Taxation News

Warning over online payment constraints

Taxation — Thu, 11 Mar 2010 12:00:00 +0000

As businesses and individuals move increasingly towards paying their taxes online, they should be aware that some banks impose financial limits, which may mean forward planning is needed.

HMRC’s guidance on how tax can be paid does not reflect these constraints.

A daily online banking limit of £10,000 seems common and many banks will charge for CHAPs payments.

The ICAEW Tax Faculty and the Chartered Institute of Taxation have raised this with HMRC, which has in turn advised taxpayers to raise it with their banks.

The £10,000 limit applies to the ‘faster payments’ service offered by some banks. These are set up in the same way as other electronic payments but are received on the same day provided the bank account at the receiving bank is enabled to accept faster payments.

HMRC are currently not able to receive these types of payments.

Class 3 contributions deadline approaches

Taxation — Thu, 11 Mar 2010 11:00:00 +0000

The deadline for making class 3 National Insurance payments for tax years from 1996/97 to 2001/02 tax years is fast approaching. Taxpayers entitled to make payment for the years must do so no later than 5 April.

Back payments must usually be paid within six years of the end of the tax year to which the contributions are related.

If payments are made more than two years after the end of the relevant tax year, the rate is likely to go up. However, special terms apply for the 1996/97 to 2001/02 tax years where the time limits for the payment of voluntary class 3 contributions were extended to 5 April 2010.

This applies to taxpayers who reach the state pension age before 24 October 2004, who are allowed to pay contributions at their original rate provided payment is made by 5 April.

Payments received after the deadline will not be accepted.

HMRC encourage online VAT payments

Taxation — Wed, 10 Mar 2010 15:00:00 +0000

HMRC have announced a change to the way by which they will accept VAT payments. From 1 April, the Revenue will treat all cheque sent by post as having been received on the date when cleared funds reach the department's bank account.

Taxpayers are advised to allow enough several days for their payments to reach the taxman and be cleared no later than the due date shown on their VAT returns. Cheques that do not clear by the due date may render the taxpayer liable to a surcharge for late payment.

The change does not affect cheque payments made by bank giro.

HMRC recommend that VAT payments be made electronically, which in most cases affords taxpayers up to seven extra calendar days in which to settle their debt. Paying by direct debit provides at least ten additional days. Individuals and businesses who file their VAT returns online must pay electronically.

First Budget of 2010 will be 'phoney'

Taxation — Wed, 10 Mar 2010 14:00:00 +0000

Alistair Darling will deliver a ‘phoney’ Budget on 24 March that will avoid introducing high-impact tax measures and instead be geared towards electioneering, according to BDO LLP.

The accounting company has forecast that it will be the second Budget of the year – following the general election expected in May – in which a newly elected administration will be forced to make ‘tough decisions’ to tackle the public deficit.

This means individual taxpayers and businesses will have to ‘steal themselves for a frustrating period of uncertainty as party politics overshadow the uncomfortable fiscal imperative to raise significant additional tax revenues as a contribution... to curb the unsustainable fiscal deficit,’ warned BDO.

Treasury announces date of Budget

Taxation — Wed, 10 Mar 2010 09:00:00 +0000

The Treasury has confirmed that the Chancellor of the Exchequer will make his 2010 Budget statement to the House of Commons at 12.30pm on Wednesday 24 March - as predicted by Taxation two weeks ago.

MPs 'alarmed' by low morale at HMRC

Taxation — Tue, 09 Mar 2010 12:00:00 +0000

A cross-party group of MPs today expresses grave concerns about low morale and a lack of efficiency at HMRC.

In a new report, the Treasury Select Committee scrutinises the Treasury and its associated bodies, noting they ‘faced extraordinary challenges during 2008-09, mainly arising from the need to respond to the emerging financial crisis and associated economic downturn’.

The document, Administration and Expenditure in the Chancellor’s Departments 2008-09, reserves its greatest criticisms for the Revenue – particularly with regards to the ‘dire results’ of a staff survey conducted in February 2009, which ranked HMRC against the responses of staff in ten other government departments

Deduction of tax at source under review

Taxation — Mon, 08 Mar 2010 12:25:00 +0000

HMRC have published a consultation on possible changes to the rules relating to the deduction of income tax at source from interest and similar payments, including patent royalties.

The system for collecting the income tax deducted by companies from these payments requires the submission of a form CT61. The Revenue wonders whether an online ‘return of income tax deducted’ form would reduce administrative burdens for taxpayers.

HMRC are aware of difficulties in applying the rules on the deduction of income tax by individuals and other non-corporate taxpayers from annual payments.

Stage managers’ tax status revised

Taxation — Mon, 08 Mar 2010 12:00:00 +0000

HMRC have issued supplementary guidance on the taxation of stage managers.

An agreement was reached in 1994 between the Revenue, Equity and the Theatre’s National Committee that stage managers, deputy stage managers and assistant stage managers, who enjoyed similar terms of engagement to actors and who carried out their trade in the same way, would be subject to the guidance on the tax treatment of theatrical performers/artists, published on 31 August 1994.

This was on the understanding that, in addition to their normal duties, there was an expectation that stage management personnel at every level would, where required, undertake to perform understudy duties in rehearsals or appear on stage in costume or in blacks.

SP 1/09 to take effect until April 2011

Taxation — Fri, 05 Mar 2010 10:30:00 +0000

Statement of Practice 1/09, ‘Employees who are resident but not ordinarily resident in the UK’, has been extended by 12 months.

It took effect from 6 April 2009 to cover the tax treatment of employees who are resident but not ordinarily resident in the UK, and who have a single contract of employment covering both UK and overseas duties.

It was introduced with the intention that it would apply for one year, before being legislated in Finance Bill 2010.

Little time left for business rates appeals

Taxation — Fri, 05 Mar 2010 08:50:00 +0000

Small firms have less than a month to contest their business rates over the past five years. Owners who believe they have been charged too much since the last revaluation in 2005 have until 31 March to appeal.

The Forum of Private Business believes around 160,000 small firms have already won backdated reductions in their rates since 1 April 2005, when the current rateable period began. Many more businesses may be eligible for a reduction.

There are two main grounds on which claimants can appeal against their rateable value.

Firms could enjoy entertainment windfall

Taxation — Thu, 04 Mar 2010 15:00:00 +0000

A VAT windfall could be on the cards for UK firms if two European cases are ruled in favour of the taxpayers in relation to input tax claims on business entertainment expenses.

The Advocate General – who provides an opinion to the European Court of Justice, which the judges consider and normally follow – has delivered an opinion in the joined Dutch cases of X Holding BV and Oracle Nederland BV (C-538/08 and C-33/09), concerning the input tax block on business entertaining expenditure that applies in the Netherlands.

The challenge relates to the issue of whether the block is compliant with EU regulations, and the Advocate General has indicated that it is not.

'Naming and shaming' to begin next month

Taxation — Thu, 04 Mar 2010 14:00:00 +0000

Finance Act 2009, s 94 comes into force on 1 April. This will give HMRC the power to 'name and shame' taxpayers where it is established that they have committed certain serious tax offences.

It is planned that names and other details will be published on the Revenue's website. Because this measure will only be applied for periods starting from 1 April, it is not expected that any individuals will be exposed before the first half of 2011.

Taxpayers who may be named are those who have deliberately evaded tax of more than £25,000 in total. If they make a full disclosure of any tax wrongs without delay, they can avoid having details put online.