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ACCA’s recommendations for the Budget 2015

ACCA’s recommendations for the Budget 2015

The ACCA (the Association of Chartered Certified Accountants) has called on the Chancellor to make a real meaningful difference to assist businesses and individuals by raising the threshold at which individuals pay National Insurance.

Chas Roy-Chowdhury, head of taxation at ACCA stated:

“Since the election in 2010 the government has taken steps to take many of the lowest paid out of income tax, with the threshold scheduled to potentially reach £12,500. However anyone earning £153 a week, equivalent to less than £8,000 per year, still has to pay NICs (National Insurance Contributions).

If the government is serious about helping the lowest paid they should raise the level at which they start paying NICs. At present those earning between £7,956 and £41,865 pay 12% of their earnings in NICs, making the amount potentially saved by the lowest paid extremely significant.

In addition, raising the threshold could actually save the Government money in the long term as many of the lowest paid would be entitled to less in benefits such as housing support.”

The ACCA also called on the Chancellor to further help individuals by removing principle private residence from falling into the inheritance tax circle. Mr Roy-Chowdhury stated:

“House prices in the UK have become almost recession proof. They keep rising year on year, but the point at which inheritance tax is paid has risen little in the past decade. We are now at the point where, in many areas of the country, the average house price is far above the threshold, and despite paying the taxes and charges that are associated with owning a property your loved ones are left with a hefty tax bill when inheriting the property.”

On the issue of Government Growth Vouchers, […]

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Reduction in tax on savings income

Savings for Tax Payers on Saving Income
From April 2015, taxpayers on lower incomes will not have to pay tax on savings income.

In the 2014 Budget, the government announced that it would reduce the starting rate of tax on savings income from 10% to 0%, assisting individuals on low income. HMRC has stated this will bring an additional million individuals who can now receive their interest gross.

At the same time, the amount on which the new 0% rate will be applied will increase from £2,880 to £5,000.

One of the reasons the government has introduced these changes is that it relieves the burden on HMRC, who have to divert dwindling resources to the exercise of dealing with claims of rebates.

In reality it means most individuals who have a total income of less than £15,600  will not have to pay tax on their savings income. Individuals who have total income of less than their personal allowances plus £5,000, will be able to notify their bank or building society to receive their interest gross.

The ability to receive interest gross is based on an individuals estimated taxable income between 6 April 2015 and 5 April 2016,  how much of the taxable income is savings income and their tax free personal allowances for 15/16.

There may be cases where some savings income is taxed at 0% and the remainder at 20%.

There are different forms to complete for registering to receive interest gross and for reclaiming the tax paid on the interest, depending on the circumstances.

For example:

Where an individuals income and savings income is less than £15,600 and they have all their tax free allowances available, they can register to receive interest gross using Form R85 and providing it to their bank or building society.
Where an individual’s […]

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Adverse weather affects productivity

The Centre of Economics and Business Research has investigated the correlation between economic growth and weather patterns overs the last years.

They have reported that since 2005, quarterly GDP growth has been 0.6 percentage points lower than typical levels when the weather has been very cold.

When minimum temperatures are one degree Celsius lower than average, quarterly GDP is on average £2.5 billion lower. This is a bigger negative effect than any other form of adverse weather, including snowfall, heat waves or flooding.

The GP falls are due to lower output as productivity is lost due to staff not been able to get to work and the transport links suffering adversely.

The Report states smaller businesses are at a disadvantage in terms of poor weather.

Scott Corfe, head of UK Macroeconomics stated:

‘Many small offices are unprepared for such events as they often lack remote access to their work due to security concerns and a lack of infrastructure. This is compounded in many cases by inadequate internet connections or computing power at staff homes. In addition SMEs (small and medium sized businesses) tend to suffer more than their larger counterparts who can spread the setup and maintenance costs of remote working infrastructure across many more staff.’

Kevin Scott-Cowell, CEO of 8×8 Solutions stated:

‘Bad weather hits businesses hard, and medium-sized companies are more vulnerable than their larger counterparts. Until now, the technical infrastructure to enable remote working and guard against disruption has been out of reach for many companies, but cloud solutions are changing this. It’s now affordable for any size business to put in place a plan and deploy the right remote working technology. This can make sure it’s business as usual for customers, whatever the weather.’

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Employment Status Report OTS

Employment Status Report by the Office of Tax Simplification
The Office of Tax Simplification’s have released a report today on Employment Status.

Employment status is a subject that all parties – businesses, individuals, agents, HM Revenue & Customs (HMRC) and HM Treasury (HMT) – see as an area that needs to be addressed.

An individual’s status as an employee (or not) is something that affects issues beyond tax – employee rights, national minimum wage, benefits and credits, pensions auto-enrolment (a significant new factor in the minds of many businesses) and others.

The report states the difficulty in applying and understanding the current tests for employment used for tax, employment law and pensions auto-enrolment.

There is no definition of self-employment in law leaving businesses, individuals and HMRC to wade through case law to establish employment status.

The consequences to employers of an incorrect decision can be significant tax and National Insurance Contributions (NICs) bills, leading many to hire contractors only through intermediaries.

John Whiting, Tax Director of the Office of Tax Simplification, said:

“The tax system is stuck in an out-of-date mindset. In the 1950s and 1960s the distinction between employees and the classic self-employed jobbing plumber was clear and easy. Nowadays working patterns are hugely varied, freelancing is a way of life for many and that simple split doesn’t work often enough.

“This causes uncertainty, risk and administrative burdens all round. We have heard from businesses about transactions being delayed or even abandoned due to the risk posed by employment status uncertainty.

“This is a difficult area with no simple solutions. We identify both direct ways of simplifying things – such as streamlining definitions – and indirect ones, which would take the heat out of the issue. Some should be acted on in the short […]

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HMRC wins Eclipse tax court case

HMRC wins Eclipse court case to protect £635 million in tax

The Court of Appeal today ruled in favour of HM Revenue and Customs against Eclipse Film Partners (No 35) LLP, protecting an estimated £635 million in tax.

Eclipse claimed to trade in film rights but was in reality a tax avoidance scheme.

Financial Secretary to the Treasury David Gauke said:

“The Government is committed to tackling tax avoidance schemes like Eclipse.

“These schemes, which were all too common in the mid-2000s, are an affront to the vast majority of businesses and people who pay what they owe.

“The Government has invested £1 billion into HMRC to track down and challenge tax dodgers and they will continue to pursue the minority who do not play by the rules.”

There were 31 Eclipse partnerships that ran for between 11 and 20 years from 2005/06. Eclipse 35 is the first of the partnerships to be taken to litigation.

The scheme sought to create substantial interest relief claims for investors.

People borrowed significant sums of money, at interest, to invest in Eclipse. As the capital was supposed to be used by the partnership for trade, the individuals could make interest relief claims against their other income.

The scheme operated by acquiring the rights to certain Disney films and then sub-leasing them back to a different Disney entity for a guaranteed income stream.

In reality, the borrowed money simply earned interest, which was then filtered through the partnerships to investors to cover the interest on their loans.

This was dressed up as a trading transaction in order to enable the partners to claim tax reliefs.

The Court of Appeal upheld earlier tribunal decisions that Eclipse 35 was not trading. As a result investors were not eligible for interest […]

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HSBC Suisse bank data share with HMRC

HMRC have formally agreed with French authorities that HSBC can share stolen HSBC Suisse Customer date with other regulators and law enforcement agencies in order to pursue criminal offences. The decision was announced by HMRC’s Chief Executive Lin Homer, in a Treasury Select Committee hearing.

The data was received by HMRC under strict international treaty conditions from French officials in April 2010. The condition for releasing this information was for the data to be used for tax purposes only, preventing HMRC sharing it with other law enforcement authorities. In August 2010 HMRC requested for the condition to be removed. Following a number of more recent representations, the French authorities gave written confirmation on 23 February that they were lifting restrictions on the use and sharing of the data with other law enforcement agencies and regulators for the purpose of investigating criminal offences.

HMRC has arranged a multi-agency meeting next week, to discuss how the stolen HSBC Suisse data can be shared with them. The agencies are the Serious Fraud Office, the Financial Conduct Authority, Crown Prosecution Service, City of London Police, National Crime Agency and EuroJust.

HMRC has already been in discussion with some of these agencies about the potential for further investigation of crimes or offences.

This post contains public sector information licensed under the Open Government Licence v3.0.

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HMRC not penalising for short delays in RTI filings

HMRC has announced that employers will not incur penalties for delays of up to three days in filing PAYE information.

Penalties for late payments will be reviewed on a risk-assessed basis rather than be issued automatically.

HMRC have stated filing deadlines have not been changed and filing is required on or before each payment date.

In order to prevent unnecessary penalties being issued, HMRC is looking to close PAYE schemes which have not been active or undertaken any RTI filings since April 2013. HMRC will write to the affected schemes to tell them about the planned closure and what to do if they are, or should be, operating PAYE.

Employers with fewer than 50 employees are reminded that PAYE late filing penalties will apply to them from 6 March.

Employers that have received in-year late filing penalties for the period 6 October 2014 to 5 January 2015 and were 3 days late or less, should appeal online by completing the “Other” box and add “Return filed within 3 days”.

HMRC is asking for comments on the way on which RTI penalties are applied. They have issued a discussion document stating:

As HM Revenue & Customs (HMRC) delivers more digital services based around our customers, we are exploring the way that we apply penalties when people fail to meet their tax or entitlement obligations. HMRC is asking for comments on the high-level issues and will ask for further, more detailed feedback as the work progresses.

HMRC are considering whether to apply a different treatment to those who deliberately fail to meet statutory deadlines or settle their liabilities on time and between those who make genuine occasional errors.

Following the consultation, HMRC will review the operation of the changes to the PAYE penalties by 5 April 2016

RTI filings […]

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Tax Summaries

HMRC is now sending out tax summaries to tax payers, setting out how much tax and National Insurance the particular taxpayer has paid and how it has been utilised on public expenditure.

Taxpayers can view their summaries online by logging into HMRC online Services.

Financial Secretary to the Treasury, David Gauke, said:

Taxpayers have a right to know how the government is spending their tax and National Insurance contributions. The Government promised to provide transparent information about its expenditure and these summaries deliver on that promise.

Any taxpayer who does not receive a tax summary can use HMRC’s tax calculator to estimate their tax bill and see how it contributes to public spending.

HMRC has also launched an app, The ‘HMRC App’ which contains the calculator and can be downloaded free of charge.

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HMRC allows changes to car benefits to be made online

Individuals who pay tax through PAYE and have company cars will be able to make changes to company car details online. This will remove the need to wait for HMRC to issue revised tax  codes.

HMRC’s Chief Digital and Information Officer, Mark Dearnley, said:

HMRC is rolling out customer-focused digital services that are so straightforward and convenient that everyone who can use them will choose to do so.

Our digital services will deliver significant savings to HMRC’s customers in both the cost of phone calls and time spent dealing with the department. They will also mean that people can deal with the department when it is most convenient for them – rather than for us.

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