have been serious consequences for high streets across the UK."
The real question is now whether the big companies will put up their prices by 20% or whether they will absorb the cost in the short term.
Monday, 5 March 2012
Staff Using Social Network sites
ACAS have just issued new guidance to assist employers with this increasingly thorny problem.
It is now widely accepted that staff no longer need an employer's PC Network to access social media sites. The emergence of many and varied mobile devices means that employers no longer have control regarding access to such sites during the working day. This can lead to time lost or at worst, the posting by staff of inappropriate comments about colleagues.
The latest guidance deals with a list of issues, dangers and benefits and then advises the appropriate way forward.
www.acas.org.uk/index.aspx?articleid=3381
It is now widely accepted that staff no longer need an employer's PC Network to access social media sites. The emergence of many and varied mobile devices means that employers no longer have control regarding access to such sites during the working day. This can lead to time lost or at worst, the posting by staff of inappropriate comments about colleagues.
The latest guidance deals with a list of issues, dangers and benefits and then advises the appropriate way forward.
www.acas.org.uk/index.aspx?articleid=3381
Friday, 2 March 2012
Inheritance Tax Planning
The current tax year comes to an end in a little over one months time. Don't overlook some simple planning points on Inheritance Tax.
Basically the 7 year gifts rule applies, where any gifts made fall completely out of Inheritance Tax charge after that time has passed.
Put simply, if your estate would have been worth £425,000 today had you not gifted £100,000 7 years ago, then instead of being liable for a £40,0000 IHT charge, the whole estate now worth £325,000 is tax free.
If you have the ability to make gifts and your estate is likely to exceed £325,000, then it is always worth considering making £3,000 worth of gifts each tax year which are tax free.
Assuming that a married couple are able, and of course wish to, use the annual exemption, it is worth remembering that they each have £3,000 to utilise which can save £2,400 per annum in potential IHT.
There are also separate small gift exemptions of up to £250 per recipient and gifts upon marriage of up to £5,000.
Finally, always keep a note of any gifts and preferably retain it with your copy Will. Oh you haven't made a Will yet? Memo to self then - make arrangements to have one drawn up.
Basically the 7 year gifts rule applies, where any gifts made fall completely out of Inheritance Tax charge after that time has passed.
Put simply, if your estate would have been worth £425,000 today had you not gifted £100,000 7 years ago, then instead of being liable for a £40,0000 IHT charge, the whole estate now worth £325,000 is tax free.
If you have the ability to make gifts and your estate is likely to exceed £325,000, then it is always worth considering making £3,000 worth of gifts each tax year which are tax free.
Assuming that a married couple are able, and of course wish to, use the annual exemption, it is worth remembering that they each have £3,000 to utilise which can save £2,400 per annum in potential IHT.
There are also separate small gift exemptions of up to £250 per recipient and gifts upon marriage of up to £5,000.
Finally, always keep a note of any gifts and preferably retain it with your copy Will. Oh you haven't made a Will yet? Memo to self then - make arrangements to have one drawn up.
Thursday, 1 March 2012
Walker Thompson Newsletter 53
Please click on any of the headings below for more information about each subject.
ONLINE VAT RETURNS
From April 2012, businesses (with very few exceptions) will have to file their VAT Returns online and pay their liability electronically. If you are not already online, now is the time to set it up.
EU COOKIES
The Information Commissioner’s Office (ICO) has published guidelines on the business use and storage of cookies.
PENSIONS AUTO ENROLMENT DATES DEFERRED FOR SMALLER EMPLOYERS
The timetable for the introduction of Pensions Auto Enrolment has been revised for smaller employers.
NEW APPROACH TO RECORDS CHECKS FROM HMRC
HMRC have announced that they intend to make changes to their business records checks programme following a review of the pilot scheme.
PAY UP ON TIME
A new guide ‘Get Paid!’ has been published. The guide which is aimed at smaller businesses contains tips and advice from both suppliers and customers. The guide covers advice on invoicing and developing a robust credit policy.
HMRC LATEST TARGETS
HMRC have announced that they will turn their attention to those involved in home improvement trades and direct selling (online market sellers) in their next round of Tax Catch Up Plans.
CLEAN UP YOUR PAYROLL DATA
HMRC have launched a new online video to help employers reduce the problems caused by inaccurate employee data.
SELF ASSESSMENT STATISTICS
According to HMRC a record 9.45 million self assessment tax returns were filed on time this year and a record 7.65 million (80.9% of them) were filed online.
BUDGET FOR GROWTH
The CBI is calling for a Budget to help businesses. To read more information on the CBI’s recommendations visit the link below.
PENALTIES FOR FAILING TO FILE PAYROLL FORMS ONLINE
HMRC have confirmed in the latest Employer Bulletin that they intend to impose penalties on all employers who fail to send their payroll starter and leaver forms online from April 2012.
ONLINE VAT RETURNS
From April 2012, businesses (with very few exceptions) will have to file their VAT Returns online and pay their liability electronically. If you are not already online, now is the time to set it up.
EU COOKIES
The Information Commissioner’s Office (ICO) has published guidelines on the business use and storage of cookies.
PENSIONS AUTO ENROLMENT DATES DEFERRED FOR SMALLER EMPLOYERS
The timetable for the introduction of Pensions Auto Enrolment has been revised for smaller employers.
NEW APPROACH TO RECORDS CHECKS FROM HMRC
HMRC have announced that they intend to make changes to their business records checks programme following a review of the pilot scheme.
PAY UP ON TIME
A new guide ‘Get Paid!’ has been published. The guide which is aimed at smaller businesses contains tips and advice from both suppliers and customers. The guide covers advice on invoicing and developing a robust credit policy.
HMRC LATEST TARGETS
HMRC have announced that they will turn their attention to those involved in home improvement trades and direct selling (online market sellers) in their next round of Tax Catch Up Plans.
CLEAN UP YOUR PAYROLL DATA
HMRC have launched a new online video to help employers reduce the problems caused by inaccurate employee data.
SELF ASSESSMENT STATISTICS
According to HMRC a record 9.45 million self assessment tax returns were filed on time this year and a record 7.65 million (80.9% of them) were filed online.
BUDGET FOR GROWTH
The CBI is calling for a Budget to help businesses. To read more information on the CBI’s recommendations visit the link below.
PENALTIES FOR FAILING TO FILE PAYROLL FORMS ONLINE
HMRC have confirmed in the latest Employer Bulletin that they intend to impose penalties on all employers who fail to send their payroll starter and leaver forms online from April 2012.
Wednesday, 29 February 2012
Processing in the new tax year
From 6th April the new emergency tax code will be 810L.
If you receive a new tax code for an employee, this must be used from the next payroll date.
If no tax code is received and the employee's current tax code has a suffix of L, then add 63 to the existing tax code for the first payroll after 6th April.
The new bands for the tax year starting 6th April 2012 are as follows:
PAYE threshold will be £156 per week / £675 per month
20% £1-£34,370
40% £34,371 - £150,000
50% £150,001 and above.
NIC LEL will be £107 per week / £464 per month
Please note there are also pension changes which will take effect from 6th April.
If you receive a new tax code for an employee, this must be used from the next payroll date.
If no tax code is received and the employee's current tax code has a suffix of L, then add 63 to the existing tax code for the first payroll after 6th April.
The new bands for the tax year starting 6th April 2012 are as follows:
PAYE threshold will be £156 per week / £675 per month
20% £1-£34,370
40% £34,371 - £150,000
50% £150,001 and above.
NIC LEL will be £107 per week / £464 per month
Please note there are also pension changes which will take effect from 6th April.
Monday, 27 February 2012
Payroll Year End
The 5th April is approaching fast and with it the Payroll Year End. P35 End of Year Returns along with all attached forms have to be submitted to the Revenue by 19th May at the latest.
So ... A few things to remember for the Year End procedures ...
So ... A few things to remember for the Year End procedures ...
- Almost all returns have to be submitted online this year, so if you are not yet registered to file online, now is the time to do it.
- A P35 must be completed for each company who has employees for whom a P11 is required
- A P14 must be submitted for each employee for whom a P11 is required.
- If you are not required to submit a P35 for the year (and you have a PAYE scheme set up), you must notify HMRC.
- Compare total PAYE & NIC due for the year against the amounts actually paid.
If a balancing payment is due - this needs to be paid to the Revenue by 19th April
If a refund is due - an amount of less than £500 will be allocated against the following year. A refund can be requested for amounts over £500 once the return has been filed and checked. - A P60 needs to be issued to each employee by 31st May
Thursday, 23 February 2012
Royal Mail - VAT changes
Following the Postal Services Act 2011, the VAT status on a number of Royal Mail products have changed.
Please follow the link below for more information as to:
Please follow the link below for more information as to:
- Products which are already liable for VAT
- Products which will be liable to VAT from 2nd April 2012
- Products which will remain VAT exempt
Tuesday, 21 February 2012
Walker Thompson advise shareholders in sale of major local travel agency
Walker Thompson is pleased to have been involved recently in the sale of Carrick Travel Ltd to its Directors, Tina Nason and Tracey Carter, as part of a Management Buy Out.
Award winning travel agency Carrick Travel has been trading for over 35 years and has numerous offices throughout Warwickshire, the Cotswolds and the M40 corridor.
Award winning travel agency Carrick Travel has been trading for over 35 years and has numerous offices throughout Warwickshire, the Cotswolds and the M40 corridor.
The company operates eight Travel Agencies, a Corporate Travel Division and an Australasia Division. It has retail outlets in Leamington Spa, Cheylesmore in Coventry, Kenilworth, Stratford-upon-Avon, Bourton-on-the-Water, Chipping Norton, Evesham and Pershore.
Sherod Williams, a Director at Walker Thompson, represented the Carrick family in relation to the sale and worked alongside Lodders Solicitors of Stratford-upon-Avon who dealt with the Sale and Purchase documentation.
Sally Carrick will continue her work locally as a Director of Shakespeare Country, an organisation promoting tourism in the Stratford and South Warwickshire area.
Sherod said, "In the current environment people still want a quality service which cannot be delivered through the internet or larger travel agencies. Anyone seeking the personal involvement of a travel advisor with specialist knowledge should give Carrick Travel a call.".
Carrick can be contacted through their website http://www.carricktravel.com/.
Thursday, 9 February 2012
Vacancy
We currently have a vacancy for a part time / full time payroll and bookkeeping clerk.
The person would ideally have experience of Sage accounting and payroll software. They would be expected to organise a portfolio of up to 30 payrolls for various clients in a wide variety of sectors. Experience of VAT Return preparation would be advantageous, as would a working knowledge of Excel.
Competitive Salary
Application with up to date CV by e-mail to kim.knowles@walkerthompson.co.uk or by letter to Empress House, 43a Binley Road, Coventry, CV3 1HU
The person would ideally have experience of Sage accounting and payroll software. They would be expected to organise a portfolio of up to 30 payrolls for various clients in a wide variety of sectors. Experience of VAT Return preparation would be advantageous, as would a working knowledge of Excel.
Competitive Salary
Application with up to date CV by e-mail to kim.knowles@walkerthompson.co.uk or by letter to Empress House, 43a Binley Road, Coventry, CV3 1HU
Thursday, 26 January 2012
Online VAT Returns
From April 2012, businesses (with very few exceptions) will have to file their VAT Returns online and pay their liability electronically. If you are not already online, now is the time to set it up.
HMRC strongly recommends you sign up to using the online service before April 2012, so that you have time to get familiar with the new service. It has also proved useful to set up online filing, and the associated direct debit mandate, some time before the first return needs to be submitted, to avoid delays in either the submission or payment of your first return.
When you submit your VAT Returns online, you must also pay any VAT due electronically. Paying electronically will normally give you to up to seven extra calendar days to submit your return and pay your VAT, unless you make annual returns or payments on account. The extended due date will be shown on your online return and you must ensure that cleared funds reach HMRC's bank account by this date. If your payment clears later than this, you may be liable to a surcharge for late payment.
Moving to online filing
HMRC strongly recommends you sign up to using the online service before April 2012, so that you have time to get familiar with the new service. It has also proved useful to set up online filing, and the associated direct debit mandate, some time before the first return needs to be submitted, to avoid delays in either the submission or payment of your first return.
When you submit your VAT Returns online, you must also pay any VAT due electronically. Paying electronically will normally give you to up to seven extra calendar days to submit your return and pay your VAT, unless you make annual returns or payments on account. The extended due date will be shown on your online return and you must ensure that cleared funds reach HMRC's bank account by this date. If your payment clears later than this, you may be liable to a surcharge for late payment.
Moving to online filing
Tuesday, 24 January 2012
T-7 and counting ...
Time is ticking away and with only 7 calender days left, the 31st January will be here before we know it.
All Self Assessment Tax Returns for the year ended 5th April 2011 must be filed online by 31st January 2012. (The deadline for most paper returns is long gone.)
If you have received a notification from HMRC that they are expecting a self assessment return from your, or you have had any assessable income during the tax year, you need to file a tax return by the deadline date.
All Self Assessment Tax Returns for the year ended 5th April 2011 must be filed online by 31st January 2012. (The deadline for most paper returns is long gone.)
If you have received a notification from HMRC that they are expecting a self assessment return from your, or you have had any assessable income during the tax year, you need to file a tax return by the deadline date.
Friday, 20 January 2012
More on PAYE Filing Penalties
Recent Tribunal decisions on penalties for PAYE returns that are filed late are inconsistent, and the taxman should issue penalty notices to taxpayers more promptly after a deadline is missed, a senior tax accountant said.
As HMRC prepares to challenge a tribunal ruling that criticized its practice of allowing fines to accumulate before issuing penalty notices, recent tribunals have reached different verdicts on the increasingly controversial subject.
Chas Roy-Chowdhury, head of taxation at the ACCA accountancy institute, said tribunal decisions on penalties were "all over the place".
The taxman should be more understanding if businesses make an honest mistake when submitting end-of-year P35 returns - which show employees' income tax and national insurance contributions - Roy-Chowdhury added.
For example, some businesses, or their tax advisers, may mistakenly send a "test version" of their P35, wrongly believing that they have completed the return.
In Croydon North Conservative Association v commissioners for HMRC - heard in the first-tier tribunal last November - the association appealed against an "unfair" £800 penalty for a P35 return that was filed late.
The employer filed their P35 online on 30 March 2011 - more than ten months after the 19 May 2010 deadline for sending the return.
The association appealed against the fine, arguing that its treasurer had no experience of PAYE. It also said that HMRC had taken eight months to notify it about the fine and that an earlier call or letter explaining that the P35 was late would have solved the problem.
The tribunal ruled in favour of the taxman, concluding that penalty notices were not intended to serve as reminders and that burden was on the taxpayer to establish a reasonable excuse for late returns.
In another case about tax penalties - Global Legalisation Services Limited v the commissioners for HMRC - heard in the first-tier tribunal last August - a company successfully appealed against a £800 penalty for a P35 form that was sent late.
The company's tax adviser said that it believed it had filed the return successfully.
After sending the the P35 return online the agent received an email from HMRC confirming receipt but warning that if the submission was a "test submission" the form should be resent using the "live transmission" in order to be processed.
HMRC said that sending a "test submission" requires the employer to "actively access test mode on the system" - meaning that the employer does not have a reasonable excuse for sending the form late.
Roy-Chowdhury said that the taxman should be prepared to reduce tax penalties to encourage people to file late returns quickly.
"When HMRC issues penalties [for late filing of a P35 form] it could say there is a £500 penalty but if you file within 30 days you will pay £100," he said.
A plan to collect income tax and national insurance contributions from employees' pay packets in "real time" rather than annually should make it easier for HMRC officials to send tax reminders and penalties quicker. The new system is due to start from April 2013.
Under real-time PAYE, employers will send HMRC information about tax and other deductions from employees' pay when, or before they make the salary or wage payment to the employee, rather than sending returns at the end of the year under the current system.
As HMRC prepares to challenge a tribunal ruling that criticized its practice of allowing fines to accumulate before issuing penalty notices, recent tribunals have reached different verdicts on the increasingly controversial subject.
Chas Roy-Chowdhury, head of taxation at the ACCA accountancy institute, said tribunal decisions on penalties were "all over the place".
The taxman should be more understanding if businesses make an honest mistake when submitting end-of-year P35 returns - which show employees' income tax and national insurance contributions - Roy-Chowdhury added.
For example, some businesses, or their tax advisers, may mistakenly send a "test version" of their P35, wrongly believing that they have completed the return.
In Croydon North Conservative Association v commissioners for HMRC - heard in the first-tier tribunal last November - the association appealed against an "unfair" £800 penalty for a P35 return that was filed late.
The employer filed their P35 online on 30 March 2011 - more than ten months after the 19 May 2010 deadline for sending the return.
The association appealed against the fine, arguing that its treasurer had no experience of PAYE. It also said that HMRC had taken eight months to notify it about the fine and that an earlier call or letter explaining that the P35 was late would have solved the problem.
The tribunal ruled in favour of the taxman, concluding that penalty notices were not intended to serve as reminders and that burden was on the taxpayer to establish a reasonable excuse for late returns.
In another case about tax penalties - Global Legalisation Services Limited v the commissioners for HMRC - heard in the first-tier tribunal last August - a company successfully appealed against a £800 penalty for a P35 form that was sent late.
The company's tax adviser said that it believed it had filed the return successfully.
After sending the the P35 return online the agent received an email from HMRC confirming receipt but warning that if the submission was a "test submission" the form should be resent using the "live transmission" in order to be processed.
HMRC said that sending a "test submission" requires the employer to "actively access test mode on the system" - meaning that the employer does not have a reasonable excuse for sending the form late.
Roy-Chowdhury said that the taxman should be prepared to reduce tax penalties to encourage people to file late returns quickly.
"When HMRC issues penalties [for late filing of a P35 form] it could say there is a £500 penalty but if you file within 30 days you will pay £100," he said.
A plan to collect income tax and national insurance contributions from employees' pay packets in "real time" rather than annually should make it easier for HMRC officials to send tax reminders and penalties quicker. The new system is due to start from April 2013.
Under real-time PAYE, employers will send HMRC information about tax and other deductions from employees' pay when, or before they make the salary or wage payment to the employee, rather than sending returns at the end of the year under the current system.
Thursday, 19 January 2012
HMRC missing a deadline - surely not?
HM Revenue and Customs has missed a key deadline which required it to create teams of cyber crime investigators and launch initiatives to counter the increased threat of web attacks on the authority's system and customers.
In its structural reform plan progress report for December 2011, HMRC said that work on the project should have been completed by November 2011, but recruitment activity is still ongoing and the scheme will now not be completed until February.
This serves to prove that despite unemployment rates spiralling, the country does not have the appropriate people trained and capable of fulfilling this vitally important role in protecting taxpayers data. Perhaps they will impose financial penalties on themselves as they do so readily with taxpayers who miss deadlines or do HMRC believe that they have a "reasonable excuse"?
In its structural reform plan progress report for December 2011, HMRC said that work on the project should have been completed by November 2011, but recruitment activity is still ongoing and the scheme will now not be completed until February.
This serves to prove that despite unemployment rates spiralling, the country does not have the appropriate people trained and capable of fulfilling this vitally important role in protecting taxpayers data. Perhaps they will impose financial penalties on themselves as they do so readily with taxpayers who miss deadlines or do HMRC believe that they have a "reasonable excuse"?
Wednesday, 18 January 2012
The rules on being late with PAYE & NIC payments
We have become aware that some businesses are wrongly interpreting the rules regarding late settlement of monthly or quarterly PAYE payments. HMRC expect that deductions made from employees for tax and NI in one month should be correctly accounted for and paid over by 22nd of the subsequent month. The penalties regime was extended to include late PAYE returns in 2009/10 and many late penalties of up to £400 were publicised in the press recently.
There does however seem to be some confusion regarding an HMRC concession which states that for one payment only each year, if it is made late, they will not seek to impose a penalty. This means that HMRC still expect the payment to be made within reasonable time NOT as some people seem to believe, that a whole month's payment can be deferred until month 12 without a penalty as long as all other payments are made on time.
HMRC deadlines contains further details.
There does however seem to be some confusion regarding an HMRC concession which states that for one payment only each year, if it is made late, they will not seek to impose a penalty. This means that HMRC still expect the payment to be made within reasonable time NOT as some people seem to believe, that a whole month's payment can be deferred until month 12 without a penalty as long as all other payments are made on time.
HMRC deadlines contains further details.
Tuesday, 17 January 2012
Self Assessment Returns
More than 1,000 taxpayers submitted their self assessment returns on Christmas Day, HMRC figures have revealed.
The figures also show that 102 people saw in the new year at their computer completing their tax returns. In total, 11,648 filed on New Year's Eve, while 8,935 people battled hangovers to submit on New Year's Day.
It is no surprise that HMRC can collect this type of data yet cannot spend the necessary time to get basic PAYE codes correct or indeed many of the other processes which create worry and concern for taxpayers.
The figures also show that 102 people saw in the new year at their computer completing their tax returns. In total, 11,648 filed on New Year's Eve, while 8,935 people battled hangovers to submit on New Year's Day.
It is no surprise that HMRC can collect this type of data yet cannot spend the necessary time to get basic PAYE codes correct or indeed many of the other processes which create worry and concern for taxpayers.
Monday, 16 January 2012
Walker Thompson Newsletter 51
WELCOME TO 2012
On 15 December 2011 Walker Thompson were successfully re-assessed against the Investors in Excellence Standard, first achieved by the firm in 2007 and again two years later.
PENSIONS AUTO ENROLMENT
The Government has confirmed that pensions auto enrolment will commence in Autumn 2012 and all employers will remain within the scope of the rules.
ADVISORY FUEL RATES FOR COMPANY CARS
New company car advisory fuel rates have been published to take effect from 1 December 2011.
CAPITAL ALLOWANCES IN ENTERPRISE ZONES
Following the Autumn Statement at the end of November 2011, more information is now available in respect of the proposal to give 100% first year allowances on plant and machinery expenditure for use in some Enterprise Zone areas.
SEED ENTERPRISE INVESTMENT SCHEME
The government has released more information on the new Seed Enterprise Investment Scheme (SEIS) aimed at smaller companies.
STATUTORY RESIDENCE TEST
The government has been consulting on introducing a Statutory Residence Test (SRT). The test which was expected to be introduced from 2012 has been delayed until 6 April 2013. More details are expected to be announced in the 2012 Budget.
SELF ASSESSMENT DEADLINE FAST APPROACHING
HMRC are reminding taxpayers that the deadline for filing self assessment tax returns is fast approaching.
THE PORTAS REVIEW
The CBI commented on a report by Mary Portas on the future of the high street.
HMRC TO ACCEPT FASTER PAYMENTS
HMRC have announced that they will now accept payments made using the Faster Payments Service. This will allow taxpayers to make faster electronic payments, typically via internet or telephone banking, enabling them to be processed on the same or next day.
2012/13 STATUTORY PAYMENTS
HMRC have announced the following statutory payment rates which are due to take affect for 2012/13. These rates are still subject to Parliamentary approval and HMRC will confirm the rates before 1 April 2012.
On 15 December 2011 Walker Thompson were successfully re-assessed against the Investors in Excellence Standard, first achieved by the firm in 2007 and again two years later.
PENSIONS AUTO ENROLMENT
The Government has confirmed that pensions auto enrolment will commence in Autumn 2012 and all employers will remain within the scope of the rules.
ADVISORY FUEL RATES FOR COMPANY CARS
New company car advisory fuel rates have been published to take effect from 1 December 2011.
CAPITAL ALLOWANCES IN ENTERPRISE ZONES
Following the Autumn Statement at the end of November 2011, more information is now available in respect of the proposal to give 100% first year allowances on plant and machinery expenditure for use in some Enterprise Zone areas.
SEED ENTERPRISE INVESTMENT SCHEME
The government has released more information on the new Seed Enterprise Investment Scheme (SEIS) aimed at smaller companies.
STATUTORY RESIDENCE TEST
The government has been consulting on introducing a Statutory Residence Test (SRT). The test which was expected to be introduced from 2012 has been delayed until 6 April 2013. More details are expected to be announced in the 2012 Budget.
SELF ASSESSMENT DEADLINE FAST APPROACHING
HMRC are reminding taxpayers that the deadline for filing self assessment tax returns is fast approaching.
THE PORTAS REVIEW
The CBI commented on a report by Mary Portas on the future of the high street.
HMRC TO ACCEPT FASTER PAYMENTS
HMRC have announced that they will now accept payments made using the Faster Payments Service. This will allow taxpayers to make faster electronic payments, typically via internet or telephone banking, enabling them to be processed on the same or next day.
2012/13 STATUTORY PAYMENTS
HMRC have announced the following statutory payment rates which are due to take affect for 2012/13. These rates are still subject to Parliamentary approval and HMRC will confirm the rates before 1 April 2012.
Welcome to the Great New Year NIC Giveaway
The take up of the National Insurance Holiday scheme that formed a key part of Chancellor George Osborne's first Budget is still way below the Treasury's initial estimates, the government has confirmed.
Exchequer secretary to the Treasury David Gauke released figures about the scheme to Parliament recently. Just over 10,000 companies have taken up the scheme since June 2010. The government had hoped for a take-up of 132,000 a year when it was announced by Osborne.
The holiday exempts qualifying new businesses in eligible regions from up to £5,000 of employer national insurance contributions for each of the first ten employees hired in the first 12 months of business.
It has received criticism because it is only available in certain regions.
Professionals have call for the scheme to be rolled out across the country. HM Revenue & Customs say that they have sent around 140,000 personalised letters to all businesses that have registered for a PAYE scheme since June 2010 at a cost of around £90,000 in October.
The Exempted areas are:
Greater London (all)
The Eastern Region comprising:
The counties of Bedford, Cambridgeshire, Central Bedfordshire, Essex, Hertfordshire, Norfolk and Suffolk.
Luton, Peterborough, Southend-on-Sea and Thurrock.
The South East Region comprising:
The counties of Buckinghamshire, East Sussex, Hampshire, the Isle of Wight, Kent, Oxfordshire, Surrey and West Sussex.
Bracknell Forest, Brighton and Hove, Medway, Milton Keynes, Portsmouth, Reading, Slough, Southampton, West Berkshire, Windsor and Maidenhead and Wokingham.
Exchequer secretary to the Treasury David Gauke released figures about the scheme to Parliament recently. Just over 10,000 companies have taken up the scheme since June 2010. The government had hoped for a take-up of 132,000 a year when it was announced by Osborne.
The holiday exempts qualifying new businesses in eligible regions from up to £5,000 of employer national insurance contributions for each of the first ten employees hired in the first 12 months of business.
It has received criticism because it is only available in certain regions.
Professionals have call for the scheme to be rolled out across the country. HM Revenue & Customs say that they have sent around 140,000 personalised letters to all businesses that have registered for a PAYE scheme since June 2010 at a cost of around £90,000 in October.
The Exempted areas are:
Greater London (all)
The Eastern Region comprising:
The counties of Bedford, Cambridgeshire, Central Bedfordshire, Essex, Hertfordshire, Norfolk and Suffolk.
Luton, Peterborough, Southend-on-Sea and Thurrock.
The South East Region comprising:
The counties of Buckinghamshire, East Sussex, Hampshire, the Isle of Wight, Kent, Oxfordshire, Surrey and West Sussex.
Bracknell Forest, Brighton and Hove, Medway, Milton Keynes, Portsmouth, Reading, Slough, Southampton, West Berkshire, Windsor and Maidenhead and Wokingham.
Monday, 2 January 2012
Self-employment National Insurance Contributions
Making sure you don't overpay self-employment National Insurance contributions.
If you expect to be both employed and self-employed you may be able to 'defer' some of your Class 2 and/or Class 4 National Insurance contributions. You'll pay what's due after the end of the tax year when the actual amount has been worked out. Doing this will make sure you don't pay too much National Insurance on any self-employment income.
Go to form CA72B Application for deferment of payment of Class 2 and/or Class 4 National Insurance contributions.
Walker Thompson's view: It is advisable to check and if in doubt apply as soon as possible. Deferment cannot be made retrospectively.
If you expect to be both employed and self-employed you may be able to 'defer' some of your Class 2 and/or Class 4 National Insurance contributions. You'll pay what's due after the end of the tax year when the actual amount has been worked out. Doing this will make sure you don't pay too much National Insurance on any self-employment income.
Go to form CA72B Application for deferment of payment of Class 2 and/or Class 4 National Insurance contributions.
Walker Thompson's view: It is advisable to check and if in doubt apply as soon as possible. Deferment cannot be made retrospectively.
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