New HMRC Service to Replace Closing Enquiry Centres

Tax adviceHer Majesty’s Revenue & Customs (‘HMRC’) have now completed a 7 month pilot scheme, held across the North East of England, whereby they closed existing HMRC Enquiry Centres and instead offered those requiring extra help with tax-related issues assistance in a different, more tailored way. With the pilot scheme now complete and deemed a success, all Enquiry Centres across the UK will be closed by 30 June 2014 (just a few days away at time of writing) in favour of the new, more tailored system.

Since the end of May, HMRC have already been rolling out the replacement service, being “a new way to support people who need extra help to get their taxes, tax credits and child benefit entitlements right”. The new service will be more tailored to individual needs and will apparently be more efficient than the Enquiry Centres, which have seen demand drastically falling over recent years. So evidently the new service is also about saving the Government money, which is good to see as it helps to reduce the UK’s overall tax burden and mitigates possible tax increases.

The Replacement Service

The replacement service will be available by telephone or face-to-face via a mobile squad of advisers, who will deal with you on the telephone, visit your home or meet you within your local community, if preferred. The HMRC specialist involved will try to resolve, as fully as possible, all tax and tax credit-related queries during the course of the initial session. This will be aided by liaison, during that session, between the adviser and other experts from different departments within HMRC; the aim being to Read more

HMRC’s ‘Direct Recovery’ of owed tax – straight from your bank account!

Direct Recovery of tax from your bank accountPart of the Chancellor’s recent Budget included plans to recover tax owed to the Treasury direct from the debtor’s bank account — all done directly and without a Court Order being necessary. This has been criticised widely but HMRC says that only 17,000 people in the UK per year would fall into this potential scenario and that it would only occur for those owing more than £1,000 in unpaid tax or tax credits owed. Moreover they say that they would only target long-standing tax debts from those who had received a minimum of 4 payment demands and whose bank and savings accounts combined had a minimum total balance of £5,000 or more remaining after any tax bad been directly seized. Also the debtor involved will have been issued with a final warning period of 14 days, during which the funds concerned would be frozen, before any tax was directly withdrawn.

Meanwhile many, including the Treasury Committee, have raised concerns by stating that it is well-known that HMRC make mistakes including, for example, sometimes asking for the wrong amount of tax from people, issuing incorrect tax cards, or worse. Similar mistakes applied through the new ‘Direct Recovery’ of tax from bank and savings accounts could be seriously detrimental to people and Read more

Time for ‘tax year end planning’ (pre-Budget)

The budget will take place on March 19th 2014 so that gives us all just 5 weeks (at time of writing) for ‘tax year end planning’. So perhaps now is the time to start reviewing investments.

N.B. We’re not financial advisers (we are tax agents and accountants) so we can’t give advice on investments. But let us simply point out that if a portfolio shows signs of some gains, one can usually realise up to £10,900 in capital gains for the tax year 2013/2014, without a capital gains tax (CGT) liability coming into force.

It might also be worth considering making the most of ISA allowances before the tax year ends (April 5th). £11,520 can currently be invested into an ISA for the tax year 2013/2014, of which £5,760 maximum can be in a ‘Cash ISA’. Because you cannot carry forward ISA allowances into a new tax year, there is only very limited time remaining to make the most of the current ISA allowance. Tax benefits in relation to ISAs are well recognised in the UK, so much so that the Treasury has already looked at the possibility of capping their total value … and who knows what news the coming Budget will bring in this regard, particularly bearing in mind the continued need for austerity measures to reduce the budget deficit during these troubled economic times.

If you would like independent financial advice, Read more

So are you one of the 6.6% who missed the tax return deadline?

Despite it being an all time record year for receipt, on-line, of ‘on time’ tax returns this year, of the 10.74 million tax returns which were due by 31 January 2013, about 708,740 were – or still are – late. That represents a shortfall of 6.6% and, at a starting penalty of £100 per late return, that’s quite a hefty total penalty. However, one could argue that an additional £71 million in the HMRC coffers in these troubled economic times is very welcome for the exchequer, even if it’s small change in the big scheme of things.

So did you miss the deadline? Here’s what you can expect in terms of additional penalties:

Late return penalties by HMRC

Remember: you still have to submit a tax return even if you do not owe any tax. Taxfile are Read more

It’s official: thousands are on the wrong tax code!

With the tax return deadline being only hours away (midnight 31 January 2014) there is still time to get professional help if you need it – particularly because HMRC  often get it wrong according to new research by UHY Hacker Young.

In just one example, HMRC sent a tax bill to a pensioner which demanded over £576k in tax! With an income of only £11k per annum this was clearly incorrect but what if it had been only hundreds of pounds wrong – would the pensioner have noticed and, if so, would he have been confident enough to question it with the might of HMRC?

According to the research, HMRC employees have been making ‘basic’ errors which have led to problems such as people being on the wrong tax code and consequently underpaying or overpaying tax. While underpaying it may sound attractive on the face of it, chances are the system will catch up and then a correction will need to be made later on, leaving the taxpayer with an unforeseen bill to pay – a real blow for cashflow.

While the UHY Hacker Young research cites an error rate in 2013 of 37% in the sample tested, HMRC are arguing that the research is wrong and that their PAYE coding notices are 99% accurate. Either way, when you consider that Read more

Tax return help 7 days a week!

By midnight on 31st January 2014, you will need to have submitted your self-assessment tax return to HMRC and have paid them any tax due for the 2012-13 financial year. It doesn’t matter if you have zero tax to pay – you still need to submit your tax return on time or you will be hit with an automatic penalty of £100 (delaying even further can, in the worst case scenario, increase this fine to as much as £1,600).

In view of this, for the month of January you can get help 7 days a week from Taxfile in Tulse Hill, South London.

Our team of tax advisers and accountants can help you with your return whatever your employment status. We can help you register with HMRC if you are not already registered, check your form and help fill it in where necessary, make sure you’ve claimed for any allowable expenses to offset tax, make sure you haven’t missed anything or claimed for something you shouldn’t have claimed, compute any tax due (or due to be refunded), and submit your tax return on-line (the only option available this late into January – paper returns are already too late!). Read more

HMRC now has landlords in their sights

Residential property lettingsHMRC (Her Majesty’s Revenue & Customs) has announced some new initiatives over the course of the last month and one of these is The Let Property campaign which is a campaign designed to recover undeclared tax from those receiving income from residential property lets. The idea is to encourage those landlords with under-declared income or gains (potentially including income tax, Capital Gains Tax and VAT) to contact them in order to make a full disclosure. By doing so they may well avoid the higher penalties which may be applied to them should HMRC discover the undeclared income/gains via other means. Don’t forget that they now have access to information shared across systems, including in relation to properties both at home and abroad, as well as being gained through their digital intelligence system ‘Connect’ which identifies links between individuals, entities and properties. So the message to landlords is loud and clear!

The campaign applies to landlords whether they have just a single property or a large portfolio of properties and encompasses lets to students, business workforces and the holiday market. Read more

New tax break for married couples

In this recently filmed interview David Cameron said:

“Marriage is a great institution and it helps to build good and strong societies so I think it’s right to back marriage properly in the Income Tax system – most other advanced industrial countries do and it and we should do it too.”

So on the eve of the Conservative Party Conference at the end of September, the Prime Minister began to unveil plans for a new allowance which will benefit an estimated 4 million married couples, including 15,000 in civil partnerships. It is aimed at those who are not in the higher tax-paying rate (so those couples with a taxable income of less than £42,285 in the tax year 2015-16) – so will benefit only those on a middle or lower income. Read more

Darling’s Increase in Personal Allowance

The Chancellor Alistair Darling has announced an increase in the personal tax allowance of £600 and an adjustment to the higher rate threshold (the total of the personal allowance and basic rate limit).

According to the tax office we do not need to make any adjustments to our tax code numbers at the moment.The emergency code for new employees without a code number remains 543L.
This change is supposed to give 22 million people on low and middle incomes a gain of £120.
Alistair Darling explains this in saying that [the need of the increase in the personal allowance] represented the fairest and most effective way to help those who had lost out due to the abolition of the 10p starting rate announced by Gordon Brown last year in his final Budget as Chancellor”

From September, all basic rate taxpayers would get a one-off increase of £60, followed by a monthly increase of £10 for the rest of the year.

By giving £600 extra to the personal tax allowance, the government also reduces the threshold at which an individual starts to pay tax at the higher rate by £600. People used to pay basic rate tax on earnings up to £36,000 above their personal allowance but higher rate tax will now apply at £34,800 and as a result 150,000 people will become higher rate tax payers.
Still confused about all these changes in the tax system? Taxfile’s tax accountants in South London and Exeter are here to help for any tax issues you might have. Visit their website or call them on 020 8761 8000 and find all the answers to your questions.

Penalties Reform – The Next Stage

Hello self-employed taxpayers,

I hope you enjoyed your holidays. I’m sure it might be quite difficult for those of you who haven’t submitted your tax return yet with the the deadline coming soon.
Now, you might wonder what this Next Stage is all about!
Well, as part of ”The Review of Powers, Deterrents and Safeguards HMRC has been developing ideas and consulting on how to modernise and align civil financial penalties.[…]The first substantial measure,[…] was a single new penalty regime for incorrect returns for income tax, corporation tax, Pay As You Earn(PAYE), national insurance contributions (NICs) and value added tax(VAT)(the main taxes)”(HMRC and the Taxpayer, Modernising Powers, Deterrents and Safeguards, Penalties Reform:The Next Stage.Consultation Document 10 January 2008).
In other words, the Tax Office wants to make sure that people do pay the right amount of tax and at the right time. The payment of taxes together with the repayments and reliefs cannot be voluntary or arbitrary. They must be governed at all times by a framework of rules
and obligations. According to HMRC, these penalties should influence behaviour, should be effective and fair.
Penalties have been considered in the following categories:
•incorrect returns
•failure to notify a new taxable activity
late filing and late payment
•record keeping and information powers failure
•other regulatory failures.

There will be no penalty where taxpayers make a mistake or misinterpret the law despite taking reasonable care in completing their returns.
To make sure your tax return is submitted correctly and in time visit Taxfile‘s tax accountants in South London and they will do it on your behalf.