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News briefing, 12 April 2013
Our weekly comments on tax stories by the national press
Business
Small companies are being warned not to miss out on a chance to use their inventions to qualify for generous tax breaks
Telegraph
While the patent box offers huge tax incentives to companies of all sizes and is well worth exploiting, the Telegraph story is little more than an uncritical regurgitation of a briefing from the Exchequer secretary, David Gauke.
Income tax
High earners are expected to shift about £5bn of income into the new tax year to benefit from the cut in the top rate of tax from 50p to 45p – which is a "big giveaway to a relatively small group of people at the very top", according to the Institute for Fiscal Studies' senior research economist, James Browne.
Times; Telegraph; Guardian
Well, of course they will. We will never know whether or not the 50% rate would have brought in more tax, because both years it was in force were affected by income shifting. However, not all income can legally be shifted; HMRC will be on the lookout for income that arose in 2012/13 but was paid the following year to take advantage of the reduced top rate.
Families with children where one parent works will be hardest hit by the latest tax changes, according to shadow chancellor Ed Balls.
Guardian
By taking his measurements from April 2010, Balls can show that the higher paid have received a tax cut, now that the 50% rate has been reduced to 45%. Had the measurement been taken from the last full year of Labour government in 2009, the higher paid would be the hardest hit, their top rate having increased from 40% to 45%.
PAYE
Business lobby groups have warned that companies could be subject to HMRC fines even if they attempt to follow the new PAYE system of real-time reporting, for which many employers are unprepared, claim accountants.
Telegraph; Telegraph; Telegraph; Telegraph
Although it took a long time to get the relaxations to RTI’s “on or before” rule, is was finally conceded, albeit as a temporary measure. HMRC are operating a light-touch approach to penalties for 2013/14. While many employers – and, indeed, many accountants – do not seem to have prepared sufficiently, it has to be said the Revenue worked hard to get the message across.
Millions of workers could effectively lose their Christmas bonuses as a result of the government’s shake-up of the tax and benefits system, accountants have warned.
Telegraph
The point of introducing RTI was to ensure universal credit took immediate account of a pay rise (or pay cut). A bonus will be affected, just as overtime will. It is surely far better for the benefit to be affected immediately rather than clawed back unexpectedly more than a year later.
VAT
Support is growing among business organisations for changes in rules to penalise companies that are late paying their VAT bills.
Telegraph
Small firms often suffer because customers (often larger businesses than themselves) do not pay invoices on time. The problem is the late payers take their custom elsewhere if they are fined for late payment.
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