Taxfile passes HMRC inspection with flying colours!

/in , , , , , , , , , , , , , , , , , , /by

HMRC inspect high volume tax return agentsHMRC have recently been targeting tax agents who file high volumes of tax returns and, as one of the UK’s top 100 tax return preparers by volume, Taxfile had the honour of having an inspection by HMRC inspectors during late October.

The two senior inspectors met all Taxfile staff who prepare tax returns and analysed the procedures undertaken by them to arrive at the figures entered on customer returns. They also reviewed, on a spot-check basis, a selection of files worked upon over this Summer. Analysis included checks on procedures, figure work and record keeping including the level of detail recorded in notes. The result was a resounding success – Taxfile passed with flying colours – of course!

HMRC were also satisfied with the way Taxfile had dealt with any occasional instances of missing client receipts. They reiterated that, where clients had lost receipts, some kind of proof of purchase was always needed in lieu of the official receipts. For example bank statements showing that the purchase was made via a debit card or cheque, or credit card statements showing the purchase was made originally with a Visa or MasterCard. Our own recommendation is to Read more

Online banking may save you money!

/in , , , , , , , , , , , , , , , , , , , , /by

Online banking can save you money on your accounting costsDo you have online banking? Sending us downloaded statement information straight from your online banking means we can more easily import the data into our system and check for expenses and income which might otherwise have been overlooked. It can also fill in the gaps where you are missing receipts or invoices. This simple service could therefore save both time and money! Most online banking platforms allow you to export this information, for example as a CSV file, and this format is perfect for our accounting system.

Don’t have online banking? No problem! We also have a new system where we can scan in your paper statements straight into our ‘Bankstream’ accounting platform, making analysis faster and easier.

Either way, ask us for further information or, better still, send us a sample download of a typical month’s bank data (or Read more

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

/in , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , /by

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

Assets hidden offshore? Not for long!

/in , , , , , , , , , , , , /by

Financial information sharing now reaches the Cayman Islands, Isle of Man, Jersey and Guernsey.

On November 5th, Her Majesty’s Revenue & Customs (‘HMRC’) announced that the Cayman Islands had joined the ever-growing list of offshore territories which will now automatically share financial information with them in respect to UK taxpayers who may have accounts there. This follows similar agreements which took place in October for Jersey, Guernsey and the Isle of Man. Clearly the idea is to further aid in HMRC’s clampdown on tax evasion and avoidance.

The Cayman Islands also agreed to become an integral part of the G5 multi-lateral information sharing initiative involving a total of 31 territories including the UK, France, Germany and Spain, based on an earlier agreement with the U.S. and now also including cooperation with South Africa. The transparency of who really owns and controls UK companies is also a key HMRC aim.

This is all an important step towards the creation of a global standard in tax transparency and information sharing, an initiative originally agreed Read more

What is equitable liability?

/in , , , , , , /by

Information about equitable liability was published in the Revenue’s Tax Bulletin in August 1995.
Most people keep their tax affairs up to date and pay their tax in time time. However, where a taxpayer has not submitted his or her return, HM Revenue & Customs can determine the taxpayer’s likely tax liability so that the tax can be pursued. There is no right of appeal against such determinations, and the tax determined is legally enforceable. Taxpayers can displace the determination with their own self assessment at any time up to the fifth anniversary of the filing date for the year of assessment in question (or one year after the determination was issued, if later).
If a taxpayer receives an assessment and does not think it is right, he or she can appeal against it and has thirty days from the date on which the notice of assessment was issued to do so. Inspectors will accept appeals once that time limit has passed if they are satisfied that there was a reasonable excuse for not making the appeal within the time limit and the application to admit the appeal late was made without unreasonable delay thereafter. If the Inspector does not think these requirements have been met, the application must be referred to the Appeal Commissioners for a decision. The Appeal Commissioners are completely independent of the Inland Revenue and their decision on this matter is final.
Otherwise, an assessment is final and conclusive and the Inland Revenue is able to take recovery proceedings — through to bankruptcy if necessary — for the full amount. There is no legal right to adjustment of the liability.
However, where the taxpayer has exhausted all other possible remedies, the Inland Revenue may, depending on the circumstances of the particular case, be prepared not to pursue its legal right to recovery for the full amount where it would be unconscionable to insist on collecting the full amount of tax assessed and legally due.
This practice is known as ‘equitable liability’. The term ‘equitable liability’ reflects the original principle of fairness to other creditors.
The Inland Revenue may be prepared to consider applying ‘equitable liability’ where it is clearly demonstrated that:
• the liability assessed is greater than the amount which would have been charged had the returns, and necessary supporting documentation, been submitted at the proper time.
• acceptable evidence is provided of what the correct liability should have been.
In such cases the Inland Revenue may be prepared to accept a reduced sum based on the evidence provided, and not to pursue its right of recovery for the full amount.
The Inland Revenue would expect full payment to be made of the reduced sum. Furthermore, it would be most unusual for such treatment to be applied more than once in favour of the same taxpayer.
In determining the revised liability, the Inland Revenue will have regard to all the relevant circumstances of the case. Acceptable evidence of the reduced liability must be produced. It will not be sufficient to seek to replace the assessment merely with the taxpayer’s or the accountant‘s estimate of the liability.
In order to make a claim for equitable liability you need a tax accountant like Taxfile in South London to help you explain your circumstances and make sure the concept of equitable liability is applied and your tax affairs are dealt with in an equal and fair way.