£9bn of Tax to be ‘Overpaid’ by Britons This Year

A “colossal” £9bn of tax will be overpaid by Britons this year as people fail to take steps to the amount they pay, according to new research.

A study by a leading website found that people will waste:

£3.94bn in unclaimed tax credits;

£1.97bn through avoidable inheritance tax;

£742m lost through not saving money into a pension;

£516m in avoidable capital gains tax;

£442m from late or incorrectly submitted self-assessment tax returns;

£328m from failing to make use of personal allowances;

£36m in avoidable tax on savings interest.

On average every tax payer in the UK will pay £186 more than they need to, with 86% of people doing nothing to reduce their tax burden. Despite this, it is estimated that wastage has dropped 9% from the previous year.

“Whilst it is encouraging to see our annual tax wastage is set to go down by 9% this year, £9 billion is still a colossal amount to be lost through error and avoidable circumstances,” said Karen Barrett, chief executive.

R&D Tax Credit to Survive Tory Election Win

The Tories have ditched plans to scrap tax incentives for research and development if they win the general election expected on 6 May.

Party leader David Cameron welcomed a report proposing the u-turn from opposition industry ‘Czar’ Sir James Dyson on how to rebalance the UK economy away from over-dependence on the City.

Cameron said the Dyson Report “represents an exciting and ambitious step forward in our desire to make Britain Europe’s leading generator of new technology”. 

Shadow chancellor George Osborne has previously proposed scrapping most of the corporation tax breaks in order to fund a reduction in the headline rate of tax on business.

But a Conservative spokesman said a Tory government “will keep R & D tax credits” refocused along lines proposed by Dyson, who urged that when public finances allow the rate of the relief should be increased to 200%.

The beneficiaries would be “high tech companies, small businesses and new start-ups “in order to stimulate a new wave of technology”.

Dyson also proposed increasing the generosity of the Enterprise Investment Scheme providing relief for “angel” investors.

Accountancy Age

2010 Budget Accounced

Gordon Brown has announced the Budget will be on Wednesday 24 March in 2 weeks

HMRC Sponsors New TV Series

A new TV series – “The Business Inspector” - has been sponsored by HM Revenue & Customs (HMRC). The programme will raise awareness among small businesses that they need to keep good records.
The Business Inspector is a four-part series that will be broadcast weekly on Five at 8pm from 10 March 2010.

Stephen Banyard, Business Customer Unit Director at HMRC said:

“We know that most small businesses want to get their tax right. But we also know too that failure to take reasonable care costs the Exchequer over £6bn a year, with a major cause being poor record keeping. We hope this series will raise awareness of the need for good record keeping.

“We also want small businesses to realise the benefits to them – such as improved cash flow – of taking better care of their records and paperwork.”

Presenter Hilary Devey said:

“Britain’s brimming with creativity but a terrifying number of businesses go bust each year and this shouldn’t be happening. I am going to teach businesses how to improve their all round business knowledge and direction, cash flow, marketing strategy and in some cases even their enthusiasm. Invaluable lessons they will never forget.”

Government Delays Crackdown on Tax in Construction

Plans for a clampdown on tax in the construction industry have been postponed until the New Year.

According to the industry magazine Construction News the focus on what the taxman regards as “false self-employment” will continue after the holidays when responses to current consultation are also expected to be published.

HMRC believes many people working in construction are in effect “employees” but adopt self employed status to avoid tax and national insurance contributions.

Accountancy Age

Taxman Should Improve Bereavement Behaviour

The Low Incomes Tax Reform Group has called on the taxman to improve its treatment of the bereaved.

A paper from the charity recommends HM Revenue & Revenue takes part in a Tell US once pilot which allows the bereaved to report a death to s single government agency which would then notify all the other relevant bodies.

In addition the group wants HMRC to begin house calls and take steps to eradicate the overpayment of tax among the elderly.

John Andrews, Chairman of LITRG, said: “LITRG tries to join up the activity of HMRC with other departments, such as the DWP and we are continually frustrated at the silo mentality of ostensibly customer-facing organisations.

“People need the maximum support from all government departments at the time of bereavement.”

Accountancy Age

Sage Warns of VAT Change Complications

Two thirds of businesses could be leaving preparations for VAT changes too late warns financial software giants.

Sage has warned businesses to prepare for the VAT changes or face the consequences.

The financial software provider has found that just a third of businesses will be prepared for the VAT changes before they close their offices for the Christmas period.

The VAT rate will return to 17.5% on 1 January 2010 causing disruption to accountancy firms and businesses in the New Year.

“This is cause for serious concern - managing the change for something as integral as VAT is not as easy as simply flicking a switch. In fact, it can be hugely complex for businesses both small and large,” said Kevin Hart, head of government relationships at Sage UK & Ireland.

“Those that fail to plan the changes now will pay the price later,” he added.

When the VAT rate was reduced this year, businesses were given just four days to prepare for the amendments. Sage has said that its VAT development team and support staff had to work around the clock to prevent widespread disruption.

There are special arrangements being drafted for certain businesses operating beyond midnight on 31 December.

Sage is advising its clients to get in touch with their accountants as soon as possible to discuss how the changes will impact them.

Accountancy Age

Pre-Budget Report 2009

Alistair Darling will make his Pre-Budget statement to the House of Commons on Wednesday 9 December 2009 at 12:30.

PBR Could See NI Hike for Rich

The pre-Budget report could see higher earners face a hike in their national insurance contributions on top of a rise in income tax, according to BDO.

Those paying income tax at 40% already face the prospect of a higher 50% band being introduced in April next year, but they may also be hit with a higher NI rate as the government tries to boost tax take.

Stephen Herring, senior tax partner at BDO said that chancellor Alistair Darling is unlikely to introduce a jump in the basic rate of income tax or another rise in the higher rate, but would be “less surprised if he were to introduce further increases in national insurance, where he could increase the upper earnings limit or contribution rates”, reported Citywire.

Herring also predicted more restrictions on personal tax reliefs, anti-forestalling measures to stop companies bringing forward dividend and bonus payments before the 50% rate is introduced, and yet more anti-avoidance legislation on bonus structures.

Paul Grant - Accountancy Age 18-11-2009

The Criminal Records Bureau Reduces Fees

The Criminal Records Bureau (CRB) has reduced the fee for Standard Disclosures.

Following a pricing review, the government agency has agreed to reduce the fee charged for a Standard Disclosure from £31 to £26. The change will come into effect from today.

For the third year running the CRB has refused to increase its fees. The planned fee reduction has been made possible due to an expected increase in the volume of disclosure applications being processed as the new Vetting and Barring Scheme comes into place from 12 October.

Checks for volunteers will continue to be free of charge which provided a saving to the voluntary sector of approximately £27 million in 2008/09.

Home Office Minister Lord Brett said:

“The CRB plays a vital role helping to protect the most vulnerable in our society by giving employers the extra tools they need to make informed recruitment decisions.

“The cost of a CRB check continues to represent good value for money given the protection and assurance that such checks provide.

“In 2008 a further 18,000 unsuitable people were prevented from gaining access to children and vulnerable adults as a direct result of a CRB check, bringing the total to around 98,000 in the past five years.”

Today’s fee decrease follows the publication of the CRB’s Annual Report and Accounts and Business Plan for 2009/10.

The business plan outlines the priorities for the year ahead and shows that during the past 12 months the CRB has:

• worked closely with the Home Office and Independent Safeguarding Authority to develop systems and processes ready for the Vetting & Barring Scheme (VBS);
• launched the first electronic application channel, e-Bulk, which allows its largest volume customers to submit multiple applications online, bringing many benefits to the CRB and its customers, including faster results and improved quality and accuracy; 
• extended the range of jobs, posts and positions that are entitled to a CRB check as part of safer recruitment practices;
• increased customer satisfaction rates to an all-time high and gained overwhelming support for CRB checks on anyone working with children and vulnerable adults; and
• prevented a further 18,000 unsuitable people from gaining access to children and vulnerable adults as a direct result of a CRB check,brining the total to around 98,000 in the past five years.

This level of investment will continue during the next 12 months as the CRB works towards implementation of the Vetting and Barring Scheme and continues to maintain and enhance its existing services and overall performance.

From today, the following fee levels will apply throughout the remainder of 2009/10:

- Standard CRB check £26 (reduced from £31)
- Enhanced CRB check £36
- POVAFirst check  £6

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