- Construction industry scheme penalties
- Phishing scams
- Back to school with tax credits
- Imperial weights and measures to remain legal
- Tips may be part of national minimum wage
- NMW rates set to rise
- 24 days annual holiday entitlement
- VAT on home computers
The Construction Industry Scheme (CIS) was significantly changed from 6 April this year when monthly returns were introduced for contractors. The CIS300 return details the payments made to subcontractors and any tax deducted from those payments. The returns have to be submitted to HMRC by 19th of the month.
Since the new CIS was introduced in April HMRC have not been imposing penalties for the late submission of the monthly returns but have advised that they will charge penalties for late returns from October 2007.
The penalties will apply not only to returns submitted late from October onwards but also to any outstanding returns for previous month’s which have not been received by HMRC by ‘close of business’ on 19 October 2007. HMRC have confirmed that they will not be issuing retrospective penalties for returns which, although made late, were received by 19 October 2007.
HMRC guidance states that where a contractor missed filing their return for May 2007 no penalty will be issued for missing the monthly deadlines in June, July, August and September, but a penalty will be charged for the return not being filed by 19 October and will continue each month until such time as it is received by them.
How much is the penalty?
The automatic, interim, penalty of £100 will be issued for each return that HMRC have not received by 19 October 2007. Further automatic penalties will be issued for each subsequent month until the return is received.
Further penalty notices may be issued to contractors with more than 50 subcontractors when the returns are eventually submitted to HMRC.
If you would like help with completing the returns please do get in touch.
HMRC have updated their guidance on so-called ‘Phishing’ scams targeting taxpayers in an effort to fraudulently obtain personal information from them.
In an effort to address this problem and increase awareness of taxpayers to the scams, HMRC have set-up a ‘Phishing’ section on its website. The page can be found by visiting the link below.
The way in which the fraudsters operate varies and the website details recent scams which include the issue of ‘fake’ forms, payment demands and details of fake departmental names.
One scam advises individuals that they are entitled to a tax rebate. The email tries to coax individuals to complete a form disclosing their bank or credit card details, on the understanding that the ‘repayment’ will be paid directly into their bank account.
If you receive any correspondence which you believe is suspicious, please do contact us
Claimants of tax credits are being reminded by HMRC that they must let them know of changes in their family circumstances within one month of the change. HMRC advise that, with children now back at school and those with older children starting or returning college and university courses soon, it is important that claimants let HMRC know if family circumstances have changed.
HMRC give a few examples to help claimants:
‘If you’ve a child over 16 who’s started, or is about to start, further education at school or college, make sure you call HMRC as soon as possible and let them know. Otherwise, it could mean you’re missing out on extra money.
And if you told HMRC your child was staying on at school or college after their exams and they’ve since changed their minds, contact them now, so they can update your claim.
Also, if your childcare costs, the hours you work, or the amount you earn changed after the kids went back, HMRC needs to know that, too.
In fact, if you’re receiving tax credits, it’s important to let HMRC know as soon as you can about changes in your circumstances, whatever the reason or time of year.’
Sarah Walker, HMRC Director of Benefits and Credits, said :
‘We know people lead busy lives and it can be easy to forget, or put off, telling us about these changes. But letting us know about changes in your work and home life means your details are up to date, and helps us make sure you are receiving the right entitlement.’
British businesses are to be allowed to continue to sell goods in pounds and ounces. After years of wrangling between the UK and the European Commission (EC), it has been agreed that the UK does not have to abandon imperial measurements entirely and replace them with metric only measurements. Instead, the EC has agreed that the imperial and metric measurements can be used side by side. Businesses are not able to sell goods using imperial measurements only as the metric equivalents must also be displayed.
Britain was expected to have to complete full metrication by 2010. The rules, which would have meant that all road signs would have be expressed solely in kilometres and the banning of sales of pub measures in pints, has now been relaxed.
BBC news article
A tribunal has ruled that in certain circumstances tips given to employees count towards the National Minimum Wage (NMW). A group of London food businesses took the case to court after HMRC claimed that some staff had not been paid the NMW between 2000 and 2003. The employees were paid between £3 and £4 per hour through the payroll plus substantial ‘tronc’ payments. The ‘tronc’ payments, made under deduction of PAYE, are money from service charges and credit card tips.
The tribunal ruled that although the tips were distributed by a ‘troncmaster’ using a separate payroll system this was to be regarded as part of the business payroll.
HMRC guidance on the treatment of tips and troncs is also contained in the link below.
National Minimum Wage (NMW) rates are set to rise again from 1 October 2007. The increased rates will be as follows:
- Adult rate (workers aged 22 and over) will increase to £5.52 (from £5.35)
- Development rate for 18-21 year olds will increase to £4.60 (from £4.45)
- Development rate for 16-17 year olds will increase to £3.40 (from £3.30)
Meanwhile, Business and Enterprise Secretary, John Hutton, told the Trades’ Union Congress conference that employers who do not pay the full NMW to workers will face potentially higher penalties for non compliance and the government will make more resources available to target non compliant employers.
Employees minimum annual holiday entitlement is increasing from 1 October 2007. The holiday entitlement will increase to 4.8 weeks (24 days if employees work a five day week) from 1 October 2007 and to 5.6 weeks (28 days if employees work a five day week) from 1 April 2009. These entitlements will be pro-rated for those employees who work part time. The increased entitlements include bank holidays, so if you or your employees already receive 24 days inclusive of bank holidays there will be no additional entitlement.
To help employers calculate their employees’ new entitlement an easy to use tool is available on the Business Link website. A ready reckoner table is also available for more straightforward cases.
Under the rules for the introduction of the new entitlement employers may pay employees for the additional holiday entitlement (the additional 0.8 weeks or 4 days) until 1 April 2009. This is a temporary measure to ease the transition.
These proposals relate to England, Wales and Scotland. The Department for Employment and Learning in Northern Ireland are in the process of making proposals for Northern Ireland.
HMRC have issued guidance on a change in their policy regarding VAT recovery on computers. The rules affect computers which are made available by employers to their employees for their personal home use. The change in guidance is as a result of the withdrawal of the favourable benefit in kind treatment which used to apply to employees who were loaned computer equipment for personal use at home. When the favourable benefit in kind treatment applied HMRC effectively disregarded the VAT implications of private use of the asset. Employers who have already loaned employees computers prior to the change in the benefit in kind rules do not have to change the VAT treatment of these assets and related costs.
HMRC will now expect businesses to identify private use and account for VAT on the private use. This is the treatment that should be applied to other business assets where private use is allowed such as mobile phones.
This change in policy will not affect businesses where computers are made available to employees who need the computer in order to carry out their job. In these circumstances, HMRC’s view is that it is unlikely that any private use will be significant when compared with the business need for providing the computer in the first place.
If an employer is unable to demonstrate that it is necessary to provide an employee with a computer in order to carry out the duties of his employment, only a portion of the VAT incurred can be reclaimed.
HMRC VAT Brief