Christmas Greetings

We would like to wish all of you the very best for Christmas and 2013.

As an alternative to sending Christmas cards this year, details of our chosen charity will appear here in January 2013.

Marshall Smalley Accountants

Important Warning

 

Please do not respond to any emails that appear to have been issued by HMRC in respect of tax repayments due.  Do not under any circumstances provide your bank details. HM Revenue & Customs do not send tax payers information via email at any time.  Any such emails should be deleted immediately.

Keeping it Simple

Owner managed businesses should welcome the Chancellor’s attempts to keep it simple, in his Autumn Statement there were few tax changes but welcome measures to encourage investment.

Reducing the main corporation tax rate to 21% from April 2014, maintaining business rates relief and a 10 fold increase in the annual investment allowance, should encourage capital investment particularly for small and medium sized businesses.

The announcement of a new Business Bank which will be provided with £1 billion of extra capital and extra spending on infrastructure projects will be particularly welcome to businesses across the country too. 

Filing Tax Returns after 31st October 2012.

Reminder – do not send paper tax returns into HMRC after 31st October 2012 (unless you have been specially asked to do so by HMRC). Even if you file your return online after you have sent a paper return to HMRC in error, you will receive a late filing penalty of £100.00.

Why You Should Make a Will

If you die without having made a valid Will the law decides who gets your money using set rules based on who outlives you, the result is unlikely to be what you would choose for yourself. Nelsons a local firm of Solicitors who provide advice to businesses and individuals have provided us with a useful quick guide that will show you what will happen to your wealth if you don’t make a Will. Marshall Smalley encourage all clients to make a Will and review it to make sure it’s what they want, this quick guide could just be what you need to take the first step, so please email us if this is of interest and we will send you a copy of this helpful one page document.

Get Ready to Operate PAYE in real time

At the moment PAYE information although processed on a monthly basis is reported only once a year on an Employers Annual return online via forms P14 and P35. Under real time reporting, employers and pension providers or agents or payroll service providers will send HMRC information about tax, NICs, student loans etc. each time they pay their employees. This will enable HMRC to keep more accurate records and it should cut down on tax inconsistencies. HMRC are continuing to run a pilot scheme with selected employers and will be extending this into the New Year. They will be sending information out to employers this October as there are things you need to do to prepare for the changes in terms of updating PAYE software and information gathering to ensure a smooth transition.

Important information for parents – new child benefit income tax charge – effective from January 2013

This could affect you if you or your partner receive child benefit on or after 7th January 2013 and if one of you have income above £50,000. HMRC will write to all taxpayers potentially affected by this change this autumn with guidance on what options will be available and what needs to be done at that time. If you are liable to pay the charge, HMRC will send you a tax return to complete during April 2013. For example a higher-earning family with three children could be worse off financially under the new rules. It is possible to opt out of receiving the child benefit but this has implications for those in receipt of National Insurance credits who care for a child at home under the age of 12 which can affect state retirement pensions. Contact us for timely advice on this issue.

HMRC Tax Return Initiative Offers Good Chance to Settle with HMRC

Higher rate taxpayers who have failed to submit tax returns are being offered the opportunity to come forward and pay up under a time-limited HMRC offer. HMRC’s Tax Return Initiative is aimed specifically at people liable to pay tax at rates of 40% and above who have been told to submit a Self Assessment tax return for 2009/10 or earlier, but have not done so. However the offer is also available to any individual who has tax returns to submit to HMRC for these years. Participants have until 2 October 2012 to tell HMRC they want to take part, submit completed returns, and pay the taxes they owe. By coming forward voluntarily participants will receive better terms and any penalty they pay will be lower than if HMRC challenge them first. After 2 October, if HMRC’s Tax Return Initiative has not been used, HMRC will use its powers to pursue outstanding returns and any unpaid taxes. Penalties of up to 100 per cent of the tax due or even criminal investigation could follow. Marshall Smalley’s advice is that the Tax Return Initiative provides a limited opportunity for those who want to get their tax affairs up to date to come forward in the next month, penalties will be higher if people don’t use this facility and some could face a criminal investigation. For these reasons we encourage people to come forward and disclose unpaid tax voluntarily under the Tax Return Initiative.

Tax Return deadlines

31st October - Paper Tax Returns If you send a paper tax return, it must reach HMRC by midnight on 31 October. 31 January - Online Tax Returns Your online tax return must reach HMRC by midnight on 31 January. Penalties if you miss the deadlines If you miss the deadlines, the longer you delay, the more you'll have to pay. So it's important to send your tax return to HMRC on time. If you have not already taken action now is the time to gather together your information. Chase in any missing statements from banks and building societies to avoid delays in processing your returns. It makes sense to find out how much tax you have to pay in advance of the payment deadlines to allow time to set it aside.

New National Minimum Wage Rates From 1st October 2012

New National Minimum Wage Rates From 1^st October 2012

£6.19 - the main rate for workers aged 21 and over 

£4.98 - the 18-20 rate

£3.68 - the 16-17 rate for workers above school leaving age but under 18

£2.65 - the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

Government Proposals Alarming Construction Industry!

A recently issued Government consultation document False self-employment in construction: taxation of workers proposes that every construction subcontractor should be deemed to be in receipt of employment income for all tax and NIC purposes, unless they can satisfy one of the three ‘key tests’:
• they provide plant and equipment (which would be defined as something beyond the tools of the trade they would normally be expected to provide); or
• they provide all the materials required to complete a job; or
• they provide other workers to carry out operations under the contract and are responsible for paying them.

This could mean a 12.8% PAYE and NIC liability for employers in respect of skilled workers who previously were regarded as self-employed.

At a time when the collapse in the housing market has already put the construction industry under pressure these proposals are bound to attract considerable interest before the opportunity to comment on them closes on 12 October 2009.

Employers to enjoy more carrot and less stick from the taxman!

HMRC have quite publically been criticised for their delayed response to the late filing of P35 annual returns by employers in recent tax years.
With their duty of fairness HMRC have responded very positively by adapting their approach for the tax year to 5 April 2012. Therefore, towards the end of April HMRC will start issuing reminders of the 19 May filing deadline when they believe the annual return remains outstanding and from the end of May they are issuing interim penalty warning letters earlier than ever before.
Whilst this is a welcome development Marshall Smalley reminds employers that they have a right of appeal against such penalties, so where there is a reasonable excuse the penalties can be reduced or even cancelled. If you have a problem with tax penalties contact Marshall Smalley and they will help if they can.

Don't Let Tax Credits Become Debits!

HMRC are warning tax credit claimants to beware of email scams. The period in the run-up to the 31 July tax credits renewal deadline often sees an increase in such criminality.

Phishing emails often promise cash back and, if an unwary recipient clicks on the link, they are taken to a cloned replica of the HMRC website. The recipient is asked to provide credit or debit card details or other sensitive information such as passwords. Fraudsters then try to steal money from the account.

Victims risk having money stolen from their bank accounts, or their personal details being sold to criminal gangs for identify fraud.

During last year’s tax credits renewals period, from April to July, nearly 94,000 phishing emails were reported by taxpayers. Even though HMRC helped shut down more than 360 scam websites during the period, others continue to be created.

Marshall Smalley advise that HMRC only ever contact taxpayers who are due a tax refund in writing by post, they don’t use telephone calls, emails or external companies in repayment cases. Anyone who receives an email claiming to be from HMRC should send it to phishing@hmrc.gsi.gov.uk before deleting it permanently.

VAT Online For All

All VAT-registered businesses in the UK now have to submit their VAT returns online, and pay electronically, for periods starting on or after 1April 2012.

To submit your VAT return online, you need to register and enrol for HMRC’s VAT Online Service. If you haven’t done so already, you need to take action now. To register, visit www.online.hmrc.gov.uk, click “Register” under the “New user” section and follow the instructions.

Marshall Smalley welcome the move as VAT filing online has a number of benefits, for example an automatic acknowledgement that your return has been received, a useful checker tool and
an email alert option to remind you when your next online return is due.

Marshall Smalley 2012 Budget Overview

The Budget delivered on 21 March 2012 was announced as a budget for business and workers to help us earn future growth in the economy. For example, tax rates for companies of all sizes are reduced and for workers we have a significant increase in the personal allowance along with the top rate of income tax reduced to 45% from 6 April 2013.
We hope this is a useful summary of some of the main changes.

BUSINESS TAXES
Corporation Tax: from 1 April 2012, the main rate of corporation tax will be reduced to 24% and then to 23% from 1 April 2013.
Small companies’ rate: as previously announced, this will be 20% from 1 April 2012. The effective rate of tax for profits between £300,000 and £1,500,000 is 25% for the year ending 31 March 2013.
Capital allowances: as previously announced, writing-down allowances will be reduced to 18% from April 2012 and the Annual Investment Allowance (AIA) reduced to £25,000.
Mileage allowance payments: from 6 April 2012, 45p per mile (no change) can be claimed for the first 10,000 miles per year travelled by an employee on business.
Research and development (R&D): as previously announced from 1 April 2012, the rate of the additional deduction available for undertaking R&D will increase from 100% to 125% of qualifying expenditure.
PERSONAL TAXES
Income tax: as previously announced in Budget 2011, the personal allowance will increase to £8,105 from 6 April 2012 and the basic rate will be reduced to £34,370. Budget 2012 has announced that, from 2013/14, the personal allowance will be increased to £9,205 and the basic rate limit reduced to £32,245.
Age Allowance: from 6 April 2013 the age related personal allowance will not be increased and they will cease to be available to those under 65 at that date.
National insurance: from 6 April 2012 the employee’s national insurance rate is 12% below the upper earnings limit and 2% above that, the rate of employer’s national insurance contributions is 13.8%.
Inheritance tax: as previously announced, the £325,000 threshold for the nil-rate band is frozen. In addition, where 10% or more of a deceased’s net estate is left to charity the rate of IHT will be reduced to 36% from 6 April 2012.
Capital Gains Tax: the annual exemption for 2012/13 is unchanged at £10,600.
Entrepreneurs Relief (ER): from 6 April 2012, the lifetime limit of gains which can benefit from ER remains at £10m.
Individual Savings Accounts: the annual limit is to be increased to £11,280 for 2012/13, up to half of which can be saved in cash deposits.
Child Benefit: from 6 April 2012 child benefit is restricted by a new charge on a taxpayer who has adjusted net income over £50,000 in a tax year, where either they, or their partner, are in receipt of Child Benefit for the year. The income tax charge will apply at a rate of one per cent of the full Child Benefit award for each £100 of income between £50,000 and £60,000. The charge on taxpayers with income above £60,000 will be equal to the amount of Child Benefit paid. This will have effect from 7 January 2013. If both partners have adjusted net income over £50,000, the partner with the higher income is liable for the charge. Child Benefit claimants will be able to decide not to receive Child Benefit if they or their partner do not wish to pay the new charge.
PROPERTY
Stamp Duty Land Tax (SDLT): a new increased 7% rate for purchases of residential property over £2 million will apply to some houses from 22 March 2012.
VAT
Registration and de-registration thresholds: the registration threshold will increase to £77,000 and the de-registration threshold to £75,000. Both changes apply from 1 April 2012.

Employers to enjoy more carrot and less stick from the taxman!

HMRC have quite publically been criticised for their delayed response to the late filing of P35 annual returns by employers in recent tax years.
With their duty of fairness HMRC have responded very positively by adapting their approach for the tax year to 5 April 2012. Therefore, towards the end of April HMRC will start issuing reminders of the 19 May filing deadline when they believe the annual return remains outstanding and from the end of May they are issuing interim penalty warning letters earlier than ever before.
Whilst this is a welcome development Marshall Smalley reminds employers that they have a right of appeal against such penalties, so where there is a reasonable excuse the penalties can be reduced or even cancelled. If you have a problem with tax penalties contact Marshall Smalley and they will help if they can.

Plant in Buildings Qualifying for Capital Allowance?

Frequently all expenditure on plant and machinery in buildings that qualifies for tax relief is not identified and claimed. In such cases it is possible to make a claim for the capital allowances that have been missed going back many years, even though that was not done when the expenditure was incurred.
Marshall Smalley recommends that if you are using a property in your business you seek their advice on capital allowance as otherwise you may be missing a significant business tax deduction.

Would your Company benefit from an R&D Tax Credit?

To support economic recovery one of the objectives of Government is to stimulate UK businesses by encouraging them to carry out research and development (R&D).
Tax credits for companies incurring qualifying R&D expenditure have been introduced to achieve this. In 2011 the rate of relief increased from 175% to 200% on annual expenditure of at least £10,000.
Marshall Smalley believes the value of this tax relief is likely to be further enhanced for 2012 in the Chancellor’s Budget on 21March.
If you think your Company may qualify for R&D tax relief we would welcome the opportunity to meet with you and discuss this further, entirely without obligation.

Could you be more tax efficient and better off?

Recent reports estimate that in the last year UK taxpayers unnecessarily paid over £12.5 billion of tax, an average of over £400 each.
Commonly such overpayments of tax arise from people failing to use all the statutory tax reliefs available to them for example, allowances such as the ISA savings allowances and the available inheritance tax reliefs.
Marshall Smalley recommends giving your tax affairs a spring cleaning before the end of the tax year to improve tax efficiency and be better off wherever possible.

Could you benefit by accelerating tax relief?

Businesses planning to invest in plant and machinery could benefit significantly by making their expenditure before the end of the current fiscal year.
The Annual Investment allowance (AIA) which currently gives a 100% initial tax deduction for qualifying investment up to £100,000 will drop to £25,000 from April 2012.
Marshall Smalley recommends that any business planning to invest in plant and machinery carefully considers the timing of expenditure as they could be significantly reducing their tax by accelerating such expenditure.

Missed the deadline for 2010/11 tax returns - Act Now!

The filing deadline has now passed and anyone who still hasn’t filed their 2010/11 tax return should send it to HMRC as soon as possible, as well as pay any outstanding tax due for the 2010/11 tax year. The new penalties for late Self Assessment returns are:
an initial £100 fixed penalty, which will now apply even if there is no tax to pay, or if the tax due is paid on time;
after 3 months, additional daily penalties of £10 per day, up to a maximum of £900. Further delays could result in a maximum penalty of £1600! In more serious cases, the penalty after 12 months can be up to 100 per cent of the tax due.

PAYE Coding Notices

HMRC will be sending out PAYE coding notices during the months of January, February or March. The new tax code applies from 6th April 2012 to ensure you pay the correct amount of tax. Not everyone will get a notice so don’t panic if you don’t receive one. HMRC will send a copy of your new code to your employer or pension provider. If you have an agent acting for you, make sure they are aware that you have a new code as they won’t receive a copy direct from HMRC.

Tax Returns for Landlords and Furnished Holiday Let Owners

Over the last few years, the buy-to-let market has grown substantially and with it, many landlords have been able to profit from the ever-increasing rental income and record low interest rates. However, landlords are often tempted to file their own tax returns to cut down on costs. The cost of filing inaccurate returns can be far greater. Seeking professional advice can reduce the amount of tax you pay.

HMRC Still Unfairly Targeting Family Businesses

Despite being widely criticised for unfairly targeting 12,000 smaller businesses HMRC
have announced that they will continue with their controversial business records checks.
Whilst HMRC initially emphasised the educational aspect of their business records checks
the reality is that they are compliance checks that can result in the collection of additional taxes.
Marshall Smalley Accountants advise all clients that it is essential to take advice from the outset
to ensure businesses are properly prepared before a business records check takes place and manage the whole process as far as possible.
So if you receive a letter from saying they would like to arrange a visit make sure you
take advice before acting.

HMRC has announced that electricians will be the next group targeted as part of its crackdown on tax evasion.
The Electrician's Tax Safe Plan will be launched in February 2012 and will offer favourable terms
for electricians to come forward and declare their unpaid tax.
Following this, HM Revenue & Customs will target those in the trade who have not come
forward.
If you any undeclared income then seek advice from Marshall Smalley Accountants and take action whilst
you can.

HMRC Targets Fashion Houses

Letters have been issued by HMRC to a number of Fashion Houses and designer labels warning against non-payment of the national minimum wage.
Letters are expected to go out again in line with London’s Fashion week in February.
Put things right now to avoid penalties later or even prosecution for non compliance.
Contact Marshall Smalley specialist Tax advisor for help.