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Cash basis

As announced in the 2012 Budget, small businesses, those with receipts not exceeding the VAT registration threshold, will be able to use the cash basis, rather than accounts prepared on an accruals basis, when calculating their taxable profits.

The change will mean firms will not need to adjust for debtors, creditors and stock, and they will generally not have to distinguish between revenue and capital expenditure.

Annual payments subject to ITEPA 2005, s 683, says Revenue

Tax advisers who submit a high volume of income tax refund returns may receive an HMRC letter asking them to sign a memorandum of understanding aimed at reducing the risks attached to such claims.

The document – headed Self Assessment Returns Resulting in a Repayment: Sharing Risk Concerns – claims it “does not constitute any type of formal enquiry or compliance check”.

Employer-supported arrangements to continue alongside

The government’s plans for a third employment status continue to change, with today’s Budget introducing a further tax break.

Workers who sign employee-shareholder contracts will pay no income tax or National Insurance (NI) on the first £2,000 of shares they receive from their employer company, the Treasury announced.

Monthly reporting temporarily allowed for firms with fewer than 50 employees

The government has published a consultation on allowing company shares traded on a wider range of equity markets to be eligible for a stocks and shares individual savings account (ISA).

The measure was mooted in the autumn statement, the idea being to include markets with a component of smaller company shares and encourage investment in these smaller entities. Comments should be submitted by email no later than 8 May 2013.

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Further to concerns about the number of changes to tax codes, which left some employees with less them half their pay after tax,  payroll management information service Payroll Alliance carried out a brief survey of employers.

The aim was to gather statistics to present to HMRC to demonstrate that all tax codes should include a 50% regulatory limit, not just K codes.

The government is to strengthen legislation to block tax avoidance through offshore intermediaries: corporate forms put between UK workers and a UK business. They are based offshore, often in tax havens, and are used to side-step employment taxes.

HMRC estimate that at least 100,000 workers are being employed in this way and, in many cases, the staff member is unaware that his or her payroll is located offshore and tax is not being paid.

Tax system is hostile to rich individuals, claims law firm