Revenue news-19sep

Large processing offices

As a result of Working Together, regular meetings are held between HMRC large processing offices and agents who have dealings with these offices. The large processing offices handle the tax affairs of some 15 million individuals employed by 475,000 businesses. They have undergone significant change over recent years with the introduction of area management and the increase in e-business. A forum will consult on various issues including:

• the experience of taxpayers and their agents who deal with these offices, and how to improve this;
• the operation of PAYE and self assessment processes within these offices, and how to make this more effective;
• the performance of these offices as a group and individually;
• issues generic to the operation of PAYE and self assessment within HMRC local offices.

Agents who deal regularly with any of the offices above should contact the Working Together forum using the new permanent e-mail window on the HMRC webpage: www.hmrc.gov.uk/workingtogether/news/lpo.htm.

Negligible values

HMRC have accepted the following security as having negligible value during August 2005 for the purposes of a claim under TCGA 1992, s 24(2).

Where the value of shares has become negligible, an allowable loss may be established by the owner claiming that they are treated as being sold and reacquired, either on the date of the claim or at a specified time within the two tax years prior to the date of claim.
See www.hmrc.gov.uk/cgt/negvalist.htm for the full list of negligible value securities.

WTC changes

HMRC has published form TC721 which formed its September 2005 mailshot to employers who pay working tax credit with wages.
The form explained that HMRC would be paying working tax credit direct to all claimants by 31 March 2006 and that from 7 November 2005 they will pay new claimants of working tax credit direct and stop sending employers start, re-start or amendment notices for existing claimants.
Between 7 November 2005 and 18 February 2006, HMRC will send employers a stop notice for each employee to whom they pay working tax credit through payroll. However, on or before 6 November 2005, HMRC has instructed employers to write a letter or e-mail to each employee to whom they pay working tax credit stating that payment of working tax credit through the pay packet is being phased out and that HMRC will be taking over responsibility for it.
It seems that despite comments from the professional bodies and other interested parties (see Taxation, 14 April 2005, page 33), HMRC have gone ahead with burdening employers with telling their employees about the changes.
Kate Upcraft, policy and research manager of the Institute of Payroll and Pensions Management, said it is very 'disappointing' that it has, first, taken HMRC so long to change the way that tax credits are paid, i.e. by swapping from the employer to HMRC, and that the administrative cost of telling affected employees about the change has fallen on the employer. It is estimated that the cost to business will be between £9 and £17 million, and Kate describes this as an 'exit cost' to employers to escape the tax credit system. She says it seems 'a complete waste of money for employers to have to write to employees about state benefits' at all.
As Richard Last for Taxation Services (BBH) Ltd says in his letter, see Feedback page 685 of this issue, he 'cannot understand why this should be the responsibility of the payroll rather than HMRC'. He points out that questions arising from the letters could easily be addressed to employers rather than HMRC, despite the HMRC telephone number given, which will mean that employers might be bombarded with queries to which they do not have the answers.

Red tape

HMRC have launched a project to measure the administrative burden on small business of complying with the tax system. This exercise was promised in the consultation document, 'Working towards a new relationship: a consultation on priorities for reducing the administrative burden of the tax system on small business' published alongside Budget 2005. This set out HMRC's strategy for reducing the administrative burdens of the tax system on small business including delivering a real improvement in their experience of the tax system.
HMRC strongly urge businesses and other groups that are contacted as part of the exercise to participate to ensure that their views are included. HMRC would like to hear from any organisations wishing to participate and can be contacted on abmeasures@hmrc.gsi.gov.uk or 020 7147 0492.
HMRC news release dated 15 September 2005

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