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News briefing, 27 Sep 2013
Admin & enforcement
HMRC compliance investigations into small and medium-sized enterprises (SMEs) netted £565m in 2012/13, 31% more than the previous year, according to accountancy firm UHY Hacker Young.
Independent
Tax campaigners concentrate on the alleged tax “dodging” of some of the largest companies; in fact most calculations of the tax gap will show that a much bigger problem is evasion and negligence in smaller businesses.
There is a huge backlog of tax disputes between HMRC and taxpayers, with numbers reaching record levels last year, according to legal firm Pinsent Masons.
Financial Times
There were 26,965 outstanding First-tier Tribunal cases in 2012/13, up from 24,273 in 2011/12. Anyone planning to appeal against a Revenue decision should be aware the process will not be speedy and consider the alternative dispute resolution system, which this month became part of the taxman’s day-to-day business.
Higher-rated taxpayers are being urged by accountants to put their financial affairs in order ahead of a number of HMRC deadlines that include the first payment of the new annual tax on enveloped dwellings.
Financial Times
Saturday 5 October 2013 is the six-month deadline for taxpayers to alert the Revenue of a tax liability for 2012/13. Failure to notify may lead to a penalty charge under FA 2008, Sch 41. This may particularly catch out those who are relieved (as opposed to exempted) from the need to make a payment, who still need to submit a return to claim the relief.
Avoidance & evasion
The government has failed in its attempts to collect undisclosed tax from British residents with money hidden in Swiss bank accounts, leaving a £2bn hole in the public purse.
Times
Some people may have chosen to use the Liechtenstein disclosure facility as their means of disclosing income hidden in the Alps, while others may not be liable to tax in the UK because of their domicile or residence status – and further individuals may simply have chosen to ignore HMRC’s threats and cajoling.
HMRC have launched a campaign to encourage buy-to-let landlords to own up to unpaid tax on rental income.
Telegraph
The Revenue says, “We appreciate some people will have made honest mistakes and some may not be fully aware that the rent from a property is taxable – and that is why it always makes sense to talk to us so we can help. It is always cheaper to come forward voluntarily and pay the tax you owe, rather than wait for [us] to come calling.”
Capital gains
Owners of holiday homes in France have been given a boost after the French government confirmed beneficial changes to its capital gains tax regime.
Financial Times
The French government has reduced from 30 years to 22 years the period of ownership before a relevant property is exempt from capital gains tax. The administration has also lowered the level of tax payable in respect of properties sold between 1 September 2013 and 31 August 2014.
Policy
Labour will be “the party of small business” by cutting their taxes at the expense of big corporations if the party wins the next general election, according to its leader, Ed Miliband.
Telegraph; Financial Times
Labour has most likely realised that more voters are small business people than corporate CEOs.
Marriage tax breaks should be targeted at couples with children under the age of three, according to the Centre for Social Justice, a think-tank.
Mail
It would certainly save money if a relief for married couples were limited to a specific demographic, but the administration could prove problematic. This would have a similar effect to tax credits, which are being simplified into a universal credit.
VAT
Low-value consignment relief (LVCR), a defunct tax break that let firms with a Channel Islands base ship goods to the UK free of VAT, may be reopened.
Mail
The main reason for abolishing LVCR was it gave multinationals who could route their deliveries through the Channel Islands an advantage over UK-based retailers. The complaint has come from Channel Islands flower growers who were the reason for the original relief; it seems unlikely that lobbying from a select committee (which is the reality of this story) will result in its reintroduction. Meanwhile, however, the committee members will no doubt have had a pleasant time on their two separate trips visiting Jersey and Guernsey.
Families face paying more for their holidays after a ruling from the EU Court of Justice on the VAT treatment of package holidays.
Mail
The ECJ has ruled that wholesale and retail supplies are subject to VAT under the tour operators margin scheme, and that VAT must be calculated on each transaction rather than the gross margin over an extended period and over multiple transactions. This may lead to companies raising their prices to take account of the increased tax.
- Blog
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