Entries Tagged 'Tax news' ↓

HM Revenue and Customs has reported a surge in tax scam phishing attempts after shutting down more than 180 websites responsible for sending out fake emails.

The body also warned taxpayers to be on their guard for fraudsters posing as HMRC agents on the phone, seeking account details.

Chris Hopson, director of customer contact, said HMRC only contacts customers in writing by post.

“We never use telephone calls, emails or external companies in these circumstances. We strongly urge anyone receiving such a phone call not to give any information to the caller, but report it to the police straightaway,” he said.

“If customers receive an email claiming to be from HMRC, we recommend they send it to us for investigation before deleting it permanently.”

If you are concerned about this you can check the advice published on the HMRC website and forward any suspicious emails to phishing@hmrc.gsi.gov.uk.

The Taxman is ending the seven-day ‘grace’ period for filing company tax returns and employers end of year PAYE returns.

From 31 March 2011, these returns must be submitted to HMRC by the actual deadline. Under the concession, HMRC did not issue penalties for late filing of Company Tax returns or employers’ and CIS end of year returns, provided they were received by the last working day within seven days of the filing date.

This ensured that penalties would not be charged when customers had taken all reasonable steps to file the returns on time, but were prevented from doing so, for example due to postal delays.

HMRC has said that the concession has become redundant because from 1 April 2011 most returns are required to be filed online and so the ‘postal delay’ excuse is no longer valid.

Anyone filing a return late will, as now, be able to request HMRC to remove any penalty, if they believe they had a reasonable excuse for the delay in filing. HMRC says that it will consider every case on its own merits.

HMRC has confirmed that they will soon stop sending VAT return reminders to those who file online although taxpayers can register to receive email reminders from HMRC. The message from HMRC states:

Important information about VAT Return reminders for online customers

Soon we will stop sending postal reminders that your VAT Return is due. If you want to receive email reminders when your returns are due, you should:

1. Log in to the VAT Online service.
2. On the ‘Your HMRC Services’ page, go to the ‘VAT’ section and select the link ‘Access Service’. This takes you to the ‘At a glance’ page.
3. From the ‘Maintain email address’ section select the ‘Add email address’ link.
4. Select the link from the ‘VAT messages’ section.
5. We will send you an Activation Code by email. When you get this, select the ‘Confirm email address’ link from the ‘Maintain email address’ and input the Activation Code as directed.

Below is a summary of the Budget changes relevant to small UK businesses and their owners.

Corporation tax

• Small company rate to reduce to 20% from April 2011
• Main company rate to fall to 27% from April 2011 followed by 1% annual reductions over the next 3 years to reach 24% by April 2014

VAT

• Standard rate of VAT to increase to 20% from 4 Jan 2011
• Sectoral rates for the Flat Rate scheme will increase at the same time as published here

Capital gains tax

• Annual exemption of £10,100 is unchanged
• Tax rate for basic rate payers remains at 18%
• Tax rate for higher rate taxpayers increases to 28% from midnight 22 June 2010
• 10% rate for entrepreneurs extended to £5m of gains in lifetime

Income tax

• £1,000 increase in Personal Allowance for tax to £7,475 with effect from April 2011
• However, the higher tax/NI rates will kick in sooner to offset the Personal Allowance increase for higher earners

National Insurance

• As previoulsy announced, NI rates will increase by 1% from April 2011
• The threshold at which NI becomes payable for employers will increase to £131 per week from April 2011
• Small businesses, in certain areas, set up over the next 3 years will be exempt from the first £5k of employer’s NI on up to 10 employees’ wages

Capital expenditure

• The maximum expenditure for immediate tax relief is reduced from £100k to £25k pa with effect from April 2012
• Other expenditure attracts reduced tax relief of 18% or 8% (previously 20% and 10%) for accounting periods ending April 2012 onwards

Furnished holiday lets

• No changes immediately so the generous tax reliefs continue for UK and EEA properties
• However, the government has announced a tightening of the rules from April 20011 – more details will be published in due course

Figures have been released showing just how bad the Taxman is at answering the telephone. 

For the 2008/09 year 103 million phone call attempts were made to the HMRC but only 57% of those calls were actually answered – down from 71% in the previous year.

To add insult to injury, HMRC estimate that if you are lucky enough to get to through to someone, there is an 11% chance that the advice you are given is wrong!

The VATman has got tougher recently on businesses asking for extra time to pay their VAT bills.

In Jan-Mar 2010 the HMRC rejected 11% of all applications compared to just 5% in Jan-Mar 2009.

However, in our opinion, there were a lot of spurious applications being accepted in 2008/09 without much testing so this is more a reflection of more thorough checking than a change in any rules.  However, if the rejection rate increases further this would be cause for concern.

The Conservative and Liberal Democrat coalition recently published its joint programme for government outlining the agreements reached on key tax and business policies.

Among the measures introduced was a pledge to review IR35 as “part of a wholesale review of small business taxation”. The document said that IR35 would be replaced “with simpler measures that prevent tax avoidance but do not place undue administrative burdens or uncertainty on the self-employed, or restrict labour market flexibility”.

Other key tax pledges:

• The personal allowance threshold will go up to £10,000 over the course of the next few years.
• The increase in employer NI thresholds proposed by the Conservatives in their manifesto will go ahead.
• Non-business capital gains tax rates will increase significantly to be close to the relevant income tax rate, with exemptions for entrepreneurial business activities.
• Tax avoidance reforms to be introduced based on Lib Dem proposals.
• Corporation tax headline rates to be reduced.

We say:

• Don’t hold your breath for the abolition of IR35.  Whilst there may be some tweaking we don’t expect wholesale changes. 
• Given the state of the economy we expect more bad news than good news in the tax world starting with the Emergency Budget on 22 June 2010.

As of April 2010, the number of years the Taxman can go back to investigate past tax returns has changed.  Below is the new position:

Normal investigation time limit – 4 years for income tax, corporation tax, capital gains tax, PAYE and VAT

Careless mistakes – 6 years for income tax, corporation tax, capital gains tax and PAYE but 4 years still for VAT

Deliberate mistakes – 20 years for income tax, corporation tax, capital gains tax, PAYE and VAT

Further details can be found on the HMRC website.

The proposed changed to the tax rules governing furnished holiday lets have been dropped from the 2010 Finance Bill due to lack of Parliamentary time before the General Election.  They were due to take effect from 6 April 2010.

This effectively means that the rules return to how they had been up to 5 April 2010 which gives such properties significant tax breaks compared to other residential lettings.

Below are details of the more relevant changes in tax rates and thresholds as announced by Mr Darling in today’s 2010 Budget.  Changes are effective from 1 April 2010 for companies and 6 April 2010 for individuals unless stated otherwise.  Further details can be found on the HMRC website.

Surprisingly there were no increases announced (for now) to the rate of VAT or capital gains tax although we think this is more to do with the forthcoming General Election than the economic state of the country.

Income tax

A new rate of 50% introduced for earnings in excess of £150k pa (the equivalent effective rate for dividends increases from 25% to 36.1%).

The personal allowance is withdrawn at the rate of £1 for every £2 of earnings in excess of £100k pa.

Company tax

Previously announced increase in small company rate to 22% is deferred (again) until April 2011.

NIC

No changes this year but a general 1% increase is planned from April 2011.

VAT

Registration threshold increases to £70k pa.

Stamp duty

A temporary SDLT exemption for first time buyers of residential property valued up to £250k.  The exemption applies for transactions between 25 March 2010 and 25 March 2012.

A new 5% SDLT rate for residential properties purchased for over £1m with effect from April 2011.

Pensions

The annual allowance increases to £255k while the lifetime allowance increases to £1.8m.

Other

Annual investment allowance for the purchase of capital assets is doubled to £100k.

Special tax rules for Furnished Holiday Lets are withdrawn (previously announced).

ISA allowance increases to £10,200 (up to 50% can be saved as cash).

Entrepreneurs lifetime limit for capital gains is doubled to £2m.