Category: Tax Advice

HMRC claims to have increased its tax after a crackdown on tax avoidance by large businesses and individuals. There has been a significant 15% increase, up £3.2bn on last year, bringing in an astonishing £23.9bn from increased activity in unpaid tax, almost £1billion above the target set by Chancellor George Osborne in his 2013 autumn statement.

This increase has been said to have been accomplished by cracking down on large scale tax avoidance schemes. More the £8billion has been secured from large business, over £1billion from criminals and £2.7billion from tackling avoidance schemes in the courts, said HMRC.

Exchequer secretary to the Treasury David Gauke said “We set HMRC ambitious targets to increase its yield and the figures published today demonstrate that HMRC is successfully meeting these challenges.

“It also sends a clear signal – HMRC will pursue those seeking to avoid their responsibilities and will collect the taxes that are due.”

Mr Gauke said on the BBC Radio 4 Today programme: ‘There is a variety of things that have been done to increase the yield, various campaigns, and better use of technology.

‘The staffs of HMRC deserve credit for what they have done… the government has been very much backing HMRC. We put in place a reinvestment programme that has contributed to this increase in yield.’

Prestigious companies such as Amazon, Google and Starbucks who was found last year to have paid no corporation tax on its profits in the UK since it began trading in 1999, caused uproar and enquires for MP’s.

HMRC has stepped up efforts to publicise the results of its tax avoidance work in response to criticism from MPs last December. MPs on the Public Accounts Committee (PAC) accused it of not using all the sanctions at its disposal to pursue unpaid tax.

“In pursuing unpaid tax, HMRC has not clearly demonstrated that it is on the side of the majority of taxpayers who pay their taxes in full,” the MPs said.

Richard Murphy then questioned the HMRC figures by claiming the new tax legislation was the result of tax compliance activity was ‘’political fantasy’’ and a PR department figment of imagination.

Capital gains tax entrepreneurs’ relief provides for a 10% rate on the disposal of a business, including a sole trade or shares in a trading company. The relief extends to the disposals within 36 months of cessation of trading, provided the business qualified for entrepreneurs’ relief for the 12 months up to the cessation date.

A recent case before the Tax Tribunal reminds us of the importance of timing in tax planning. A Mr Rice owned a car dealership in Peterborough which ceased trading in May 2005, but the premises from which the business traded were not sold until April 2008 – just within the 36 month period so the relief was available!

Finance Act 2012 introduced a 15 per cent rate of SDLT on the acquisition by certain non-natural persons (broadly companies) of dwellings costing more than £2 million. Finance Bill 2014 reduced this threshold to £500,000. The previous £2 million threshold will continue to apply, subject to exceptions, where contracts were entered into before 20 March 2014.

Acquisitions by trustees or for the purposes of letting, trading or redevelopment, trades involving making a dwelling available to the public, providing dwellings for occupation by certain employees or use as a farmhouse are excluded from the higher rate charge.

Class 2 NIC for the tax year 2014/15 is charged at the rate of £2.75 per week. It is possible for those with earnings below the small earnings limit of £5,885 (for 2014/15), to apply for the small earnings exception using form CF10.

Some taxpayers are both employed and also self-employed and so will have a PAYE code. From April 2014, HMRC can collect outstanding Class 2 NIC by adjusting the PAYE tax code.  If a Class 2 National Insurance contributions debt is being collected through a tax code, HMRC will have written to the taxpayer earlier in the year requesting payment. If you do not want your Class 2 National Insurance contributions debt to be included in your tax code, then you will need to pay the amount due in full.

There are plenty of myths about the tax rules on company cars and the Pool Car Policy, but you should believe them at your peril as getting it wrong could result in a costly investigation by HM Revenue & Customs. Here, A&C Chartered Accountants can let you know the facts about the Pool Car Policy.

So what is a Pool Car and what is the restriction.

Pool Cars must meet the following conditions:

HMRC:http://www.hmrc.gov.uk/payerti/exb/a-z/c/cars.htm

• Used by more than one employee
• Not ordinarily used by one employee to the exclusion of others
• Not normally kept at or near employees’ homes
• Used only for business journeys – private use is only permitted if it is merely incidental to a business journey (for example, commuting home with the car to allow an early start to a business journey the next morning)
• Provided all these conditions are met, you have:
• No reporting requirements
• No tax or NICs to pay

What to report, what to pay

Provided all these conditions are met, you have:

• No reporting requirements
• No tax or NICs to pay

Banning all private use is essential for you ‘pool car’ to be considered by the Tax man. If one of these conditions is not met let’s say that your the car/van is regularly kept at one of the employees homes, the car will be considered an not a pool car, and as a result private use of the car creates a tax liability. But tis tax liability will no only effect this particular employee but all the employees who use the car.

For Any more information regarding the issues raised in this article please do not hesitate to contact a member of the a&c Team. Call 0161 962 1855 or email chloe@ac-accounts.co.uk

We all remember the notorious flat rate charge of £200 that was introduced back in 1990 for the private use of mobile phones provided by employers. Don’t we?. The aim of the charge was to discourage employers from providing them, however with the increasing dsemand and emphadisi on communication, this actually made no difference. In 1999 HMRC decided to swcrap the Tax and ever since mobile phones have been one of the most popular tac free benefits employers could provide for their employees.

It is a shame that we are still hearing that many new business owners and entrepreneurs fail to realise the benefits of having a business mobile phone for work purposes. The majority of people think that using their own personal mobile for business calls will be sufficient for them to get the company to foot the bill. In truth, the law governing this area means that such people may well find themselves subject to national insurance and income tax contribution demands as the phone bill is seen as a payment of expenses and thus a “taxable benefit“. A company mobile on the other hand is deemed to be a tax-free benefit.

This is covered by Section 319 of the Income Tax (Earning and Pensions) Act 2003 and the Finance Act 2006.

a&c Chartered Accountants have provided a breakdown of how you can make sure you reap the benefits of this useful business/tax tip.

How do mobile phones qualify for exemption?

TO ensure this benefit is completely tax free the following conditions have been put in place bu the HMRC:

• The contract for the phone must be in the name of employer and not the employees
• The phone must be provided by the employer so that the handset belongs to them
• The employee can only benefit from this exemption for one mobile phone

Employer

You must ensure that the name on the mobile phone cotract is not one of an employer. The name on the account must strictly be of the employing companies name. This way you shall avoid any tax imlications in the future as the phone wioll only allow itemised business calls to be paid by the company. This is also relevant in regards to how you pay your monthly bill. All direct debits or payment arrangement must be made by the company only. If the contract or payment methods are regiostered by anyone else other than the compny you are technically only able to claim the proportion of the costs that relate to your business. If this is the case you will be expected by HMRC to russle through the your recorded phone records and add up the pennies yourself.

Rememebr that HMRC must be noted if the contract is in your name and you are claiming full cost through the company, because you are creating a taxable benefit. Hmrc will then issue you a PD11 form for you to complete.

Changing The Name On The Contract

Most providers are more then happy to change your contract into the nam of the company. If you do come across any problems you should aim to terminate your contract as soon as possible and then once your contract has ended you can then open a new contract in the companys name. One issue most new businesses incur is the fact they have not yet established a credit rating and in result of this if you are a new business with no credit history then you will be charged premium for the contract change. The added cost should then be evaluated and compared against the tax cost and if needed the contract will be transfered into the company once established.

Smartphone’s

In recent time HMRC has now recognised that smartphones meet the demands of the conditions, to be usec as a mobile phone.

Family Members

If your company kindly provides a mobile phone for your spouse/son/daughter or other relative then this phone must of only been issues to them by the director or employeed of your company in order to benefit from the exemption. It is vital that you are able to demonstrate that your family member carries out some sort of labour for the company and was not just given the phone because they are related.

For any further information on the issues raised in this article please don’t hesitate to contact a member of the a&c Team. Call 0161 962 1855 or email chloe@ac-accounts.co.uk

Many mortgage lenders are now requesting a copy of the official HMRC tax calculation (SA302) as confirmation of income for mortgage applicants. Previously, they would have accepted income confirmation by the borrower’s accountant. There is thus a conflict between planning to minimise income for tax purposes and declaring a higher level of income to support a mortgage application.

A further problem is that the SA302 HMRC calculation cannot be downloaded from the HMRC website when third party software has been used to submit tax returns, and copies are not routinely sent out by HMRC. To obtain a SA302 calculation you are required to phone HMRC and ask for the form  to be sent out by post. This usually takes about 14 days.

The accountancy bodies are calling for HMRC to allow accountants to download and print off the SA302 for their clients to support their mortgage applications.

For more information on this, or for fast and friendly advice on any of our other tax services, get in touch via our contact page or call us on 0161 962 1855.

As previously announced, it has been proposed that from 6 April 2015 CGT will be charged on non-residents who make disposals of UK residential properties. HMRC have issued a consultation document to consider how the charge can be implemented and the tax collected.

Part of the proposal may also affect UK residents who own more than one residential property. Currently, where a taxpayer has more than one residence, it is possible to elect which of those properties is to be treated as their principal residence so that private residence relief (PRR) will apply to the gain on the elected property. To prevent non-UK residents from electing their UK residence as their PRR, it is proposed that the current election system is removed and replaced with the requirement that the taxpayer demonstrates the main residence they have occupied during the year.  If implemented, this proposal could have a serious impact on a number of individuals, such as MPs and others who keep a flat in London which is occupied during the working week and another residence in the country for the weekend and where the rest of the family live during  the week.

According to the Bank of England the yearly rate of growth in lending to UK businesses has decreased by £0.5 billion in 3 months to February 2014. However this is nothing compared to the £3.3 billion decrease in the preceding 3 months.

Key findings:

• The stock of lending in the real estate sector – which has the biggest stock of business loans – fell by 8.1% in the year to February 2014
• Demand for credit across all business sizes increased in 2014 Q1, according to respondents to the Bank of England’s Credit Conditions Survey
• £15.3 billion of new gross syndicated lending was granted in Q1 2014 was, 20% lower than the same period last year.
• The annual rate of growth for lending to businesses by UK financial institutions has been negative since mid-2009
• The pace of decline in the stock of lending to UK businesses has eased slightly since the start of 2013
• Lending growth rates for small and medium-sized enterprises (SMEs) were stronger than for businesses overall in 2009.

In April 2009 the Bank of England’s Trends in Lending report assessed develop,ents in lending to the UK economy.

Key figures since 2009:

If you require any information about the issues raised in this article a&c Chartered accountants are more than happy to help. It might say accountants on the door but we like to work as a business guide to help you and your business grow and flourish. Call 061 962 1855 today to discuss the future of your business.