Win £100,000 for Filing Tax on Time

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

Know Your Oversea Shopping Limits This Christmas

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.

HMRC Tackles London’s Fast Food VAT Dodgers

A new taskforce to tackle VAT abuse in London’s fast food outlets was announced today by HM Revenue & Customs (HMRC).

HMRC has identified that there is a problem with some fast food outlets deliberately falsifying their records and mis-declaring their true sales levels in order to avoid paying the correct taxes.

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

“This taskforce will come down hard on fast food outlets that have chosen to break the rules and evade the taxes they should be paying. Honest businesses have absolutely nothing to worry about.

“This taskforce comes hard on the heels of one launched last month targeting the restaurant sector in London. If you deliberately seek to evade tax HMRC can and will track you down, and you’ll face not only a heavy fine, but possibly a criminal prosecution as well.”

This is the 4th taskforce launched by HMRC since May 2011. HMRC is planning a further nine taskforces in 2011/12, with more to follow in 2012/13. The taskforces come as a result of the Government’s £900m spending review investment to tackle tax evasion, avoidance and fraud from 2011/12, which aims to raise an additional £7bn each year by 2014/15.

If you are aware of someone who is evading their taxes you can tell HMRC via the Tax Evasion Hotline by phone on 0800 788 887, via the email hotline, or by post full details can be found at www.hmrc.gov.uk

SMEs Warned Over Business Records Checks

The taxman’s approach to small business records checks has undergone a “subtle change in tone” from being an educational exercise to a compliance check, advisors have warned.

HM Revenue & Customs yesterday released the summary of responses to its consultation on the business records checks initiative. It said that “business records checks are primarily a compliance check, not an educational exercise”.

However, Guy Smith, senior tax consultant at Abbey Tax Protection, said that this represents a “subtle change” from the way it was originally being sold to advisors.

In letters sent to businesses as part of a pilot, HMRC recommended areas of improvement for record keeping and informed the companies that they might receive visits within three months to check the improvements have been made, Smith added.

“Up until now, the underlying theme has been one of informed education,” he said. “However, that now seems to have changed with the publication of the summary of responses report.”

The consultation said: “A policy of not charging a penalty for an initial finding of significant record keeping failure would risk creating the perception that there is no need to change behaviour in relation to poor record keeping unless and until one has been caught out at least once.”

But this is in contrast to the consensus among respondents, Smith said, which favoured giving respondents time to make improvements and issuing first warnings.

Mike Down, tax partner at Baker Tilly, said that the initiative “has always been a mix of educational awareness and compliance checks”. But there are still issues about whether this is a good use of resources and how well publicised it has been.

Down also said that the Taxman “jumped the gun” on the pilots. “The summary of responses said the pilot scheme began on 4 April but the first letter was sent out on 21 March. They jumped the gun. The original consultation said it would start in the second half of 2011.”

Story from: Accountancy Age

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VAT Cheats Targeted in Crackdown

As part of a campaign launched today aimed at VAT rule-breakers, HM Revenue & Customs (HMRC) will be sending letters informing businesses how to register to pay what they owe. The new campaign focuses on individuals and businesses trading above the VAT threshold of £73,000 turnover but who have not registered for VAT.

More than 40,000 letters will be sent out over the next few weeks. Under the terms of the VAT Initiative, those who have not registered to pay VAT can come forward any time up to 30 September to tell HMRC that they want to take part. If they make a full disclosure, most face a low penalty rate of 10 per cent on VAT that has been paid late.

They will also be invited to disclose any other tax arrears. Where they have to pay a penalty on undeclared tax other than VAT, this will be lower than the customary penalty of up to 100 per cent charged to those who fall outside the opportunity.

After 30 September, using information pulled together from different sources, HMRC will investigate those who have failed to come forward. Substantial penalties or even criminal prosecution could follow.

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

“This is our third campaign, raising more than £500m from voluntary disclosures and a further £100m so far from follow-up activity.

“Our campaigns are designed to ensure tax is paid so that the money is available to spend on public services used by everyone.

“The aim is to make it easy for individuals and businesses to contact us, make a full disclosure of their income and face a reduced penalty on any tax owed.

“I urge people who have not registered their businesses for VAT to get in touch with HMRC and get their tax affairs in order simply and on the best available terms.”

To use the VAT Initiative people and businesses must:

• Register with HMRC by 30 September to “notify” that they plan to make a voluntary VAT disclosure;
• Tell HMRC about VAT due and make arrangements to pay it, as well as any penalties due, by 31 December.

How to let HMRC know of the intention to make a tax disclosure:

• Online by completing a notification form at http://www.hmrc.gov.uk/ris/vat/
• Ring HMRC on 0845 600 5217

A dedicated team is available to give information and advice.

Previous HMRC campaigns have targeted offshore investments, medical professionals and people working in the plumbing industry.

For assistance with your VAT obligations, contact Davenports today using the simply form below:

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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

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.

Company cars - advisory fuel rates from 1 June 2011

HM Revenue & Customs has published new advisory fuel rates effective from 1 June 2011 and are available on the HM Revenue & Customs website:

http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

The rates are now to be reviewed four times a year. Any changes will take effect at the beginning of each calendar quarter – on 1 March, 1 June, 1 September and 1 December and will be published on the HM Revenue & Customs (HMRC) website shortly before the date of change.

In view of the increased frequency of review, HMRC will no longer consider changing the rates if fuel prices fluctuate by 5 per cent from the published rates.

Employers should make themselves aware of any changes by referring to this page in late February, May, August and November each year. It is the primary source of information.

VAT
Customs will also accept the figures in the table for VAT purposes though employers will need to retain receipts in line with current legislation.

Judge Takes Dim View of HMRC’s Approach

A First-tier Tribunal judge in a recent appeal took a very dim view of HMRC’s approach.

In brief, the taxpayer tried to file her tax return online in January 2010 but found that she could not access HMRC’s website. She contacted HMRC’s support line, but did not receive a reply. HMRC issued two late filing penalties: one for not filing by 31 January and the second for still not having filed her return six months later.

In support of its failure to respond in time, the Revenue claimed that the taxpayer had emailed the VAT online services helpdesk in error. It argued that the taxpayer had to take responsibility for ensuring that her tax affairs were dealt with correctly and on time, and that this was not negated by her having twice emailed the helpdesk. The department, somewhat extraordinarily, argued that it could not reasonably be expected to reply to her emails before 31 January 2010.

The First-tier Tribunal judge found the latter ‘proposition startling’, saying he was sure HMRC would expect a business to which they had sent correspondence, not only to be able to reply within 14 days but actually to do so. He said ‘there is no reason why the standards applicable to businesses and commercial organisations should not also apply to an organ of the state’.

While agreeing that it was the taxpayer’s responsibility to file her self assessment return on time, the judge added that ‘it was equally the responsibility of HMRC to provide online filing facilities that worked and provided the promised filing facility’. He was ‘wholly unimpressed by the argument that there was no obligation on HMRC to reply to the appellant’s emails to its helpdesk; there is little point in there being a helpdesk if, in fact, it does not provide help’.

The upshot was that the judge found that the taxpayer had a reasonable excuse for failing to file online by the 31 January 2010. The excuse was that the online filing facility provided by HMRC did not work as it should have and, furthermore, HMRC failed to provide her with the help that she had requested within a reasonable time which, the judge suggested should have been within three days.

The judge’s comments are total indictment of HMRC’s not infrequent unprofessional and lackadaisical dealings with taxpayers and agents. Sadly, the taxpayer lost the moral high ground by failing to file her return until several months later, so the second £100 penalty stood.

Story from Tax Advice Network

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