HMRC Increases Late Filing Penalties

People who submit their tax return after the 31 January deadline will face significantly higher penalties, HMRC has announced.

Previously, returns filed after the deadline would attract a £100 fine. However under the new framework, which first applies to 2010/11 tax returns, taxpayers who file their returns late will be charged £100 on day one and further daily penalties of £10 after three months.

It means that a tax return filed six months late could attract a penalty of at least £1,300.
According to HMRC, the old £100 penalty failed to act as a deterrent. It hopes the new harsher penalty system will therefore encourage people to ‘submit returns as soon as possible’.

‘HMRC spends a lot of time pursuing late returns and getting involved in unnecessary appeals work. We want to focus our resources on more productive work such as catching criminals and collecting tax,’ said a HMRC spokesperson.

Story from Accountancy Age

Phasing Out of National Insurance Number Cards Continues

Traditionally HM Revenue & Customs (HMRC) has notified individuals of their National Insurance number for the first time by sending them a plastic National Insurance number card.

Last year, as part of the Government’s Spending Challenge, the Chancellor announced that HMRC would stop issuing National Insurance number cards and send letters instead (saving £820k a year).

HMRC stopped issuing replacement National Insurance number cards in October 2010. Since then, if you ask for a reminder of your National Insurance number you get a letter confirming it instead.

From July 2011, HMRC will stop issuing cards to adults. If you’re an adult and need a National Insurance number for the first time, you will receive your number on a letter from the Department for Work and Pensions (Jobcentre Plus).

However, if you are approaching age 16 and are eligible to receive a number automatically, you will still be sent a National Insurance number card. This will continue until later in the year.

Millions of people will still have a National Insurance number card. As the cards are phased out, there will be growing numbers of people who will have a letter instead. If you are an employer you will need to bear this in mind when taking on a new employee.

You do not need to have a National Insurance number card - it is your number that is important.

Find out more about how to get a National Insurance number, when you’ll need one and what to do if you don’t receive yours or forget or lose it by following the link below.

Applying for a National Insurance number

LibDems Plan £1m Property Sales Tax

The Liberal Democrats are drawing up plans for capital gains tax (CGT) to be levied on the sale of homes worth more than £1m in exchange for their support for the scrapping of the 50p tax rate.

Senior LibDems will tell chancellor George Osborne that the scheme must be implemented before the next election if he wants to abolish the 50p tax rate, the Daily Mail reports. Business secretary Vince Cable suggested previously that there should be a 1% annual levy on all homes worth above £1m.

Under the scheme, the 28% CGT rate will be levied on profits over and above the £1m threshold. Around 250,000 homes would be above the £1m threshold and last year 7,185 properties were sold for a seven figure sum.

The Mail also reports that VAT on home improvements could be reduced to 5% to encourage owners to renovate rather than sell, while stamp duty could be scrapped for lower earners.

Article from AccountancyAge

HMRC to Use Web Robot

New campaigns targeting VAT defaulters, private tutors and e-marketplaces will be launched by HM Revenue & Customs (HMRC) over the next year.

HMRC will use cutting-edge tools such as “web robot” software to search the internet and find targeted information about specified people and companies. Using the software, the department can pinpoint more accurately people who have failed to pay the right tax. The “web robot”, used with the department’s Connect computer system, also helps find people who are trading without telling HMRC.

Connect alerts HMRC to previously invisible tax evasion by matching a vast amount of HMRC and third-party data, enabling a fast and focused response to tax evasion. It shines a light onto previously hidden relationships, uncovering anomalies between such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies.

Before designing and launching the campaigns, the department will seek input from interested parties.

HMRC announced last month that a campaign targeting VAT rule-breakers trading above the £73,000 turnover threshold but who have not registered for VAT will be launched in the summer.

Other campaigns that will be launched in 2011/12 will focus on:

• Those who provide private tuition and coaching. This addresses the risk posed by all professionals who, because of their field of expertise, are able to earn money from providing tuition and coaching – either as a main or a secondary income. It covers people providing private lessons, regardless of whether they have a teaching qualification, and could include, for example, fitness/dance/lifestyle coaches through to national curriculum subject tutors and others.
• E-marketplaces. This will cover those who are using e-marketplaces to buy and sell goods as a trade or business and who fail to pay the tax owed. People who only sell a few items and who are not traders are unlikely to be liable to tax and will not be targeted by this campaign.
• Trades. This will build on HMRC’s plumbers’ campaign and give an opportunity to another group of tradespeople to come forward and declare unpaid tax.

Mike Wells, HMRC’s Director of Risk and Intelligence, said:

“We want to make sure HMRC listens to as many informed views as possible for our future campaigns. We want the views and experience of people and organisations outside the department to play a fuller part in the campaigns that we design for customers.

“By being open about our areas of interest for the coming year we hope to maximise that exchange of information and ensure we reduce the tax gap and help customers pay what they owe.

“We will use the information we gather to pursue people who choose not to use the opportunities we provide for them to put their affairs in order on the best possible terms. It will be more expensive if we come and find people, so I urge them to come forward and disclose voluntarily.”

So far, more than £500m has been raised by HMRC from voluntary disclosures and a further £100m from follow-up activity. Previous campaigns have targeted offshore investments, medical professionals and people working in the plumbing industry.

Third of iXBRL Tax Returns Failed in April

One in three businesses failed to successfully submit their corporate tax returns using new technology in April, according to HM Revenue & Customs figures.

HMRC mandated as of 1 April that all corporate tax returns must be filed online using a new technology, iXBRL.

In April, 22,000 of the 66,513 returns required re-submission because of iXBRL problems. The Taxman said it would take a sympathetic approach to any mistakes made in the first year of the technology’s introduction.

Phill Robinson, CEO of IRIS Accountancy Solutions, which provides iXBRL software, said: “The fact is that there are still huge numbers of businesses that have not provisioned properly for the introduction of iXBRL, with many choosing to file their April 2011 reports early to avoid using the new format.

“However, businesses really do need to get up to speed with the new standard as soon as possible. The mandation date may have passed but the issue of iXBRL has not gone away. With as little as seven per cent of companies having an April year end, the real impact of iXBRL will be seen in the coming months.”

From 2013, all financial reports filed at Companies House will also need to be in iXBRL format.

Story from Accountancy Age

Davenports have successfully filed all necessary corporate tax returns in the new iXBRL format since April, when it was introduced. For further information on how Davenports can assist you in your tax compliance, simply complete the form below and a member of our team will contact you shortly.

Accountancy Request

1. Your Name(required)
2. Post Code
3. Contact Number(required)
4. Email(valid email required)
5. I Need...
6. Help!
   A Change of Accountant
   Assistance starting up
   Help with the Payroll
   Help with Tax, CIS or VAT
   Help with getting money from my clients
7. Any other comments
8. To receive your FREE key fob, tick this box
9. Verification