- Unwelcome tax demands for employees
- We’re all going on an NI holiday
- Tell HMRC about a change of name or address by email
- Reporting VAT errors
- HMRC reminder about paying VAT by cheque
- HMRC alert to Employer CD-Rom users
- Cessation of company trading
Up to 1.4 million taxpayers are expected to receive an unwelcome surprise as HMRC are in the process of issuing calculations of PAYE underpayments for the last two tax years. The underpayments, some of which run into thousands of pounds, but with and average of approximately £1,400 are a result of incorrect tax codes being operated against their pay. The errors have come to light due to the checking of individuals’ liabilities by HMRC after the introduction of their new NPS computer system.
Those individuals who have underpaid tax of less than £2,000 will generally be expected to repay the unpaid tax via extra tax deductions from their pay from April 2011 onwards. Those with larger sums due will need to make arrangements to pay the amount outstanding. Dame Lesley Strathie, HMRC chief executive, announced during her appearance at the Treasury committee that HMRC was dropping plans to charge 3% interest on the larger amounts of underpaid tax due.
According to the HMRC guidance
‘Those who have underpaid will make additional payments through the PAYE system, provided the payment due is under £2,000. All payments will begin next year, and no immediate, one-off payment will be required. In cases of genuine hardship HMRC will allow payments to be spread across a period of three years.
If the payment due is over £2,000, HMRC will write to the individual again setting out the next steps for repayment.’
A significant number of taxpayers, approximately 5.8 million of them, are also expected to receive a cheque for a repayment of overpaid tax. The average amount overpaid being £400.
If you receive a calculation of underpaid or overpaid tax, and would like it checking please do get in touch.
In the Emergency Budget the Chancellor announced the Regional Employer National Insurance Contributions Holiday.
The Coalition Government intends to introduce a scheme, to become law in early 2011, to help certain new businesses where the ‘principal place of business’ is not in Greater London, the Eastern or South East Regions.
The scheme is intended to apply to businesses commencing on or after 6 September 2010, with transitional rules for those which commenced on or after 22 June 2010.
Broadly, for businesses commencing within the three-year qualifying period, employers will not have to pay the first £5,000 of Class 1 employers’ NIC due in the first twelve months of employment. This will apply to each of the first ten employees hired in the first year of business. The relief can be by way of a reduction in monthly/quarterly payments of employers’ Class 1 NIC or by refund.
There are various anti-avoidance rules to prevent businesses ceasing and restarting and for companies which fall within what are known as the ‘IR35’ or Managed Service Company regimes.
The Business Link website contains application forms and further guidance.
One point to note is that the scheme will not become law until 2011. To quote from the guidance:
‘The Holiday will be introduced in a National Insurance Bill in the Autumn and is expected to receive Royal Assent in early 2011, when it will become law. Until that time, businesses eligible for the Holiday will, as a result of the exercise of HMRC Commissioners’ collection and management powers, be able to receive the benefit of the Holiday from 6 September 2010.
New businesses which choose to participate in the scheme in advance of it becoming law should note that if the draft … is not enacted in substantially the same form they will be required to pay over to HMRC by 19 April 2011 any contributions that they have withheld which remain due.’
So, wait and see may be the best option in the near future.
HMRC are publicising the facility to alter certain details by email.
If your circumstances have changed, either your name or address, you can let HMRC know using their email service.
Link: HMRC guidance
If you find that you have made a mistake on a previous VAT return you may need to tell HMRC or adjust the next return.
HMRC has found that many of the mistakes reported to their Error Correction Team could have been corrected by the taxpayer. As there is currently a six to eight week delay in processing corrections, HMRC are advising taxpayers to correct the mistake themselves if at all possible.
HMRC have issued guidance on what to do if it is discovered that a mistake has been made.
If you would like any help in this area please do get in touch.
Link: HMRC guidance
HMRC have recently issued a reminder about paying VAT by cheque.
From 1 April 2010 all VAT-registered businesses with a VAT-exclusive turnover of £100,000 or more, and all newly-registered businesses regardless of their turnover, must submit VAT returns online and pay electronically.
Businesses that are not caught by the above rules can still pay by posting HMRC a cheque but, from 1 April 2010, all cheque payments sent to HMRC by post are treated as being received by HMRC on the date when cleared funds reach HMRC’s bank account, not the date of receipt.
So sufficient time must be given for the cheque to reach HMRC and clear into HMRC’s bank account. A cheque generally takes three bank working days to clear.
HMRC also state:
‘However if paying by post please:
- make your cheque payable to ‘HM Revenue & Customs only’ followed by your nine-digit VAT registration number and send it with your return using the pre-addressed envelope provided by HMRC
- do not fasten the cheque with paper clips or staples or in any other manner.’
Link: HMRC guidance
HMRC are advising employers who use their Employer CD-ROM to update it now so that they have access to the most recent guidance and calculators.
HMRC are advising that the CD-ROM is to be replaced with a new downloadable application – ‘Basic PAYE Tools’ – in February 2011, and downloading the September update will ensure that employers can take full advantage of this new product.
The September update can be downloaded at www.hmrc.gov.uk/employers/cdrom.
HMRC is also urging employers to register for its email alert service, which notifies employers when new information is available on the HMRC website. Register at www.hmrc.gov.uk/paye/forms-publications/register.htm.
Stephen Banyard, Director of HMRC’s Business Customer Unit, said:
‘I encourage all employers who use our CD-ROM to download the update as soon as possible, and also register for our email alert service, to ensure they receive all the latest employer news.’
Link HMRC news
If your company ceases to trade then it is essential that you inform us of this straight away. HMRC require companies to file corporation tax returns within twelve months of the cessation to trade, or penalties may be charged. As the cessation date is unlikely to be the company’s normal accounting date it is possible to miss the statutory filing date, therefore it is important that we are kept fully informed.