Category Archives: Tax News

HMRC unfair to small businesses

Taxman’s unfair to target small business
The Daily Express’ political columnist Ross Clarke explains why he believes it is unfair that the taxman is targeting small businesses. He feels that the government has decided that it can’t or won’t tackle large multinational tax evaders, so they have decided to crack down on the little guy instead. Mr Clarke notes that honest tradesman will suffer as the taxman will launch more investigations that demand fussy details about transactions made years ago. He says tradesman that have lost their records face a situation in which they are treated as guilty until proved innocent. He concludes that the country needs a complete overhaul of the tax system to ensure that the rules are fair for all.
Daily Express, Page: 14

HMRC VAT Campaign

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HMRC announces the VAT Outstanding Returns campaign

An opportunity for non-filers to bring their VAT up to date

HMRC has launched its latest campaign, aimed at VAT-registered traders who have one or more overdue VAT returns. The VAT Outstanding Returns campaign offers the opportunity to bring their affairs up to date.

This is the latest in HMRC’s programme of campaigns, or disclosure opportunities. These are designed to encourage voluntary disclosure: the obligation is on the taxpayer to come forward and meet their obligations by a set deadline. The campaigns offer a carrot and stick approach: favourable terms for those who come forward, but a tough approach to those who do not.

To take advantage of the VAT Outstanding Returns campaign the business must complete and submit the outstanding returns and pay the tax due by 28 February 2013. HMRC is not explicit about how penalties might be mitigated for those who take up this opportunity, beyond saying that “If you submit your return to HMRC now you will get the best terms available”. If VAT Returns are still outstanding after 28 February, the taxpayer’s affairs will “receive closer attention from HMRC”.

Most campaigns have two deadlines, first to notify HMRC that you intend to take part and the second to make the disclosure and pay the tax. This campaign – like the previous VAT one – has just the one deadline, 28 February.

There may be some VAT-registered businesses that no longer need to do returns, eg because they are no longer trading or turnover has fallen. These should (or in some cases, could choose to) de-register. They should contact HMRC.

More information about campaigns is on the HMRC website. This included details of current and forthcoming campaigns:
•At the moment, in addition to the latest VAT campaign, there is one other live campaign, the Direct Selling campaign, which has a deadline for disclosures of 28 February 2013.
•A Property Sales campaign is due to start in March 2013 and is aimed at undeclared sales of residential property other than a main residence.
•The Trades Sweep-Up Campaign, a follow-up to previous campaigns aimed at plumbers, electricians, etc, was due to start in December 2012 but has been postponed. Those who were intending to make a disclosure under this campaign should contact HMRC’s Campaigns Voluntary Disclosure Helpline

Xmas Time

Well it’s coming around to that time soon…yes Christmas Party time. If you are planning a Christmas Party, make sure its tax deductible by following a few simple rules.

Your party must be:

  • Open to all employees
  • An annual event
  • Cost less than £150 per head

If you meet the above criteria then there is no benefit in kind on the Christmas Party and it is allowable for tax.

However beware…

  • The £150 includes VAT
  • If the cost is £151 then all of it is taxed as a benefit in kind!
  • This is not a licence to put a flat rate of £150 through your accounts
  • You can have more than one event but the £150 is reduced proportionately
  • Like all business costs you must have a receipt
  • The event must be for all employees and not just directors – except where the director is the only employee

The £150 limit is for each employee so no family or friends allowed sorry! However if you are a Director and therefore an employee of your own company then you can have a Christmas meal courtesy of the company.

Check out HMRC’s website for more detailed information on social functions and Christmas parties at http://www.hmrc.gov.uk/paye/exb/a-z/s/social-functions.htm

RTI Filing Penalties

This is what will happen if you file late or make a mistake

The new RTI PAYE system poses challenges for employers and the question many have been asking is will they be penalised if they make a mistake? HMRC has nowpublished guidance on how penalties for 2012/13 and 2013/14 will be applied where a return is late or inaccurate.

From April 2013, almost all employers and pension providers will be required to report PAYE in real time. This means that information about all PAYE payments needs to be submitted to HMRC online on or before the time employees are paid, rather than at the end of the year as they are now.

 

The submission an employer has to make on or before each pay day is called the Full Payment Submission (FPS).

Late returns 2012/13 and 2013/14

There will be no change to the penalties where returns for the tax years 2012/13 and 2013/14 are filed late. The current penalty regime will continue to apply at the tax year end. There will be no penalties if in-year Full Payment Submissions (FPSs) are submitted late.

Note that although RTI doesn’t start officially until April 2013, HMRC has been running a pilot for some time now on which many employers have already been enrolled. It would have been rather hard if these pioneering volunteers were to have been subjected to new penalties in 2012/13. Also, some large employers are not joining RTI until after April 2013. By October 2013, all employers will be operating under the new rules, but again, it seems sensible to wait until everyone is on board before imposing new penalty rules.

Employers and pension providers must submit an FPS ‘on or before’ they pay an employee or pensioner. If they still have information to send after 5 April, they can send this on an FPS until 19 April, but then will use an Earlier Year Update after that. To avoid a late filing penalty for 2012/13 and 2013/14, they must report the final payment made to an employee or pensioner by 19 May following the end of the relevant tax year.

Inaccurate returns 2012/13 and 2013/14

HMRC will not charge penalties for inaccuracies identified on in-year FPSs for 2012/13. However, penalties may be charged after the end of the tax year, based on the final FPS for the year. So this means that the rules for getting it wrong for the year overall are very like the existing penalty rules for 2012/13.

Penalties for inaccuracies may apply to in-year returns from the 2013/14 tax year. HMRC will use the same considerations which apply now under Sch 24, Finance Act 2007 and continue to use a risk-based approach to identify employers who may be submitting incorrect returns.

Guidance is published in the guide ‘What happens if you don’t report payroll information on time’.

Late payment of PAYE

PAYE and NIC must continue to be paid in full as they are deducted through the tax year. RTI submissions will make it very clear to HMRC how much it can expect from employers each month. Late payments will be very obvious. HMRC’s guidance states the following:

Underpayments 2012/13

From Monday 19 November 2012 HMRC started contacting employers with apparent underpayments to help them get up-to-date and on the right lines with their payments.

Late payment penalties 2012/13 and 2013/14

For the tax years 2012/13 and 2013/14, HMRC will continue to use a risk-based approach to identify employers who are not complying with their payment obligations and who therefore might be liable to late payment penalties. Where employers who are not complying with their obligations are identified, late payment penalties may be charged.

HMRC will notify employers who may have defaulted on either a filing or payment obligation as soon as possible to enable them to get back to compliance quickly and avoid any further penalties for future failures.

For further information on payment of PAYE, please read ‘PAYE/National Insurance payments and deadlines’.