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17 January 2001
Revenue press releases
New penalty goes ahead
New penalty goes ahead
Revenue press releases
New penalty goes ahead
As widely anticipated, the existing requirement for the newly self employed to notify the Revenue immediately of their liability to pay Class 2 National Insurance contributions is to be backed up by a new £100 penalty if they fail to register on time without a reasonable excuse. (See 'The Carrot and the Stick' by John Newth in Taxation, 2 November 2000 at page 113, and 'Let Us Consult Sensibly' by David Brodie in Taxation, 23 November 2000 at page 212.) Anyone starting up as self employed must now register with the Revenue within three months, starting from the last day of the month in which self employment began. So anyone who began self employment in January 2001 or earlier and does not register by 30 April will incur the new penalty from 1 May.
The Revenue announced its proposals in this regard as a 'discussion paper' in late October and invited interested parties to 'discuss' the proposals. It seems that the interested parties must all have agreed wholeheartedly with the Revenue since its proposals are going ahead seemingly unchanged. Perhaps it would be cynical to ask 'why bother' with the 'discussion' at all.
The Social Security Contributions (Amendment) Regulations 2001/45, (Northern Ireland) 2001/46 introducing the new penalty were laid on 10 January, and will come into force on 31 January 2001.
This new penalty comes as part of a package of measures launched by Dawn Primarolo, the Paymaster General, under the guise of offering help to those starting up in business. In practice it will be a penalty for ignorance or for being too poor to be able to afford early advice. The measures are a result of the recommendations in Lord Grabiner's report on the informal economy that there should be an effective requirement to notify the Revenue on or soon after the start of business, and that more and better help should be offered to new businesses in understanding their responsibilities.
The existing registration form is to be made shorter and more straightforward to complete and provide telephone registration facilities.
The registration for Class 2 National Insurance contributions will also be treated as notification for tax and Class 4 National Insurance contributions purposes – so that the newly self employed will only need to notify the Revenue once. By default therefore, the old six-month time limit for registering as self employed has disappeared.
On registering, the newly self employed will receive a 70-page long Starting up in Business guide covering tax, National Insurance, VAT, tax credits and the records that should be kept. It has been designed to provide integrated, step-by-step guidance in as plain a language as possible on what to do when starting, maintaining and expanding the business.
In addition, the Revenue's business support teams will provide face-to-face help, and there is a dedicated helpline. The Revenue has also produced a video for people thinking about working for themselves Starting up in business – cutting through the red tape. This trails the guide, registration and other help that the Inland Revenue claims to offer to small businesses.
The helpline number is 08459 15 45 15, and opened on 10 January. It is open 7 days a week from 8am to 8pm, with calls charged at local rates.
(Source: Inland Revenue press release dated 10 January 2001.)
Negligible Values
In the quarter to 31 December 2000, the Revenue accepted that all equity in the following companies were of negligible value within the meaning of section 24(2), Taxation of Chargeable Gains Act 1992 on the dates shown below:
Hunter Limited 13 March 1998
Mackie International Group Plc 26 February 1999
John Tames Plc 21 March 2000
World Telecom Plc 11 November 2000
Versailles Group 2 November 2000
Amalgamated Financial Investments Plc 5 April 2000
Essex Furniture Plc 24 February 2000
First rewrite Bill
The Tax Law Rewrite project has produced its first Bill, which rewrites the current legislation on capital allowances. The Bill was introduced in Parliament on 10 January.
The Bill and the accompanying explanatory notes are published by The Stationery Office. They are also available on the Internet at www.publications.parliament.uk.
(Source: Inland Revenue press release dated 10 January 2001.)
Hector goes
Hector, the country's best known taxman, has been officially retired. Hector was introduced in 1995 to draw attention to the introduction of self assessment, although even then he was lampooned as showing a typical stereotype which may not have been altogether desirable.
No decision has yet been made as to whether Hector will be replaced, but the Revenue is likely to continue advertising on TV and in the press to remind people of their obligations and the penalties that they face under self assessment.
(Source: Inland Revenue press release dated 11 January 2001.)
Internet filing discounts
The Revenue has recently laid regulations before the House of Commons to provide for discounts for the use of the Internet service for self assessment tax returns and employers' end of year returns. The regulations are The Income Tax (Electronic Communications) (Incentive Payments) Regulations 2001 (SI 2001/56).
Copies of these regulations are available from the Stationery Office. They are also on the Revenue website: www.inlandrevenue.gov.uk.
The Internet service for self assessment was eventually launched in July 2000. Employers will be able to register for the pay-as-you-earn Internet service from February 2001. Following consultation, it has been decided to offer the discounts to all employers who use the Internet service to send their 2000-01 end of year return to the Inland Revenue and make at least one electronic payment for 2000-01.
(Source: Inland Revenue press release dated 11 January 2001.)
Personal representatives
Personal representatives have a statutory duty to deliver an account of all appropriate property and the value of that property (section 216(1), Inheritance Tax Act 1984). Section 216(3) allows them to include an estimated value, if an exact value cannot be obtained, but only after the fullest enquiries reasonably practicable have been made.
The Revenue recognises that this can pose practical difficulties if there is a proven need for obtaining a grant urgently. Where it accepts that there is a genuine need for a quick grant, it still expects the personal representatives to make such enquiries as they can in the time they have in order to include as considered an estimate as possible.
The Revenue will not seek penalties in these cases when the account contains estimated values, even if the estimates are unresearched. This does not mean that all values in such accounts need to be estimates. If there is a correct value for an asset, then that should be included.
If the need for a grant is urgent, the Revenue would be happy for a letter to be faxed outlining the circumstances. It would then telephone to discuss the matter and agree whether or not there is such a need. The fax number to be used is 0115 974 3045.
(Source: Inland Revenue IHT Newsletter, December 2000.)
Paying tax over the Internet
Since 10 January 2001, self assessment taxpayers have been able to pay their tax by debit card over the Internet in a new facility developed jointly by the Inland Revenue and Girobank. The Revenue already allowed a range of electronic payment methods, including direct credit by BACS or CHAPS, telephone banking, Internet banking (bank's products), debit card over the telephone, direct debit.
Taxpayers who visit the e-business area of the Revenue website: www.inlandrevenue.gov.uk, will be presented with a hyperlink to the Girobank BillPay service. The first time that they use the Girobank service they will have to register to use it, but on subsequent occasions they will be able to go straight into the Girobank site to pay.
Once into the Girobank site, the taxpayer indicates which bills are to be paid, and enters his reference (the ten digit self assessment reference). This is also a once only process. Having done this, when the taxpayer wants to make a payment to the Revenue, he goes into the Girobank site, enters his debit card details and the amount he wants to pay. Girobank processes the payment, debiting the taxpayer's bank account and crediting the Revenue account. Girobank sends an electronic file to the Revenue, which will be used to update the taxpayer's self-assessment record.
There is no cost to the taxpayer apart from the normal Internet connection charges and any bank charges.
(Source: Inland Revenue press release dated 10 January 2001.)
New penalty goes ahead
As widely anticipated, the existing requirement for the newly self employed to notify the Revenue immediately of their liability to pay Class 2 National Insurance contributions is to be backed up by a new £100 penalty if they fail to register on time without a reasonable excuse. (See 'The Carrot and the Stick' by John Newth in Taxation, 2 November 2000 at page 113, and 'Let Us Consult Sensibly' by David Brodie in Taxation, 23 November 2000 at page 212.) Anyone starting up as self employed must now register with the Revenue within three months, starting from the last day of the month in which self employment began. So anyone who began self employment in January 2001 or earlier and does not register by 30 April will incur the new penalty from 1 May.
The Revenue announced its proposals in this regard as a 'discussion paper' in late October and invited interested parties to 'discuss' the proposals. It seems that the interested parties must all have agreed wholeheartedly with the Revenue since its proposals are going ahead seemingly unchanged. Perhaps it would be cynical to ask 'why bother' with the 'discussion' at all.
The Social Security Contributions (Amendment) Regulations 2001/45, (Northern Ireland) 2001/46 introducing the new penalty were laid on 10 January, and will come into force on 31 January 2001.
This new penalty comes as part of a package of measures launched by Dawn Primarolo, the Paymaster General, under the guise of offering help to those starting up in business. In practice it will be a penalty for ignorance or for being too poor to be able to afford early advice. The measures are a result of the recommendations in Lord Grabiner's report on the informal economy that there should be an effective requirement to notify the Revenue on or soon after the start of business, and that more and better help should be offered to new businesses in understanding their responsibilities.
The existing registration form is to be made shorter and more straightforward to complete and provide telephone registration facilities.
The registration for Class 2 National Insurance contributions will also be treated as notification for tax and Class 4 National Insurance contributions purposes – so that the newly self employed will only need to notify the Revenue once. By default therefore, the old six-month time limit for registering as self employed has disappeared.
On registering, the newly self employed will receive a 70-page long Starting up in Business guide covering tax, National Insurance, VAT, tax credits and the records that should be kept. It has been designed to provide integrated, step-by-step guidance in as plain a language as possible on what to do when starting, maintaining and expanding the business.
In addition, the Revenue's business support teams will provide face-to-face help, and there is a dedicated helpline. The Revenue has also produced a video for people thinking about working for themselves Starting up in business – cutting through the red tape. This trails the guide, registration and other help that the Inland Revenue claims to offer to small businesses.
The helpline number is 08459 15 45 15, and opened on 10 January. It is open 7 days a week from 8am to 8pm, with calls charged at local rates.
(Source: Inland Revenue press release dated 10 January 2001.)
Negligible Values
In the quarter to 31 December 2000, the Revenue accepted that all equity in the following companies were of negligible value within the meaning of section 24(2), Taxation of Chargeable Gains Act 1992 on the dates shown below:
Hunter Limited 13 March 1998
Mackie International Group Plc 26 February 1999
John Tames Plc 21 March 2000
World Telecom Plc 11 November 2000
Versailles Group 2 November 2000
Amalgamated Financial Investments Plc 5 April 2000
Essex Furniture Plc 24 February 2000
First rewrite Bill
The Tax Law Rewrite project has produced its first Bill, which rewrites the current legislation on capital allowances. The Bill was introduced in Parliament on 10 January.
The Bill and the accompanying explanatory notes are published by The Stationery Office. They are also available on the Internet at www.publications.parliament.uk.
(Source: Inland Revenue press release dated 10 January 2001.)
Hector goes
Hector, the country's best known taxman, has been officially retired. Hector was introduced in 1995 to draw attention to the introduction of self assessment, although even then he was lampooned as showing a typical stereotype which may not have been altogether desirable.
No decision has yet been made as to whether Hector will be replaced, but the Revenue is likely to continue advertising on TV and in the press to remind people of their obligations and the penalties that they face under self assessment.
(Source: Inland Revenue press release dated 11 January 2001.)
Internet filing discounts
The Revenue has recently laid regulations before the House of Commons to provide for discounts for the use of the Internet service for self assessment tax returns and employers' end of year returns. The regulations are The Income Tax (Electronic Communications) (Incentive Payments) Regulations 2001 (SI 2001/56).
Copies of these regulations are available from the Stationery Office. They are also on the Revenue website: www.inlandrevenue.gov.uk.
The Internet service for self assessment was eventually launched in July 2000. Employers will be able to register for the pay-as-you-earn Internet service from February 2001. Following consultation, it has been decided to offer the discounts to all employers who use the Internet service to send their 2000-01 end of year return to the Inland Revenue and make at least one electronic payment for 2000-01.
(Source: Inland Revenue press release dated 11 January 2001.)
Personal representatives
Personal representatives have a statutory duty to deliver an account of all appropriate property and the value of that property (section 216(1), Inheritance Tax Act 1984). Section 216(3) allows them to include an estimated value, if an exact value cannot be obtained, but only after the fullest enquiries reasonably practicable have been made.
The Revenue recognises that this can pose practical difficulties if there is a proven need for obtaining a grant urgently. Where it accepts that there is a genuine need for a quick grant, it still expects the personal representatives to make such enquiries as they can in the time they have in order to include as considered an estimate as possible.
The Revenue will not seek penalties in these cases when the account contains estimated values, even if the estimates are unresearched. This does not mean that all values in such accounts need to be estimates. If there is a correct value for an asset, then that should be included.
If the need for a grant is urgent, the Revenue would be happy for a letter to be faxed outlining the circumstances. It would then telephone to discuss the matter and agree whether or not there is such a need. The fax number to be used is 0115 974 3045.
(Source: Inland Revenue IHT Newsletter, December 2000.)
Paying tax over the Internet
Since 10 January 2001, self assessment taxpayers have been able to pay their tax by debit card over the Internet in a new facility developed jointly by the Inland Revenue and Girobank. The Revenue already allowed a range of electronic payment methods, including direct credit by BACS or CHAPS, telephone banking, Internet banking (bank's products), debit card over the telephone, direct debit.
Taxpayers who visit the e-business area of the Revenue website: www.inlandrevenue.gov.uk, will be presented with a hyperlink to the Girobank BillPay service. The first time that they use the Girobank service they will have to register to use it, but on subsequent occasions they will be able to go straight into the Girobank site to pay.
Once into the Girobank site, the taxpayer indicates which bills are to be paid, and enters his reference (the ten digit self assessment reference). This is also a once only process. Having done this, when the taxpayer wants to make a payment to the Revenue, he goes into the Girobank site, enters his debit card details and the amount he wants to pay. Girobank processes the payment, debiting the taxpayer's bank account and crediting the Revenue account. Girobank sends an electronic file to the Revenue, which will be used to update the taxpayer's self-assessment record.
There is no cost to the taxpayer apart from the normal Internet connection charges and any bank charges.
(Source: Inland Revenue press release dated 10 January 2001.)
