JULY 2010 - INTRODUCTION

In this issue we cover the end of an HMRC concession on penalties and also new guidance on safe maintenance at work.

Please browse through the articles using the links below and contact us if any issues or questions arise.

End of Period of Grace

Safe Maintenance

Energy Efficient Buildings

Pay Freezes Affect the Public Sector…But Not the Private Sector

The Sky’s the Limit

Business Investment Increases at Fastest Pace Since 1987

Scrap Extension of Rules on Working Time?

New Guidance for Charities

NIC Holiday

End of Period of Grace

An HMRC concession, ESC B46, was introduced in 1995 and means that HMRC will not issue penalties for late filing of company tax returns or employers’/contractors’ end-of-year returns, provided that they are received by the last working day within seven days of the filing date.

The concession ensures that penalties will not be charged where all reasonable steps to file the returns on time have been taken.

However, all forms P35 and P14 must already be filed online by the majority of businesses and contractors are no longer required to file end-of-year construction industry returns. In addition, from 1 April 2011 company tax returns for accounting periods ending after 31 March 2010 must be filed online.

Therefore, ESC B46 has become redundant and so will come to an end on 31 March 2011. Any businesses filing a return late will have to show that they had a reasonable excuse for the delay in filing to avoid a penalty.

Link: HMRC statement

Safe Maintenance

A new European initiative has been launched which highlights the risks during maintenance and repair work and how to avoid them.

It is estimated that between 25% and 30% of all manufacturing industry deaths in Britain result from maintenance activity, with common causes of fatalities and major injuries including falls from height and failure to properly isolate machinery so that it restarts while being worked on.

The British campaign includes a 'one stop shop' safe maintenance section of the HSE website, which features a checklist to assess how good current maintenance practices are and pointers on how to improve.

HSE Chair, Judith Hackitt, said:

‘Maintenance work is often seen simply as a disruption to normal service, but it is fundamental to the integrity of every system and to the health and safety of workers and the public.

All organisations, irrespective of their size and purpose, need to take the opportunity to look at how they plan and manage maintenance to see if improvements could be made. With planning and the right skills it can be done efficiently and will lead to increased production and better service delivery.’

Links: HSE guidance HSE release

Energy Efficient Buildings

The European Union has published a new energy efficiency Directive for buildings, which sets out rules for the energy performance of both new and existing buildings. This is considered to be an important target area in achieving the EU climate and energy objectives.

The new Directive will require Member States to update their building codes so that all new buildings, by the end of 2020, meet high energy-saving standards. Existing buildings will have to be upgraded where possible.

Where technically and economically feasible, the energy performance of existing buildings will have to be improved during major renovations and regular inspections of boilers and air conditioning systems will also be required.

Link: EU Directive

Pay Freezes Affect the Public Sector…But Not the Private Sector

The latest research on pay settlements from Income Data Services (IDS) has found that pay freezes have dropped to the lowest level since January 2009 but that, in the public sector, 35% of pay awards with effective dates in April resulted in pay freezes.

The typical pay awards in the private sector rose to 2% in the three months to the end of April 2010, up from 1.9% in the three months to March.

Ken Mulkearn, editor of IDS Pay Report, said:

‘Our latest figures present strong evidence that pay freezes – one of the key features of the recession – are now fading, in the private sector at least, as the economy stabilises.

However, the picture in the public sector is very different, with the number of freezes rising. The number of employees affected by freezes is likely to rise as well, since the public sector bargaining groups are relatively large.’

Link: IDS press release

The Sky’s the Limit

Cloud computing allows businesses a way of managing data, hardware and software requirements by using internet-based resources. Documents, emails, customer information, business applications and other assets can be stored online and this makes them accessible from any computer or mobile device with an internet connection and web browser.

Cloud computing can help businesses become more efficient and this new guide from Business Link explains how cloud computing works, how to decide if it is right for your business and what you need to consider when implementing it.

This guide also looks at some of the risks involved with cloud computing including data protection, business continuity and issues around service provision.

Link: Business Link

Business Investment Increases at Fastest Pace Since 1987

Investment by UK businesses rose at the fastest rate since 1987 in the first quarter of 2010, according to the Office for National Statistics.

Business investment rose by 7.8% compared to the previous quarter but business investment is still 7.7% lower than the same period in 2009.

In addition, the UK financial services sector grew at the fastest rate since September 2007 during the second quarter of 2010, according to the Confederation of British Industry. However, the growth was much lower than expected and firms still feel that business levels are well below normal.

Links: ONS release CBI release

Scrap Extension of Rules on Working Time?

In June, the European Parliament voted in favour of including self-employed lorry drivers within the 2002 Directive on the organisation of the working time of lorry and bus drivers.

Previously, self-employed drivers could spend up to 56 hours/week driving as long as they drove no more than 90 hours over a two-week period. This change means that drivers will be limited to working a total of 48 hours/week including maintenance, loading and administrative work.

The Federation of Small Businesses (FSB), supported by business leaders and MEPs, has called on the European Commission to stand by its proposal not to include self-employed lorry drivers within the working time regulations.

Link: FSB release

New Guidance for Charities

Earlier this year a series of changes were made to the tax rules for charities and Community Amateur Sports Clubs (CASCs). Broadly, the rules are intended to offer UK tax reliefs to EU charities and also allow donations to EU charities to qualify under the Gift Aid scheme.

However, one of the knock-on effects of these changes was to alter the rules about who is allowed to manage the charity. For tax purposes, those involved in managing the charity must be ‘fit and proper’.

HMRC have issued guidance on this test for managers, which is important to read if you are involved in running a charity or a CASC. If you would like further help or advice, please do get in touch.

Link: HMRC guidance

NIC Holiday

The Coalition government intends to introduce a scheme to help new businesses in targeted areas of the UK by allowing a reduction in employers’ national insurance (NIC).

For a business commencing within a three-year qualifying period, the employer will not have to pay the first £5,000 of Class 1 employers’ NIC due in the first 12 months of employment. This will apply to each of the first ten employees hired in the first year of the business.

The scheme is intended to start no later than September 2010. Any new business set up from 22 June 2010 which meets the criteria set out will also benefit from the scheme.

The counties and regions which will benefit will be Scotland, Wales, Northern Ireland, the North East, Yorkshire and the Humber, the North West, the East Midlands, the West Midlands and the South West.           

Further details are to be released soon.

Link: HMRC FAQs

MAY 2010 - ENEWS

In this month’s enews we include advice for those employers whose employees may suffer from World Cup fever!  With an emergency Budget looming we will of course update you on any forthcoming changes.

Please browse through this month’s articles using the links below and contact us if any issues or questions arise.

Flexible working – the World Cup

State Pension age and national insurance contributions

Budget date announced

Changes to the advisory fuel rates from 1 June 2010

Child Trust Fund to be cut

Are there VAT increases ahead?

Holiday entitlement

P11D deadline looming

HMRC warn of email rebate scam

Flexible working – the World Cup

Acas (the Advisory, Conciliation and Arbitration Service) is advising employers to be ready for the World Cup. Some employees will be expecting their employers to be flexible about working hours so that they can watch matches. Employers may also be worrying about their employees being less productive, hung over or sick following over enthusiastic celebrations.

The World Cup kicks off in South Africa on 11 June 2010 and employers need to plan ahead to try and keep everyone happy. As matches are due to kick off at 12.30, 15.00 and 19.30 ( UK time) employers will need to plan ahead to ensure they have a clear and consistent policy for those wanting to watch matches.

Acas advice as detailed on their website is that employers should try to be:

·         “Flexible, where possible - for example, by altering start and finish times during the working day or allowing longer lunch breaks

·         Clear about what you expect from employees - in terms of attendance and performance during the World Cup. Managing employees’ expectations of what might be possible is key to keeping them onside

·         Communicative - start talking to each other now about the World Cup and how you hope to manage leave and working hours

·         Honest - if you cannot accommodate any changes to your work practices then say so. Also, you may need to remind employees that any special arrangements for watching matches are only temporary

·         Fair - you need to be seen to be fair about the way you respond to requests for time off and avoid favouritism”.

For more advice visit the Acas website.  For details of when the matches are being played visit the FIFA website link below.

Internet links: Acas article FIFA website

State Pension age and national insurance contributions

HMRC are reminding employers to take care when deciding whether or not their employees need to pay national insurance contributions (NICs). Employees do not need to pay NICs on reaching State Pension age (SPa). Some payroll software warns employers as women approach age 60 to check their national insurance status as previously women would have been exempt from the employee contribution from age 60. This warning may now be being issued too early.

As a result of changes brought in by the 1995 Pensions Act, from 6 April 2010 the age at which women reach SPa will gradually rise to become the same as it is for men of 65.  The change is being phased in between 6 April 2010 and 6 April 2020 on a sliding scale, and will affect women born between 6 April 1950 and 5 April 1955.  All women born on or after 6 April 1955 will reach SPa at age 65.

For more information see the latest Employer Bulletin and for a look up table of dates see appendix C following the link below.

Internet links: Employer Bulletin DWP report

Budget date announced

The new coalition government is settling into office and a date has been announced for the emergency Budget. Chancellor of the Exchequer George Osborne will present the emergency Budget on Tuesday 22 June 2010.

Some details of government proposals can be found in the Coalition Agreement which can be accessed using the link below.

We will keep you informed of announcements.

Internet links: Treasury press release  Coalition agreement

Changes to the advisory fuel rates from 1 June 2010

To reflect the increase in fuel prices, HMRC have issued new advisory fuel rates for employees driving employer provided cars. These take effect for all journeys undertaken from 1 June 2010, so employers using the advisory rates should advise affected employees and update any expense forms as soon as possible.

The advisory fuel rates may be used for journeys undertaken on or after 1 June 2010.

HMRC have in the past given employers a month’s notice of changes to these rates. However, according to the HMRC guidance:

“These rates apply to all journeys on or after 1 June 2010 until further notice, allowing them to reflect fuel prices more quickly. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.”

Other points to be aware of about the advisory fuel rates:

• Employers do not need a dispensation to use these rates.
• Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
• The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.

If you would like to discuss your car policy, please contact us.

Internet link: HMRC advisory fuel rates

Child Trust Fund to be cut

The government has outlined plans to make changes to the Child Trust Fund as part of plans to cut  £6 billion in expenditure.

The government intends to introduce secondary legislation to scale back government payments due to Child Trust Funds from 1 August 2010. From that date, payments at birth will be reduced from £250 to £50 for better off families, and £500 to £100 for lower income families; and payments at age 7 stopped. The government intends to introduce primary legislation to stop all payments from 1 January 2011. Additional contributions for disabled children will be paid this year. From 2011/12 the money used for these additional contributions will be redirected to respite care for disabled children.

Internet links: Times online Press notice

Are there VAT increases ahead?

The British Chamber of Commerce are predicting that we should expect an increase in VAT to help deal with the country’s budget deficit.

David Frost Director General of the British Chambers of Commerce (BCC) said:

 “…… the employer National Insurance rise, planned for 2011, should be abolished in full. Most businesses expect VAT to increase after an election to help plug the hole in our public finances. Considering companies have already said that VAT would be less damaging to their operation than a hike in NICs, it seems obvious that the tax on jobs should be scrapped and replaced by a less harmful tax on consumption.”

Internet link: BCC press release

   Holiday entitlement

With signs that spring is finally here many employees will be planning or longing for their summer holidays. Holiday entitlement is one of the complex areas which can cause employee dissatisfaction if not handled correctly, especially for those with part time or irregular hours. Since 1 April 2009 the minimum statutory holiday entitlement has been 5.6 weeks inclusive of Bank Holidays, the equivalent of 28 days for those employees working a five day week.  Employers may of course offer more holiday if they wish. 

To check either your own, or your employees minimum holiday entitlement visit the link below.

Internet link: Business link website

   P11D deadline looming

The forms P11D, and where appropriate P9D, which report employees’ and directors’ benefits and expenses for the year ended 5 April 2010, are due for submission to HMRC by 6 July 2010. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A National Insurance Contributions at 12.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.

If you would like any help with the completion of forms P11D or the calculation of the Class 1A liability please get in touch.

Employers may wish to complete the forms electronically and submit them online.  For information on this use the online submission link below.

Internet links: HMRC P11D guidance Online submission

HMRC warn of email rebate scam

HMRC are warning that taxpayers are being emailed stating that they are entitled to a tax rebate.  These emails are being sent from a number of bogus email addresses. They inform recipients that they are entitled to a tax rebate and invite them to complete an online form to receive a rebate of tax.

HMRC are advising that taxpayers should not visit the website contained within the email or disclose any personal or payment information.

Email addresses used to distribute the tax rebate emails include:

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         hmrc This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

·         This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

HMRC have confirmed that they do not send out emails using these email addresses.

Internet link: HMRC scam email examples

JUNE 2010 - INTRODUCTION

In this month’s enews we cover the key changes in the new government’s first Budget.

We also look at some initiatives from HMRC to help agents and their clients to reduce risk when preparing returns and to assist individuals in understanding the tax credits system.

Please browse through the articles using the links below and contact us if any issues or questions arise.

Emergency Budget

Capital gains tax changes

Standard rate of VAT to increase

HMRC amend PAYE penalties guidance

Keep proper records!

HMRC launch tax credit video

Business link guidance for farmers

Maternity rights for the self employed

Emergency Budget

George Osborne presented his first Budget on Tuesday 22 June 2010.

For the first time, forecasts were published in advance of the Budget. The Office for Budget Responsibility was formed in May 2010 to make an independent assessment of the public finances and the economy in advance of each Budget and Pre-Budget Report. Within the framework of these forecasts George Osborne stated that a tough but fair Budget was needed.

Many fundamental announcements have been made which affect the taxation of most individuals and these include:

·         An increase in the personal allowance of £1,000 from 6 April 2011 for those aged under 65 but higher rate taxpayers will not benefit due to a reduction in the basic rate band upper limit.

·         An increase in the rate of VAT to 20% from 4 January 2011.

·         A new 28% rate of capital gains tax for higher and additional rate taxpayers.

·         An increase in the maximum Entrepreneurs’ Relief to £5 million from £2 million.

·         A scheme to reduce NI contributions for new businesses in particular areas.

·         Corporation tax rates to be reduced and the system to be reformed.

·         The Annual Investment Allowance for capital allowances is to be reduced from £100,000 to £25,000 and the annual writing down allowances are to be reduced from April 2012.

Link: Treasury Website 

Capital gains tax changes

A new rate of Capital Gains Tax (CGT) of 28% will be introduced. For individuals, the rate of CGT remains at 18% where total taxable gains and income, after taking into account all allowable deductions including losses, personal allowances and the CGT annual exemption, are less than the basic rate limit. The new 28% rate will apply to gains or any parts of gains above this limit.

The new rate of CGT will apply to gains arising on or after 23 June 2010.

Subject to a number of conditions, gains on qualifying business disposals by individuals and certain trustees are eligible for Entrepreneurs’ Relief. This provides an effective CGT rate of 10% and works by applying a 4/9 reduction to the chargeable gain and then charging the balance at 18%.  The change to the CGT rate would mean that the normal 4/9 reduction would no longer achieve 10%. The rules will be changed so that the rate of tax for gains on qualifying disposals on or after 23 June 2010 will be 10% and the previous 4/9 reduction will cease to apply from this date.

The amount of gains that can qualify for Entrepreneurs’ Relief will also be raised from £2 million to £5 million for gains arising on or after 23 June 2010.

Link: HMRC Budget note

Standard rate of VAT to increase

It is proposed to increase the standard rate of VAT from 17.5% to 20% with effect for any supply made on or after 4 January 2011. The rate change does not affect either zero-rated supplies nor those supplies subject to VAT at the 5% reduced rate.

Detailed guidance has been issued by HMRC for businesses on implementing the change.

Links: HMRC Budget note  HMRC guidance

HMRC amend PAYE penalties guidance

At the start of the tax year new late payment penalties were introduced for PAYE and other payments due from employers. The new rules apply to almost all employers and contractors, whether they employ one or a hundred employees. The rules apply to monthly, quarterly and annual periods of PAYE starting on or after 6 April 2010.

HMRC can impose late payment penalties on PAYE amounts due that are not paid in full on time, including:

·         monthly, quarterly or annual PAYE;

·         student loan deductions;

·         Construction Industry Scheme deductions;

·         Class 1 NIC; and

·         annual payments of employers' Class 1A and Class 1B NIC.

HMRC have now amended their guidance to include comments on so-called ‘warning letters’. HMRC state:

‘The letter is only to let you know that HMRC think you have made a PAYE payment late and that a penalty could be charged. It is not a penalty notice and you can’t appeal against it.

Importantly, it does not mean a penalty will definitely be charged, and you may get a penalty even if you do not get a letter.

If you agree that you have made a late payment, you should make sure you pay on time and in full in future. The next time you pay late you may become liable to a penalty. HMRC will contact you before a penalty is charged. If they charge a penalty they will send you a penalty notice.

If you believe you have received a letter in error, perhaps because you have already paid, have a time to pay agreement or have a ‘reasonable excuse’ you don’t need to contact HMRC yet. But you may find it helpful make a note of why you don’t think a penalty is chargeable in case HMRC contact you about penalty action in future.’

If you receive a letter but have paid on time, it may worth telling HMRC that their records are currently wrong to avoid problems later on. If you are experiencing problems with paying PAYE or any other tax on time, HMRC may be prepared to defer payment and this, in turn, may avoid penalties.

Please get in touch if you would like to discuss this further.

Link: HMRC guidance

Keep proper records!

HMRC have recently issued a reminder about the various 'toolkits' that they have developed to assist agents when preparing returns. Although the toolkits are aimed at tax professionals, they highlight common errors and the steps that can be taken to reduce those errors. The first series of toolkits cover:

·         marginal small companies' relief;

·         capital allowances for plant and machinery;

·         personal and private expenditure;

·         capital gains tax for land and buildings; and

·         capital gains tax for trusts and estates.         

The intriguing thing about all of the toolkits is that the main area of risk for all the above areas is record keeping or the lack of it!

In addition, for capital allowances for plant and machinery the main areas of risk include:

·         record keeping e.g. different proportions of non-business use during the period of ownership and detailed records of all acquisitions and disposals;

·         acquisitions and disposals e.g. whether the asset qualifies for capital allowances; and

·         non-business use of assets, particularly cars.        

For private and personal expenditure, the main areas of risk are:

·         record keeping e.g. non-business expenses being incorrectly recorded or misposted in the business records and claimed in error as allowable expenses;

·         personal bills being paid by the business;

·         travel and subsistence;

·         entertaining, gifts, subscriptions and sponsorship; and

·         drawings and capital account.           

So the moral is clear – good records today keep the taxman at bay. If you would like to discuss this area in more detail, please do get in touch.

Link: HMRC website

HMRC launch tax credit video

Every year, tax credit claimants must renew their tax credit awards by 31 July or their payments may stop. Claimants on ‘nil awards’, and those receiving only the full family element of Child Tax Credit, will receive a statement of their 2009/10 award. If these details are correct no further action is needed and the claims are automatically renewed. However, if the details on the award statement are wrong, claimants must tell HMRC.

HMRC have launched a series of online videos to help claimants through the annual renewal process. The interactive videos take claimants through the renewal process step-by-step, offering the chance to tailor the help to their own circumstances. The videos cover key areas such as:

·         providing details of the previous year’s income;

·         notifying HMRC of any changes in circumstances that haven’t already been reported during the year; and

·         checking the accuracy of the information in the renewals pack.

HMRC’s Director of Benefits and Credits, Steve Lamey, said:

‘These new videos are a great way of getting help and advice on renewing your tax credits, and should be able to answer any questions you may have about the renewals process.

Once you’ve received your pack, please don’t put it off – renew straight away. The sooner you renew, the sooner we can make sure you’re receiving the right money.’

Links: News release Video

Business link guidance for farmers

Business Link has set up a dedicated new online service for farmers and growers. Whether they are starting up or looking to expand and diversify, the service will help:

‘…focus your planning, apply best practice and meet government requirements - whatever your agricultural sector.

You can access guidance and tools, and sign up for email alerts to let you know when the rules change. The content is developed by government experts and in consultation with farmers' groups. At the moment this content only applies to English legislation.’

Link: Business Link

Maternity rights for the self employed

It appears as though the self employed will become entitled to maternity leave for the first time under new laws introduced by the European Union (EU).

The new rules provide equivalent access to maternity leave as for employees but on a voluntary basis. The EU is expected to adopt the legislation at the end of June and then EU countries will have two years to introduce it into national law. So…watch this space.

Link: EU release

APRIL 2010 - ENEWS

This month’s enews contains several employer related articles following the end of the tax year. With a General Election looming we will of course update you on any forthcoming changes. Who knows what the following month will bring with the various parties and their election promises. 

Please browse through this month’s articles using the links below and contact us if any issues or questions arise.

Penalty guidance on late payment of PAYE

National Minimum Wage rates

Furnished holiday letting reprieve

HMRC offer advice on fraud emails

P11D deadline looming

VAT and Royal Mail postage

Online submission of employers forms

Penalty guidance on late payment of PAYE

HMRC have been warning employers for some time that they may have to pay a penalty if they do not pay their PAYE deductions on time. They have now issued more detailed guidance on the way in which the penalties will work. The penalties will apply to PAYE deductions due for a period starting on or after 6 April 2010 include PAYE, Student Loan deductions, Construction Industry Scheme payments, Class 1 NICs, annual payments of employers' Class 1A NICs and annual PAYE Settlement Agreements payments.

Deductions of PAYE, NICs, Student Loan deductions and Construction Industry Scheme payments are generally due by 19 of each month (or 22 if paid by electronic means and cleared into HMRC’s bank account). Small employers are able to pay quarterly.

HMRC are advising employers to let HMRC know if they are likely to have difficulty making a payment on time, so that arrangements can be made and penalties can be avoided. Their guidance states that where employers enter into ‘time to pay’ arrangements, before the liability becomes due, no penalty will be charged.

Penalties for late payment start at 1% increasing to 4% depending on the number of late payments in the year. Extra penalties will be added where liabilities are outstanding for a further six and then 12 months.

Internet link: HMRC guidance on late payment

National Minimum Wage rates

From October 2010, National Minimum Wage rates will increase from

• £5.80 to £5.93 an hour for workers aged 21 and over
• £4.83 to £4.92 an hour for workers aged 18 to 20
• £3.57 to £3.64 an hour for workers aged 16 to 17.

The government has extended the adult minimum wage rate to 21 (previously 22) year-olds from October 2010 and, for the first time, an apprentice minimum wage rate has been set at £2.50 an hour.

The Low Pay Commission Chairman David Norgrove said:

"We are pleased that the government has again accepted the Commission’s recommendations. The introduction of an apprentice rate marks an important extension to minimum wage protection across the UK."

Penalties for non compliance

From April 2009 HMRC are able to charge penalties to those employers found to be in breach of the NMW rules.

Automatic penalties are levied on employers where HMRC officers find NMW arrears. The penalties range from £100 to £5,000 with 50% prompt payment discounts for employers who settle within 14 days of notification.

The penalty is payable in addition to arrears owed to the workers.

In serious cases of non compliance the employer may be tried in a Crown Court and in those cases the fines are unlimited.

If you have any queries on the NMW please do get in touch.

Internet links:  NMW rates NMW penalties

Furnished holiday letting reprieve

Getting the Finance Bill 2010 passed between when it was published on 1 April 2010 and the dissolution of Parliament on 12 April was always set to be a heavy load in spite of the fact that there were only 73 clauses and supporting schedules.

That load was lightened as certain of the more unpopular proposals were dropped. The abandoned additional increase on cider duty compared to other alcoholic drinks may have grabbed the headlines but another tax related proposal may be of wider interest.

The favourable tax regime for Furnished Holiday Lettings accommodation was due to be repealed from 6 April 2010. This proposal was dropped from the Finance Bill but what happens next depends on the outcome of the General Election. The Financial Secretary to the Treasury has pledged that this and the other withdrawn clauses will be re-introduced in a second Finance Bill should his party be returned to government.

It does mean for the present there is uncertainty as to the tax treatment of this type of property business as 2010/11 gets under way. We will keep you informed of any further developments.

Internet link: Accountingweb article

 HMRC offer advice on fraud emails

HMRC are reminding taxpayers to be vigilant as there have been several reports of scam emails.

Where taxpayers believe they may have been the victim of an email scam they should report the matter to their bank/card issuer as soon as possible. HMRC have previously advised that that those providing their details have had their accounts emptied and credit cards used to their limit. Victims are also at risk of having their personal details sold on to organised criminal gangs. 

This is not the only area where HMRC are aware of a problem. Companies are being targeted by email for a National Insurance service. The email offers the service of applying for a rebate of National Insurance on the customer’s behalf, usually for a fee. These companies are not affiliated with HMRC in any way.

HMRC’s further advice is to:

• Check the http://www.hmrc.gov.uk/security/fraud-attempts.htm to see if the email you have received is listed.
• Forward suspicious emails to HMRC at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it and then delete it from your computer/mail account.
• Do not click on websites, links contained in suspicious emails or open attachments.
• Follow advice from www.getsafeonline.co.uk

Internet link:  HMRC current security messages

  P11D deadline looming

The forms P11D, and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2010, are due for submission to HMRC by 6 July 2010. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A National Insurance Contributions at 12.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.

If you would like any help with the completion of forms P11D or the calculation of the Class 1A liability please get in touch.

Internet link: HMRC P11D guidance

VAT and Royal Mail postage

Some types of postal services offered by the Royal Mail will be subject to VAT from 31 January 2011.

According to the latest information issued by HMRC

“In broad terms, the proposed changes will mean that any service which is individually negotiated or not subject to any price and regulatory control will become liable to VAT at the standard rate. This includes, but is not limited to:

• all individually negotiated services
• Parcelforce services
• door-to-door (unaddressed mail)
• mailroom services”.

The change follows European Court of Justice Decision known as TNT Post UK Ltd which ruled that the UK has applied the exemption for postal services more widely than was permitted under the special rules which applied to Post Office Mail. HMRC will introduce new legislation to amend the rules from 31 January 2011.

HMRC are currently considering claims submitted by businesses following the TNT case. As claims are subject to strict time limits it is important to act quickly. It should be noted that first, second and metered mail and standard parcel delivery are and will continue to be exempt. A claim cannot be made in respect of these services.

For more information please do get in touch.

Internet links: VAT Brief VAT on postage

 Online submission of employers forms

The employer’s annual returns P35 and P14 (P60) are due for submission to HMRC by 19 May 2010. Broadly all employers must submit their forms online this year.  Previously those employers with less than 50 employees could file paper forms.

The final date for payment of PAYE, National Insurance Contributions, Construction Industry Scheme deductions and Student Loan deductions was 19 April 2010 (22 April 2010 for cleared receipt of electronic payments into HMRC’s bank account).

The deadline for providing employees with their forms P60 is 31 May 2010 (Bank Holiday Monday).  Employees must be provided with a paper form P60 this year. HMRC have confirmed that for 2010/11 electronic forms will be acceptable.

Internet links: HMRC employer guidance  IPP press release