July 2008

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Points to Ponder

 

Welcome to our forty second newsletter – produced during July 2008 and issued in August 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.

 

 

 

1.An accountant’s joke

 

What’s the difference between tax avoidance and tax evasion? Answer – Jail.

 

This was printed in one of our accountancy magazines, but if you think about it, it’s not really funny.

 

 

 

2. Offshore account.

 

HMRC has announced that it collected over £400million via the
voluntary disclosure and expects to raise even more from those who
didn’t own up!

 

 

 

3. HMRC On-line filing.

 

A recent survey of accountants has proved that the HMRC service has
been worse this year than in previous years. There are also rumours that
the current free access may become chargeable. So, by law returns must
be filed on line but you will have to pay for the privilege!

 

 

 

4. Back tax bills for some pensioners

 

The Birmingham Tax Office has just admitted that it has been issuing
incorrect PAYE codes for some pensioners since 1983 and now plans to
start collecting the underpayments. All tax offices have been advised to
look at codes issued to pensioners in receipt of company pension.

 

 

 

5. The new head of HMRC

 

Two women and five men are now chasing the job as head of HM Revenue
& Customs – let’s hope whoever comes in can improve things there –
no more lost disks?

 

 

 

6. HMRC and the Construction Industry

 

Contrary to what all accountants believed, there have as yet been no
major reported cases in respect of investigations in to Worker Status in
the Construction Industry. Is this because HMRC doesn’t know where to
start, or is waiting until they can impose higher levels of fines? At
£10,000 per error per month, finding something in July 2008 could bring
in £40,000, but this time next year, that could be £160,000.
Representation is being made to the Revenue to not backdate claims for
errors if the businesses concerned can prove they have made every effort
to correct the situation. We know how difficult it is with a workforce
that has always been self-employed, but the Revenue will not accept that
as an excuse.

 

 

 

7. Underpaid postage

 

We are still having major problems with this. Letters that have the
wrong stamp, or no stamp, on them are being delayed for up to 6 weeks
before the Post Office lets us know they have them. Recently this has
resulted in a student failing to get a grant and difficulties over
claims for Children’s Tax Credit. Please do check you are putting the
right postage on letters?

 

 

Now from previous newsletters:

 

P35 on-line submission problems

 

It has just come to light that, due to a problem with our software,
some of our year end submissions for the payrolls have not been
registered on the Revenue website. If you receive any correspondence
from HMRC regarding your P35, please pass it to us immediately, so that
we can deal with it.

 

 

 

Corporate Manslaughter & Corporate Homicide Act 2007.

 

We’ve all read reports of major disasters that would now result in a
prosecution under this new act, but it covers all sizes of companies,
partnerships and even sole traders. The only way to stay within the law
is to ensure that your Health and Safety policy is reviewed regularly
and is enforced.

 

 

 

Employee’s business use of private cars.

 

If you ask your employee to use their own car, ensure that your
Health and Safety policy requires them to assure you that the vehicle is
completely “legal” in all respects and that they are happy to use their
own transport.

 

Allowances for cars

 

Within the next couple of years, the tax allowances for business cars
will be much reduced on cars with CO2 emissions above 160g/km.

 

Royal Mail failures.

 

The British Chambers of Commerce has announced that its research in
to companies’ use of the Royal Mail has found that 86% of the
respondents had started using e-mails and the Internet for
communication, instead of the post. 68% believe the Royal Mail is not a
professional service anymore.

 

ACAS Services

 

If you have queries about employment regulations, your first line of
enquiry should be a call to ACAS, as they are there to advise both
employees and employers. Their Helpline number is 08457 47 47 47 or
their website is www.acas.org.uk.

 

Tax doesn’t have to be taxing – but it is!

 

Adam Hart-Davis – the face of the Revenue advertising campaign, has
said in an interview on Radio Five Live that tax IS too taxing and far
too complicated. HMRC responded furiously that “We will not be using Mr.
Hart-Davis for any self assessment advertising in future”.

 

First Aid at Work

 

All businesses must have first aid cover. The extent of the cover
required depends on the number of employees and details can be found on
the Health and Safety Executive’s website at www.hse.gov.uk/firstaid/index.htm or call 0845 345 0055 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

 

Earlier non-on-line Self Assessment filing date. This has now officially been brought forward to 31^st October. The on-line filing date has stayed at 31^st January, but this may be altered next year.

 

Proposal to make record keeping standards statutory -
in other words, if your records don’t meet the proposed new legal
requirements, you will have committed a criminal offence!

 

Increased Revenue powers to obtain information These points come back to what we have been asking all clients to do – HELP US TO HELP YOU BY KEEPING RECORDS AND TELL US EVERYTHING. We can only help you comply with the new laws if you let us have all the relevant information.

 

CIS Certificate withdrawals

 

The Revenue has started its review of gross certificates for
sub-contractors and is withdrawing them when tax payments and returns
have not been kept up to date.

 

Corporation Tax

 

The Chancellor is increasing this to 22% over the next couple of
years, effectively making it higher than the basic rate of income tax,
which is reduced to 20%.

 

VAT Registration Level

 

This has been increased to £67,000 in any rolling 12 months.

 

Income Shifting Regulations

 

Now is the time to review “family” arrangements in respect of business shares.

 

CIS Fines

 

As expected, HMRC have not got everything working properly with the
scheme. It appears that the Government’s computer system can’t cope with
continuing nil returns.

 

Excessive Bank Charges

 

The delayed decision is expected soon on the legality of bank overdraft fees.

 

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%.

 

Rent-a-room

 

Increase in the right to paid holidays.

 

National Minimum Wage

 

These have all increased and are due to increase again in October.
The rate for adult workers goes up to £5.73 per hour, for 18 – 21 year
olds it will be £4.77 and for 15 – 17 year olds, £3.53