03/02/2012 by Neil.

HMRC has announced a suspension of the Business Records Check (BRC) program until the new tax year, when they will implement a new approach.The pilot programme conducted 2,437 Business Records Checks up to 4^th January 2012 and found that 28% of businesses had some issue with their record keeping and that an additional 11% had issues serious enough to warrant a follow-up visit.Any new BRC appointments will be postponed until the revamped approach is launched early in the 2012/13 financial year. However, HMRC will continue to undertake visits already booked (including follow up visits) to those already identified as having seriously inadequate statutory records.HMRC will confirm the new start date of the program in due course. However, when the program does restart, HMRC will initially contact those businesses it considers to be at a higher risk of keeping inadequate records by phone or letter to ask about their record keeping. This information will then be used to determine whether a full Business Record Check is required.

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03/02/2012 by Neil.

Changes to the present pension tax rules will allow over 60s to cash in up to two pension pots as a lump sum.·         Changes apply from April 2012.·         Pension pots of up to £2,000 in value can be considered for this treatment.·         HMRC will allow 25% to be taken free of tax. The balance will be taxed at individual’s marginal income tax rate.·         Only two pension pots can be considered. 

Its always a good idea to a state pension forecast. A BR19 request can be made online.

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07/10/2011 by admin.

At the end of the current fiscal year, 5 April 2012 for income tax payers and 31 March 2012 for companies, the current level of Annual Investment Allowance is being reduced from £100,000 to £25,000.If your accounting year end coincides with the fiscal year end this presents no computational difficulties as all qualifying expenditure, for the year ending 5 April (31 March) 2012, up to £100,000 will provide a 100% deduction for income tax and corporation tax purposes.But what happens if your trading year end straddles the fiscal year end?

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07/10/2011 by admin.

HMRC are actively searching the internet for evidence of eBay traders that are consistently selling goods on eBay. They are known to be exploring the use of ‘internet robots’ to scour cyberspace!
And this activity is not necessarily restricted to eBay traders. What about car boot sales, sales via classified ads? Which raises an interesting question - when does a hobby become a trade, and more importantly, when do any surplus funds become subject to tax?
Generally speaking if you are selling your own private possessions you will not be trading. However you may be considered ‘in business’ if you habitually buy and sell goods on eBay and/or at car boot events. The list that follows is the published ‘badges of trade’ that HMRC use when considering this matter.

1. An intention to make a profit supports trading.
2. The number of transactions involved - systematic and repeated transactions support trade.
3. The nature of the goods sold - are the goods only capable of being turned to advantage by being sold? Or do they yield income, or give enjoyment through pride of ownership?
4. Existence of similar trading transactions - was this a one-off transaction or part of a pattern that suggests trading?
5. Changes to the goods - were the goods repaired, modified or improved to sell them more easily?
6. The way the sale was carried out - were the goods sold in a way that indicates trading, or to raise cash in an emergency?
7. The source of finance - was money borrowed to buy the goods? Were any profits to be used to repay the loan?
8. Interval of time between purchase and sale - goods being traded are usually bought then sold quickly.
9. Method of acquisition of the goods - goods acquired by an inheritance, or as a gift, are less likely to be the subject of trade.

As you can see one or more of these cases could apply to most hobbies.
The current penalty regimen adopted by HMRC precludes sticking your head in the sand. Don’t wait for the brown envelope to appear. If you are uncertain about the tax status of your money-making hobby call us now.

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07/10/2011 by admin.

At present purchases of qualifying plant and other equipment can be written off against your taxable profits.
Tax relief is obtained by utilising the Annual Investment Allowance. For the current tax year, 2011-12, this amounts to a 100% write off with a limit of £100,000.
As with most opportunities all good things come to an end! From April 2012 the annual limit is being reduced to £25,000.
So if your plans over the next year or so include substantial investment in replacing worn out, or buying new, qualifying equipment, timing is absolutely critical.
Call us if you would like more information about these changes.

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08/04/2011 by Neil.

For those who Income Tax Self Assessment (ITSA) applies, HM Revenue & Customs (HMRC) will be issuing 2010/11 notices and paper returns which will include information on the new penalty framework and how it will significantly increase penalties for those who file and pay late.
The new penalties will be issued automatically to all those in ITSA who do not file and pay on time.

New penalty regime

The new penalty regime for ITSA 2010/11 returns will be:

Late filing penalties

• When any return is late, an initial £100 fixed penalty arises the day after the filing date. This applies even if there is no tax to pay or the tax due has been paid on time.
• Individuals are notified they will be liable for a further daily penalty if the return is not submitted within three months of the filing date. The penalty is calculated at £10 per day, until the return is filed, for a maximum of 90 days (up to £900).
• After the daily penalties, and if the return is still outstanding six months after the filing date, a further penalty arises, calculated at five per cent of the tax liability on the return or £300 if this is higher.
• Where the return is still outstanding after 12 months, a further penalty arises, calculated at five percent of the tax liability on the return or £300 if this is higher.
• If a determination has been made because the return has not been received, the penalties at six and 12 months will be based upon the estimated amount in the determination, and then adjusted retrospectively when the self-assessed amount is returned.

Late payment penalties

• at thirty days late there will be charged an initial penalty of five per cent of the tax unpaid at that date
• at six months late and there will be charged a further penalty of five per cent of the tax that is still unpaid
• at 12 months late there will be charged a further penalty of 5 per cent of the tax that is still unpaid
• these penalties are additional to the interest that will be charged on all outstanding amounts, including unpaid penalties, until payment is received

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08/04/2011 by Neil.

Current NMW rates

There are different levels of NMW, depending on your age and whether you are an apprentice. The current rates are:

• £5.93 - the main rate for workers aged 21 and over 
• £4.92 - the 18-20 rate
• £3.64 - the 16-17 rate for workers above school leaving age but under 18
• £2.50 - the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

The age at which you become entitled to the main rate was reduced from 22 to 21 on 1 October 2010.  The apprentice rate was introduced on the same date.
If you are of compulsory school age you are not entitled to the NMW. Some of your other employment rights are also different.

Rates from 1 October 2011

The NMW rates are reviewed each year by the Low Pay Commission and from 1 October 2011:

• the main rate for workers aged 21 and over will increase to £6.08
• the 18-20 rate will increase to £4.98
• the 16-17 rate for workers above school leaving age but under 18 will increase to £3.68 
• the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship will increase to £2.60

Past NMW rates can be viewed on the Low Pay Commission website

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08/04/2011 by Neil.

5 Apr 11 HM Revenue and Customs (HMRC) has confirmed that it will be going ahead with a major reform of the PAYE system.
The overhaul will involve a switch to a real time information system.The new system will mean that employers must supply HMRC with details, such as income tax, national insurance contributions and student loan payments, on each payroll day rather than at the end of the year.

HMRC said that the change would bring several benefits. These include making it easier to ensure individuals pay the right tax after a change of job and removing the need for the P45/P46 process over time.There would be a simplification of the PAYE end of year reconciliation process for employers, and much of the uncertainty that leads to errors in the tax credits system would be lifted.

Following a period of consultation, HMRC said that it is to embark on a pilot scheme in April 2012, involving volunteer employers and software developers.Work to ensure data quality will begin in October 2011 and continue until all employers have moved to the new system.

Once the pilot scheme has been successfully completed, the plan is that employers will be expected to start using the real time information system from April 2013. It will become mandatory by October 2013.David Gauke, Exchequer Secretary to the Treasury, said: “Real Time Information will support improvements to the PAYE system making it more accurate for taxpayers and easier for employers and HMRC to administer.

“We need a PAYE system that can meet the demands of the 21st century workplace and ensure that the tax system works better.” Stephen Banyard of HMRC added: “We wanted people who use the system every day to give us their views on the collection of Real Time Information. We have listened to the concerns of payroll providers and employers surrounding the proposed mandation date and amended our plans to take these into account.“We want to work with software developers and employers to help us deliver the new system. I urge anyone interested in being involved in the pilot to contact us.”

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11/03/2011 by Neil.

Plans by HM Revenue and Customs (HMRC) to scrutinise the record keeping of smaller firms could prove costly for many enterprises, it has been claimed.

In its response to HMRC’s consultation on the proposals, the Institute of Chartered Accountants of Scotland (ICAS) said that the plans are flawed.

Under the new regime, as many as 50,000 small businesses could come under HMRC scrutiny as a way of making sure their business records meet minimum reporting standards. If not, a fine of up to £3,000 could be imposed.However, the ICAS argued that HMRC’s assumptions about the spread of poor record keeping among smaller firms are unsubstantiated and that the estimated costs of the scheme are being massively understated.

HMRC has calculated that each visit, on average lasting half a day, would cost a business £54.The ICAS, on the other hand, believes that, given the level of disruption that a visit will entail, the actual cost will be ten times as great, approaching somewhere nearer £560.

Ian Dewar, convenor of the ICAS small business tax sub-committee, said that the attitude of the tax authorities that SMEs with poor records have chosen to have poor records is a misconception.He continued: “Those with the courage and tenacity to embark on new business ventures are forced to battle from the outset against a mass of Government regulation and red tape.

Typically they don’t go into business because of their record keeping skills.“HMRC should be looking for positive ways of encouraging taxpayers to maintain adequate records, rather than adopting a big-stick approach that we believe will cost owner managers a lot of resource that could have been better directed towards growing their businesses.”

The ICAS wants the first of any HMRC business record checks to be penalty-free, with the tax body simply providing practical advice or a warning if appropriate

Clienst are encouraged to join our TAX SAFE service, providing cover for the costs of HMRC investigations.

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11/03/2011 by Neil.

Firms are being reminded that significant changes to the corporation tax system come into effect next month.

From April 2011, all Corporation Tax payments will have to be made electronically, and all company tax returns must be filed online for accounting periods ending after 31 March 2010.

The returns will also have to be filed using a specified data format, known as Inline XBRL or iXBRL.As well as limited companies, the changes will affect other organisations that pay corporation tax, including clubs, societies, associations, co-operatives, charities and other unincorporated bodies.

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