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"Thinking Ahead"

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Getting ready for 2016-17 tax year and finishing 2015-16.....

LIMITED COMPANY DIRECTORS / OWNERS ARE ENCOURAGED TO READ…

Beware the new dividend tax…

We were waiting for this to be rubber stamped before and now it has, and given the widespread impact this is likely to have on small and family run businesses, we think this topic is worth visiting in further detail.

By way of a recap the key facts are as follows:-

From April 2016, notional 10% tax credit on dividends will be abolished. A £5,000 tax free dividend allowance will be introduced. Dividends above this level will be taxed at 7.5% (basic rate), 32.5% (higher rate), and 38.1% (additional rate) Dividends received by pensions and ISAs will be unaffected

Whilst all of the detail is still sketchy, it is likely that dividends will continue to remain non-deductible (unlike, say, a director’s salary) for corporation tax purposes.

These changes are clearly aimed at small companies who pay a modest salary (designed to trigger entitlement to the State Pension without actually resulting in a PAYE liability), and a larger dividend payment in order to reduce their National Insurance costs. This is a tax planning strategy which has been used by owner managed limited companies for some time now.

Although the changes will not come into effect until April there appears to be widespread confusion over how exactly the proposed changes to the taxation of dividends will actually work in practice. There appears to be two differing opinions.

Some think that either:

1) The new £5,000 dividend allowance will, like the savings allowance, be included in the basic rate band, or

2) The dividend allowance will be in addition to the basic rate band.

Whichever change applies there’s no denying that either method will be highly detrimental not only for small business owners and family companies but also for many investors.

So let's run through some examples as to how the new rules might work.

Proposed rules

Example 1 - Assumes the dividend allowance is within the basic rate band

If you are basic rate taxpayer, and you receive all your income in dividends you will be up to £2,025 worse off!

The basic rate tax threshold for 2016/17 is £43,000 (personal allowance of £11,000, plus basic rate tax band of £32,000)

If a dividend of £43,000 is received we assume (at this stage) that it is taxable as follows, breaking it down into the different "slices":

The first £11,000 - covered by your personal allowance The next £5,000 - covered by your dividend allowance The next £27,000 - taxed at the new 7.5% = £2,025 tax due.

Example 2 – Assumes the dividend allowance extends your basic rate band

If you are basic rate taxpayer, and you receive all your income in dividends you will be up to £1,650 worse off!

The basic rate tax threshold for 2016/17 is £43,000 (personal allowance of £11,000, plus basic rate tax band of £32,000), plus you have a £5,000 dividend allowance.

If a dividend of £43,000 is received it is taxable as follows, breaking it down into the different "slices":

The first £11,000 - covered by your personal allowance The next £5,000 - covered by your dividend allowance The next £22,000 - taxed at the new 7.5% = £1,650 tax due.

If we assume that George’s dividend tax is just a bad dream (or nightmare), what would the position be under the old rules if you received all your income in dividends?

Example – old rules

The basic rate tax threshold for 2016/17 is £43,000 (personal allowance of £11,000, plus basic rate tax band of £32,000).

If a dividend of £43,000 is received, it is grossed up to £47,777.77 (£43,000 x 100/90) taxable as follows, breaking it down into the different "slices":

The first £11,000 - covered by your personal allowance The next £32,000 - taxed at 10% = £3,200 The next £4,777.77 is taxed at 32.5% = £1,552.77 You receive a tax credit = £ (4,777.77) Tax is paid of £nil (the tax credit is non-repayable under the old rules).

This is hardly sufficient time for small businesses owners to makes adjustments for the negative impact these changes will have on their businesses from April 2016 given that its only in the last few weeks that they have finalised the proposals! You will be paying more tax, but importantly less than the current alternatives away from the limited company structure.

Whilst this is only our personal opinion, we cannot help but wonder whether the current Government is actually on the side of small business and enterprise. Especially given the fact that many large multi-national companies will have seen their effective rate of tax cut from 28% to 18% before the end of this Government’s current term.

PAYE Notice of Coding changes

Under self assessment this additional tax would be payable by 31 January 2018, as the balancing payment for that tax year. However, HMRC doesn’t want to wait that long for the extra tax, so it has amended the tax codes of many owner/directors to “code out” an estimated amount, which is approximate to the dividend tax due for the year.

The deduction in the PAYE code is labelled ‘dividend tax’, and the notes on the P2 (PAYE coding notice) say: “this is to collect the basic rate of tax due on your dividend income.” The P2 notes for a higher rate taxpayer refer to higher rate tax. To work out whether the deduction for “dividend tax” is approximately correct you need to estimate the taxpayer’s total income tax liability for 2016/17.

Example

Ann has decided to take a salary of £8,060 from her company in 2016/17 and dividends of £34,900. She has expected to receive bank interest of £40. Her personal allowance is £11,000, so her estimated taxable liability for 2016/17 is: £ Allowances deducted or tax rate Taxable due Salary 8,060 PA: 8060 0% Interest 40 PA : 40 0% Dividends: 2,900 PA: 2900 0% 5,000 Dividend on £5000 0% 27,000 At 7.5% £2,025 Total income 43,000

Ann’s PAYE code for 2016/17 is: 87L and her notice of coding says it is calculated as:

Personal allowance £11,000 Less dividend tax: 10,125 Amount of tax free income: 875

The dividend tax deduction is the approximate tax due: £2,025 divided by her marginal tax rate 20%: £2,025/ 20% = £10,125. Conversely: £10,125 @20% = £2,025 dividend tax.

HMRC has assumed that Ann will receive salary of £11,000 in 2016/17 as in 2015/16 she took a salary equivalent to the personal allowance of £10,800. With a salary of £11,000 Ann would pay tax on £10,125 (11,000 - 875)@20% = £2025, the exact amount of dividend tax estimated to be due.

Ann plans to reduce her salary to £8,060, as her one-person company will lose the employment allowance for 2016/17 and she doesn’t want to pay employer’s or employees’ NI for the year. On a salary of £8,060 Ann will pay tax on £7,185 (8,060-875) @20% = £1,437, which is not enough to cover the dividend tax due of £2,025.

The taxpayer (or us on your behalf) can object to having dividend income or interest included in their PAYE code. To get the PAYE code changed we can call HMRC and get the coding updated. Please let us know if receive a coding and having read the above would like us to have it removed.

One thing is for sure - small business owners need to start reviewing the way they extract profits from their company. If you have available profits the simplest and easiest tax planning point is to bring dividends into the 15/16 tax year wherever possible to take advantage of the existing rules for the final time.

HMRC – dividend allowance fact sheet

https://www.gov.uk/government/publications/dividend-allowance-factsheet/dividend-allowance-factsheet


2014-15 Tax Return final deadline - 31st January 2016

2014-15 Tax Returns. The deadline is 31st January for both filing and tax payments relating to the year ended 5 April 2015. Please ensure you send or email us your records as soon as possible.

Company cars – April 2016 increases

The financial benefits of driving a company car have continued to erode over recent years, but this benefit remains one of the most popular and potent perks of a job. In general terms, less tax will be payable on 'greener' cars, but the tax charges on lower emissions vehicles are set to rise significantly in real terms over the next few years.

Two new appropriate percentage bands apply from 2015-16 for cars emitting between zero and 50gkm CO2, and between 51and 75gkm CO2, with the appropriate percentages set at 5% and 9% respectively. For cars emitting 76-94gkm CO2 the appropriate percentage band increased to 13% from 6 April 2015. Finance Act 2014 made further changes to increase these 'lower emissions' bands to 7% and 11% respectively from 2016-17. The appropriate percentage for cars with emissions of between 76-94gkm CO2 will rise to 15% from 6 April 2016.

It was announced at Budget 2014 that in 2017-18, the appropriate percentage for the 0-50gkm CO2 band will be 9% and 13% for the 51-75gkm CO2 band. Finance Act 2015 enacted these figures, together with the figure of 17% for the 76-94gkm CO2. Budget 2014 also announced that in 2018-19 and future years, the appropriate percentage for the 0-50gkm CO2 band will be 13% and 16% for the 51-75gkm CO2 band. Again, Finance Act 2015 enacted these figures, together with the figure of 19% for the 76-94gkm CO2.

If the emissions figure is equal to the relevant threshold, the appropriate percentage is 14% for 2015-16, rising to 16% in 2016-17. If the emissions figure exceeds the relevant threshold, the threshold percentage is increased by one percentage point for every 5gkm CO2 in excess of the relevant threshold up to a maximum of 37% for 2015-16 and subsequent years.

Although the tax payable on cars with lower emissions is still considerably lower than those with higher outputs, the increases set to take effect over the next few years will mean 'greener' company car drivers will experience steeper increases in the resulting tax payable.

It is worth noting that up to £5,000 may be deducted from the list price calculation for any capital contribution made by the employee, which could be provided in the form of an interest-free or low interest loan from the employer. This may help to reduce the tax payable on the provision of a company car.

Dividend allowance

The government announced at the summer 2015 Budget, that a new dividend allowance of £5,000 will be introduced from 6 April 2016. Broadly, from that date, it is expected that the existing dividend tax credit will be abolished, a new annual dividend tax allowance of £5,000 will be introduced, and the rates of tax on dividend income will change. The legislation introducing the dividend tax changes has not yet been published and the rules outlined below are therefore still subject to possible change.

From April 2016, the 10% non-refundable dividend tax credit that currently attaches to dividends will be abolished, the dividend tax allowance will take effect, and the rates of tax on dividend income exceeding that allowance will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers. The dividend allowance will be available to anyone who has dividend income. However, it has been designed in such a way that those with significant dividend income will pay more tax than those with smaller amounts.

The new rates of dividend tax will apply only to the amount of dividends received in excess of £5,000 (excluding any dividend income paid within an individual savings account (ISA)). It is important to note that the dividend allowance will not reduce total income for tax purposes, and dividends within the allowance will still count towards the basic or higher rate tax bands. This means that the dividend allowance is effectively treated as a zero rate of tax on the first £5,000 of dividends. This differs from other tax allowances (for example, the personal allowance) which are deducted from taxable income.

Dividends received by pension funds that are currently exempt from tax, and dividends received on shares held in an ISA, will continue to be tax free.

December’s Questions and Answers

Q. Can I claim for the time I spend repairing my rental property? I own three rental properties and spend a considerable amount of time each year undertaking various necessary repairs. Can I pay myself say, an hourly rate, for the time I spend on the properties and claim a corresponding deduction in my accounts?

A. Any amounts taken from the property rental business will simply be viewed as a withdrawal of profits from the business and taxed accordingly. The HMRC Property Income Manual states 'A landlord can't deduct anything for the time they spend themselves working in their own rental business. They can deduct any wages or salaries they pay to their spouse, civil partner or other relations for working in the rental business provided the amounts paid represent a proper commercial reward for the work done. The spouse, civil partner or relative will be taxable on their earnings if their income is large enough'.

Q. What is the difference between zero-rated and exempt supplies for VAT? I have recently started running my own business providing training services. HMRC have advised me that VAT is not charged on the type of services I am providing. Does this mean that my services are zero-rated for VAT or actually exempt? Do I need to register for VAT? I am confused!

A. Although both zero-rated and exempt supplies result in no VAT being applied to the supply, the consequence is very different between them and it is important to get it right. Zero-rating is a rate of VAT, albeit at zero per cent. The goods and/or services to which it applies are taxable supplies. This in turn renders any supplier of zero-rated goods and/or services liable to register for VAT, where appropriate (see the GOV.uk website here for further information on registration). The advantage of VAT registration is that VAT can be reclaimed on costs. However, a business making solely exempt supplies is not making taxable supplies, so cannot register for VAT. Consequently, all VAT incurred upon expenditure becomes an additional irrecoverable cost. Where a supply could be either zero-rated or exempt, zero-rating takes priority.

Q. Is medical treatment taxable? One of my most valuable employees has been ill over recent years and as a result has had to take several weeks off work. If I pay for any medical treatment on his behalf, will my employee be liable to tax on it?

A. Expenditure by employers on medical treatment for employees is generally chargeable to income tax either as a payment of earnings or as a taxable benefit. However, from 1 January 2015, an exemption from income tax applies where an employer funds recommended medical treatment where the recommendation itself meets certain specific requirements. This means that expenses incurred by an employer to cover medical treatment which is recommended to an employee for the purposes of assisting the employee to return to work after a period of absence due to injury or ill health should not be treated as a chargeable benefit on the employee. The exemption applies to expenditure up to a cap of £500 per tax year per employee. December’s Key Tax Dates 19/22 - PAYE/NIC, student loan and CIS deductions due for month to 5/12/2015 30 - Deadline for 2014/15 self assessment online returns to be filed if you are an employee and want tax underpaid to be collected by adjustment to your 2016/17 PAYE code (for underpayments of up to £3000 only)


The Budget & Finance bill July 2015

Click her to read the article

March's Tax Tips & News

Welcome to our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

If you need further assistance just let us know or you can send us a question for our Question and Answer Section.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

Please contact us for advice. We're here to help!

Salary, dividend or pension contributions?

When you work for your own company you can decide how much salary to pay yourself, how much to pay into your pension fund, and what proportion of the remaining profits to take as a dividend. The split is important as it will affect the tax and national insurance payable by you and your company.

A salary just sufficient to be covered by your personal allowance (£10,600 for 2015/16), will be tax free, assuming you have no other income. However, if your company has more than one employee (including directors), a salary of over £10,000 (for 2015/16) will mean the recipient has to be automatically enrolled in the company’s pension scheme, under the auto-enrolment rules.

We will be in contact with all our our employer businesses in the next few weeks to discuss Auto Enrolment pensions and what you need to be doing and when you’ll need to start making plans for providing employer pensions.

You must pay national insurance contributions (NIC) at 12% on your salary above £8,060. So if the company pays you £10,600, you take home £10,295 after NIC deductions. The company will also pay employer’s NIC of £343.34 on that salary. However, most companies are entitled to an employment allowance of £2,000 p.a. to set against NIC due for all the employees. This means the company doesn’t pay over employer’s NIC until the £2,000 allowance is used up.

You could pay yourself a salary just under the NI threshold of £8,060, so you receive an NI credit towards your state pension, but you don’t actually pay any tax or NI. However, at that annual salary level you will be “wasting” £2,540 of your tax free personal allowance, unless you have other income to cover it. The 1/9th tax credit attached to a dividend can’t be repaid even if the dividend is covered by your tax free personal allowance.

Finally, don’t forget your company can make contributions into your pension scheme and get a tax deduction for the cost. From 6 April 2015, if you are aged 55 or more you will be able to draw all funds from that scheme, although 75% of the fund will be taxable in your hands.

The implications of drawing funds out of a pension scheme can be complex and irreversible, so you should take advice from a financial adviser registered with the financial conduct authority (FCA) before making any decisions concerning pensions.

RTI Penalties

Last month we warned you about the penalties coming into effect for late filed RTI reports. The good news is that HMRC are cutting employers just a little slack, and will now allow three extra days in which to submit the full payment submission (FPS) report.

Normally the FPS must be submitted on or before the day the employees are paid, but there are some circumstances in which the FPS can be submitted up to 7 or 14 days later. For example, the FPS can be submitted within 7 days of the pay day if the employees’ pay can’t be calculated until the end of their shift, such as for harvest workers.

If you have already received a late filing penalty notice for a period since 6 October 2014, you can ask for the penalty to be removed. Do this by logging an appeal via the online appeals system. Complete the “other” reason box with the statement “return filed within 3 days”, and the penalty should be cancelled. We can do this for you if you send us a copy of the penalty notice.

Penalties for late paid PAYE were also due to be applied automatically from 6 April 2015. However, HMRC is now going to assess the reason for the apparent late payment of PAYE before sending out a penalty notice.

We hope this means HMRC will only issue a late payment penalty when it is clear that PAYE was deliberately paid late. This should avoid penalties being issued for disputed amounts that appear on your business tax dashboard (online accounts) with HMRC. If your online account shows you owe an odd amount of PAYE please let us know without delay.

Child benefit claw-back

If you or your spouse/partner claim child benefit, and at least one of you has adjusted net income of £50,000 or more for the year, the highest earner must declare the benefit on their tax return in order to pay back part or all of the child benefit as a tax charge.

HMRC is writing to taxpayers who it thinks should have paid the child benefit tax charge for 2013/14, but didn’t. Unfortunately some people who have received such letters are childless, or haven’t claimed child benefit for decades.

If you have received one of those letters by mistake, don’t ignore it. HMRC can alter your tax return to collect the tax it thinks is due. You need to reject any such incorrect alteration to your tax assessment within 30 days, but we can help you do this.

If you do earn over £50,000 and want to keep your child benefit for 2014/15 there are a number of things you can do.

First, work-out your adjusted net income. This is your gross salary before tax, less expenses that have not been reimbursed by your employer, but which are tax deductible, such as the cost of travelling to a temporary workplace and professional subscriptions. The self-employed should start with taxable profits and deduct trading losses. Any profits from let property, gross amounts of interest and dividends must also be included.

Next, deduct the grossed-up amount of donations made under Gift Aid, and grossed-up pension contributions made to personal pension schemes. Paying more pension contributions or making additional Gift Aid donations before 6 April 2015 can reduce your adjusted net income, and hence preserve your child benefit.

Remember only 1% of the child benefit is clawed-back for every £100 of adjusted net income above £50,000, so you might lose only a small amount of the child benefit as a tax charge.

Company cars

Does your company still own or lease the car you use for private journeys? You may need to rethink that arrangement in light of the tax charges due to apply in the years ahead.

From 6 April 2015 all company cars will generate a tax charge for the driver and the employer, even electric cars will be taxed on 5% of their list price. The taxable benefit for other low emission vehicles (51-75g/kg) will leap up from 5% to 9% of the vehicle’s list price. The taxable benefit for all other cars will also increase by two percentage points. The taxable benefit for high emission cars (over 210g/km), will increase from 35% to 37% of the list price.

In 2016/17 all company car drivers will suffer another 2% hike in taxable benefit, except for those which are already taxed at the maximum of 37% of the car’s list price. From 2017/18 the tax shoots up again, as for each extra 5g of CO2 emissions the taxable benefit increases by two percentage points of the list price. “Classic” cars with no recorded CO2 emissions will also be hit with increased taxable benefit charges.

Say you were provided with a new Lexus NX 300 H Sport on 5 April 2014. Its list price is £40,000, and it has a CO2 emissions rating of 121g/kg. If you keep the car for four years you will be taxed 86% of its initial value:

Tax year        Taxable benefit:
2014/15       £6,800
2015/16       £7,600
2016/17       £8,400
2017/18       £11,600
total        £34,400

March Questions & Answers

Q. In the February newsletter you said holiday pay was not a contractual right. I don't understand how that can be the case. Please explain.

A. New regulations came into force from 8 January 2015 which indicates that employees can't take a claim to a civil court for breach of contract if their employer fails to pay amounts of holiday pay on the basis of an entitlement under the Working Time regulations. The new regulations indicate that the right to holiday pay is a separate statutory right not contractual right. However, if the amount of holiday pay is stipulated in the employee's employment contract, and that amount is not paid, the employee may be able to claim breach of contract.

Q. My company uses the flat rate VAT scheme, so we don't reclaim VAT on the things we buy. When I set up the company it bought some office furniture for £1,500. I am now moving to new offices and selling the old furniture. Must the company charge VAT on the sale of the furniture even though it didn't reclaim VAT when it purchased the items?

A. Any sales the company makes, including selling on surplus assets, must carry VAT as the company is VAT-registered. There are different rules when selling land or buildings. The fact that the company didn't reclaim VAT when it purchased the assets is irrelevant.

Q. I run a pub which has a cash machine (ATM) inside. I've just received an extra business rates bill from the local authority in respect of the cash machine for £3,600! They haven't charged a separate bill for the ATM before now. Is there anything I can do?

A. You can appeal against the business property valuation, including the treatment of the ATM as a separate property. Do this by contacting the national Valuation Office Agency (VOA). If you can't agree a reduction in the property's rateable value you can take your case to a Valuation Tribunal. But don't delay, as if you succeed in getting a reduction in the rates due, you will only get a refund for periods from 2010 to 2015, if your appeal was made by 31 March 2015.

March Key Tax Dates

19/22 - PAYE/NIC, student loan and CIS deductions due for the month to 5/3/2015

31 - Last minute tax planning for the 2014/15 tax year. Ensure you use up all exemptions to which you are entitled


November's Tax Tips & News

Welcome to our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

If you need further assistance just let us know or you can send us a question for our Question and Answer Section.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

Please contact us for advice. We're here to help!

2013 - 2014 Self Assessment deadline looming...

If you are self employed or work in a Partnership please get your records together as soon as possible in order to avoid the January rush.

The Returns for the tax year ended 5 April 2014 are due by 31st January, as is any tax liability. Please give yourself time to prepare for any liability. To assist you here is a link to our Tax Return checklist.

https://gallery.mailchimp.com/7cfa2a06d50f6b905f523dd4d/files/Tax_Return_Checklist_2014.pdf

National Insurance Contributions

It seems that HMRC is trying to gather every penny in tax and national insurance contributions (NIC), from every possible source. Recently it has been demanding payment of class 2 NICs from landlords and investors in investment partnerships. If you get a bill for back-dated class 2 NICs should you pay it?

The annual class 2 NI liability is a relatively small amount (£143 for 2014/15), but it can provide you with an entitlement to the UK state pension. At least ten full years of NI contributions will be required to receive any state pension if you reach state pension age (SPA) after 5 April 2016. Note that SPA is gradually being increased up from age 65. If you are currently aged under 54 you will not become entitled to your state pension until you reach at least 67.

If your main source of income is rents or investments, paying class 2 NICs for past tax years could provide you with some state pension entitlement. On the other hand if your main income is from an employment, you are probably paying sufficient class 1 NICs in each tax year to gain your pension entitlement. We can help you decide what is best for your circumstances.

Mini One Stop Shop (MOSS)

This sounds like a friendly retail outlet where you might buy a pint of milk on aSunday evening. In fact it is short-hand for the online portal which UK businesses should use from 2015 to account for VAT they owe in respect of digital services provided to customers in other EU countries.

We mentioned this new rule in our July 2014 newsletter. "Digital services" includes a multitude of products such as:

- music downloads; - video on demand; - electronic books; - online games; - anti-virus services; - software purchased by download; - charges by online auction sites; - sales of data or images online; and - automated learning or exams.

From 1 January 2015, if you sell a digital service to someone in another EU country, who is not a business (ie an individual, Government body or perhaps a charity), you must account for VAT in the country where that customer belongs. This means you need to charge VAT on your invoice to your overseas customer at the rate that applies in the customer's country, and then pay that VAT to the tax authority of that country.

As there are 28 EU countries it would be an administrative nightmare to complete a quarterly VAT return in every country in which you have customers. Hence the need for an online portal (MOSS) to do all the VAT accounting and payment in one go.

The VAT MOSS portal is now open for businesses to register (see https://www.gov.uk/vat-on-digital-services-in-the-eu), but it's not going to solve all the admin nightmares. For instance:

- you need to know the VAT rates that apply to your products in all the countries you sell to; - your VAT invoices to customers in other countries must comply with the local regulations - which are NOT the same across the EU; - VAT-MOSS returns must be made for calendar quarters irrespective of the periods for which you draw up your UK VAT return; - VAT due under MOSS must be paid electronically by the 20th of the month following the end of the quarter, but payment can't be made by direct debit; - the tax authorities for every EU country you sell to can inspect your sales records, which must be retained for 10 years.

You also need to be VAT registered in the UK before you can use the MOSS system. Contact us and let's talk about what you need to do.


October's Tax Tips & News

Welcome to our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

If you need further assistance just let us know or you can send us a question for our Question and Answer Section.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

Please contact us for advice. We're here to help!

Creating Extra Cash-flow

Could your creative company benefit from a boost to its cash flow? If it produces computer games, films, high-end TV or animation programmes, it may qualify for a new payable tax credit.

All of these products can qualify for extra tax relief if they can be certified as culturally British, and at least a quarter of the core production costs are incurred in the UK. There are some other conditions:

-

only businesses trading as companies can qualify for the tax relief, not individuals or partnerships; and

- the product must be intended for release to, or to be broadcast to the general public, not produced for training or advertising purposes.

High-end TV programmes are essentially quality drama; not news, current affairs or quiz shows. Unfortunately producing original music doesn't qualify as a creative product for these tax reliefs.

There are separate tax relief schemes for the different categories of products, so it is important to look at the detail for your particular sector. However they all work in broadly the same way: the company can claim an extra 100% deduction for up to 80% of the core production costs. Say the company spends £100,000 in the UK on producing a TV animation programme, if the tax relief applies it would claim an enhanced deduction for those core costs of £180,000.

If your company makes a loss after this deduction, that loss can be surrendered for a payable tax credit. Our tax experts can guide you through the detail of these new tax reliefs.

Understanding the CIS

If you are a contractor in the construction industry it is essential that you deduct the right amount of Construction Industry Scheme (CIS) tax from payments you make to subcontractors.

A common misunderstanding about the CIS is that deductions of CIS tax only have to be made from labour costs. This is not the case, but it may work out like that in practice.

HMRC's instructions are clear, the contractor must deduct the following cost items as listed on the subcontractor's invoice before applying the appropriate rate of CIS tax (20% or 30%) to the net amount:

- VAT charged;
- CITB levy paid;
- materials;
- consumable stores;
- fuel used - except for travelling;
- plant hire; and
- manufacturing or prefabricating materials.

If the contractor does not deduct the right amount of CIS tax they remain liable for that tax to HMRC, unless the contractor can persuade HMRC to demand the CIS tax directly from the subcontractor.

In a recent case the judge was very critical of the company directors and internal accountant for not taking the trouble to read the CIS regulations and taking care to apply them. This is a bit harsh, as the regulations are not easy to understand. However, you should at least make sure that anyone who operates the CIS within your company reads the guidance concerning CIS on the HMRC website. If you are unsure about any aspect of the CIS ask us for clarification.

VAT on International Services

When you sell services to businesses in other countries, the sale will generally be outside the scope of UK VAT. You don't charge VAT on your invoice, but you need to report the value of that sale as part of the total in box 6 on your VAT return. There are exceptions to this general rule for services connected to land, live performances, catering or passenger transport.

If the sale is to a VAT registered business in another EU country the sale must also be reported on your EC Sales list. If your customer is not a business, or is not VAT registered, the sale should not be included on the EC sales list. However, from 2015 sales of various electronic services, broadcasting or telecoms to non-business customers could affect your liability to register for VAT in the customer's country.

If your customer is located outside of the EU, you don't report the sale on the EC sales list, but the value of the sale must still be added to the total to be declared in box 6 on your VAT return.

These distinctions are easy to get wrong, so do ask us if you have any doubts about how to report international sales.

Scottish Taxes

The Scottish people have spoken and the majority have decided they want Scotland to remain part of the UK. However, that doesn't mean everything will remain the same. We already know there will be two new taxes in Scotland from 1 April 2015, and a variation to income tax rates for Scottish taxpayers from 6 April 2016.

If you are planning to buy land or buildings in Scotland, you should be aware that the tax you will pay on top of the purchase price is currently uncertain for completion dates on or after 1 April 2015. This is because Stamp Duty Land Tax (SDLT) will be replaced by Land and Buildings Transaction Tax (LBTT) for sales of land and buildings in Scotland from that date.

The LBTT will have different rules to the SDLT, which will continue to apply to land transactions in England, Wales and Northern Ireland. For example LBTT will have a nil rate band as well as at least two other bands, but probably different bands and rates for residential and non-residential property. The rates and thresholds for the new LBTT are expected to be revealed as part of the Scottish Government's budget in October 2014.

The other new tax from 1 April 2015 is a Scottish replacement for landfill tax. The rates and thresholds for the Scottish landfill tax will also be announced as part of the Scottish Government's Budget for 2015/16 in October 2014.

From 6 April 2016 the Scottish Government will be able to replace 10p out of each tax band with the Scottish Rate of Income Tax (SRIT). This will apply to all individuals resident in Scotland including pensioners, who fall into a new definition of "Scottish taxpayer". However, the SRIT will have to apply within the tax bands imposed by the UK Government, and the personal allowances will not change.

As currently agreed (and this could change following negotiation for further powers) the rate of the SRIT must be the same for all the tax bands. For example if the SRIT is set at 10p, the total tax rates will remain where they currently stand for the whole of the UK: 20%, 40%, and 45%. If the SRIT is set at say 15p, Scottish taxpayers will pay income tax at 25%, 45% and 50%.

A new tax authority: Revenue Scotland, has been set up to administer the new Scottish taxes, and any other devolved taxes that may follow. Income tax, including SRIT, will continue to be administered by HMRC.

October Question & Answers

Q. My consulting company holds a significant amount of cash and I would like it to buy a piece of artwork as an investment, what are the tax implications?

A. If the artwork is kept at your home there will be a taxable benefit in kind, which needs to be declared on the annual form P11D.
Say the artwork cost £30,000:
You will pay income tax on 20% x £30,000 = £6,000 at your marginal rate, each year. The company must also pay class 1A NICs of 13.8% x £6,000 = £828 per year.

If the artwork is to be kept in a bank vault as a pure investment, there won't be a benefit in kind charge for you. However, the business must pay the insurance and storage costs, for which there will be no tax deduction. There is also no tax deduction for the cost of buying the artwork as it is not an item used for the business.

If the company closes, any creditors will be able to access the value of that art, just as if it was cash. If the business is solvent when it closes holding significant investments, it may not qualify for entrepreneurs' relief, which would otherwise reduce the tax you pay on any gain made on the liquidated asset of the company down to 10%.

Q. I am currently aged 57 and while I have been out of the country, I have paid voluntary national insurance contributions to allow me to qualify for the state pension. I recently asked the Pensions Service whether I need to carry on paying voluntary NICs but I'm very confused about the answer. Do I need 10, 30 or 35 qualifying years, to get the full state pension?

A. The rules for qualifying for the State Pension will change for anyone who reaches state pension age after 5 April 2016, so that includes you. A person currently needs 30 years of NICs to achieve full entitlement to the state pension, but that is to increase to 35 years for people who reach state pension age from April 2016. You will need a minimum of 10 qualifying years to get any of the new state pension, which will be paid at a flat rate.

Q. How can I easily calculate a total amount to claim for the self-employed business I run from my home, for example the total amount of usage for rent, gas, insurance, council tax, internet usage and broadband?

A. There is an easy way to calculate the deductible amount of your home expenses, you simply record how many hours you work at home each month and claim the appropriate flat rate:

- Working 25 to 50 hours at home allows a £10 claim for the month
- Working 51 to 100 hours at home allows a £18 claim for the month
- Working 101 or more hours at home allows a £26 claim for the month

This rate covers the cost of power, telephone, internet access, but it doesn't cover council tax, insurance, rent or mortgage interest. Those other costs should be apportioned according to the space you use for your business in the property, and how many hours you use that space. We can help you with the calculation.

October Key Tax Dates

1 - Due date for payment of Corporation Tax for the year ended 31 December 2013

5 - If a Tax Return has not been received, individuals and trustees must notify HMRC of new sources of income and chargeability in 2013/14

14 - Return and payment of CT61 tax due for quarter to 30 September 2014

19 - Tax and Class 1B national insurance due on PAYE settlements for 2013/14

19/22 - PAYE/NIC, student loan and CIS deductions due for month to 5/10/2014 or quarter 2 of 2014/15 for small employers

31 - Deadline for 2013/14 self-assessment paper returns to be filed for HMRC to do the tax calculation. If a paper return is being filed also the deadline for tax underpaid to be collected by adjustment to your 2015/16 PAYE code (for underpayments of up to £3000 only)


September's Tax Tips & News

Welcome to our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

If you need further assistance just let us know or you can send us a question for our Question and Answer Section. You can ask us anything by simply replying to this newsletter.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

If you still need to submit your papers for the 2013-14 Tax Return please do so sooner rather than later to ensure you have plenty of time to plan for any tax liability. The link to our checklist is here...

Tax_Return_Checklist_2014.pdf

On saving money we are also pleased to be able to offer you a link to discounted utilities; you can find out of you might be able to make significant savings here. By taking a gold bundle you can guarantee savings against what you already pay. Its worth a look even if you decide its not for you. Furthermore you can get all of your household bills on one single monthly bill.

www.paylessutilities.co.uk

Please contact us for advice. We're here to help!

September 2014

Late Filing Penalties

From 6 October 2014 the HMRC computer will automatically issue you with a penalty if you submit your full payment submission (FPS) under RTI "late", or don't submit it at all for a month in which you paid your employees.

So what makes the FPS "late"? HMRC say the FPS must be submitted on or before the day the employer pays the employees (the "payment date"). But is that the day the funds leave the employer's bank account or the day the employee receives the money?

In fact the "payment date" for RTI purposes is neither of these dates. It is the date contractually agreed between the employer and the employee to be the date on which the employee is to be paid. If the funds happen to be passed to the employee on an earlier or later date, perhaps due to a bank holiday, that doesn't change the "payment date". This is explained in HMRC's RTI guidance on non-banking days.

So whatever the payment date is in your employee's contract (verbal or written), that is the date that you should enter in the payroll software as the regular payment date. As long as the FPS is submitted before that regular payment date, you should be able to avoid any late filing penalty.

In fact you will be allowed one late filing per tax year without incurring a penalty. The HMRC computer will warn you that you have submitted your FPS late by sending an electronic notice sent through HMRC's PAYE online service. You may have already received some of these electronic warning messages, but at present no penalties have been issued. If you receive any more late filing warnings do let us know as the late filing penalties can be up to £400 per month for large payrolls.

VAT On Multi-products

Most products and services are subject to standard rate VAT at 20%, but some products are zero-rated (VAT applied at 0%), while others, e.g. rent for certain buildings, are exempt from VAT. There is a limited range of products and services that attract 5% VAT.

If you supply a package which is made up of products and services which carry different rates of VAT, you need to be sure of the split to charge the right amount of VAT to your customers. The VAT man may insist that you charge VAT at the highest rate if he thinks the lower-rated product is only incidental to the total package the customer is buying. For example a printed leaflet (zero rate) sold with a DVD (standard rate).

Say you own a large retail building and let out space within it as shops and in it are shops for antique dealers. The rent is exempt from VAT if you have not "opted to tax" your whole building. Each dealer can ask you to sell stock on their behalf if he is not present when a customer arrives. This selling service should be standard rated as an agency service.

In a similar case to this the VAT man argued that the whole charge to the dealers (rent and selling service) should be charged at 20% VAT. Fortunately the Tax Tribunal disagreed and ruled there were two elements which should have separate VAT charges, as this is how the antique dealers viewed the arrangement.

If your products have several elements with different VAT treatments, talk to us about how your customers view the mix, and how you should split the VAT charges.

Redress Payments

Was your business mis-sold an interest rate hedging product (IRHP) by its bank? The Financial Conduct Authority (FCA) has required the banks concerned to make redress payments to the wronged businesses, and some of those payments are coming through now.

If you receive an IRHP redress payment it will be made up of:

- consequential losses and basic redress; and - interest is paid at 8%.

The bank may deduct tax at 20% from the interest element, where it is paid to an unincorporated business. Look out for such tax deductions declared in the documentation supplied by the bank. The interest and any tax deducted needs to be shown on the business tax return. However, if you trade as a company the interest should be shown as loan relationship income not as trading income.

If the original IRHP payments were treated as trading deductions for your business, the redress payment should be included as trading income in your accounts. It should be included in the accounts for the period in which it is received. If the redress is paid by instalments, each instalment should be included in the business accounts for the period in which it is received.

If the original IRHP payments were not treated as taxable deductions (perhaps because the product was treated as a hedging asset in your company accounts) the redress payment may be treated as a capital receipt. We can advise you on the correct accounting and tax treatment.

Travel Question

If you contract through your own personal service company (PSC), you will be an employee of that company and you have to obey the strict tax rules that apply to employees' travel deductions when claiming expenses from your PSC.

The first rule is that the cost of ordinary commuting cannot be claimed. This is defined as travel to a permanent workplace, which is somewhere attended regularly to perform the duties of the employment. Travel costs to a temporary workplace can be claimed, but the conditions that make a workplace 'temporary' must be met.

A place is not a temporary workplace if the employee attends for a continuous period of more than 24 months, or the attendance is expected to last more than 24 months. If your PSC takes on a contract that is expected to last say 36 months at one location, you can't claim travel costs to that location, as your workplace is not a temporary workplace from the start of the contract.

Another definition of 'temporary workplace' is one which the worker attends to perform a task of limited duration or for some other temporary purpose. HMRC has a rule of thumb that if the worker is attending a place for 40% or more of his working time, that is a permanent workplace and travel costs to the location can't be claimed.

If you work at your client's office for say 15 hours per week out of a 40 hour normal working week, your client's office is a temporary location even if the contract exceeds 24 months. Please discuss the matter of travel expenses with us before you take on a long contract, as the deductibility of the travel costs may tip the balance on whether the contract is worthwhile.

September Key Tax Dates

19/22 - PAYE/NIC and CIS deductions due for month to 5/09/2014

30 - Closing date to claim Small Business Rate Relief for 2013/14 in England

Need Help?
New Clients Welcome!

Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there's anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list. If you are not already a client and are interested in becoming one, we would love to provide you with a competitive quote for our services.

All new client consultations can be carried out via email and are provided free of charge and without obligation.

About Us

ABPS Accountancy are based in North West Kent, offering UK business owners and individuals a wide range of services.

All clients receive fixed fees, work delivered on time and free unlimited phone support. Visit our website http://www.abpsfinance.co.uk for more information.

Q. Private school fees are so expensive, can I get my company to pay the fees directly and save myself a bit of tax?

A. If the company pays a bill such as the school fees, which you are personally liable to pay, the payment is treated for national insurance (NI) purposes. It is as if the company had paid it to you so the company must pay employers NI on top of the amount of the fee. However, it is a benefit in kind so it must be reported on the form P11D and the income tax you are due to pay will be included in your PAYE code for the next year. In the long run you don't save any tax or NI.

If your company contracts directly with the school to be the person responsible for paying the school fees, the tax position is slightly different. The payment must be treated as a benefit in kind and reported on your form P11D, and the company must pay class 1A NICs on the amount paid. You pay tax on the payment to the school, but not NICs.


August's Tax Tips & News

Welcome to our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman. If you need further assistance just let us know or you can send us a question for our Question and Answer Section. We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

Please contact us for advice.

In the meantime, if you have not yet sent us your details so that we can prepare your Tax Return for the year to 5 April 2014, here is a handy reminder of what we'll need.

https://gallery.mailchimp.com/7cfa2a06d50f6b905f523dd4d/files/Tax_Return_Checklist_2014.pdf

We're here to help!

Accelerated Payments

The Taxman now has the power to demand tax from you if you have used a registered tax avoidance scheme, or if he thinks the tax scheme you have used is similar to one that has been judged to fail by a Court or Tribunal.

For some years most tax avoidance schemes have been registered under the Disclosure Of Tax Avoidance Scheme (DOTAS) rules. Each scheme was issued with a DOTAS reference number, known as a "DOTAS number" or SRN, which had to be shown on tax returns of taxpayers who used the scheme.

If you were advised to include a DOTAS number on your tax return, and HMRC has already opened an enquiry into that tax return you should watch the post for a tax demand headed "Accelerated Payment Notice". This could arrive at anytime from now until April 2016.

If you receive an accelerated payment notice you can't appeal against it, but you can ask HMRC to reconsider the amount demanded within 90 days. We can help you with this.

You may also want to consider some other options such as:

We should discuss the consequences of paying the accelerated tax demand on the rest of your tax affairs; will you be able to meet your other tax liabilities when they are due?

Maximising Statutory Maternity Pay

Paying statutory maternity pay (SMP) is not optional. It must be paid if your employee qualifies, but the good news is that a small business can recover 103% of the SMP paid from HMRC. A business that pays less than £45,000 of class 1 NICs in one tax year is defined as "small" for this purpose.

In a family business there may be scope for maximising the SMP payable for the first six weeks of maternity leave, and hence getting the Government to refund that SMP with a bit extra to cover the employer's NICs due. Let's see how this could work.

Where the employee earns at least £111 per week the employer must pay SMP at these rates for the following periods:

- for the first 6 weeks - 90% of the employee's average weekly earnings (AWE); - the remaining 33 weeks - the lower of £138.18 or 90% of their AWE.

If a bonus is paid in the crucial "relevant period" - which is used to calculate the employee's "average weekly earnings" - the SMP payable for the first six weeks automatically increases. The remaining 33 weeks of SMP are not affected as that period is paid at a flat rate where earnings exceed £153.53 per week.

The relevant period is a period of at least 8 weeks ending on the pay day before the "qualifying week". The qualifying week falls 15 weeks before the expected birth date, so you need to know the expected date of birth before timing the bonus payment.

Say the expectant mother normally earns £520 per week, she will receive £468 per week in gross SMP for the first six weeks. Her employer will pay class 1 NICS of £260.82 on top of this SMP and will be able to recover: £468 x 1.03% = £2,892.24. If the class 1 NICs on the SMP are covered by the employment allowance of £2,000 for the business, the employer effectively recovers £2892.24 against an SMP cost of £2808.

However, paying a large bonus won't necessarily be tax effective; it depends on how much NICs can be covered by the employment allowance.

Say the employee receives a bonus payment of £2,000 in the relevant period, this bonus generates an employer's NICs bill of £276, and increases her AWE and hence her SMP for the first six weeks to £675 per week. Her employer can recover £675 x 1.03% for six weeks = £4171.50.

But this is a marginal increase from £2892.24 which was recovered without the bonus; an increase of £1279.26 for paying out £2447.40 (bonus + NICs on the bonus and SMP).

There is a calculator on the GOV.UK website that can help you work out the SMP that will be due, and you can change the answers to each question to see how difference in pay will change the SMP. We can also help you crunch the numbers.

Commission Refunds

If you invest through a firm of financial advisers, you may well receive a repayment of commission from that firm each year. In previous years any refunded commission was rolled into the earnings from your investments or set against charges, so you may not have been aware of it. However, from 6 April 2013 the financial adviser must deduct tax from any refunded commission and show the amounts paid and deducted separately on your annual statement .

You should look out for these refunded amounts on your investment statement for 2013/14, as it must be declared on your 2013/14 tax return. However, don't add it into your interest, or dividend income. The correct place to declare the refunded commission is in box 16 on your self-assessment tax return under "other taxable income", with an explanation of the income in box 20.

We will do this for you when we complete your tax return, but please remember to provide us a copy of your investment statement that shows the refunded commission.

EC Sales Lists

If your business is VAT registered and you sell goods or services into other European countries you must generally also submit an additional form to the Government called an EC Sales List (ESL also known as form VAT101). There are no payments to be made or reclaimed with the ESL, as you do on your quarterly VAT return form, but you must submit the ESL on time or HMRC will charge a penalty for late submission.

If you export goods worth more than £35,000 per year you will need to complete a monthly ESL, otherwise it's a quarterly task. However, where your total turnover is less than £106,500 and you export less than £11,000 you can ask HMRC for permission to submit just one ESL per year.

HMRC should send you an ESL form to complete if you have filled in box 8 on your VAT return. Don't ignore it, as the deadline for returning the form is just 14 days from the end of the quarter. If you chose to complete an online version of the ESL you have 21 days from the end of the quarter. These deadlines are much shorter than that for your quarterly VAT return.

We can complete and submit the ESL online on your behalf.

August Questions & Answers

Q. In July 2011 I sold a property which had been used for my business. I planned to reinvest the proceeds in another property, but that acquisition never happened. I know I should now pay Capital Gains Tax on the gain made in July 2011. How do I go about doing that?

A. The period in which you should have reinvested the proceeds ran out in July 2014, so you do need to pay the CGT due for 2011/12 unless you get the tax inspector to agree to extend the period for reinvestment. He will only agree to an extension if you were prevented from reinvesting by circumstances beyond your control.

The disposal made in July 2011 should have been reported on your 2011/12 tax return as part of your provisional claim for roll-over relief. You should now write to the tax office to withdraw that provisional claim and declare the full taxable gain. The tax will be payable immediately and interest will run from 31 January 2013.

Q. I work as a self-employed courier for a large courier company who operates self-billing for VAT purposes and pays me monthly. I have just registered for VAT which has been back-dated to 1 May 2014. What should I do to collect the VAT due for May, June and July?

A. You should ask your customer if it is acceptable for you to issue a VAT only invoice to them. Calculate the VAT due as if the total amounts you have received in May to July under self-billing are the net amount of your fees for the period. You should also supply your customer with a copy of your VAT registration certificate, so the company knows to add VAT to your self-billing invoices in the future.

Q. My personal service company is about take on an IT servicing contract in Belgium. The customer will pay me a rate for every day I attend their premises, on top of my fee for the whole contract. This 'per diem' rate is less than HMRC's benchmark rate for expenses when working in Belgium. Can it be paid directly to me personally or should it be paid to my personal service company?

A. The 'per diem' rate should be paid to your company and be included in its turnover for VAT purposes, so treat it as a gross receipt including VAT. Your company can pay you expenses for working abroad, at or below the HMRC agreed benchmark rates. Do not short circuit this by accepting the per diem rate straight into your personal bank account as this will create a VAT mess.

August Key Tax Dates

2 - Last day for car change notifications in the quarter to 5 July - Use P46 Car

19/22 - PAYE/NIC, student loan and CIS deductions due for month to 5/8/2014i


July's Tax Tips & News

Welcome to our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

If you need further assistance just let us know or you can send us a question for our Question and Answer Section.

Tax Investigation Service

Please note the deadline for joining the service for 2014/15 is next Monday. If you haven't signed up or would like more information please let us know. The fee for limited companies is just £195 including VAT and that includes the directors' personal tax affairs as well.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

Please contact us for advice. We're here to help!

Real Time Information (RTI) Penalty Notices

As an employer you may have received an RTI penalty warning letter accusing you of not submitting all of the RTI returns required for 2013/14. However, that letter may be incorrect.

HMRC has admitted that its computer has churned out inappropriate penalty warning letters to employers who have submitted employer payment summaries (EPS) during 2013/14. If you have submitted all the required RTI returns for the tax year you can ignore the warning letter, as a penalty will not be charged.

This "cry wolf" by HMRC sets a dangerous precedent, as you may be inclined to ignore further RTI penalty warning letters that could be issued later this year.

From October 2014 new penalties come into effect where the monthly full payment submission (FPS) is submitted late, or an EPS is not submitted where a FPS is not required as no payments are made. If or when those new penalties arrive you will be able to appeal against the penalty online. Note this online appeal system is not up and running yet.

From October 2014 the FPS will contain a new box that allows you to tell HMRC why the FPS is apparently late, perhaps because you are taking advantage of the concession for payrolls with nine or fewer employees.


July Key Tax Dates

5 - Deadline for PAYE settlement agreement for 2013/14

6 - Deadline for 2013/14 forms P11Db, P11D and P9D to be submitted and copies of P11D and P9D to be issued to relevant employees

Deadline for employers to report share incentives for 2013/14 - form 42

14 - Return and Payment of CT61 tax due for quarter to 30 June 2014

19/22 - PAYE/NIC, student loan and CIS deductions due for month to 5/7/2014 or quarter 1 of 2014/15 for small employers

31 - Second self-assessment payment on account due for 2013/14

Second 5% penalty surcharge on any 2012/13 outstanding tax due on 31 January 2014 still unpaid

Deadline for Tax Credits to finalise claims for 2013/14 and renew claims for 2014/15

Half yearly Class 2 NIC payment due

Penalty of 5% of tax due or £300, whichever is greater for 2012/13 personal tax returns still not filed


HMRC Tax Investigations:

HMRC’s tax receipts from investigations into small and medium-sized businesses have increased by 31% in the last year, according to figures obtained.

“Compliance” investigations into SMEs raised £565m for HMRC in 2012-13, up from £434m in 2011-12 (year ending March 31),

In the 2010 Spending Review, the Chancellor set a target to net an extra £7bn a year in additional tax revenues from compliance activity.

“Small businesses are bearing the brunt of HMRC’s tougher approach to tax investigations,

Small and medium-sized businesses are often less likely to have accountants to manage their finances, making them prone to mistakes when filling in returns and therefore an easy target for HMRC, Maugham said.

“That also means they are in a weaker position to negotiate over allegation of underpaid tax than a big corporate.”

Since 2010, HMRC’s taskforces have focused on tax evasion in sectors of the economy ranging from medics and plumbers to restaurant owners and door-to-door sales people.

HMRC said its tax taskforces have raised more than £80m since 2011. It expects to bring in more than £90m per year from new taskforces launched over the next three years.

The Revenue added that the targeting of different industries is a smart use of resources, but some tax experts question whether modest returns from some campaigns are worth the effort.

The taskforces are part of £917m in funding from the government spending review to tackle tax evasion, avoidance and fraud from 2011/12.


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