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News briefing, 11 Oct 2013
Administration and enforcement
The new real-time PAYE system threatens a wave of tax code errors by HMRC, accountants have warned.
Telegraph
HMRC rushed in to launching a compulsory system that is considerably more expensive for employers to comply with than the department suggested. The Telegraph does a good job here of talking to accountants and then relaying the information in a form its readers will understand, highlighting in particular problems with payment reconciliation and incorrect codes.
Health professionals including physiotherapists and podiatrists are being offered an opportunity to come clean about unpaid tax without risking major fines.
Times
Here comes yet another ‘amnesty’ under the usual terms of a lower fixed rate of penalty for coming forward. It is not clear whether or not HMRC have sufficient information, or enough personnel, to follow up on those who do not come clean. The department must be notified of undisclosed income by the end of December, and the tax paid by 6 April 2014.
Taxpayers are increasingly likely to take legal action against HMRC rather than submit a complaint to the department, according to data obtained by publisher Bloomsbury Professional.
Times
The Times is confused about what issues taxpayers can take to the First-tier Tribunal. It deals with technical matters, not administrative complaints, which can be referred to the Adjudicator after all avenues within the Revenue have been exhausted.
Systemic failings by HMRC are causing thousands of legitimate complaints from taxpayers to be thrown out by the department, according to a report from the Adjudicator’s Office.
Mail
This is an old story, based on a report published three months ago. The tabloid has picked up on the matter of ESC A19 cases, by which taxpayers can apply to have outstanding tax written off. HMRC often challenge such claims, even when they are legitimate.
Avoidance
Wealthy owners of expensive properties bought through offshore companies are to face new rules forcing them to declare tax they have attempted to avoid.
Guardian
The Guardian has fallen for the hype in the government announcement, making a meal of two straightforward pieces of news: the enveloped dwellings tax has been added to the disclosure of tax avoidance schemes regime, and a requirement has been added to disclose the National Insurance (NI) numbers and unique taxpayer references of scheme clients.
Business
Business groups have called on the government to promote wealth creation through measures headed by tax cuts.
Telegraph; Telegraph
These demands were sparked by the prime minister’s claim that “profit, wealth creation, tax cuts, enterprise are not dirty, elitist words” – but less tax is unlikely in the light of the chancellor’s target of an annual budget surplus. Implementing reduced regulation in the limited time before the general election looks problematic, too.
Capital gains
UK owners of second homes across in France received a tax boost after the local government reduced the burden on the sale of properties, potentially cutting capital gains tax bills by more than 40%
Times
See an earlier briefing for our comment.
Environmental taxes
HMRC are to revive the so-called skip tax, a charge on waste dropped by the chancellor last year.
Telegraph
The Telegraph story quotes a landfill tax rate increase from £2.50 per tonne to £72 and then £80. What it does not say is the higher rates are already operative for “active” waste but some materials are being reclassified to no longer be eligible for the lower rate.
Income tax
The UK made a bigger cut to its top rate of personal tax – from 50p to 45p – than any other country last year, according to a survey by accountancy giant KPMG.
Financial Times
The reduction is flagged as the biggest tax cut in the world, but it did follow a rise in the top rate from 40% to 50%. There must be a point at which a high income tax band acts as a disincentive.
People in the top 1% of earners pay almost a third of all income tax received by the Treasury, official figures show.
Telegraph
This statistic follows on from the top rate tax drop news above. Perhaps it is as an indication that the rich are getting richer. As always, the statistics do not give percentages for payments of NI; employees’ NI bears comparatively more heavily on the 99% than on the 1%
The government’s tax breaks to married couples is “wrong” and will leave some people worse off if they get a pay rise, according to the Institute for Fiscal Studies.
Telegraph; Times; Guardian
The predicted result is inevitable when an allowance is based on a specific tax band, as is currently the case with the personal allowance, giving rise to paying tax at a higher rate than the top level of 45% The problem would be worst if introduced with a “cliff edge” as currently proposed, but allowing a taper as was eventually agreed for child benefit withdrawal will make the position even more complex.
Policy
The UK should introduce a flat tax system to stop middle-class families from paying punitive rates, according to Simon Walker, director general of the Institute of Directors
Mail
Yawn! The UK has something quite close to a flat rate system, with combined tax and NI rates on salaries that vary between 32% and 47%. The solution to unfairness and anomalies in the tax system is not a flat rate but properly thought-out policies and effective legislation.
David Cameron has ruled out introducing a mansion tax if he is returned to office as prime minister at the next general election.
Telegraph
In other words, “PM flogs dead horse”.
David Cameron has dismissed Labour’s tax policy as “nuts” and insisted the party’s plans would jeopardise the economic recovery.
Telegraph
It is unsurprising Cameron is critical of the opposition’s corporation tax plans, since they directly counter Conservative proposals. More practically, would Labour maintain a small profits rate of 20%, with the complexity that involves, or would the party charge those companies 21% as well?
- Blog
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