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Qualified audit
For the second year running, Sir John Bourn, head of the National Audit Office, has qualified his audit opinion of the Inland Revenue's accounts. He published his report on the Revenue's accounts for 2003-04 on 21 October, and while he confirmed that overall the Revenue continued to secure an effective check over the assessment, collection and allocation of tax during the year, he qualified his opinion in respect of tax credits.
Qualified audit
For the second year running, Sir John Bourn, head of the National Audit Office, has qualified his audit opinion of the Inland Revenue's accounts. He published his report on the Revenue's accounts for 2003-04 on 21 October, and while he confirmed that overall the Revenue continued to secure an effective check over the assessment, collection and allocation of tax during the year, he qualified his opinion in respect of tax credits.
Some £13.5 billion on child tax credit and working tax credit was distributed by the Revenue in 2003-04. However, the high level of overpayment under earlier tax credit schemes, some 10% to 14% by value, led Sir John to qualify his audit opinion on the trust statement for the previous year, 2002-03. The Revenue told the Committee of Public Accounts in December 2003 that claimant error rates under the new tax credits payable from 2003-04 might be half the rates under the previous schemes. It has not yet estimated the level of financial error on the new tax credits and so Sir John has no evidence that error has reduced significantly to enable him to give an unqualified audit opinion. He has therefore qualified his audit opinion on the 2003-04 trust statement account.
Problems were caused by the Revenue's systems not working as intended when child and working tax credits were introduced in April 2003, creating problems for claimants, employers and the Revenue. It had to move staff from other tax work to help with these problems. It plans to recover fully from the impacts of the initial tax credits problems by the end of 2004-2005.
The Inland Revenue report and annual accounts for 2003-04 can be found on the Revenue website at www.inlandrevenue.gov.uk/pdfs/report2004.pdf or can be purchased, price £29, from The Stationery Office, 0870 600 5522.
(National Audit Office press release dated 21 October 2004.)
Japan
Discussions at official level are to be held in Tokyo from 8 to 12 November 2004 to review the 1969 Double Taxation Convention (as amended by the 1980 Protocol) between the United Kingdom and Japan. Representations are invited and should be sent to: Charlotte Enever, Revenue Policy International, Inland Revenue, Victory House, 30-34 Kingsway, London WC2B 6ES, e-mail: Charlotte. Enever@ir.gsi.gov.uk.
(Inland Revenue news release dated 27 October 2004.)
Investigatory powers
The Revenue's new Regulation of Investigatory Powers Manual has been published. The manual sets out guidelines for the conduct of covert activities in the course of Revenue investigations, to ensure compliance with the Regulation of Investigatory Powers Act 2000 and other recent legislation including the Data Protection Act 1998 and Human Rights Act 1998.
The manual is available at www.inlandrevenue.gov.uk/manuals/ripamanual/index.htm.
Insolvency
From April 2005, the Revenue will be able to accept in-year cessation returns online. This applies up to the date of bankruptcy, or winding up or when an administrator, administrative receiver, or supervisor of a voluntary arrangement is appointed. For example, if one of these events occurs in June 2005, an employer return to that month can immediately be filed online. If the employer is a small employer, the 2005-06 tax-free incentive of £250 will be paid. It should be noted that the insolvency practitioner is not legally obliged to submit pre-appointment returns, albeit that he usually does if books and records are available.
This incentive payment, if due, will be credited to the employer's payment record in a very similar way to a payment on account. Assuming there are debts due to the Revenue, any incentive payment will be set against its claim.
(Tax Bulletin Issue 73, October 2004.)
Facts and Figures
Tax Deposit Certificates
Rates of interest on and after 6 Aug 2004
Applied Cashed
for tax
Deposit of under
£100,000 1.25% 0.50%
£100,000 or over:
months held
(a) under 1 1.25% 0.50%
(b) 1 but less than 3 3.75% 1.75%
(c) 3 but less than 6 3.75% 1.75%
(d) 6 but less than 9 3.75% 1.75%
(e) 9 to 12 months 3.75% 1.75%
United Kingdom Bank Base Rates
From To p.a.
5 Feb 2004 5 May 2004 4.00%
6 May 2004 9 Jun 2004 4.25%
10 Jun 2004 4 Aug 2004 4.50%
5 Aug 2004 Current 4.75%
Repayment Supplement and Interest on Tax
From 6 Sept 2004:
Customs: Pay 7.50%; Receive 4.00%
From 6 Sept 2004:
Income tax, CGT and NIC:
Interest on tax 7.50%
Repayment supplement 3.50%
Inheritance tax 4.00%
Corporation Tax:
Accounting periods 30.9.93-30.6.99
Pay 6%; Receive 2.75%
Accounting periods ending after 30.6.99
Pay 7.50%; Receive 4%
From 16.08.04 on instalments:
Pay 5.75%; Receive 4.5%
Official Rate of Interest
From 6 Jan 2002 5.00%
State Retirement Pensions
Taxable Amount 2004/05 2003/04
Single 4,139.20 4,027.40
Wife (non-contrib.) 2,477.80 2,410.20
Foreign Exchange
Spot rates to sterling
31.12.03 31.3.04
Australia A$2.376 A$2.4072
Canada C$2.3133 C$2.4154
Denmark DKr10.5674 DKr11.1342
Euro zone €1.4192 €1.4955
Hong Kong HK$13.898 HK$14.3188
Japan Yen191.85 Yen191.201
Norway NKr11.9095 NKr12.6185
South Africa Rand11.9492 Rand11.5831
Sweden SwKr12.8806 SwKr13.8598
Switzerland SwF2.214 SwF2.3283
USA US$1.7901 US$1.8378
Average rates to sterling
31.12.03 31.3.04
Australia A$2.524 A$2.4488
Canada C$2.2881 C$2.2893
Denmark DKr10.7423 DKr10.7070
Euro zone €1.4457 €1.4400
Hong Kong HK$12.7301 HK$13.1806
Japan Yen189.3354 Yen190.9326
Norway NKr11.5624 NKr11.9099
South Africa Rand12.3217 Rand12.0949
Sweden SwKr13.1934 SwKr13.1427
Switzerland SwF2.1973 SwF2.2266
USA US$1.6348 US$1.6939
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