Glasgow 2014 Gets Tax Boost
January 26, 2012 by Davenports Tax Team
Filed under Accountancy News
Athletes resident outside of the UK who compete at the Glasgow 2014 Commonwealth Games will be exempt from income tax, Chief Secretary to the Treasury, Danny Alexander will announce in Glasgow today. The decision mirrors a similar exemption in place for London 2012.
The decision will help spread the Olympic legacy into Scotland and encourage top athletes to compete at the Commonwealth Games. Under UK tax rules, any sportsperson not resident in the UK is subject to UK income tax on any payment in connection with their performance here, including a proportion of any worldwide endorsement income.
Chief Secretary to the Treasury, Danny Alexander, Secretary of State for Scotland, Michael Moore and Scottish Minister for the Commonwealth Games and Sport, Shona Robison will today visit the Commonwealth Sports Arena and Sir Chris Hoy Velodrome in Glasgow to see progress on construction of the venue where elite athletes from across the Commonwealth will compete in 2014.
Danny Alexander, Chief Secretary to the Treasury, said:
“With six months tomorrow to go until London 2012, I’m pleased to announce this special exemption for Glasgow 2014 which will prolong the Olympic legacy and help spread the long-term benefits into Scotland.”
“Everyone wants to see the best athletes compete at Glasgow 2014 and this exemption will make that more likely. Seeing the Sir Chris Hoy Velodrome today, it’s clear that Glasgow will be an outstanding venue for the Commonwealth Games which showcases the best of UK and international sporting talent.”
Minister for Commonwealth Games and Sport, Shona Robison said:
“I am delighted that an agreement has been reached to exempt international competitors from tax on any income arising from their appearance in the Commonwealth Games.”
“We want to deliver a memorable Games which attracts the cream of Commonwealth athletes to Glasgow 2014. Today’s announcement is a giant stride forward and follows productive discussions between the Treasury, the Scottish Government and the Glasgow 2014 Organising Committee.”
“The Games will show the world what vibrant and welcoming places both Glasgow and Scotland are, which is why this agreement is so important. This is yet another significant milestone in the journey towards the Games, which are on time, on budget and on track to deliver a lasting legacy for all of Scottish society.”
Welcoming the announcement, Glasgow 2014 Chairman, Lord Smith, said:
“This agreement opens the door for the Commonwealth’s elite international athletes such as Jamaica’s sprinters, Australia’s swimmers and cyclists and Kenya’s distance runners to compete at the Glasgow 2014 Commonwealth Games.”
“As a major multi-sport event, with a truly global reach, Glasgow 2014 and its Games Partners are working very hard to make the XX Commonwealth Games a ‘must attend’ event for the brightest stars of the Commonwealth.”
“There is no doubt that today’s announcement significantly increases the access and attraction for top performers to compete at Glasgow 2014.”
Councillor Gordon Matheson, Leader of Glasgow City Council, said:
“Securing this tax exemption for the Commonwealth Games is good news for everyone.”
“Glasgow’s aim is to deliver an outstanding Commonwealth Games and ensuring we have the biggest sporting stars competing here is essential.”
HMRC Will Cancel Late Filing Penalties for Soliders
January 25, 2012 by Davenports Tax Team
Filed under Accountancy News
British armed forces personnel in active service who have failed to file their tax return in time will have their penalties cancelled as a ‘Reasonable Excuse’ if they get in touch with HMRC.
As discussed on BBC Money Box, soldiers serving in Afghanistan will still face penalties if they fail to file by the 31 January deadline, but there will the chance to appeal.
Paul Lewis said: “HMRC refused to talk about this all week, but on Saturday morning at 11.30, [half an hour before Moneybox was broadcast], they told us if armed forces let us know, we will immediately cancel penalties. They will accept serving in Afghanistan as a Reasonable Excuse.
An HMRC spokesperson also told AccountingWEB: “For a service person who is serving with the military in Afghanistan, we appreciate that they have higher priorities than filling out their tax return. They’re in a fairly unique position, a combat position, and obviously that has to come first for them, and we completely understand and support that.
“So if they couldn’t complete the return by 31 January the penalty notice would be automatically generated by the system. However, if the service person contacts us as soon as they can to point out that they didn’t complete it because they were on a tour of duty in Afghanistan, we would cancel that penalty notice.
HMRC confirmed that while there is a 30-day deadline to appeal, they will “apply common sense”, and this will be waived for those serving in Afghanistan.
“You’re supposed to appeal within 30 days, but again we know that being on active service in Afghanistan is a pretty unique position, so we would be very flexible about that and as soon as they got in touch we would make sure they didn’t have anything to pay.
The advice is, don’t wait for penalty – send a letter in to accompany your late return.
Story from AccountingWeb
Win £100,000 for Filing Tax on Time
January 12, 2012 by Davenports Tax Team
Filed under Accountancy News
The government may offer a £100,000 prize to self-assessment filers for sticking to deadlines under current proposals.
The Behavioural Insight Team has suggested HM Revenue & Customs create a prize draw for those that file tax returns on time to ease congestion on IT systems in the run up to the 31 January deadline.
Similar schemes have been undertaken by some London local authorities which created a £25,000 prize draw for people who paid their council tax via direct debit. It is estimated the local authorities have managed to save about £345,000 annually due to the scheme.
The proposal has been welcomed by the CIoT with the institute claiming it suggested the idea a couple of years ago during meetings on the Carter Review which offered ideas on how to make IT more efficient at HMRC.
An HMRC spokesman said: “This is a very interesting contribution to how we maximise self assessment filing. The new penalties mean late filers could now face penalties of up to £1600 across the year and be excluded from a potential £100,000 prize draw. It pays to file on time.”
Last year about 78% of self-assessment tax returns were filed online which equates to about 7m submissions.
Story from: Accountancy Age
Government to Waive VAT on Military Wives’ Charity Single
December 21, 2011 by Davenports Tax Team
Filed under Accountancy News
The Chancellor of the Exchequer, George Osborne, has today announced that the Government will waive VAT on sales of the Military Wives choir’s Christmas single by making an exceptional one-off charitable donation to the Royal British Legion, and Soldiers, Sailors, Airmen and Families Association (SSAFA), the charities chosen to benefit from sales of the song. The donation will be equivalent to the sum of the VAT receipts collected on sales.
Recognising the service of the armed forces and the high levels of public support for the single, as well as the exceptional contribution both charities make through their work with members of the forces and their families, George Osborne and Defence Secretary Philip Hammond want to maximise the donation that the charity receives by adding the VAT equivalent.
George Osborne said:
“Our armed forces demonstrate incredible commitment to the nation and make sacrifices for all of us. The Military Wives choir is doing a great job of raising money for this hugely worthy cause. We will donate the tax collected on the single so that as much as possible of the money spent by the public on this fantastic song goes to charities helping our armed forces and their families this Christmas.”
Philip Hammond said:
“Christmas can be a particularly difficult time for our brave service personnel deployed on operations, but also for their families at home. I am delighted to be supporting the Military Wives choir in this initiative, who in turn are supporting our Armed Forces community.”
Tutors and Coaches Have Less Than One Month to Clean The Slate On Tax
December 8, 2011 by Davenports Tax Team
Filed under Accountancy News
Private tutors and coaches have less than a month left to tell HM Revenue & Customs (HMRC) about any tax that they owe.
They were offered a special tax plan – the Tax Catch Up Plan – in October this year. Registering by 6 January 2012 ensures that tutors and coaches don’t lose out on the best terms to disclose and pay what is owed.
The Tax Catch Up Plan is for people providing tuition or coaching, regardless of whether they have a registered qualification. It is aimed at those who profit from tuition and coaching as a main or secondary income, on which the correct tax has not been paid.
The opportunity is available to people teaching traditional academic subjects, fitness and dance, musical instruments, art, life coaching, personal training and other instruction.
After 6 January 2012, using information pulled together from different sources, HMRC will investigate those who have chosen not to come forward.
Marian Wilson, Head of HMRC Campaigns, said:
“Tutors and coaches who have notified us of their intention to disclose unpaid tax will have until 31 March to tell us what they owe and make arrangements to pay.
“From January we will use the information at our disposal to investigate tutors and coaches who have not declared their full income. I therefore strongly urge anyone in this group who thinks they may have outstanding income tax liabilities to get in touch with HMRC and get their tax affairs in order.
“This is the first step for those with undisclosed income or gains to avoid a full tax investigation and much higher penalties. Contact us before we contact you.”
The Tax Catch Up Plan has two stages:
- By 6 January 2012, tutors/coaches/instructors must register with HMRC to “notify” that they plan to make a voluntary tax disclosure.
- By 31 March 2012, those who have registered to notify must tell HMRC what they owe and pay the tax, interest and penalties due.
People can register online by completing a notification form – www.hmrc.gov.uk/ris/tcup/index.htm - or by calling HMRC on 0845 601 8817. A dedicated team is ready to help, Monday to Friday, 08:00 until 19:30.
If you think you may fall into this group, contact Davenports today to see how we can help
HMRC Targets Fashion Houses Exploiting Interns
December 8, 2011 by Davenports Tax Team
Filed under Accountancy News
Fashion houses are the latest targets of an HM Revenue & Customs campaign aimed at ending the exploitation of interns.
HMRC has written to a number of fashion houses and designer labels warning them about non-payment of the National Minimum Wage.
The letters are being sent to fashion houses that exhibited at London Fashion Week in September 2011, and are expected to do so again at the capital’s Fashion Week in February.
Michelle Wyer, HMRC’s Assistant Director for National Minimum Wage, said:
“These letters give fashion houses plenty of warning that they are under scrutiny. If they are not playing by the rules, now is the time to put things right. Non-payment of the national minimum wage is not an option.
“Our message is clear: don’t wait for us to come knocking on your door; put things right now and avoid a penalty and possible prosecution.”
Letters to 102 fashion labels have been issued, with compliance visits due to begin early in the New Year.
If you have received one of these letters, why no get in touch to see how Davenports can help
Know Your Oversea Shopping Limits This Christmas
November 9, 2011 by Davenports Tax Team
Filed under Accountancy News
Don’t get hit by unexpected charges when you are shopping for Christmas bargains this year, HMRC’s Angela Shephard advised today.
If you are going abroad to do Christmas shopping, or buying goods online from non-EU countries, you need to know how much you can buy before you have to pay import duty or VAT.
HM Revenue & Customs (HMRC) Head of Customs Policy, Angela Shephard, said:
“We know many people like to go abroad at this time to buy their Christmas gifts, or buy online from non-EU countries, and think that the ‘cheaper’ price they see is always the price they finally pay. HMRC is keen to remind the general public how much they can actually bring back from abroad or buy from an online overseas seller without having to pay import duty or VAT.
“You don’t want to be faced with unexpected extra charges, when you thought you had found a bargain.”
- Arriving in the UK by commercial sea or air transport from a non-EU country, you can bring in up to £390 worth of goods for personal use without paying customs duty or VAT (excluding tobacco and alcohol, which have separate allowances, and fuel). Arriving by other means, including by private plane or boat for pleasure purposes, you can bring in goods up to the value of £270. Above these allowances and up to £630, there is a duty flat rate of 2.5 per cent.
Detailed information on the non-EU limits for alcohol and tobacco products can be found on HMRC’s website at http://www.hmrc.gov.uk/customs/arriving/arrivingnoneu.htm - Should you buy goods over the internet or by mail order from outside the EU, you will have to pay VAT if the value of the package is over £15.
- If the goods are over £135 in value, customs duty may also be due, although this will depend on what they are and where they have been sent from. Where, however, the actual amount of duty due is less than £9, this will not be charged.
- If someone sends you a gift from outside the EU, import VAT will only be due if the package is valued at over £40. To qualify as a gift, the item must be sent from one private individual to another, with no money changing hands.
Please note that excise duty is always due on all alcohol and tobacco products purchased online or by mail order. - If you are thinking of going across the Channel to replenish beers, wines, spirits or tobacco products, there are no limits on the amounts of duty and tax paid goods you can bring back personally from another EU country, as long as they are for your own use. You may, however, be asked questions at the UK border if you have more than:
- 110 litres of beer,
- 90 litres of wine,
- 10 litres of spirits
- 20 litres of fortified wines,
- 800 cigarettes,
- 200 cigars,
- 400 cigarillos or
- 1kg of tobacco
to establish these quantities are genuinely for your own use.
Hoteliers Face Prospect of VAT Boost Following European Court Ruling
September 5, 2011 by Davenports Tax Team
Filed under Accountancy News
Hoteliers could be in line for a bumper VAT bonus following a ruling by the European Court regarding no-shows.
Before the decision, the UK tax authorities took the view that when a guest with a reservation fails to turn up or contact the hotel to cancel his or her booking, the guest still had a right to use the room. This, argued HM Revenue & Customs (HMRC), meant that the room had been supplied and the money the hotel received should be subject to VAT as normal.
However, the European Court ruling states that such income should be treated in the same way as forfeited deposits.
Barry Laurie, tax partner in the Edinburgh office of chartered accountants French Duncan LLP, who works with hotel groups, said: “The decision means that although VAT is charged as normal when the money is received, as soon as it becomes clear that is effectively a cancellation charge the VAT can be reclaimed.”
HMRC has now accepted the change, which could open the door to thousands of claims for VAT rebates stretching back as far as four years.
“It is now recommended that hoteliers should go back over their books and check where VAT has been paid on no-shows to determined how much overpriced tax they were due,” said Laurie.
“Since this decision radically alters the tax status of cash received by hoteliers for no-shows, it is important that they scrutinise their records for the past years and prepare a properly documented claim.
“Hoteliers should also be checking cases where deposits have been forfeited as a result of a booking cancellation because the court ruling means that they are effectively compensation, and thus outside the scope of VAT.”
The ruling could also apply to cancelled restaurant bookings, as long as the table is not specific and the charge represents compensation for breach of contract.
“However, I would expect HMRC to challenge this treatment as the case was in respect of hotel bookings and they don’t tend to see the wide picture without a fight,” added Laurie.
Story from Caterer Search
If you’re a hotelier and require assistance with this please contact us using the simple form below:
Give Your House to Your Children to Avoid IHT
August 16, 2011 by Davenports Tax Team
Filed under Accountancy News
This is a great example of the sort of Popular Misconceptions About Tax.
The simple idea is to ensure that the house isn’t owned by the parents when they die and IHT becomes payable. It should come as no surprise that the tax rules are wise to this idea.
Firstly the gift would be ignored for IHT purposes if the parents continue to live there. So the House gets caught by ‘Gift with a Reservation Of Benefit’ rules and is still subject to IHT.
But the position is now probably worse than it was. For example:
When the house is sold by the children the gain will be subject to Capital Gains Tax (CGT) unless they happen to live there with Mum & Dad. If no gift had been made there would no CGT if the property was sold shortly after the parents death.
The parents security of tenure in what is no longer ‘their’ property is now vulnerable to any court rulings that follow if their children divorce or become bankrupt.
It’s also worth noting that under the current rules no IHT is payable unless someone’s taxable estate when they die is more than £325,000 (£650,000 for married couples and registered civil partners).
So if anyone acted on this PMA Tax idea they would simply have created more problems and more tax liabilities than if they’d done nothing. Far preferable to seek out professional advice from someone who really understands the IHT rules and gives this sort of advice on a daily basis.
Story from Tax Advice Network
Employment Ruling Could Affect Tax Status of One Million Workers
August 15, 2011 by Davenports Tax Team
Filed under Accountancy News
A Supreme Court judgment on the employment status of contractors could affect the tax liabilities of one million workers and a large number of businesses, experts have claimed.
Car valeters who carried out work for Autoclenz took the company to the Supreme Court to claim they were employees. The company claimed that substitution clauses in the contract – which place an obligation on the individuals to provide services when they were unable to – proved that the individuals were not employees.
However, the court ruled that these clauses were not a true reflection on the workers’ employment status. The judges said that tribunals should take into account the expectation of the parties and the bargaining power between the parties to decide whether the workers had a choice in signing the contract. These factors could trump the written agreement, the court added.
This ruling means that “the foundations of employment status have been rocked to their very core”, MacIntyre Hudson claimed.
Alastair Kendrick, employment tax director at the firm, said that many businesses had used substitution clauses to protect themselves from paying PAYE and HM Revenue & Customs has had trouble proving that individuals are, indeed, employees.
“We are talking about one million workers being affected,” Kendrick added. Many of these individuals will be in the construction industry, he said.
“This raises issues for the employer,” Kendrick added. “Many will be now be paying PAYE rather than Schedule D tax. They can expect a knock on the door from the taxman for retrospective taxes – this can go back as far as six years.”
Richard Mannion, national tax director at Smith & Williamson, the mid-tier accounting firm, said that there are four main tests in case law for deciding whether someone is employed or self-employed.
The first test is “mutuality of obligations” (was the ‘employer’ under an obligation to offer work and was the ‘employee’ under an obligation to accept the work if offered? If there are no mutual obligations there can be no contract of employment). Test two is the “master/servant relationship” (can the ‘employer’ tell the ‘employee’ how to do the work?).
Test three is “integration” (is the ‘employee’ operating as part of a team, for example someone who manages a team of employees is likely to be an employee).
Test four is “economic reality” (does it look like the person is self-employed, for example do they provide all their own tools and do they work for a number of customers).
The final test is “painting a picture”. All of the above tests need to be considered, none will decide a case on their own. “One judge said it was necessary to paint a picture with all of the details and then stand back to look at the picture from a distance,” said Mannion.
