Tax Champion Blog

Budget 2014 Mar 21, 2014

Were you on Budget Watch on Wednesday? What did you think of Osborne’s announcements? Here is our breakdown of the Budget 2014: Growth Forecast Economy expected to grow by 2.7% in 2014, higher than December forecast of 2.4% 2015 growth forecast to be 2.3%, 2.6% in 2016 and 2017   Welfare Cap Set at £119bn in 2015-16, rising to £127bn in 2018-19   Tax Avoidance 15% stamp duty on properties worth £500,000+ bought by corporations Increase in HMRC’s budget for tax avoidance prevention New “guilty until proven innocent” approach   Business £7bn cut from energy bills for manufacturers No employee NI for under 21s Increased investment allowance......Read More

Auto Enrolment - The Facts Mar 18, 2014

If your employer hasn’t adopted auto-enrolment yet, chances are, they soon will. On April 1 st  2014, all businesses with 160 or more employees will have to offer a workplace pension, and all staff  must  be auto-enrolled. From April 2017, it will become compulsory for  all  businesses with employees, no matter how few, to enrol them in a workplace pension scheme, whether they like it or not. To find out the staging date for your business, grab your PAYE reference and  go here . As an employee, you can choose to opt-out, but your employer will be legally required to enrol you on a scheme – if you do not wish to participate in the scheme your employer will have to un-enrol you the following month and refund......Read More

Budget 2014: Predictions Mar 18, 2014

It’s that time of year again. That’s right, the Budget will be announced tomorrow, and we’ve got a few predictions to share with you.   Energy Bills The price of non-renewable fuels could come under the microscope again this year, with the manufacturing industry body, EEF , requesting a reduction in the carbon price floor, or the carbon tax.   Tax While it’s possible that income tax and National Insurance (NI) may eventually be combined into one single ‘earnings tax’, in the meantime Osborne could raise the threshold to lower the amount of NI paid by low earners. From 6 th April 2014, the income tax threshold is due to increase to £10,000, however, employee NICs begin to be charged at 12% on earnings......Read More

Employers' Allowance - 1 Month To Go Mar 7, 2014

  On April 6 th every business in the UK will be able to claim a refund of £2000 per year for their employer National Insurance contributions (NICs). From next year, around 450,000 small businesses which employ up to four adults or ten 18-20 year olds full time on the National Minimum Wage, or one person on up to £22k a year, will no longer be required to pay a penny in NICs.  In total, the Employment Allowance will benefit approximately 1.25m employers, including businesses, charities and community amateur sports clubs. A list of the excluded employers can be seen here . Employers can claim the cashback using their normal payroll software, and depending on the specific software package, it could be as simple as ticking a......Read More

The Dentist, the Revenue & the P35 Mar 3, 2014

Recently, another story came to light that further proves HMRC can’t be trusted to give reliable advice. A Dentist has lost his appeal against HMRC at  First Tier Tribunal , after being charged £500 for the late submission of a P35 for the 2010/11 period.  Mr Heslop retired from his dental practice in September 2010, and having settled his PAYE liabilities, phoned HMRC to make sure nothing else was required of him. He was told that he had provided everything they needed and nothing more was required. In September 2011, he was informed that he must file a P35 for the 2010/11 period, which he did, and was duly charged a £500 penalty for late submission. In the circumstances, he believed he stood a good chance if he appealed......Read More

Scammers Con Taxpayers with Fake Tax Return Site Mar 3, 2014

Were you one of the unlucky victims of a scam that conned thousands of innocent people as they tried to complete their tax returns last week? A site which almost exactly replicates the official HMRC website for filing tax returns has been set up by three men from the North East, who insist that the scheme is completely legal and merely takes advantage of loopholes in the law. The men, who are all university educated in business, set up a network of websites that copy the exact layout, colours, font, and even text from genuine government sites, to trick honest, hard working men and women into paying hundreds of pounds for services that are usually provided free of charge. Only a few short sentences in the website’s small print......Read More

Tax Relief for Flood Affected Businesses Mar 3, 2014

HMRC and the government have announced a series of measures to help those affected by the recent floods, with the worst affected area experiencing extreme weather conditions, flooding, power cuts and a limited or non-existent rail service. Businesses affected by the bad weather can apply to their local authority for three months’ worth of business rate relief, and those who take advantage of Time To Pay could have their arrangements extended for up to three months for VAT, PAYE and CT. A £10m fund for farmers has been announced to restore agricultural land affected by the flooding. A £5k repair and renew grant will be available for homeowners and businesses with flood damage to help pay for repairs. Major Banks have pledged £750m for customers who have been......Read More

Autumn Statement 2013: Summary Jan 21, 2014

Did the Autumn Statement 2013 meet your expectations? The majority of the Chancellor’s announcements had been leaked prior to the statement, so there weren’t many surprises, but there were a few pleasant confirmations for businesses and individuals alike.   Here is our summary of the Autumn Statement 2013:   Business Rates   Osborne capped the increase in business rates at 2% in England and Wales from April 2014, and some retail premises in England will receive a discount on this. The rate was due to increase 3.2% in April 2014, having increased nearly 23% in just five years, and overtaken rent as the biggest outgoing faced by retail businesses. Capping the rate will cost the Treasury £300m next year. In addition, businesses......Read More

Google Earth HMRC's Newest Tool in the Battle Against Tax Avoiders Jan 21, 2014

In a recent article in the  Daily Mail , it was revealed that Revenue inspectors have taken to using Google Earth to catch out tax avoiders by spotting clues to the individual’s lifestyle and wealth, such as cars and home improvements.   HMRC is battling to close a £35billion gap between what it believes is owed and what is actually collected in tax, and is claiming that this hidden economy is costing taxpayers £9billion a year. However, the Revenue has spent almost £1billion in the last three years alone trying to enforce the law by setting up taskforces and buying a supercomputer for £50million, called Connect, to catch out tax avoiders.   Knowles Warwick’s Tax Manager, Michelle, has seen clients caught out by this type of spying......Read More

SMEs Bear the Brunt of HMRC's Taskforces Jan 21, 2014

According to a report published by accountancy firm  UHY Hacker Young , HMRC’s tax receipts from investigations into small and medium-sized businesses have increased by 31% in the last year. In fact, “Compliance” investigations into SMEs alone raised £565m for HMRC in 2012-13, up from £434m in 2011-12, according to the report. In the 2010 Spending Review, the Chancellor stated that he aimed to net an extra £7bn a year in additional tax revenues from compliance activity. Since then, HMRC’s  taskforces   have targeted a wide range of sectors for potential tax avoidance; from medics and plumbers to restaurant owners and door-to-door sales people. “Small businesses are bearing the brunt of HMRC’s tougher approach to tax investigations,”  said Roy Maugham, Tax Partner at UHY Hacker Young. According to Maugham, small and medium-sized......Read More

The Perils of Ignoring the Tax Man Sep 13, 2013

If you have received a tax return from HMRC but chose not to return it, be warned.  The tax man’s bite is definitely worse than his bark.  You may have received penalty warning letters which you have ignored because you did not think you were due to fill in the return. You may have had determinations issued by HMRC which again you have not paid because you do not think they are correct. You may get a letter advising you that they will take you to court and threatening you with bankruptcy Once in court, HMRC will look to make you bankrupt which will have an impact on other finance arrangements that you may have. The bank will close your account, loan facilities will be withdrawn,......Read More

Having their cake and eating it. Sep 13, 2013

How many public organisations do you know who can raise an estimated bill, make you bankrupt on this fictitious liability, and then refuse to remove it when it is proved to be wrong? HMRC can and do.  If a taxpayer fails to complete a tax return for a number of years, HMRC will raise determinations. The taxpayer has three years after the filing date for the return to submit it; if they miss this deadline then HMRC's instructions to staff are very clear.   1.  If the tax on the return is less than the estimated determination then the determination will stand and the taxpayer has to pay the higher amount. 2.  If the tax on the return is more than the estimated determination then the return is passed to a compliance unit......Read More

Barking up the wrong tree Sep 13, 2013

HMRC are currently in the process of checking employees PAYE.  They compare what should have been deducted with what was actually deducted by the employer.  Strangely enough, if there is an underpayment HMRC are sending out P800 underpayment notifications to employees and asking them to pay the amounts due.   The tax legislation clearly states that an employer must deduct PAYE correctly from its employee’s wages and pay it over to HMRC in a timely manner.  If they make an error by operating an incorrect tax code; using the wrong tax tables; failing to follow the P45/P46 procedure; incorrectly considering an employees tax status; or by paying gross and not operating a tax code the employer should be pursued for the tax. HMRC are obviously choosing to pursue an easier target, in fact they identified approximately......Read More

UK residence – working abroad. Apr 26, 2013

If you spend any length of time working abroad, you may be used to the idea that such periods, provided they cover a full tax year, are periods of non-UK residence, and that HMRC are not interested in your income while you are out of the country. What happens is that the year in which you leave and the year in which you return are effectively split into two parts for tax purposes, so that any overseas income after you leave and before you return falls out of the UK tax net. What has changed? On the surface, not a lot: if you work abroad for more than a full tax you will still be non-resident, and split year treatment can still be claimed – in fact it is......Read More

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