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61 Friar Gate  Derby  DE1 1DJ

 

Registered to carry out audit work Association of Chartered Certified Accountants.

www.auditregister.org.uk under number 8011438

Member of the Association of Chartered Certified Accountants
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Blog

MTD for VAT clarified in new communication from HMRC

Adrian Mooy - Tuesday, September 18, 2018

 

HM Revenue & Customs (HMRC) has finally issued a new notice on Making Tax Digital for VAT in which it has clarified many of the questions that businesses had.

 

VAT notice 700/22: Making Tax Digital for VAT has been created to act as a point-by-point guide to the new regime and includes new advice from HMRC to help fill the gaps where the policy has previously been unclear.

 

Within the document, HMRC confirms that VAT-registered businesses with annual VATable turnover under the VAT registration threshold (currently £85,000) do not have to comply with MTD, but can voluntarily sign up by informing the tax authority in writing.

 

Exemptions will also be offered to businesses on the grounds of religion, insolvency, or because it is not reasonably practicable to use digital tools.

 

Exempt companies will have to contact the general VAT helpline to ask HMRC to approve the exemption or seek “digital assistance”.

 

HMRC has also confirmed the information that each business will need to submit in regards to each VATable supply made by the business, this includes:

 

 - time of supply (tax point)

 - value of the supply (net value excluding VAT)

 - rate of VAT charged.

 

Partially exempt businesses or those that use a VAT scheme may not be able to report how much VAT they can reclaim on each individual invoice. In this instance they can record:

 

all the VAT paid; or

none of the VAT; or

the estimated amount of the recoverable VAT.

 

Once the partial exemption or other scheme calculation is completed, an adjustment will be made to the digital VAT records.

 

Some permanent information about the business must also be recorded digitally, such as the name, address, VAT number and any VAT accounting scheme used.

 

However, businesses will not have to keep a digital image of each purchase invoice.

 

HMRC has also announced that it has seen demonstrations of various MTD software and tested online accounting products within the HMRC test environment. It has produced a list of tested software, although it is likely that additional providers will be added to this list at a later date.

 

The VAT notice confirms that the full MTD service won’t be available from HMRC when MTD for VAT goes live in April 2019.

 

This will mean that businesses won’t be able to submit voluntary updates or supplementary data to support their VAT return initially, although these will be added at a later date.

HMRC collects more than £30 billion worth of extra tax

Adrian Mooy - Tuesday, September 11, 2018
New figures from HMRC have revealed that the tax authority brought in a total of £605.8 billion in the year to April 2018.

 

This 5.4 per cent increase in the Revenue’s tax collection over the previous year includes:

 

£186 billion in Income Tax (2016/17 £173 billion)
£130.5 billion in National Insurance Contributions (2016/17 £122.5 billion)
£128.6 billion in VAT (2016/17 £124.4 billion)
£53.3 billion in Corporation Tax (2016/17 £51.1 billion).

 

The latest data was revealed in HMRC’s annual report and accounts, which shows that compliance yield went up over the year by £1.4 billion to £30.3 billion.

 

Of the areas of taxation covered in the report, only Capital Gains Tax saw a decrease – falling by 7.1 per cent. This was primarily the result of the reduction in the tax rate from 18 per cent to 10 per cent for non-higher rate taxpayers.

 

“Every year, through our compliance work, we collect or protect billions of pounds that would have otherwise been lost to the UK through fraud, tax avoidance, evasion and non-compliance,” a HMRC spokesperson said.

 

“We’ve strengthened our grip on those who deliberately cheat the system and continue to pursue those who refuse to pay what they owe, applying civil and criminal sanctions as appropriate to this dishonest minority.”

 

Looking at its investigation and tax cases, HMRC recorded a 90 per cent success rate in tax prosecutions, which along with the 78 per cent of successful outcomes for appeals heard in the tribunals and courts, accounted for £37 billion worth of tax being collected.

 

Looking at its crackdown on offshore evasion, the report said: “Last year, over 140 individuals were the subject of criminal investigation for offences associated with offshore tax evasion, including four arrests and a further six interviews under caution relating solely to the Panama Papers.

 

“Since 2010, we’ve brought in more than £2.8 billion from domestic and global initiatives to tackle offshore tax evaders. Since June 2012, 26 individuals have been successfully prosecuted, resulting in over 100 years of custodial sentences and 12 years of suspended sentences.”

 

The report also includes information on HMRC’s digital activities. It reports that the number of taxpayers using digital tax accounts grew throughout the year and that ahead of the introduction of Making Tax Digital for VAT, there are currently around 15 million individuals using personal tax accounts and three million businesses using business tax accounts.

Tens of thousands of fake HMRC websites taken down

Adrian Mooy - Friday, September 07, 2018

 

Figures published by HM Revenue & Customs (HMRC) show that 20,750 malicious websites have been taken down over the last year – 29 per cent more than in the previous year.

 

Although it has brought in cutting-edge technology to tackle the problem, the Revenue is warning the public to remain alert, as substantial amounts of money could be lost by anyone who fall victim to such a site.

 

Neither HMRC nor banks will ever contact people out of the blue to ask for their PIN, password or bank details.

 

Mel Stride MP, the Financial Secretary to the Treasury, said: “The criminals behind these scams prey upon the public and abuse their trust in Government. We’re determined to stop them.

 

“HMRC is cracking down harder than ever, as these latest figures show. But we need the public’s help as well. By doing the right thing and reporting suspicious messages you will not only protect yourself, you will protect other potential victims.”

 

In addition to fake websites, HMRC is also warning of text message and email scams, which purport to be from HMRC, offering refunds. It has said that it never notifies taxpayers of refunds in this way.

 

An email verification system has been in place since November 2016 to verify that emails actually are from HMRC – it has reportedly already blocked half a billion phishing emails reaching taxpayers.

 

The Revenue is also trialling technology that detects text messages that suggest they originate from HMRC and stops them being delivered.

Documents reveal HMRC plans to secretly access bank account information

Adrian Mooy - Saturday, September 01, 2018

 

 
Documents published online have revealed HM Revenue & Customs’ (HMRC) plans to secretly access bank account information.

 

The planned new powers come in the form of information orders, which are used by the Revenue to determine that taxpayers are paying the correct amounts of Income Tax, Corporation Tax, Capital Gains Tax and VAT.

 

Banks, building societies, accountants, lawyers and estate agents can all be ordered to divulge financially sensitive information.

 

These groups are currently able to notify their clients if HMRC requests access to this information, but would not be able to under the new plans.

 

HMRC can only make such a demand with the permission of a Tribunal if a taxpayer refuses access to the information, but officials are calling to have this relaxed so that only secretly accessed accounts would need Tribunal approval.

 

James Daley, the Managing Director of Fairer Finance, said: “The system we have got contains essential protections for taxpayers’ privacy and rights. The idea that HMRC can request information from people’s banks, from estate agents and other third parties without notifying the individual is shocking.
 
“They are bypassing checks and balances that are there to protect people. Of course we want to crack down on people who aren’t paying their taxes, but there has to be a balance between that and breaching privacy. This can’t be a lazy shortcut for the taxman.”
 
A spokesman for HMRC said: “We are simply consulting on updating existing powers to obtain account information to help establish the right tax has been declared.

 

“Nothing has been decided. If these powers became law, we expect they would only apply to a few hundred cases each year and of course there will be safeguards in place to protect taxpayers.”

 

UK’s tax gap continues to fall

Adrian Mooy - Monday, August 20, 2018

 

 
Figures released by HM Revenue & Customs (HMRC) show that the UK’s tax gap is continuing to fall.

 

The Revenue has revealed that the tax gap for the 2016-17 tax year was 5.7 per cent, down from six per cent in the previous year and 7.3 per cent in 2005-06. It says that, had the tax gap not fallen, a total of £71 billion less tax would have been collected last year.

 

The figures show that of the total tax that was unpaid, the largest proportion was from small businesses, with £13.7 billion not paid.

 

According to HMRC, taxpayer error was nearly twice as likely as criminality to be the culprit for missing tax, with errors costing the Revenue £9.2 billion in lost income, while criminality cost £5.4 billion.

 

Meanwhile, Income Tax, National Insurance and Capital Gains Tax had the biggest tax gap at £7.9 billion. The VAT gap, on the other hand, has fallen from 12.5 per cent in 2015-06 to 8.9 per cent in 2016-17.

 

Mel Stride, Financial Secretary to the Treasury, said: “These really positive figures show that the tax gap is the lowest in the last five years, which reflects the hard work that HMRC and I have been doing to ensure we support businesses to pay the right tax at the right time and clamp down on tax evasion and avoidance.

 

“Collecting taxes is essential for funding our vital public services such as the NHS – indeed, had the tax gap remained at its 2005/06 level the UK would have lost £71 billion in revenue destined for public services, enough to build 200 hospitals.”

 

Jon Thompson, Chief Executive of HMRC, added: “The UK is the only country in the world to regularly publish their tax gap in detail and at 5.7 per cent, it remains at its lowest for five years. I am pleased that the downward trend shows HMRC and HM Treasury’s continued hard work to tackle evasion and avoidance is working.

 

“HMRC is also working hard to help taxpayers get their tax right by offering support and investing in digital services to improve businesses’ record keeping and reduce errors.”

 

The Revenue is now touting the forthcoming launch of its flagship Making Tax Digital programme as the latest weapon in its arsenal as it looks to reduce the tax gap further.

 

Making Tax Digital for VAT

Adrian Mooy - Thursday, August 16, 2018

HMRC has published further information on Making Tax Digital for VAT (MTDfV).

 

The VAT notice sets out some further details of the MTDfV regime, which will ultimately require taxpayers to move to a fully digital tax system.

 

 
Under the rules, businesses with a taxable turnover above the VAT threshold (currently £85,000) will be required to keep digital records for VAT purposes using 'functional compatible software' and provide their VAT return information to HMRC via an application programming interface.
 
This notice explains:
 - the digital records businesses must keep and the ways to record transactions digitally in certain special circumstances
 - what counts as 'functional compatible software', and when software programs do and do not need to be digitally linked where a combination of programs is used.

 

The new rules have effect from 1 April 2019, where a taxpayer has a ‘prescribed accounting period’ which begins on that date, and otherwise from the first day of a taxpayer’s first prescribed accounting period beginning after 1 April 2019.

 

 

Link:  https://www.gov.uk/government/news/hmrc-publishes-more-information-on-making-tax-digital


 

Off-payroll working in the private sector

Adrian Mooy - Thursday, July 26, 2018

 

HMRC has launched a consultation on how to tackle non-compliance with the off-payroll working rules in the private sector and are asking for comments on the best way to do this.

 

HMRC estimates only 10% of PSCs that should apply the legislation actually do so, and the the cost of this is projected to increase from £700m in 2017/18 to £1.2bn in 2022/23.

 

This consultation provides an early evaluation of the public sector reform and invites responses on how best to deal with non-compliance in the private sector.

 

This consultation considers a number of potential options for tackling the non-compliance with the off-payroll working rules in the private sector. However, the fundamental principles of the off-payroll working rules, that the employment status test determines who should be taxed as employees, are not being considered as part of this consultation.

 

In respect of the public sector

 

‘HMRC has analysed PAYE data covering the first 10 months of the reform, from April 2017 to February 2018. This shows that in any given month since the reform was introduced, there are an estimated 58,000 extra individuals who are paying income tax and NICs undertaking work for a public authority above expected levels.

 

HMRC estimates that an additional £410 million of income tax and NICs has been remitted from these engagements, since the public sector reform was introduced.

 

On the basis of this evidence, the government’s assessment is that the public sector reform has been successful both in increasing tax compliance and resolving the compliance challenges faced by HMRC in enforcing the off-payroll working rules in the public sector.’

 

Private sector

 

‘The government considers extension of similar reform to the private sector to be the lead option which will effectively tackle non-compliance.’

 

The consultation closes on 10 August.

 

Internet link: GOV.UK consultation https://www.gov.uk/government/consultations/off-payroll-working-in-the-private-sector

HMRC extends RTI late filing easement until April 2019

Adrian Mooy - Wednesday, July 18, 2018

 

HMRC has extended the payroll Real Time Information (RTI) late filing easement until April 2019.

 

Under RTI payroll obligations employers must submit details of payments made to employees on or before the day that wages are paid via a Full Payment Submission.

 

The updated guidance extends the easement, introduced in April 2015 to April 2019. The easement applies where an employer’s FPS is late but all reported payments on the FPS are within three days of the employees’ payday. This easement applies from 6 March 2015 to 5 April 2019.

 

However, HMRC go on to clarify that employers who persistently file after the payment date but within three days may be contacted or considered for a penalty. Potential monthly penalties range from £100 to £400 depending on the size of the employer.

 

Workers' rights for Pimlico Plumber

Adrian Mooy - Tuesday, July 17, 2018

A plumber has won a legal battle for working rights in a Supreme Court ruling.

 

The Supreme court has backed up an earlier ruling by an Employment Tribunal in the case of a contractor engaged by Pimlico Plumbers.

 

Plumber Gary Smith carried out plumbing jobs for Pimlico Plumbers. He was VAT registered and paid tax on a self employed tax basis.

 

The Supreme Court has ruled that Gary Smith was entitled to workers' rights and confirmed that the Employment Tribunal was ‘entitled to conclude’ that Mr Smith was a worker.

 

As a worker, Mr Smith was entitled to rights including holiday and sick pay. Details of workers rights can be found GOV.UK worker

 

Pimlico Plumbers chief executive Charlie Mullins said that he was ‘disgusted by the approach taken to this case by the highest court in the United Kingdom.’

 

‘This was a poor decision that will potentially leave thousands of companies, employing millions of contractors, wondering if one day soon they will get a nasty surprise from a former contractor demanding more money, despite having been paid in full years ago. It can only lead to a tsunami of claims.’

Small businesses say the Government should simplify business rates

Adrian Mooy - Monday, July 16, 2018

 

A survey has revealed strong support from the UK’s small business community for measures to simplify business rates.

 

A total of 71 per cent of the small businesses questioned said business rates should be simpler and have a greater degree of flexibility.

 

Meanwhile, 49 per cent of SMEs said the Government is doing too little to assist with business rate relief, with just 36 per cent satisfied with its efforts.

 

Of those questioned for the research, carried out by Close Brothers Asset Finance, 56 per cent had seen their bills increase in the last two years.

 

“The message from SMEs is clear that more needs to be done,” said Neil Davies, CEO of Close Brothers Asset Finance.

 

“Our study has found that it’s a nuanced picture out there and what I mean by that is that the call for clarity is not driven by cost concerns.”

 

Chancellor Philip Hammond has previously made concessions following concerns from SMEs. This includes bringing forward the next business rates revaluation from 2022 to 2021.


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