HMRC able to take up to £17,000 from taxpayers

News has emerged of HMRC being able to take up to £17,000 from taxpayers as part of its recovery procedures. Walker Thompson wants to clarify here that this is a mechanism to code out larger tax debt via PAYE and is NOT linked to the proposals allowing HMRC access to peoples bank accounts.

The change, expected to raise £115m in the 2015-16 tax year, has aroused less controversy than plans to deduct the money from bank accounts because it spreads payments over the year and does not affect those earning less than £30,000, who will still be subject to a £3,000 limit. HMRC has introduced a sliding scale so only those earning more than £90,000 would face a potential £17,000 deduction. It has also guaranteed that it would not take more than half the salary of those affected.

We assume this means Gross Salary but with certain high earners the tax code already accounts for various benefits in kind such that taking half of salary through additional coding could possibly leave no net pay !

Newsletter 84

Headlines from our latest newsletter.  Please click on any of the links below for more information :

RTI PENALTIES FOR SMALL EMPLOYERS DELAYED

HMRC have confirmed that employers with fewer than 50 employees will face automated in-year penalties for late real-time PAYE returns from 6 March 2015 which is later than had originally been anticipated. - See more at: http://www.walkerthompson.co.uk/newsletters/Newsletter-84#RTI

VAT FOR DIGITAL BUSINESSES AND THE MINI ONE STOP SHOP

The one-stop VAT service starts from 1 January 2015 for businesses supplying what are collectively known as ‘digital services’ in the EU. - See more at: http://www.walkerthompson.co.uk/newsletters/Newsletter-84#VAT

NATIONAL MINIMUM WAGE RISES

The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. - See more at: http://www.walkerthompson.co.uk/newsletters/Newsletter-84#NMW

FUEL ADVISORY RATES

New company car advisory fuel rates have been published which took effect from 1 September 2014. - See more at: http://www.walkerthompson.co.uk/newsletters/Newsletter-84#Fuel

AUTUMN STATEMENT DATE ANNOUNCED AND HAVE YOUR SAY

The government has announced that the Autumn Statement 2014 will take place on 3 December. - See more at: http://www.walkerthompson.co.uk/newsletters/Newsletter-84#Autumn

P11D

The Daily Mail reported yesterday on the thousands of warning letters sent out incorrectly to UK businesses.

HMRC blamed computer updating – or lack of it – for the error which related to penalties for non submission of forms P11D which declare employees benefits in kind.

Many commentators remain concerned that HMRC want the right in law to take treasury debt direct from bank accounts and state that this sort of internal mis-management is exactly why such powers should not be permitted.

One last chance for landlords

HMRC has announced one last chance for landlords who fail to declare all their rental income to come clean - or else take the consequences. 

HMRC estimates that up to 1.5 million landlords may be underpaying up to £500 million in tax every year. Under the Revenue’s Let Property Campaign, landlords who may owe tax – whether through misunderstanding the rules or deliberate evasion – can come forward and declare any unpaid tax, although they will have to pay possible penalties and interest. 

The Revenue says it will be “working with a variety of bodies over the next few months to develop tools and guidance to support landlords of all types and help them get their affairs up to date.”

HMRC says it will use information it holds about property rental in the UK and abroad, along with information already held on its digital intelligence system Connect, to identify people who have not paid what they owe. 

This is also likely to include cross-referencing letting agents’ returns with those of their landlord clients. For investors that fail to come forward, higher penalties – or even criminal prosecution – could follow.

Further details of the amnesty can be found at https://www.gov.uk/let-property-campaign

Courtesy of Alternative Estates Coventry

Small firms win RTI reprieve

In the latest relaxation of RTI rules, HMRC has announced that it will exempt small employers with 49 or fewer staff from RTI late filing penalties until March 2015.  Until that date, they will be allowed to submit PAYE information monthly.  "We know from our experience of rolling out of RTI that to ensure a smooth transition for our customers its best to introduce changes in stages.  This will allow us to update our systems and enhance our guidance and customer support as needed.  We know that those who have had most difficulty adjusting to real-time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty", HMRC's director-general for personal tax Ruth Owen comments.  The exemption was welcomed by the CIOT as a "positive step", however, it warned that wrinkles remain in the overall system.  It warns that the taxman is guilty of firing off erroneous message to small firms, accusing many of these firms of late filing, non-filing and late payment.  This results in additional form-filling for these business and often requires a lengthy appeals process.

Experts predict NI changes

The Sunday Times reflects on a report by the King's Fund which suggests more than 1m over-65s should prepare for an increase in their tax bills.  The report recommends an end to the exemption that allows those who continue working past state retirement age to avoid 12% NI.  Tax experts say the report could pave the way for the current system of NI to be abolished.  Andrew Hubbard of Baker Tilly said "We have employment taxes that have to be paid if you are working.  Why should you be allowed to avoid them because you have celebrated a certain birthday?"  Chas Roy-Chowdhury, head of taxation at the ACCA, agreed, saying "I think it highly likely that something will change".

Property taskforce targets the North West

A new taskforce launched by HMRC is now tackling people trying to dodge property tax in the North West and North Wales.  The taskforce, which aims to recover £5m, is targetting people who have sold one or more properties and have not paid CGT or disclosed rental income.  So far the HMRC's property crackdown, which has seen similar taskforces set up in London, the South East and Yorkshire, has recovered more than £12m "HMRC taskforces are deployed in sectors and areas where we've detected a high risk of tax evasion.  For example, in a previous property taskforce in London in 2013 we uncovered a barrister who had evaded £471,512 in unreturned capital gains", Jennie Granger, Director General of Enforcement and Compliance at HMRC, explains.  In the Telegraph Matthew Lynn writes that tax campaigns targeting landlords are too heavy handed and that people should be encouraged to profit from buying and letting property.

Small firms facing rates rise

Around 67,000 SMEs in England face above-inflation rises in their bills next year, according to property consultancy Gerald Eve.  The firm points out that the end of transitional relief for small businesses in April 2015 has coincided withe George Osborne's decision to postpone a revaluation of the property values used to calculate the tax, with many facing steep rises in rates as a result.  The FSB has said business rates are among the biggest concerns of its members, with online competitors increasingly able to undercut those paying for physical premises.  Jerry Schurder, head of rating at Gerald Eve, said the chancellor should cap rates rises to inflation in December's Autumn Statement and promise a radical overhaul of the system

Trader jailed over tax scam

An internet trader has been jailed for two years after failing to pay tax or VAT on at least £300,000 of his earnings.  John Woolfenden sold CDs, DVDs and console games on various websites, but made no mention of his online trading income on his self-assessment tax returns.  A spokesperson stated "HMRC will pursue every avenue to ensure evaded taxes are restored to the taxpayer and public finances".

Raise taxes to reform care system

A report commission by the King's Fund think-tank is calling for a review of wealth taxation, including IHT, in order to pay for radical reform of the UK's care system.  The report recommends everyone over 40 and those on more than £42,000 should pay extra NI, and that pensioners who continue to work should be charged NI for the first time.  Wealthy pensioners should also be stripped of free prescriptions, free TV licences and the winter fuel allowance, potentially freeing up billions of pounds.  Dame Kate Barker, who chaired the report's panel, stated "if we are going to provide a decent society and decent care, we're going to have to find the money".

Pensions crisis looms

A survey from the Chartered Institute of Payroll Professionals has found that almost half the working population have no form of retirement provision.  The poll of 2,000 people found that 49% were neither members of a company scheme nor had private provision.  The findings come despite a government drive to ensure that all companies operate pension schemes for their workforces by 2017.

December date for Autumn Statement

George Osborne is to deliver the Autumn Statement, an annual update on the state of the economy, on December 3.

Britain rises up world league table

Britain rose one place to ninth in the World Economic Forum's ranking of the world's most competitive economies.  The forum said that, overall, the UK had "one of the most sophisticated business environments in the world", underpinned by an efficient labour market and the capacity for innovation among its businesses.

Barlow issues apology over tax affairs

Former Take That singer-songwriter Gary Barlow has used Twitter to apologise "to anyone who was offended by the tax stories earlier this year".  A second tweet said "With a new team of accountants, we are working to settle things with all parties involved ASAP".  Mr Barlow and two band mates faced a multimillion-pound tax bill after attempting to shelter £66m in a tax scheme called Icebreaker.

Companies face prosecution for failing to prevent economic crime

Speaking at the Cambridge Symposium of economic crime, Jeremy Wright, the attorney-general, confirmed the government is considering widening criminal liability for the corporate world through the creation of an offence of a corporate failure to prevent economic crime, in a move that would significantly increase the reach of the Serious Fraud Office, according to its director David Green.  Separate rules due to come into force in October will see firms fined as much as 400% of any profits accrued from bribery.  The FT notes that the SFO has not yet prosecuted a company under the Bribery Act for failing to prevent corruption.  Neill Blundell at Eversheds comments "it is interesting to note that prior to any such prosecution, there is now the idea of extending the provision of all economic crime".  Meanwhile, the director of the economic crime command at the UK's National Crime Agency, Donald Toon, has warned professional services firms that they will face investigation should they "enable" organised crime with their services.  Mr Toon said a plan would be formulated by the end of the year on how to tackle "professional enablers" but action by both the NCA and the solicitors' regulator could happen sooner.

Self-employment reaches record high

The Guardian's Angela Monaghan cites ONS figures which show self-employment in the UK is at its highest level since records began almost 40 years ago.  The proportion of the total workforce self-employed is 15% (4.6m people), compared with 13% in 2008, and 8.7% in 1975.  Frances O'Grady, the TUC general secretary said its "worrying that much of the recent increase is due, as the ONS says, to the limited opportunities for people to move out of self-employment".  Ms O'Grady continued "Self-employment appears to be a key factor in the UK economy's shift towards low-paid work.  Many people want to work for themselves.  But the growth in self-employment is reducing people's pay, job security and retirement income - and is likely to be reducing the government's tax take, too".