Toni Hunter's SuperBlog » Customs

can you afford to miss the self-assessment deadline?

Toni — Wed, 28 Dec 2011 21:43:01 +0000

HM Revenue and Customs (HMRC) has always taken a dim view of the late filing of self-assessment tax returns, but it has now introduced significant new penalties for those who fail to meet the deadlines.

The deadline

If you are registered for self-assessment and have not already filed your paper return then you will need to do so online by 31 January 2012. This may still seem a long way off, but it makes sense to start preparing now rather than leaving your return until the last minute, when it will be more difficult to deal with any issues which may arise.

The penalty

Under HMRC’s new regime, late returns will incur an initial fixed penalty of £100.

This will apply even if there is no tax to pay or any tax due for the year has already been paid on time.

If your tax return has still not been filed after three months, then HMRC will impose additional daily penalties of £10, up to a maximum of £900.

After six months, the penalty increases to either £300 or five per cent of the tax, depending on which is greater. The penalty could increase to 100 per cent of the tax due if returns have still not been filed after 12 months.

Late tax

Any overdue tax must also be paid by 31 January. If this deadline is missed then HMRC will impose a penalty of five per cent of the amount due after 30 days, six months and 12 months respectively. It is also worth noting that HMRC will charge interest on top of these penalties.

Stop procrastinating

As with any tax matter, it is always better to act sooner rather than later.

The longer you leave it, the bigger the penalty will be.

At George Hay, we can assist with a wide range of tax matters, including ensuring your self-assessment tax return is filed on time.

Friendly, approachable, reliable professionals

Disclaimer: This article is for general guidance only. All taxation planning should only be undertaken after appropriate professional advice. George Hay Chartered Accountants are registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

new target for HMRC investigations

Toni — Thu, 28 Jul 2011 20:25:39 +0000

If you are a tutor, a fitness instructor or make your money by selling through the internet, then the taxman may soon be taking a particular interest in your financial affairs.

More targeted investigations

HM Revenue and Customs (HMRC) is stepping up its tax investigations of specific sectors where it believes tax is being underpaid.

A date for the investigations to launch has yet to be announced and there have been no guarantees of an amnesty for those who forward to get their affairs in order wish to confess, although those who settle up any unpaid tax early are far more likely to get much better terms than those who are caught out.

Among those targeted will be private tutors and coaches who earn main or secondary income from private lessons, whether they are qualified or not, and ranging from national curriculum tutors to fitness or lifestyle coaches.

HMRC is also interested in individuals who use online marketplaces such as eBay to buy and sell goods as a trader or business without paying the resulting tax. This will, of course, not affect those who buy or sell in low volumes on eBay, such as private individuals selling unwanted items. HMRC is only interested in those who consistently use the online marketplace to make a profit.

Non-VAT registered businesses

Other traders who will come under the spotlight will be those whose turnover exceeds the £73,000 threshold but who have not registered for VAT. Don’t forget that now that the Inland Revenue and Customs and Excise work together as HM Revenue & Customs, they share your business data.

Act early to mitigate penalties

As with any tax matter, it is always better to act now than to wait for the taxman to come calling.

If you fall under any of these sectors then George Hay can help you register with HMRC and get your affairs in order.

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83,000 phishing attempts reported to HMRC in one month

Toni — Wed, 15 Sep 2010 22:29:51 +0000

In the past few days, with the complete mayhem caused by HMRC’s PAYE coding fiasco , clients of ours have received some very strange calls apparently from HMRC asking for payroll references and other data that we know they already have on their records, so please be wary of all unsolicited emails and phonecalls purporting to be from the Tax Office.

Too good to be true

Of course, no one wants to pay more tax than they should, so being told you are due a refund will come as good news.

In some cases, it may seem too good to be true – and that’s because it is.

If you receive a telephone call or an email from someone at HM Revenue & Customs (HMRC) informing you of a tax refund then the person on the other end of the line is not the taxman but a criminal “phishing” for your bank account details.

HMRC has reported an alarming increase in the number of people being targeted in this way, with a record 83,000 phishing attempts reported in one month alone.

Written Correspondence

In some cases, letters are sent out purporting to be from external companies acting on behalf of HMRC and beginning with a sentence such as “we have reviewed your tax return and our calculations of your last year’s accounts show a tax refund of XXXX is due”. The letter will give a specific figure which the victim is supposedly due.

Phishing and identity fraud

The thieves ask for bank details in order to pay in the non-existent refund. However, they then use this information to try to take money from the victim’s account.

Victims not only risk having their accounts emptied, but their details could also be sold on to other criminal gangs who may target them further.

Tax office communication policy

HMRC does not contact customers who are due a tax refund by telephone or email. It always writes to them directly, without using any external companies.

Advice

Anyone who receives a telephone call from someone offering them a tax refund should not give out any information to the caller but report it to the police immediately. Likewise, they should not reply to emails but forward them on to HMRC at phishing@hmrc.gsi.gov.uk.

If you have already responded to a telephone call, email or letter and think you may have been the victim of a scam then you should contact your bank or card issuer as soon as possible.

HMRC Update – September 2010

An email from “HMRC Online Services – test@test.com’ is being issued, stating the recipient has one new alert message and should log in to their Online Account to read it. The link in the email directs you to a fraudulent website where personal data is requested. If you receive this notification, please forward it to phishing@hmrc.gsi.gov.uk.

Friendly, approachable, reliable professionals

At George Hay, we are experienced in all areas of taxation and can advise you on whether a genuine tax refund is due. If you are in any doubt about any communications you have received regarding a refund, please speak to us.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

VAT: Have you made a mistake?

Toni — Thu, 19 Aug 2010 20:10:32 +0000

If you have discovered that you have underpaid VAT to HM Revenue & Customs and are concerned what action you should take, read on.

When did the error occur?

HMRC are now able to look back at the previous four years records should they chose to carry out an inspection whereas previously they were only able to look at the previous three years.

The extra year is not all bad news it also means should you have made an error in your favour you now have an extra year to rectify it.

Declaring errors

For accounting errors beginning on or after 1 July 2008, businesses can adjust past errors on the next VAT return they submit providing the error is less than £10,000 or one per cent of the Box 6 turnover figure up to a maximum of £50,000. Any errors above these amounts must be notified to HMRC on a separate form.

Penalties

A new penalty system was introduced for VAT returns due to be submitted after 1 April 2009. Penalties are now charged based on a percentage of the VAT payable.

If an error has been made but reasonable care has been taken then no penalty is applicable, but deliberate or concealed errors are dealt with more seriously and can attract a penalty equal to 200% of the VAT undeclared.

Honesty is always the best policy

Should you have made a mistake and are likely to incur a penalty then honesty is your best policy, as this can lead to a reduction in the penalty charged. But beware if you have already been notified of a visit by HMRC voluntary disclosure before they carry out their inspection will not reduce your penalty.

Evading VAT registration

Failing to register your business for VAT when it should have been can be costly. Now that HM Revenue & Customs manage direct and indirect taxes it is easy for them carry out checks with regards to business turnover.

The annual registration limit increased to £70,000 from 1 April 2010.

And finally,

Don’t forget, all new businesses and those with a turnover over £100,000 must now submit their VAT Return electronically. If you have not already registered make sure you do as soon as possible. Do not leave it until the day your return is due it will be too late. For more information click here

How do you feel about paying the wrong amount of tax?

Toni — Mon, 10 May 2010 12:45:45 +0000

PAYE notices of coding are notorious for being erroneous, but HMRC have surpassed themselves with this computer generated nightmare that not only leads to extra work and a lot of confusion but may even leave you paying too much tax.

Multiple Notices

In the last few months you may have received several Notices of Coding all showing different codes for the tax year 2010/11. There have been a number of instances where taxpayers have been receiving one tax code one day followed by a different one the next or even more than one code in one day. This has left many people bewildered and uncertain about exactly what tax code will be operated against their income and many of the codes issued are wrong anyway.

New HMRC system

The problems have occurred as a result of HM Revenue & Customs recently introducing a new system for issuing coding notices called the National Insurance and PAYE Service (NPS). The new service has brought to light various discrepancies in their records and so they have been trying to rectify the errors, hence so many codes being issued all at once. They expect to complete their review by mid April 2010 which will hopefully bring an end to all the confusion.

Resolution?

Any problems occurring as a result of an incorrect code will ultimately be resolved at the end of the tax year once a taxpayer submits their 2010/11 Tax Return to HMRC. However if serious problems are not dealt with near the beginning of the tax year it could result in a large underpayment arising for some people which it may not be possible to collect via a later year’s tax code. If you are not required to file a Tax Return, over or underpayments may go undetected for quite some time.

A careful review is necessary

In view of the problems which have occurred it is important that any codes received for 2010/11 are reviewed fully. If you believe that your code is incorrect you should either contact your advisor if you have one or HMRC as soon as possible.

Need help?

As agents we receive a copy of the majority of PAYE Coding Notices issued to our clients and therefore we are able solve many of the matters arising before problems begin to appear. We have discovered various reasons for an incorrect code but the problems particularly appear to have affected those with multiple employments. Close scrutiny of your code is therefore important.

Are you prepared for compulsory online VAT?

Toni — Thu, 04 Feb 2010 21:30:12 +0000

The new ‘VAT online service’ (VOS) was launched by H M Revenue & Customs (HMRC) in November in prepartion for the compulsory online filing of VAT returns and electronic payment of liabiliies for VAT periods commencing 1st April 2010.

These new regulations will be enforced and effect all

existing VAT registered businesses with a turnover (excluding VAT) of £100,000 or more (taken from the previous four returns submitted)
businesses that register for VAT on or after 1st April 2010, regardless of turnover.

Once your business has been required to file online once, it must continue to do so. The only exemptions are businesses involved in an insolvency procedure or those who have satisfied HMRC that the religious beliefs are incompatible with the requirement to use electronic communications!

If your business is VAT registered, you can expect to receive a letter from HMRC during February 2010 notifying you of your obligations.

There are proposals for this to be just the first step of the process and that all VAT registered businesses should manage their VAT returns and payments electronically from 1st April 2011.

The new VOS will enable users to

Register for VAT
Enrol for electronic filing
View previously submitted electronic returns
Set up email alerts to remind business owners of when returns should be submitted

Of course, if you do not want to be burdened with this, your accountant will be able to act as your agent in the same way as they can file payroll and self-assessment returns. They will ask you to an authority to act (HMRC form 64-8 is not adequate for VOS) and may re-issue their letter of engagement to clarify the terms of this service.

More information can be sought from your accountant or HMRC’s online services website

Gift Aid

Toni — Mon, 07 Dec 2009 10:01:19 +0000

This is a very short post just to let you know that the easy-to-read guidance offered by H M Revenue & Customs on the Gift Aid scheme has been updated.

If you are, or are thinking of running a gift aid scheme for your deserving cause, I highly recommend you read this http://www.hmrc.gov.uk/charities/gift_aid/basics.htm

I would particularly like to highlight the fact that the time limit for making a claim has reduced to 4 years.

A message from Charity Commission Direct

Toni — Fri, 23 Oct 2009 10:38:39 +0000

Please see below a message sent from the Executive Director of Charity Services on 23rd October 2009 about the importance of meeting deadlines despite the current postal disruption.

At George Hay we endeavour to file as much as possible online to the Commission, Companies House and H M Revenue & Customs and have done for many years. We believe this provides a better quality service to our clients as well as mitigating costs by reducing resources. www.georgehay.co.uk

Dear Sir

Online Service and Postal Disruption

I am contacting to you as a professional advisor of charities. In light of the postal strike the Commission is reminding all our key customers of the services that can now be carried out on line and to strongly encourage you to use e-mail when contacting us.

The Commission has conducted research which indicates that approximately one-quarter of all its ‘hard copy’ post emanates from a professional adviser. In the majority of instances this post could have been sent to us by e-mail or through our website. We have to arrange for letters and documents to be scanned and this inevitably increases our administration costs and causes delay.

The Commission has been growing its online services in recent years and there has been an increasing uptake by our customers who value the swift service this can guarantee. The following services are offered online as an alternative to submitting hard copy:

Filing of Annual Returns;
Filing of accounts and Trustee Annual Reports;
Registering changes to the composition of a trustee body;
Applying for registration online. It currently takes an average of 12 days to register a charity over the internet, with the same process via postal applications taking around twice as long on average.
Online publications. The online versions of our publications are the most current whereas some hard copy may not have been recently revised.

Using the Commission’s online services speeds processes up for our customers, and even where the enquiry does not relate to an online service we are generally able to act upon an e-mail more quickly than with ‘hard copy’. We can reply to most e-mail enquiries inside 5 days. This means that you can provide a quicker service to your clients.

Finally the Commission also offers template forms for a variety of actions your clients might take. These include amending their governing document; applying for authority to pay trustees; vesting land in the Official Custodian and dissolving a charity. Because the information requested is standardised we can consider applications on these forms more quickly than when they are contained in a letter alone.

The following link will take you to the landing page where these forms are housed: http://www.charity-commission.gov.uk/common/applyforit.asp

If you have documentation to send the Commission, you can attach this to your e-mail and send to the Commission at: enquiries@charitycommission.gsi.gov.uk

I hope that this information is of help to you

With best wishes,

Yours sincerely

David Locke

Executive Director of Charity Services

Charity Commission for England and Wales

Public benefit – your best defence….

Toni — Sun, 18 Oct 2009 12:50:52 +0000

The Charity Commissioners have been quite public about their detailed and sometime rigorous reviews of registered charities’ compliance with their public benefit tests.

The two key principles of this imperative test being:

1. There must be an identifiable benefit (or benefits)

It must be clear what the benefits are, how they relate to the aims of the organisation and they bust be balanced against any detriment or harm.

2. The benefit must be to the public (or section of the public)

The beneficiaries must be appropriate to the aims. If a section of the public is the target, the opportunity to benefit must not be unreasonably restricted by geography or ability to afford fees etc. People in poverty specifically must not be precluded from the opportunity to benefit and any non-public benefit should be incidental.

The implications of losing charitable status are huge. Not only would the loss affect public confidence and therefore the ability to raise funds, but H M Revenue & Customs have the right to ‘unwind’ tax exemptions claimed in the past six years which could create liabilities that would simply end the organisation’s ability to continue.

If you would like to see some of the Commission’s “Emerging Findings” reports, take a look at their website. http://www.charity-commission.gov.uk/publicbenefit You will notice that they seem to be targeting fee charging schools as they are suggesting that offering a few bursaries to good students that can not afford to attend, does not constitute ‘public’ and is not going far enough to remove restrictions, but all charities are susceptible to this review.

Any charity with annual income above £25,000 (effective for accounting periods commencing 1^st April 2009) must attach a Trustees’ Report to their financial statements and file these with the Commission with in 10 months of the accounting year end. For incorporated charities this is in addition to the required Directors report.

This report is in my view, the best defence against a review as it gives the Trustees the chance to explain the activities of the organisation in both financial and non-financial terms as well as stating the aims, objectives and policies of those charged with governance. It should tell the ‘story’ of the charity for the year giving those who are not trained in business the ability to understand how the charity is performing and the impact it is having on the public.

Much of my time spent working with trustees of charities revolves around this key report, guiding and advising them on structure, essential disclosures and helping them to explain the accounts and performance of their organisation.

Important deadlines for taxpayers…

Toni — Mon, 14 Sep 2009 21:23:29 +0000

Self-assessment deadlines have changed – don’t be late!

H M Revenue & Customs (HMRC) are working hard to encourage businesses and individual taxpayers to file online to help them become more efficient and effective. As part of this strategy they have changed the deadline if you wish to continue submitting a paper Return.

Generally, if you are sent a notice to complete a Tax Return you must return it completed before the later of 31 October following the end of the tax year and three months following the date of issue of the notice. Failure to do so will result in a £100 penalty regardless of the tax due. This is a significant change, so beware. (£100 per partner if the Return relates to a partnership)

For paper returns submitted by this date, HMRC will:

calculate your tax for you (though you or your accountant can calculate it for yourself if you want)
tell you what to pay by the following 31 January
collect tax through your tax code (if possible) where you owe less than £2,000.

Returns sent via HMRC’s website or an electronic service provided by your accountant may be submitted up to 31 January. There are many advantages of electronic submission which all our clients benefit from, the main ones being:

Tax Returns are processed almost immediately and an acknowledgement of successful submission is provided.
Your liability is calculated automatically and any refund due is issued by the system direct to your bank account. Typically this occurs within 10 working days and saves banking and postage costs/time. Manual processing can take weeks, sometimes months.
PAYE coding notices are updated and re-issued without delay (if appropriate)
The lack of ‘human’ intervention prevents processing errors and re-enforces the process now, check later strategy intended for Self-Assessment

There are a few situations where online tax returns can’t be made. In these cases the submission deadline is 31 January.

Companies House deadlines and penalties have changed too…..

If you operate your business through a Limited Company please be aware that the accounts filing deadline has been reduced by one month for accounting periods beginning on or after 6th April 2008.

A private company now only has 21 months from incorporation or in subsequent years nine months from its’ accounting period end to submit financial statements to Companies House.

From 1st February 2009 the late filing penalties imposed by Companies House have also become a lot more onerous.

If your accounts or Tax Returns are not up to date,

call us for a free no obligation consultation. 01480 426500