TAX GAP REMAINS LOW
HMRC has published a report showing that
the UK tax gap in 2017/18 is estimated to be £35 billion. This is 5.6% of
total theoretical tax liabilities, and a small increase of 0.1% from 5.5% in
2016/17.
HMRC therefore secured 94.4% of all tax due.
The tax gap is the difference between the
amount of tax that should be paid to HMRC compared to what is actually paid.
Further details in the report show:
•
the overall tax gap has fallen
from 7.2% since 2005/06
•
the duty-only excise tax gap
has reduced from 8.4 % in 2005/06
to 5.1% in 2017/18.
•
the corporation tax gap has
reduced from 12.5% in 2005/06 to
8.1% in 2017/18.
Jesse Norman MP, Financial Secretary to the
Treasury, said:
'The
UK's low tax gap underlines both how the vast majority of people are paying the
correct amount of tax, and how effective HM Revenue and Customs has been in its
efforts to clamp down on tax evasion and avoidance.'
The report advises that the majority of
taxpayers want to get their tax right, but many are still finding this hard,
with avoidable mistakes costing the Exchequer over £9.9 billion a year. HMRC
advise that £3 billion of this is attributable to VAT alone.
With the introduction of Making Tax Digital
(MTD) for VAT, HMRC anticipates that the tax lost due to avoidable errors will
be reduced because of the improved accuracy that digital records provide.
Internet
link: GOV.UK news
Over two thirds of EU citizens that are
currently in the UK are here for work. The government is advising that if these
individuals plan to remain living and working in the UK, after it leaves the
EU, they can now apply to the EU Settlement Scheme (EUSS).
EU, EEA, or Swiss employees, and their
family members, can apply to the EUSS if they want to continue to live, work,
and study in the UK after 31 December 2020. This applies whether UK leave the
EU with a deal or with a 'no deal'.
Under the scheme, successful applications
will be granted either settled or pre-settled status. Status depends on how
long they have been living in the UK when they apply. In both cases, they can
continue to work in the UK, use public services like the NHS, and access public
funds such as pensions. Irish citizens do not need to apply.
The government has created an employer toolkit to help EU
citizens with their application. The toolkit includes items such as posters and
videos and information on how to apply. Employers do not have any obligation to
share any information or even check whether employees have applied. However,
they may wish to offer reassurance to their employees and make sure they have
the right information.
However, employers have a duty not to
discriminate against EU citizens with regards to the UK's decision to leave the
EU, both as a prospective and current employer.
Internet
links: Agent Update 72 GOV.UK EUSS
HMRC is phasing in its landmark Making Tax
Digital (MTD) regime, which will ultimately require taxpayers to move to a
fully digital tax system.
Under the rules, businesses with a taxable
turnover above the VAT threshold (currently
£85,000) must keep digital
records for VAT purposes and provide their VAT return information to HMRC using
compatible software.
The rules have effect from 1 April 2019
where a taxpayer has a 'prescribed accounting period' which begins on that
date, or otherwise from the first day of a taxpayer's first prescribed
accounting period beginning after 1 April 2019.
However for some VAT-registered businesses
with more complex requirements the rules do not take effect until 1 October
2019. Included in the deferred start date category are VAT divisions, VAT
groups and businesses using the annual accounting scheme.
Businesses in the deferral group should
have received a letter inviting them to join the MTD for VAT scheme. The scheme
will be mandatory for the first VAT return period starting on or after 1
October 2019. The letter encourages businesses to join early in order to be
prepared for
1 October 2019. However, it does highlight that once a business
has joined MTD for VAT, the old system of filing VAT returns can no longer be
used.
HMRC has announced that those entities that
use the GIANT service for VAT will have their deferral period for MTD further
extended. A mandation date has not yet been confirmed.
GIANT is the 'Government information and
NHS Trust' service, a special online system that is used by the public sector
bodies, such as the NHS trusts and government departments, to file additional
information with their VAT returns.
Those affected should have received a
letter in June from HMRC informing them of the extension to their deferral
period. HMRC will write again later in the summer with details of the revised
timetable.
Please contact us for help with MTD for
VAT.
Internet
link: GOV.UK MTD for VAT
HMRC has issued the June 2019 edition of
the Employer Bulletin. This includes articles on a number of issues including:
•
labour supply chain fraud
•
using loans to avoid Optional
Remuneration Rules
•
re-enrolment of staff back into
a workplace pension scheme
•
GDPR fees
•
contractors operating CIS – new
VAT reverse charge on building
and construction services
•
using Tax-Free Childcare to
make school holidays easier.
If you have any queries on payroll matters
please contact us.
Internet
link: Employer Bulletin
The government has announced a package of
measures to ensure small businesses get paid on time. Under the proposals large
businesses could be fined for failing to pay smaller suppliers on time as part
of a robust package of measures.
The measures include:
•
proposed new powers for the
Small Business Commissioner to
tackle late payments through fines and binding
payment plans
•
company boards to be held
accountable for supply chain payment
practices for first time
•
the introduction of a new fund
to encourage businesses to use
technology to simplify invoicing, payment and
credit
management.
The government has also announced that
responsibility of the voluntary code of best practice, the Prompt Payment
Code, will be moved to the Small Business Commissioner.
Small Business Minister Kelly Tolhurst
said:
'The
vast majority of businesses pay their bills on time, with the amount owed in
late payments halved over the last five years. But as a former small business
owner, I know the huge impact a late payment can have on the ability of a small
business to plan, invest and grow.'
'Small
businesses are the backbone of our economy and through our modern Industrial
Strategy we want to ensure the UK is the best place to start and grow a
business. These measures will ensure that small businesses are given the
support they need and ensure that they get paid quickly - ending the
unacceptable culture of late payment.'
Internet
link: GOV.UK news
Under self assessment taxpayers are
required to make payments on account of their tax liabilities. The payment on
account instalments consist of two payments on account of equal amounts:
•
the first on 31 January during
the tax year and
•
the second on 31 July following
the end of the tax year.
These are set by reference to the previous
year's income tax liability and Class 4 NIC if any.
A final payment (or repayment) is due on 31
January following the tax year.
Payments are not due where the previous
year's liability is less than £1,000 or where 80% of the previous year's bill
was met by tax deductions at source.
The Association of Taxation Technicians
(ATT) has warned that 'some people may
not receive the tax demands they expect by the end of July' for their
self assessment, even if it may be due.
ATT has issued a press release saying that
the HMRC system did not correctly process all the payments on account
information for 2018/19. As a consequence, the demand for the first payment on
account for January 2019 may not have been issued.
Unless those taxpayers contacted HMRC, the
next demand for payment on account, due on 31 July 2019, may also not be
issued. HMRC has confirmed that if it has not issued a demand for payment on
account, the full amount will be requested in January 2020.
Making a voluntary payment may not be
processed correctly. If you want to make a payment on account that is due, then
taxpayers or their agents are advised to contact HMRC.
Jon Stride, Co-Chair of the ATT's Technical
Steering Group, said:
'If a
taxpayer does not make any payments on account during 2019, then their tax bill
in January 2020 could be significantly larger than they are expecting and could
come as quite a shock. We are concerned that taxpayers may not realise what has
happened and might not set aside enough money to meet their full tax bill in
one amount next January.'
Internet
links: AAT press release GOV.UK self assessment bills
International investors who wish to set up
and expand their operations in the UK can now benefit from an online tool launched
by the Department for International Trade (DIT).
The new tool, termed the UK Investment
Support Directory, enables international investors to connect with a range of
businesses across the UK. Potential investors can find an expert in their
specific industry or region.
According to the DIT, the UK Investment
Support Directory has been created to make information about the investment
process 'more accessible', and is part of a wider initiative to 'generate more
foreign direct investment in the UK'.
Graham Stuart, Minister for Investment,
said:
'The
launch of the new UK Investment Support Directory is one of many ways in which
the DIT is helping to drive investment to every corner of the UK. We hope this
new directory will be an invaluable resource for investors thinking of setting
up operations in the UK.'
Internet
links: Investment Support Directory GOV.UK news
HMRC has launched a consultation to review
the extent to which the emerging practices are leading to 'unfair tax outcomes'
in the administration and collection of Insurance Premium Tax (IPT). HMRC's
consultation document states:
'We
have been made aware of business practices involving administration and
arrangement fees which may be leading to unfair tax outcomes in the insurance
industry.'
'This
involves the artificial manipulation of insurance and broker structures to
create different tax outcomes. IPT is chargeable on the gross premiums, whereas
fees are not subject to IPT or VAT.'
The consultation is open until 17 July
2019.
Internet
link: Consultation
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