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HM Revenue & Customs phishing emails

Posted by: edwinsmith on July 29th, 2011

HM Revenue & Customs (HMRC) is alerting taxpayers to a surge of fake ‘phishing’ emails sent out by fraudsters.

The email informs the recipient they are due a tax rebate, and provides a click-through link to a cloned replica of the HMRC website. The recipient is asked to provide their credit or debit card details. Fraudsters then try to take money from the account using the details provided. Victims risk having their bank accounts emptied and their personal details sold on to other organised criminal gangs.

HMRC have confirmed that currently they will only ever contact customers who are due a tax refund in writing by post. They don’t use telephone calls, emails or external companies in these circumstances. There is more security advice on the HMRC website.

If anyone receives an email claiming to be from HMRC, please send it to phishing@hmrc.gsi.gov.uk before deleting it permanently.

Other advice would be not to click on websites, links contained in suspicious emails or open attachments and follow advice from http://www.getsafeonline.co.uk/.

If you have reason to believe that you have been the victim of an email scam, report the matter to your bank/card issuer as soon as possible. If in doubt please check with HMRC at http://www.hmrc.gov.uk/security/fraud-attempts.htm.

Filed under: Tax

HMRC extends ‘tax cheats’ campaign

Posted by: edwinsmith on July 29th, 2011

HMRC have announced a selection of new campaigns designed to target rule breakers and home in on tax evaders.

Over the next year HMRC will use cutting-edge tools such as “web robot” software to search the internet and pinpoint more accurately people who have failed to pay the right tax. The “web robot”, can also be used with the department’s Connect computer system, which collects third party data to uncover hidden relationships and anomalies in order to highlight people who are trading without telling HMRC.

HMRC have announced that they intend to operate a selection of campaigns in 2011/12 targeting the following areas:

  • Those trading over the £73,000 turnover limit without registering for VAT
  • Those who provide private tuition or coaching without declaring the income to HMRC
  • Business trading in E-market places (eBay etc) with out registering as a business with HMRC
  • An extension of the plumbers’ campaign will invite other tradespeople to declare underpaid tax

Previously, HMRC have operated campaigns targeting offshore investments, medical professionals and people working in the plumbing industry and have raised more than £500m from voluntary disclosures and a further £100m from follow-up activities.

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

If you think that you have not paid the correct amount of tax or would like advice regarding VAT registration please contact us.

Filed under: Tax, VAT

Mileage Allowance Payments (MAPs)

Posted by: edwinsmith on June 29th, 2011

The approved mileage allowance payment (AMAP) for tax and National Insurance purposes for cars and vans increased from 6 April 2011 from 40p per business mile to 45p per business mile with a restriction for the first 10,000 business miles for tax purposes only.

The current tax rates per business mile are:

Kind of vehicle Rate
Car or van 45p for the first 10,000 miles

25p thereafter
Motorcycle 24p
Cycle 20p

 

The current National Insurance rates per business mile with no mileage restrictions are:

Kind of vehicle Rate
Car or van 45p
Motorcycle 24p
Cycle 20p

 

Employees can also receive a tax free payment for carrying passengers on business journeys in their own car or van at the rate of 5p per mile.

Tax rules - What to report, what to pay

If the MAPs you pay to an employee exceed the approved amount for the tax year, then:

 

  • for company directors or employees earning at a rate of £8,500 or more per year, report the excess amount on form P11D
  • for employees earning less than that, you have no reporting requirements
  • regardless of the employee's earnings, you have no tax to pay to HMRC

 

If the MAPs you pay are below the approved amount for the tax year:

  • you have no reporting requirements
  • you have no tax to pay to HMRC
  • your employee will be able to get tax relief (called Mileage Allowance Relief, or MAR) on the unused balance of the approved amount – this can be claimed on the employee’s tax return or by completing Form 87 ‘Tax relief for expenses of employment’.
  • you can make separate optional reports to HMRC of any such unused balances under a scheme called the Mileage Allowance Relief Optional Reporting Scheme (MARORS) - contact your HMRC office if you want to enter the MARORS scheme

 

National Insurance

The rules for National Insurance contributions (NICs) differ from those for tax in a number of ways and take into account a wider range of expenses. NICs are due on payments of relevant motoring expenditure (RME) above a certain level. The maximum amount of RME that can be disregarded for NICs purposes for an employee in each earnings period is called the 'qualifying amount'. The qualifying amount (the amount you can disregard for NICs purposes) where a mileage rate is paid is calculated by multiplying the employee's business miles in the earnings period by the applicable rate per mile from the table above.

NIC rules - What to report, what to pay

If the RME you provide to an employee in the earnings period exceeds the qualifying amount:

  • add the excess to their other earnings for that earnings period when calculating Class 1 NICs (but not PAYE tax) through your payroll

 

If the RME is below the qualifying amount, you have:

  • nothing to report
  • no NICs to pay

 

Note that there is no NICs equivalent of Mileage Allowance Relief and you cannot carry forward the difference between RME and the qualifying amount to use in a later earnings period.

Please contact us at Edwin Smith if you require further advice.

Filed under: PAYE, Tax

Tax credit – reminder to renew

Posted by: edwinsmith on May 31st, 2011

HMRC are reminding tax credit claimants to renew claims by the 31 July deadline or their payments may stop.

It is best to act as soon as the renewal packs are received from HMRC.

The accuracy of the information in the pack will need to be checked and HMRC should be informed of any changes in circumstances that hasn’t already been reported during the year. These could be about working hours, childcare costs or pay. If asked, details of the previous year’s income must be provided.

Having the right documents to hand will help reduce errors when filling out the form or calling the tax credits helpline on 0845 300 3900. These would be, for example, payslips, end of year P60 forms and childcare details.

The DirectGov website has more help and information on renewing your tax credits.

Alternatively, please contact us at Edwin Smith.

Filed under: Tax

Business Record Checks

Posted by: edwinsmith on May 23rd, 2011

HMRC has started pilot business record checks in 8 locations (Edinburgh, Irvine, Manchester, Liverpool, Stockport, Sunderland, Sheffield and Portsmouth) running until 15 July.

It is expect that up to 1,200 Business Record Check (BRC) visits will be undertaken by the 30 HMRC staff assigned to the pilot.

HMRC has clarified that the BRC initiative does not insist on a specified format for business records, but checks whether the records of all business income and outgoings are recorded in a way appropriate for the size and nature of the trade.

HMRC has also stated that it does not intend to charge any penalties for record keeping failures during the current phase of testing and continues to review its long-term planning around the introduction of such a charge in the future.

At some point during 2011 it is expected that the BRC visits will become standard practice and penalties are likely for poorly kept records. More information is expected after the initial pilot.

HMRC have issued free tools to help you get your business records in order. The four new products are suitable for the self employed, sole traders and small businesses. Also you can contact us as we can help you review your records.

Keeping records for business – what you need to know: a basic guide with a helpful list of where to get more information.

A general guide to keeping records for your tax return: detailed guidance on record-keeping covering what type of records you may have to keep, common problems and examples for different types of business.

Set up a basic record-keeping system: with examples of spreadsheets and information about setting up a record-keeping system.

Find out what records you should be keeping: looks at the records you need to keep and assesses how well you are keeping them. If you are thinking of starting business the tool provides you with a checklist. If you are established it will give feedback and advice on improvements you may need to make.

Filed under: PAYE, Tax, VAT

Reminder – Changes to Class 2 National Insurance contribution payment dates

Posted by: edwinsmith on May 16th, 2011

From April 2011 the payment of Class 2 National Insurance contributions will change and become due on the 31 July and 31 January each year, bringing payment dates in line with Self Assessment.

Please see our previous article about the changes to payment dates for Class 2 National Insurance contributions for more information.

The HMRC website also has more information on the payment date changes for Class 2 National Insurance contributions.

Filed under: Tax

New penalties for self assessment from 6 April 2011

Posted by: edwinsmith on April 20th, 2011

From 6 April 2011, HMRC have introduced new penalties for late filing of a tax return and late payment of tax for tax years 2010/11 onwards. This applies to personal, trust and partnership tax returns.

Under the new penalty regime, the penalty for late filing for personal and trust returns will no longer be capped at the lower of £100 and the balance of tax outstanding at 31 January.

The penalties for late filing will include:

  • £100 penalty immediately after the due date for filing (whether or not the tax has been paid)
  • daily penalties of £10 per day for returns that are more than 3 months late, running for a maximum of 90 days
  • penalties of 5% of the tax due for the return period (or £300 if greater) for prolonged failures (over 6 months and again at 12 months)

 

The penalty regime for late payment of any tax due will be:

  • a penalty of 5% of the amount of tax unpaid, generally 1 month after the payment due date (or at the filing date of the relevant return)
  • further penalties of 5% of any amounts still unpaid at 6 months and 12 months

 

You will also have to pay interest on all outstanding amounts, including any unpaid penalties, until payment is received.

Filed under: Tax

State pension age for women changing

Posted by: edwinsmith on April 4th, 2011

The age at which women are eligible to claim their state pension is changing, effective from April 2010.

The previous retirement age for women was 60, but this is increasing gradually to age 65 between April 2010 and November 2018 to be inline with the existing retirement age for men.  The changes will affect women born after 6 April 1950 and the date at which you will be eligible to claim your state pension is dependent on your birthday.  You can find out your individual state retirement age online.

The latest announcements also indicate that the government plans to increase the retirement age further for both men and women once the above scheme has been completed.  The increases are aimed to reflect changes in life expectancy.  Please look out for future articles on this website once the legislation has been agreed.

For further information and guidance regarding state pensions please contact us.

Filed under: PAYE, Tax

Online Corporation Tax Returns and electronic payments from 1 April 2011

Posted by: edwinsmith on March 21st, 2011

From 1 April 2011 onwards, all companies and organisations will have to file their Company Tax Return online, with accompanying computations and accounts, for any accounting period ending after 31 March 2010.

Our accounts and Company Tax Return software have been updated to provide this service to our clients.

Also from 1 April 2011 Companies and organisations will also have to make electronic payment of any Corporation Tax due, which means not paying by cheque. There are various methods of making electronic payment such as:

  • Direct Debit
  • Paying by debit or credit card over the internet: BillPay
  • Paying by internet, telephone banking or Bacs Direct Credit
  • Paying by CHAPS transfer
  • Paying by Bank Giro
  • Paying at the Post Office

The HMRC website has more detailed guidance on how to pay Corporation Tax.

Please see our previous article on filing accounts and Company Tax Returns online for more details.

Please contact us if you would like to know more or if you have any questions.

Filed under: Tax

Reduction in amount of Annual Investment Allowance (AIA) – Plant & Machinery

Posted by: edwinsmith on March 15th, 2011

From April 2012 (1 April 2012 for companies and 6 April 2012 for self employed) the maximum amount of the annual investment allowance (AIA) will be reduced from £100,000 to £25,000 a year for business investment in most Plant and Machinery.

The AIA gives a 100% allowance on expenditure on the amounts mentioned above for most Plant and Machinery (excluding cars).

Businesses whose accounting period spans the relevant operative date in April 2012 will need to apportion the maximum allowances. Therefore the above changes will start affecting businesses whose accounting periods commence after 6/4/2011 (see below for example).

Where businesses spend more than the annual limit of AIA the additional expenditure is dealt with in the normal capital allowances regime. These rates will also be reduced from April 2012. The capital allowance rates that can be claimed on the balance of plant and machinery expenditure carried forward will be reduced from a) 20 % to 18% and from b) 10% to 8% for main rate and ‘special rate*’ expenditure respectively.

*Special rate expenditure includes expenditure on ‘integral features’ of a building structure.

A 100% first year allowance can still be claimed on energy and water efficient plant.

Example

A company with an accounting year end of 30 September 2012 would calculate its maximum Annual Investment Allowance (AIA) based on -

a) Maximum AIA for period 1/10/2011 to 31/3/2012 – 6/12 x £100,000 =£50,000.

b) Maximum AIA for period 1/4/2012 to 30/09/2012 - 6/12 x £25,000 = £12,500.

The company’s maximum AIA for the transitional period would therefore be the total of a) and b) = £62,500 (£50,000 + £12,500). In relation to b) no more than £12,500 of company’s actual expenditure in that part period would be covered by the transitional AIA entitlement.

Please contact us if you require any further information.

Filed under: Tax
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