RTI Penalties
RTI Penalties HMRC had threatened penalties for those employers that don’t comply with the new RTI rule, here’s an update to see what the latest is. What is RTI? (Real Time Information) Starting from April 2013, all employers must send details of salary, tax and national insurance to HMRC via the internet each time they make a payment to an employee. This means that the end of year returns P35 & P14 are no longer required and so there won’t be any late filing penalties for these documents. Instead penalties will be imposed for missing the RTI deadlines. Penalties HMRC have announced the late notification penalties won’t apply for the first year of RTI and instead they’re working on a fair and practical way to implement these from 2014. PAYE errors The RTI submissions (Full Payment Submissions) won’t be subject to fines for late submission in the first year however penalties will still be charged under the existing rules for employers who make PAYE errors. Late Payments Interest and penalties will continue to be charged on late payments however it is worth noting that under RTI it will be clearer to HMRC when a payment is late and to calculate the interest and penalty due. Watch this space for further information and if you have any questions please don’t hesitate to get in touch. Ben Courtley West Chartered Certified...
read moreKey Points from the Autumn Statement 2012
George Osbourne has delivered his 2012 Autumn Statement we’ve summarised the key points covering business, individuals & pensions. BUSINESS The small companies rate of tax is to be left at 20% but the main corporation tax rate will be cut by a further 1% to 21% by 2014. Small business rate relief is to be extended by another year to 2014. INDIVIDUALS The personal allowance to go up to £9,440 next year. The 40% tax threshold is to rise by 1% in 2014 and 2015 from £41,450 to £41,865 and then £42,285. The capital gains tax annual exemption amount is to increase by 1% to £11,000 in 2014/2015. Inheritance tax limits, which currently stand at £325,000, will increase by 1% in £329,000 in 2015/16. The overall ISA savings limit will increase from £11,280 in 2012/13 to £11,520 in 2013/14. PENSIONS The annual savings limit will reduce from £50,000 to £40,000 in April 2014. From 2014/15 there will be a further reduction in the lifetime pension relief allowance from £1.5 to £1.25m. If you have any queries on the above please don’t hesitate to get in...
read moreTaxman Deploys more Task Forces
As part of a £900m investment, HM Revenue and Customs are deploying extra task forces to curb the activities of tax dodgers. These teams are expected to recover more than £30m for the public purse. HMRC have several operations set up to target restaurants, hair and beauty businesses, pubs and nightclubs as well as motor trade companies in the South West, Yorkshire, the North East, and South Wales. Their remit is to examine the records of business and individuals and carry out other necessary investigations to catch and deal with tax avoiders and evaders. The project follows similar successful operations last year targeting market stall holders, taxi firms, restaurants and property rental businesses. Those task forces managed to collect more than £50m from tax dodgers, and the operations are now being rolled out more...
read morePAYE: Real Time Information
There is something big happening in the world of payroll and it’s going to affect all employers. HMRC are introducing “Real Time Information”. Currently, HMRC don’t really know how much is owed on your company payroll until the P35 is submitted at the end of the year. This makes it hard to chase for outstanding amounts owed without guessing. Basically, what this means for an employer is that for every pay date a submission needs to be made to HMRC detailing the amount due. When will this happen? The pilot is being rolled out in April 2012 and this will affect all employers from October 2013. How will it work? Originally, HMRC wanted this bolted onto a BACS transmission, but the majority of small firms pay their staff by normal bank transfer and not through the BACS system, in fact there might even be one or two employers out there who still pay their employees by cheque or cash! Instead, this will be an additional part of the payroll software used by employers or their payroll agents. What problems might you encounter with this new system? Please make sure your payroll figures are correct and complete before preparing your payroll, because once it’s been submitted to HMRC it will be very difficult to correct. Please make sure your payroll records i.e. names, addresses, dates of birth, national insurance numbers etc. are also correct as one incorrect piece of data in the submission will prevent the whole submission from being accepted. Regardless of which data is correct, yours or HMRC’s, if they don’t agree, it won’t be accepted. It remains to be seen how this one will be resolved – painfully, if the PAYE coding notices are anything to go by. HMRC have identified 110 pieces of information they want for each employee, the list includes, passport number and “current gender”. Hopefully they’ll narrow this list down but clearly this will create more work for HR departments. What else? Well P45’s are to be scrapped and instead we will have a “leavers statement”. We don’t know what the difference is yet. Hopefully the system will be refined before implementation though! The tip of the iceberg? HMRC have also expressed a desire to have “Centralised Deductions”. What does this mean? Employers tell HMRC what each employees gross pay is to be, the employers then give the gross payment to HMRC who then pass the net pay onto the employees. No, we don’t think they understand what they’d be letting themselves in for either. If “Real Time Information” is a success then they might consider developing this idea, but it is just an idea at the moment. Ben Storey FCCA Courtley West Chartered Certified Accountants....
read moreChanges in VAT & Entertaining
Following a case in the European Court of Justice, HMRC has changed its position relating to recovery of input tax on entertainment expenses. Historically input tax has never been claimable since VAT was first introduced in the UK but following the Danfoss and Astra Zeneca case, HMRC have concluded that the block on recovering input tax on overseas customers is inconsistent with EU law. Going forward businesses can now claim the input tax incurred when entertaining overseas customers and subject to a four year rule HMRC will also allow claims for previously restricted input tax on the entertainment of overseas customers. The VAT notice 700/65 was amended in November to reflect this change. HMRC Brief 44/10 details this and also sets out three scenarios to help businesses to ascertain whether the input tax on entertainment costs is claimable: 1) Meetings in the office: HMRC considers that when an overseas customer is entertained in a staff canteen or similar to facilitate a business meeting, the input tax on such entertaining will be recoverable. HMRC takes the view that any private benefit derived by the overseas customer is accessory to the needs of the business 2) External meetings or events: where meetings cannot be held in house due to lack of space or facilities, the same general principle will apply as for meetings in the office, and the input tax will be recoverable. This will apply only to the basic provision of refreshments and food. If the expenditure goes beyond that, there should be a private use charge, or, alternatively, no claiming of the input tax 3) Corporate hospitality events: businesses sometimes offer customers or potential customers general hospitality, such as golf days and the like. HMRC will not allow the input tax deduction as such events are unlikely to have a strict business purpose. Courtley West Accountants in...
read moreSME’s Warned about Business Records Checks
The taxman’s approach to small business records checks has undergone a “subtle change in tone” from being an educational exercise to a compliance check. HM Revenue & Customs recently said “business records checks are primarily a compliance check, not an educational exercise”. However, this is not what was originally being sold to advisors. Letters sent to businesses as part of a pilot by HMRC recommended areas of improvement for record keeping and informed companies that they might receive visits within three months to check the improvements have been made. Up until now, the theme had been one of informed education but that now seems to have changed with HMRC now calling it a compliance check. HMRC responded to the change by saying “a policy of not charging a penalty for an initial finding of significant record keeping failure would risk creating the perception that there is no need to change behavior in relation to poor record keeping unless and until one has been caught out at least once.” A fair argument but some are saying that the Taxman “jumped the gun” on the pilots. “The summary of responses said the pilot scheme began on 4 April but the first letter was sent out on 21 March. They jumped the gun. The original consultation said it would start in the second half of...
read moreFollow Us!
