Posts tagged ‘Hmrc Website’

During his first budget speech in the Summer the current chancellor announced that the standard rate of VAT would be increased from 17.5% to 20% on 4th January 2011, the third rate change in two years. 

If you are using the flat rate scheme, this change will affect you too.  Be sure to check your new rate on the HMRC website.

Administrative Burden

For business that supply goods and services to other VAT registered businesses, the burden will be one of administration.

  • The default rates in bookkeeping systems such as SAGE need to be altered – ask for help
  • Business owners and bookeepers need to be clear about the tax point being used – the time of supply is important.
  • If you are using the Cash Accounting Scheme it is imperative that you can identify payments received on or after 4th January 2011 that relate to supplies made prior to that date, to be able to account for them at 17.5%
  • Make sure your book keeping is as up to date as possible, confusion surrounding work/supplies that span the VAT change are likely to be exacerbated if you are behind with your paperwork.
  • If you display prices inclusive of VAT you will need to be prepared to change literature/brochures/websites etc.

Financial Burden

But for business such as tradesmen and retailers that supply goods and services to non-VAT registered consumers, there are additional considerations as the change may have a significant financial impact.


  • How price sensitive are your customers?  Will they find a cheaper alternative or simply stop purchasing your offerings if you add another 2.5% to your prices?
  • If you don’t increase your prices, can your business afford the reduced margins?  If you don’t increase them now, when?
  • Speak to your customers, they may be willing to pay a deposit in advance of receiving your goods and services to take advantage of the current VAT rate. (For full details on whether this ruling can apply to your business click here )
  • Ensure you have procedure in place that will allow you to measure the amount of work carried out up to the date of the VAT rate change, such as detailed timesheets, as you are entitled to split your invoice.  i.e. work performed in 2010 charged at 17.5% plus work carried out in 2011 at 20%.

Effect on Economy

The Chartered Institute of Personnel and Development has predicted that the VAT rate increase will result in the loss of an estimated 200,000 UK jobs.

The effect on an already under pressure retail sector is going to be huge, I don’t think anyone dare to hazard a guess at how huge.


We have been fortunate enough to benefit from one of the lowest rates of VAT in Europe for many, many years, but will this increase really have a significant effect on our huge deficits?  I am not convinced.


For guidance on how to implement the change and minimise the impact on your business, please get in touch.

Another easy to read article about the VAT increase and price sensitivity : What’s a small business to do?  

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.

HMRC now have powers to name and shame individuals and companies who deliberately evade taxes, by publishing their names, address and details of their evasion on the HMRC website.

New Powers

The law that provides HMRC with the power to disclose is included at Section 94 of the Finance Act 2009.  This ruling can be used by HMRC for accounting periods starting 1 April 2010, it therefore may take a little time before anything ‘juicy’ is made public.

ShameDeminimus

To be named and shamed the evasion must be deemed to be deliberate and involve tax of £25,000.



Preventing the embarrassment

A full voluntary disclosure of tax wrong doings without undue delay may help avoid the detail being published.

My thoughts

Once again HMRC have been given more opportunity to burden taxpayers with the subjective views of individual inspectors.

  • deliberate
  • undue delay and
  • ‘full’ disclosure

are all terms that I consider could be misconstrued or misrepresented and this allows different cases to be dealt with in different ways dependant on the mood, attitude or experience of the inspector.

If you are exposed to this new HMRC power, defending your position by challenging the inspectors opinion of your guilt may well be expensive and stressful.


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.

The end of the tax year is almost here, so those of you who administer the payroll function for your business are nearing a busy time and need to ensure you are prepared for a few changes which occur this year.

Online Filing

The first change affects those who have not previously filed their Employer Annual Return online. 2009/10 is the first year that online filing is mandatory for all employers regardless of the size of the business. Paper filing of forms is no longer an option. Therefore if you have not previously been registered for electronic filing you must ensure you now register with HMRC’s PAYE Online Service which can be done via the HMRC website.

Late Payment Penalties

Another change which will affect employers from May 2010 is the introduction of late payment penalties if your PAYE is paid late. Currently interest is only charged when the PAYE payment is received late at the end of the tax year.

From May 2010 your PAYE payment will need to be received on time either each month or each quarter depending upon which basis you pay.  Businesses will have to ensure that HMRC always receive postal payments by the 19th of the month or that electronic payments are received in HMRC’s bank account by 22nd of the month to avoid a late payment penalty. The new late payment penalties will apply to all employers and contractors that do not pay on time.

Details of whether you have incurred a penalty will not be sent out until April 2011 but will apply for the whole of the 2010/11 tax year. Penalties will start at 1% of the late amount and will increase to 4% depending upon how many times you pay late. You will not have to pay a penalty if only one payment is late unless it is more than six months late. Payments that are more than six months late may attract a penalty of 5% and a further 5% if still outstanding after more than twelve months.

This is an important change for employers who should ensure they get in to the practice of paying their liability on time each month not just at the payroll year end to avoid any extra costs.

If you have any queries regarding the preparation of your payroll my colleagues at our in-house payroll bureau PayScheme will be happy to help. Contact a member of the team direct on 01767 220199.

 

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.