Thursday, 31 December 2009

Pre-budget report is due next Wednesday

There is already speculation that announcements will be made about tax increases, necessary to balance the books (and halve the deficit over 4 years). Talk is about raising VAT within the next 18 months to at least 20% - already VAT is reverting back to 17.5% from January 1, 2010. Fiscal experts predict that such an increase will bring in about £9bn additional revenues per annum. There is also speculation that Mr Darling may increase capital gains tax to 20%.

New tax-free fuel rates for company cars

HMRC have announced the new fuel rates payable to employees without generating a taxable benefit, applicable to employees when they pay for fuel in company cars out of personal funds. It makes sad reading as these compensatory rates are totally insufficient, meaning the employee pays tax on reimbursements of costs when paid back at higher rates. These rates took effect from 1 December 2009.

The rates are as follows:

Engine sizePetrolDieselLPG
1400cc or less11p11p7p
1401cc to 2000cc14p11p8p
Over 2000cc20p14p12p

Extension of new disclosure opportunity deadline

HMRC have extended the deadline for notification of a liability to disclose an overseas tax liability from 30 November 2009 to 4 January 2010. The rest of the timetable for making disclosure is unaffected by this extension.

Repayment of overseas VAT to UK-registered traders

An online VAT refund system will be used for all claims submitted from 1 January 2010. This will replace the current paper-based process. UK businesses will submit claims for VAT incurred in other EU member states through the HMRC website, rather than direct to the member state of refund as at present. It is already possible to register and enrol to use the new service but refund claims will have to wait until 1 January.

Monday, 30 November 2009

Adjudicator’s Office reports on HMRC complaint level

The Adjudicator’s Office, which handles complaints against HMRC, has reported that it now takes on average about 13 months for taxpayers’ complaints to be delay with by HMRC. A large proportion of the backlog is made up of complaints over the tax credits award system and self-employed tax disputes. However, critics say that the adjudicator and HMRC are to be blamed for allowing a backlog to be built over the last 2 years. a taxpayer’s charter was legislated for in this year’s finance act, that tells the taxman to treat taxpayers with respect, provide clear explanations of rules quickly and correct mistakes quickly.

From April 6 2010, minimum retirement age will jump by 5 years

Reminder: From April 6 2010, minimum retirement age will jump by 5 years, from age 50 to 55. The increase will mean that people who were born between April 7 1955 and April 5 1960 (estimated to be 4 million people) could be forced to delay drawing their pension until later than they would like. It makes sense for those who are caught in the relevant age bracket to consider whether drawing on their pension before April 6 2010 or not, especially for those who may have a specific financial liability between the age of 50-55, such as a mortgage repayment or a child’s university costs.

Saturday, 31 October 2009

£1.9 million VAT fraud exposed, eight jailed

There were three financial advisers among the fraudsters. They had set up limited companies trading fictitiously in children’s clothes, fruit and vegetables and animal feed. As a result, they were able to claim the VAT on bogus business expenses; there is no VAT due on the fake sales of those items as they are zero rated. They then pocketed the VAT refunded to these companies and invested it in property and to fund their lifestyles. Those jailed face confiscation hearings to recover monies and assets involved. We understand that the fraud was discovered when suspicions were raised during an investigation into these companies by Customs & Excise when C&E officers attempted to verify those business claims (a routine procedure when it comes to significant VAT claims) and during routine VAT visits to inspect records. The case was then passed to HMRC criminal investigators.

1.5 million pensioners are overpaying tax

The National Audit Office in its Report “H M Revenue & Customs: Dealing with the tax obligations of older people”, estimates that 1.5 million pensioners are overcharged tax by the Revenue by an average £171 per person. It also found that 36% of pensioners do not understand their tax obligations. Reasons are down to the complexity of older people age-related allowances and because the Revenue does not award the age-related allowances automatically without a need for a claim.

Pregnant women can claim a one-off tax-free payment

Reminder: Pregnant women can claim a one-off tax-free payment called “Health in Pregnancy Grant” if they are at least 25 weeks old. Expectant mums can spend the money anyway they like. The benefit does not affect tax credits or any other benefits. A claim form can be obtained from a doctor or midwife. The form will need to be sent to HMRC within a month or the grant may be missed.