HMRC Uncovers Untaxed Money in Grave

A businessman planned to leave £140,000 in his aunt’s grave for 20 years to avoid tax.

Tax inspectors were tipped off and obtained permission from the priest to recover their £50,000 share. The unnamed man was going to leave the money in the grave up to the time limit for tax investigations, reported The Sun.

Dave Hartnett, permanent secretary for tax, said: “Tax evasion isn’t a victimless crime. But we’re getting better at catching cheats. It’s not worth the risk.”

It was disclosed in April that the HM Revenue & Customs has paid informers £437,000 in return for tip-offs since 2007, and prosecutes around 200 people a year for tax evasion.

Investigators announced a crackdown on middle-class professionals earlier this year, with doctors already under greater scrutiny.

Budget 2010: HMRC Officers to Get Powers to Open People’s Post Without Asking Permission

Officers will be allowed to intercept any suspicious mail anywhere in the country and open it before it is delivered, under plans being drawn up by the Government to amend the Postal Services Act.

The measure is billed as a bid to crack down on tobacco smuggling. However, a HM Revenue and Customs spokesman said the powers could be applied much more widely.

Currently, Royal Mail staff have a legal right to intercept suspicious letters and parcels in mail centres and sorting offices and pass them to HM Revenue and Customs.

Tax inspectors must then notify the addressee and agree a mutually acceptable time to open the letter or parcel, before deciding whether to take any enforcement acdtion.

However the Government is now proposing to remove the legal requirement which will now allow inspectors to open suspicious post without asking permission first.

Treasury documents say: “HMRC will no longer be required to notify the addressee and invite them to attend before such packets can be opened”.

The new measure will be passed into law as part of the Budget over the next few weeks, and amend section 106 of the Postal Services Act 2000.

Under current law, the only other enforcement officers who can open mail are border guards who can open the post without permission at ports and airports.

The change was disclosed in a Treasury document published alongside the Budget headlined “Tackling tobacco smuggling in the post”. However a HM Revenue and Customs spokesman said the powers would be applied much more broadly.

The spokesman said: “The change is mainly directed at helping to combat tobacco smuggling but the powers in s106 apply to any contraband including prohibited or restricted goods.”

She declined to say how many times HM Revenue and Customs had used the existing powers in recent years.

Accountants warned that it was likely tax inspectors would seek to use the powers in other areas once they became law.

Heather Taylor, a senior tax partner at Grant Thornton, said: “This seems like a very small and limited change, but it could be a very big step for increased powers HMRC. Once new powers are in the hands of HMRC they tend to be extended.”

Civil liberties campaigners were appalled about the increased powers. Alex Deane, a spokesman for Big Brother Watch, said: “This is a dreadful development. The post has always been regarded as near-sacrosanct in law.

“The last time our mail was opened by the authorities without notice, our country was fighting a World War. I hardly think that the situation produced by the government’s tobacco tax compares.

“Once the principle of opening our mail has been accepted, what else will the Government use as an excuse to pry into our post?”

HM Revenue and Customs are growing increasingly aggressive in their battle with tax evaders. Earlier this year it announced plans for a crack down on middle class professionals who do not pay their fair share of tax.

A Royal Mail spokesman said: “Royal Mail has no powers to open the mail and in rare cases when an item of mail clearly poses a hazard to other mail and/or the safety of our people - for example, if a noxious chemical was spilling from a package - we would call in HMRC and, usually, the police.”

The Telegraph

HMRC Cracks Down on Tax Avoidant Smokers

Some smokers are avoiding tax in their choice of cigarette according to HM Revenue & Customs.

It seems duty paid on normal cigarettes is equivalent to duty paid on longer ones which HMRC deems as avoidance of tax.

To combat this from January 2011 any cigarette longer than 8cm, excluding the tip, will be treated as a separate cigarette and receive added duty, according to the Daily Telegraph.

A HMRC spokesman told the newspaper the technical change “is designed to stop a tax avoidance method”.

In a further crackdown any cigarette which is a further 3cm above the 8cm, will be treated as a third cigarette. Meaning any cigarette 12cm or longer will be treated as three cigarettes, not one.

A normal cigarette excluding the tip is 6cm in length.

The taxman has yet to announce the level of duty the brands, affected by this change, will have to pay. It also has not confirmed whether certain slim cigarettes, which are longer than the usual size, will be affected.

The chancellor announced in the budget this week cigarettes would rise by 15p immediately or 1% above inflation which is set at 3%. He added from 2011 to 2015 duty on cigarettes would rise 2% above inflation.

Accountancy Age

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.”

Warning on UK Tax Codes

Incorrect tax codes may have been sent by HM Revenue & Customs (HMRC) because of an error in a new computer system.

The codes tell taxpayers how much their employers and pension firms will deduct in income tax in the coming financial year 2010-11.

The Chartered Institute of Taxation (CIOT) says taxpayers could be asked to pay up to £108 a month too much.

The Revenue said it had no evidence of a widespread problem but advised taxpayers to check carefully.

“There will be some incorrect tax codes as there always are at this time of year,” said an HMRC spokesman.

“But the coding notice tells people what the code relates to and tells them to contact us if it is wrong,” he added.

‘Nasty shock’

The CIOT has called on the Revenue to launch a publicity campaign to alert taxpayers to the potential problem.

“Most people on PAYE are used to assuming that what the taxman sends them is correct,” said Andrew Hubbard of the Chartered Institute of Taxation (CIOT).

“But this year, many of them are being given wrong information, and unless they spot it and tell HMRC, their employer will receive the wrong information too.

“They could get a nasty shock when they open their April pay packet and see it is as much as a hundred pounds lighter than they are expecting,” he added.

It is not clear how many incorrect tax codes have been sent out, or may be distributed in the coming weeks.

The CIOT said the scale of the problem might be indicated by the fact that this year about 25 million coding notices are being distributed, which is about twice last year’s number.

The Revenue explained that the increase was a natural feature of the new system.

“It creates a single record for customers for the first time, and this, together with increased automation compared to previous years, is resulting in many more people having more accurate codes than before,” the spokesman said.

Computer problem

The codes have been sent out in batches in a process that started in the first week of January and which ends in the first week of March.
  If the whole of that personal allowance is wrongly applied that would cut a basic rate taxpayer’s pay packet by about £108 a month or £1,295 a year

CIOT
They go first to individual taxpayers in a P2 notice for them to check, before the code is sent to their employer.

However some people are receiving two or more more coding notices which are different.

The problem appears to lie with a new computer system designed to process the collection of income tax via the PAYE system, along with national insurance contributions.

The CIOT said the system’s database was failing to distinguish between current jobs and old ones, leading to tax codes being calculated on the assumption that someone has more than one job.

It said this was resulting in some people having their personal allowance split between two jobs, or allocated entirely to a job they no longer had, which would force their current employer to deduct too much tax.

“The personal allowance will be £6,475 for most people under 65 in 2010-11,” said the CIOT.

“If the whole of that personal allowance is wrongly applied that would cut a basic rate taxpayer’s pay packet by about £108 a month or £1,295 a year,” it said.

In a few cases the Revenue computer system has removed the personal allowance on the assumption that the person’s income will be higher than £100,000.

Earners above this level will lose their personal allowance this coming tax year, in a measure first announced by the Chancellor in the 2008 pre-budget report.

Accountancy Age

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

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.

Tax Doesn’t Have to be Taxing

Missed the 31 October deadline for tax self-assessments? Use Davenports, we file everything electronically giving you until 31 January 2010.

Find out more about our taxation and accountancy services.

Students Getting Educated About Tax

Full time students pay income tax just like everybody else but research from HM Revenue & Customs (HMRC) reveals that more than half of the UK’s 2.3 million university students don’t realise this.

The good news is many of those who have paid tax will be entitled to get it back if they have earned less than £6,475 during this year.

Students who think they may have paid too much tax can use the student tax calculator on HMRC’s website (http://www.hmrc.gov.uk/calcs/stc.htm) to find out if they are due a cash refund and HMRC plans to launch a tax fact Facebook application complete with a refund calculator.

Three out of every four students take paid work, and if they have worked over the summer vacation or intend to get part-time work during term-time HMRC wants to help them to get the facts about tax right so that they don’t pay more tax than absolutely necessary on their hard-earned cash.

HMRC’s research also shows that there is no such thing as a typical student job – summer posts range from retail and hospitality to counting the number of passengers on trains or setting up bouncy castles for a city council.

Jane Frost, Director of HMRC Individuals Customer Directorate said:

“The start of the academic year is a good time to get educated about tax.

Making sure your tax code is right from the start of your paid employment can save you money and is good training for life after graduation. We want to help students understand how the tax system works ideally so they pay the right amount of tax from the outset and can claim what is due.”

Key questions for Students

As well as being aware of their Personal Allowance, students should also find out:

What do I do with forms such as the P45, P60 and P38(S)?

Students who plan to work only during the holiday periods, and expect to earn no more than the Personal Allowance (currently £6,475) in the tax year can ask their employer for a P38(S) which they should complete and return to their employer at the start of their job. A P45 is given out at the end of a job and shows the pay received and tax deducted between the start of the tax year (6 April) and the date the employment ceased (if before 5 April the following year). The P60 summarises the yearly earnings and tax paid for a particular job. Students with more than one job at the 5 April each year will receive a P60 from each employer. The P45 and P60 forms should be kept in a safe place for future reference.

What does my tax code mean?

Your tax code shows how much you are allowed to earn before paying any tax. This helps employers to work out how much tax to deduct from your pay.

What if I have more than one job?

Like everyone else, students only have one Personal Allowance for each tax year and if they start a new job without finishing their first job, their second employer will ask them to fill out and sign a form P46. The employer uses the information on the P46 to notify HMRC that a new employee has started and to ensure the correct code is operated on earnings from the second job.

What are National Insurance contributions (NICs)?

NICs pay for social security benefits that you may receive later in your life and to help pay for the National Health Service. National Insurance contributions are recorded against a person’s name using a National Insurance Number. NICs are deducted at source from pay by employers and cannot be claimed back. They are only paid once your income exceeds £110 a week. You’ll need to keep a record of your National Insurance Number for any dealings with your tax office and your employer(s).

Who do I need to tell when I change address?

HMRC needs to be kept informed of your address. This is the individual’s responsibility – don’t assume your college or university will do it - and ensures you won’t miss any important letters or forms – or rebates!

Students can find all the information they need at: www.direct.gov.uk/studenttaxadvice.

Next Page »