In this month’s e-news we report on HMRC’s expanded online VAT service and the latest round of HMRC campaigns.
Please contact us if you would like any further details on any of the issues covered.
THE AUTUMN STATEMENT
CHANGES TO VAT ONLINE SERVICES
HMRC CLOSE IN ON ‘TAX CHEATS’
HMRC ANNOUNCE LATEST TARGETS
UPDATED APPROACH TO BUSINESS RECORDS CHECKS
VAT REGISTRATION THRESHOLD NO LONGER DUE TO THOSE NOT ESTABLISHED IN THE UK
PARTIES FOR EMPLOYEES
SIMPLER HEALTH AND SAFETY GUIDANCE
MORE FLEXIBILITY IN THE LEAVE AVAILABLE TO PARENTS
PAYROLL RTI SYSTEM ‘UNREALISTIC’
IMPROVING GENDER DIVERSITY IN BOARDROOMS
PROPOSAL TO REMOVE RED TAPE ON BUILDING EXTENSIONS
On 5 December George Osborne delivered his Autumn Statement to the House of Commons. Here is a brief summary of the economic facts:
Reports and official forecasts suggest that households will experience effective pay cuts until 2014, with higher-rate taxpayers losing five per cent of their income due to the Government’s austerity measures.
This year will have seen the worst squeeze on living standards since the Second World War and the turmoil caused by the eurozone crisis means that conditions could possibly get even worse, the Chancellor said.
In his annual Autumn Statement, Mr Osborne admitted that the Government would have to borrow £111?billion more than expected by 2016 due to the lack of economic growth. Unemployment is expected to peak at 2.8?million next year.
The Office for Budget Responsibility (OBR), the independent financial watchdog, sharply reduced its forecasts for growth to 0.9 per cent this year, down from 1.7 per cent, and to 0.7 per cent next year.
As a result, Mr Osborne was forced to water down his previous assertions that government debt would be under control by the time of the next election. He instead announced plans to continue cutting public spending until 2017 — by £15?billion more than forecast. This means he will have to campaign for the 2015 general election against the background of another austerity agenda.
More in depth details on the measures affecting business will be released through our website and blog as the relevant legislation unravels.
HMRC have announced various changes to their online services including the introduction of the VAT online registration service which was promised earlier this year.
They have also taken the opportunity to introduce a new online variations service which should allow businesses to:
• make changes to the principal place of business and contact details
• deregister for VAT
• apply for Annual Accounting or Flat Rate Scheme
• view and print the VAT certificate and
• enrol for VAT Online.
Please do get in touch if you would like any assistance with any of these issues.
HMRC have launched an advertising campaign warning ‘tax cheats’ to declare all their income before it is too late.
The campaign is part of HMRC’s targeted approach to help taxpayers pay the right amount of tax, at the right time. Guidance is available at www.gov.uk/sortmytax.
David Gauke, Exchequer Secretary to the Treasury, said:
‘Most people play by the rules and pay what they owe, but HMRC is cracking down on those who don’t. Using the £917 million the government has made available to tackle avoidance, evasion and fraud, HMRC is closing in on tax cheats.’
‘It always makes sense to declare all your income and tax dodgers are simply storing up trouble for the future; getting caught means higher fines, and in the most serious cases criminal prosecution. There is an alternative. Simply visit the new website and make a fresh start.’
Internet link: HMRC press release
HMRC have launched new taskforces to tackle ‘tax cheats’ in the following sectors:
• the rag trade(manufacturing, wholesale, retail and textile recycling in the Midlands, North Wales and the North West)
• the Scottish alcohol industry and
• the rental property sector in the South East.
David Gauke, the Exchequer Secretary, said:
‘The vast majority of people play by the rules. We will not tolerate tax evasion and will crack down on the minority who choose to break the rules.’
‘It cannot be fair that, while most people are paying the right tax, a tiny minority are not paying what they should.’
‘HMRC is on target to collect more than £50 million as a result of taskforces launched in 2011/12.’
HMRC have announced an updated approach to business records checks.
Following a pilot programme of Business Records Checks (BRC), which looked at the records of in excess of three thousand SMEs, HMRC have amended their approach to these checks.
Businesses which HMRC believe are more likely to be at risk of having inadequate records will initially be contacted by letter. HMRC will then phone the business to go through a short questionnaire.
Depending on the outcome of this phone call, HMRC will subsequently confirm to some businesses that no further action is required. Where some issues are identified, businesses will be offered targeted self-help education options.
HMRC have confirmed that where businesses are assessed as being at risk of keeping inadequate records they will be referred for a BRC visit.
Please let us know if HMRC contact you about a BRC.
Internet link: HMRCBRC
A decision in the European Court of Justice has confirmed that only businesses established in a Member State can benefit from its domestic VAT registration threshold.
As a consequence, from 1 December 2012, ‘non-established taxable persons’ (NETPs) will no longer be able to benefit from the UK VAT registration threshold. This means that they will be required to register for UK VAT when they make their first supply of goods or services in the UK regardless of the value.
NETPs already making supplies here will be required to register for UK VAT with effect from 1 December 2012.
As detailed in the HMRC guidance:
‘From 1 December 2012, any non-established business which makes or intends to make taxable supplies in the next 30 days has 30 days from the date it formed that intention to notify HM Revenue & Customs (HMRC) that it is required to register for VAT. Businesses which become required to register in the UK on 1 December 2012 will have to notify HMRC of that fact by 30 December 2012.’
Please contact us if you have any concerns in this area.
Internet link: VAT Brief
With the season for office parties fast approaching we thought it would be a good idea to remind you of the tax implications. The good news is that, unlike entertaining customers, the costs of entertaining employees are generally allowable against the profits of the business.
But what about the tax consequences for the employees themselves? Is it a perk of their jobs and will they have to pay tax on a benefit?
Generally, as long as the total costs of all employee annual functions in a tax year are less than £150 per attendee (VAT inclusive) there will be no tax implications for the employees themselves. In considering this limit make sure you have included all the costs, which may include not only the meal itself but also any drinks, entertainment, transport and accommodation that you provide.
If the costs are above the £150 limit then the full cost will be taxable on the employee. In that case do get in touch so we can advise you how best to deal with them.
Internet link:HMRC guidance
The Health and Safety Executive (HSE) has launched an online ‘Health and Safety Toolbox’ aimed at smaller, low-risk businesses. It is hoped that the Toolbox, which can be accessed from the right hand side of the HSE’s home page, will make it quicker and easier for small businesses to find the information that applies to their industry. This should enable them to manage health and safety issues themselves, without the need to use health and safety consultants.
Employment Minister Mark Hoban said:
‘Small and low risk businesses should be focusing their time on growing and becoming a success not having to waste precious time and money on unnecessary bureaucracy. This Toolbox will make it quick and simple for businesses to discover everything they need to know about health and safety.’
Deputy Prime Minister Nick Clegg has announced that parents will be able to share up to 12 months leave after the birth of a child from 2015.
The plans will allow working parents to take up to 52 weeks off in total either together or in separate blocks and will be more flexible than the current system.
Nick Clegg said:
‘Reform is long overdue and the changes we are making will shatter the perception that women have to be the primary care-givers.’
‘In the future, both mothers and fathers will be able to take control of how they balance those precious first months with their child and their careers.’
Internet link: BIS top stories
The Institute of Chartered Accountants in England and Wales (ICAEW) has warned that the RTI reporting system will be ‘at best unrealistic and at worst impossible’ for small employers. This is despite HMRC publishing proposals explaining when employers will be allowed up to an extra seven days to send some information to HMRC.
Frank Haskew, head of ICAEW Tax Faculty, said:
‘We are particularly concerned about the impact this will have on smaller businesses, which are the lifeblood of the UK economy and essential if the UK is to continue to grow.’
Under the RTI, employers will have to submit payroll information to HMRC electronically on or before every payday, with potential penalties applying to employers submitting returns late.
The ICAEW suggestion is that HMRC move the RTI return date to the 19th of the month following the tax month of payment, which is the same as the current PAYE due date, being familiar to employers.
RTI is compulsory for most employers from April 2013.
We will keep you informed of developments.
Internet links: ICAEW press release
The CBI commented on proposals from the European Commission, aimed at achieving a better gender balance in the boardrooms of some European companies.The proposalsapply to companies listed on stock exchanges in EU’s Member States.
Katja Hall, CBI Chief Policy Director, said:
‘Businesses will be relieved that the Commission has listened to their concerns. These new proposals rightly focus on the need to improve boardroom diversity, while allowing firms to recruit the best candidates from the widest possible talent pool. MEPs should get behind this approach.’
‘Increasing the number of women in boardrooms is important for businesses, who know that gender diversity brings greater creativity, higher performance and better customer insight. That is why firms are already taking action to increase the flow of women to the top, such as targeting mentoring schemes at women and offering flexible working.’
Proposal to remove red tape on building extensions
The government has announced proposals to make it quicker and cheaper to make improvements to homes and business premises.
The proposals would mean that, for a limited period, much of the red tape required to complete a planning application for a small-scale, single-story extension would be removed. It has been confirmed that the current safeguards that ensure neighbours and communities are not adversely affected will remain in force. The proposals will also not apply to protected areas or listed buildings.
Internet link: News