February 2008

• 
• 

Points to Ponder

 

Welcome to our thirty fifth newsletter – produced during February 2008 and issued in March 2008,
to keep you up to date with some of the changes in Income tax, National
Insurance and VAT along with compliance regulations for businesses,
plus other oddments that have caught our eye. If you would like a copy
of any past newsletters, please call and we can either send or e-mail
them to you.

 

 

 

My apologies, but this month’s news is again brief as we have been
hit by various illnesses, as well as the general clearing up needed
after the final rush for the Self Assessment deadlines.

 

 

Please can I give another reminder about ensuring you put the right
amount of postage on letters? The changes mean different sized stamps
are needed on large envelopes.

 

 

 

Now to the news:

 

 

 

Property Owners Beware! (Speak to Sue)

 

Last week, HMRC sent out 500 letters to property owners who they
believe are not declaring income from lettings. These taxpayers have
been traced through small ads in local newspapers, cards in newsagents’
windows and the Internet. They expect to send out at least a further
1,500 letters shortly. Even if your lettings are making a loss, you are
required by law to make returns of all rental income. This is another
source of penalty income for HMRC to tap in to, as well as the
likelihood of large sums in back tax. As failure to declare income is
fraud, the Revenue can go back at least 20 years in making assessments.

 

 

 

Illegal Working Fines (Speak to Sue)

 

From 29^th February 2008, new measures have come in to
force that were set out in the Immigration, Asylum and Nationality Act
2006. These measures include a fine of up to £10,000 per illegal worker
for employers who employ illegal migrant workers and a maximum two-year
prison sentence and / or an unlimited fine for employers who knowingly
employ illegal migrant workers. Employers will also have a
responsibility to check the on-going entitlement of migrant workers who
have a time-limited visa (such as a working holiday visa) to ensure that
their employees’ immigration status remains valid.

 

 

 

Increase in SSP, SMP etc. (Speak to Sue or Dave)

 

From 6^th April 2008, statutory sick pay will go up to
£75.40 per week. Statutory maternity, paternity and adoption pay will
also increase to £117.18 per week. Additional information is available
at www.berr.gov.uk

 

 

Capital Gains Tax changes (Speak to Angela)

 

There is to be an introduction of a single 18% CGT rate from 6^th
April 2008, abolition of taper relief, indexation allowance and halving
relief. There will be compulsory rebasing of costs to 31^st
March 1982, for assets held at that date and simplification of the rules
for matching certain assets (mostly shares) disposed of with assets
acquired. There will be a new “entrepreneurs’ relief” for gains arising
on the disposal of a business. The first £1m of an individual’s lifetime
capital gains that qualify will be taxed at 10%. Full details have yet
to be published, so watch this space!

 

 

Previous News

 

Capital Allowances (Speak to Angela)

 

A major change in allowances is proposed from next tax year, with
expenditure up to £50,000 being given 100% first year relief as opposed
to the current 40% or 50%.

 

 

 

Lower VAT Rate on renovations (Speak to Sue)

 

From 1^st January 2008, renovations and alterations to
residential properties that have been empty for at least 2 years will be
eligible for the reduced VAT rate of 5%.

 

 

Offshore account disclosures. (Speak to Sue)

 

HMRC has given notice that a further 175 banks have been targeted but
may extend their disclosure scheme with reduced penalties but only to
account holders who haven’t received a letter from their bank. If you
have an offshore account, please make sure we know about it.

 

Protecting tax revenues. (Speak to Sue or Angela)

 

Following losing the case in Arctic Systems, the Government is trying
to stop the gap. Basically, they will be reviewing all arrangements
where family are shareholders or income is passed to a non-fee
generating person. This is why we do not recommend an equal shareholding
or shares held by children.

 

 

 

CIS Changes and fines (Speak to Sue, Nimmi or Dave)

 

The new regulations came in to force in April 2007. Fines have been imposed from 19^th October, and they cover all late returns outstanding as of that date – including nil returns.

 

 

 

No more paper Self Assessment returns

 

From next April, HMRC will no longer accept substitute paper Self
Assessment returns, like those we generate on our computer system.
Returns must be made on line or completed by hand on the forms supplied
by HMRC.

 

 

 

HMRC promise “Openness and early dialogue in enquiries”. (Speak to Bernadette or Lorraine)

 

HMRC has published a notice that it intends to be more open and
direct when initiating enquiries, including full information on what and
why it is making enquiries, how long it estimates they will take to
complete. This may be the time to consider your Professional Fee
Protection Insurance; especially if we said your records were not really
up to scratch!

 

 

Introduction of the new Money Laundering Regulations.

 

With the increase in terrorism and drug smuggling, we can understand
the need to monitor movements of money but the controls we have to
introduce are very heavy-handed and will be time-consuming, all adding
to overhead costs. Basically we need to be able to prove that we have
checked our clients’ identities and have such proof on file. For those
who have been with us for some years, we should hopefully have
sufficient documents already to satisfy the requirements, but for the
majority of you we shall still need to copy your passport or some other
identification that carries your photograph. We shall also need utility
bills to prove your home address. It would really help us if we can make
the necessary copies next time you call in to the office. I feel that
this identity checking is intrusive to say the least, especially as we
have known so many of you for so long, but if we are to maintain the
practise, we must ensure we have the required information on file – and
Oh yes – it will be securely stored to comply with the Data Protection
Act too!

 

 

 

Directors’ Duties & Responsibilities – changes in the Companies Act

 

From 1^st October 2007, directors have additional obligations by law.

 

 

 

Rent deposits

 

Landlords are now required to register tenants’ deposits with one of
three Government approved schemes. Now deposits are either held by a
third party or covered by insurance.

 

 

 

Health and safety regulations and training

 

Any business with 5 or more workers, including sub-contractors,
owners and part-timers, must have a written Health and Safety Policy and
have carried out risk assessments as well as nominating and training a
first aider and a fire marshal.

 

 

 

Spam e-mails

 

Just don’t open these, or they will multiply. If you’re not sure of a message’s content, delete it unread.

 

 

 

Rent-a-room

 

Don’t forget this useful tax-free source of income.

 

 

Increase in the right to paid holidays.

 

With effect from 1^st October 2007, the entitlement is going to increase to 4.8 weeks or 24 days for a full-timer and then on 1^st April 2009, increases again to 5.6 weeks or 28 days for a full-timer. These days include bank holidays and will be pro-rata’d for part-timers.

 

 

 

National Minimum Wage

 

These have all increased – please check with Dave.