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  • taxmedic 11:52 am on May 20, 2011 Permalink | Reply
    Tags: , , VAT   

    HMRC targets VAT Cheats 

    HMRC targets VAT Cheats

    HM Revenue & Customs (HMRC) today announced an initiative to crack down on VAT rule breakers. The new campaign will focus on individuals and businesses who are trading above the VAT threshold but who have not yet registered for VAT.

    The initiative is being discussed with interested parties to ensure HMRC has as much information from them as possible before launching the campaign later in the summer.

    Mike Wells, HMRC’s Director of Risk and Intelligence, said:

    “Our aim is to get as much input as possible into our future campaigns so that the views and experience of people and organisations outside the department play a fuller part in what we design for customers.

    “We are already in contact with a number of interested parties and I expect many more to contact us with their views before we finalise the design of the VAT initiative.

    “This will be the model for all our future campaigns and we look forward to being even more open about the compliance activity HMRC is undertaking to ensure we reduce the tax gap and help customers pay what they owe.”

    Each HMRC campaign is aimed at reducing the tax gap by focusing on areas where a significant underpayment has been identified. The department provides simple, straightforward opportunities for customers to put their records in order on the best possible terms, followed immediately by activity focused on the non-compliant who choose not to take up the opportunity. HMRC has raised over £500m from voluntary disclosures and a further £100m so far from follow-up activity.

    Previous campaigns have targeted offshore investments, medical professionals and people working in the plumbing industry. For each HMRC has used new technology and legislation to gather and analyse data, from internal and external sources, to identify people who should come forward. This has provided thousands more investigations, now being worked through, including a number of criminal investigations.

    To join the VAT Initiative discussion, individuals, organisations or businesses should contact Nicky Prys-Jones (Nicola.j.prys-jones).

     
  • taxmedic 8:09 pm on May 19, 2011 Permalink | Reply
    Tags: Alan Lee, , Bradford, Greater Manchester Police, , , Humber Police, Investigation, Laundering, Manchester, Money, North West, nottingham, Nottinghamshire. rochdale, Operation Enigma, southport, , West yorkshire Police, Yorkshire   

    Fifteen arrested in money laundering investigation 

    Fifteen arrested in money laundering investigation

    Officers from HM Revenue & Customs (HMRC) investigating suspected money laundering offences in excess of £200 million have arrested 15 people during early morning raids across the North West, Yorkshire and Nottinghamshire today.

    Around 250 investigators from HMRC, assisted by officers from a number of police forces, carried out over 20 property searches in Rochdale, Manchester, Bradford, Southport and Nottingham as part of the enquiry.

    The arrests come as a result of a long-running HMRC investigation, codenamed Operation Enigma.

    HMRC’s Deputy Director for criminal investigation Alan Lee comments:

    “Operation Enigma is an HMRC-led investigation targeting money laundering offences. At various stages of the investigation, we have worked closely with colleagues from Greater Manchester Police and West Yorkshire & the Humber Police.

    “Further details cannot be provided at this early stage, as our investigation is continuing.
    However, our activity today sends out a clear message to those involved in this type of criminality. Attempts to launder the proceeds of crime are treated extremely seriously by HMRC, and we will relentlessly pursue any individuals or crime gangs believed to be actively involved in money laundering.”

    The investigation remains live and active at this time.

     
  • taxmedic 8:05 pm on May 19, 2011 Permalink | Reply
    Tags: Compliance, evasion, , Minimum Wage, NI, NMW, Olympics, self employed,   

    Olympics site contractors reminded of tax rules 

    Olympics site contractors reminded of tax rules

    Companies working on construction projects for next summer’s Olympic Games are warned today that HM Revenue & Customs (HMRC) will crack down on tax, National Insurance or national minimum wage breaches.

    Mike Eland, HMRC’s Director General of Enforcement and Compliance, said:

    “We aim to help contractors and employers understand their responsibilities and comply with their obligations but we will also catch and deal with those who deliberately break the law. This is only fair to those businesses who do play by the rules and want to compete on a level playing field.

    ”The Olympic and Paralympic Games represent a great opportunity for UK companies – but they must at the same time meet their tax and employment obligations.

    ”Only those who choose to break the rules, or deliberately evade the tax they should be paying, will be targeted. Honest businesses have absolutely nothing to worry about.

    “But the message is clear – if you deliberately seek to evade tax, HMRC can and will track you down and you’ll face not only a heavy fine but possibly a criminal prosecution as well.”

    HMRC will target contractors and employers who:

    • do not correctly classify the employment status of their workers;
    • do not deduct and account monthly for PAYE and National Insurance;
    • do not deduct and account monthly for deductions under the Construction Industry Scheme(CIS) ;
    • avoid paying the national minimum wage; and
    • fail to meet their obligations to file statutory CIS or PAYE returns.

    If they are late paying PAYE or CIS deductions, interest and penalties can be charged. Late or non-filing of monthly CIS returns by contractors can also lead to penalties. And breaches of NMW legislation can result in an unlimited fine and criminal record.

    In addition, falsely classing workers as “self-employed” to avoid tax, National Insurance or NMW can result in severe financial penalties.

     
  • taxmedic 5:53 pm on May 13, 2011 Permalink | Reply
    Tags: , high court,   

    Supreme Court supports HMRC avoidance fight 

    Supreme Court supports HMRC avoidance fight.

    TAXPAYERS WHO try to exploit broad-brush tax legislation will have greater trouble arguing their case in court following a Supreme Court ruling, lawyers have warned.

    HM Revenue & Customs appealed against decisions by the upper tribunal and Court of Appeal that found in favour of Tower MCashback, a software development partnership. The case centred around the partnership artificially paying too much money for software rights, which was subsequently recycled back into the firm to pay back a bank loan.

    Tower MCashback then claimed first year allowances on the software, which was treated as capital. This was offset against other income, leaving the partnership with a minimal tax bill.

    The Court of Appeal said that this practice was in accordance with capital allowance legislation, which was broad brush in approach and allowed companies to offset the acquisition of rights for the basis of trade against their tax bill. As there was no doubt the software had been purchased, this was acceptable, the CofA said.

    However, the Supreme Court said that it was required to consider what had been spent on the software in reality.

    Jason Collins, a partner at McGrigors, said the courts used the “Ramsay” approach, which focuses on transactions that have only come about for tax avoidance purposes. “Ramsay allows a court to evaluate the true reality of a series of transactions rather than look at the particular transaction which the tax legislation seeks to tax or give relief for,” he said.

    “HMRC tend to approach Ramsay as if it were a broad spectrum antibiotic which negates all forms of tax planning and will say Tower MCashback supports this.”

    However, he added, this only comes into play if the particular legislation permits the courts to look into the reality, which only applies in broad-brush legislation.

    “The status quo is that planning around prescriptive legislation or legislation which creates legal ‘fictions’ will tend to succeed and it is HMRC’s responsibility to make sure its legislation does not contain loopholes,” he said.

    taxmedic assist in all areas of personal and corporate taxation, call 0845 519 7683 or email medic

     
  • taxmedic 5:15 pm on May 13, 2011 Permalink | Reply
    Tags: , Mike Eland, , tax evasion, tax investigation   

    New task forces to tackle tax dodgers were announced today by HM Revenue & Customs (HMRC). 

    The first task force will focus on the restaurant trade, targeting businesses in London over the coming weeks.

    The specialist teams will undertake intensive bursts of compliance activity in specific high risk trade sectors and locations across the UK. The restaurant trade in Scotland and the North West will be the next areas targeted.

    They come as a result of the Government’s £900m spending review investment to tackle tax evasion, avoidance and fraud from 2011/12, which aims to raise an additional £7bn each year by 2014/15.

    Mike Eland, Director General Enforcement and Compliance, said:

    “These task forces are a new approach which uses HMRC’s resources to identify and tackle rule-breakers and evaders swiftly and effectively.

    “Only those who choose to break the rules, or deliberately evade the tax they should be paying, will be targeted. Honest businesses have absolutely nothing to worry about.

    “But the message is clear – if you deliberately seek to evade tax HMRC can and will track you down, and you’ll face not only a heavy fine, but possibly a criminal prosecution as well.”

    HMRC is planning a further nine task forces in 2011/12, with more to follow in 2012/13.

    Tax Investigations?? or Declarations?? – Taxmedic can help – 0845 519 7683 or email medic@taxmedic.co.uk

     
  • taxmedic 5:11 pm on May 13, 2011 Permalink | Reply
    Tags: Chancellor, employment, george osbourne, HM Revenue & customs, , House of Commons, self employment, , tax credits   

    More than £1 billion of fraudulent and incorrect tax credit payments were stopped in 2010/11, Chancellor of the Exchequer George Osborne revealed today. 

    The Chancellor told the House of Commons that HM Revenue & Customs (HMRC), as part of its new error and fraud strategy, had set itself the target of saving £1bn by March 2011 that would otherwise have been paid out as tax credits, either in error to customers or to criminals defrauding the system.

    The Chancellor said:

    “The department has exceeded its £1bn target, and prevented a total of £1.05bn being incorrectly paid out – an increase of 60 per cent in just one year.

    “The Government is committed to cutting the amount of money lost to fraud and error in the benefits system. HMRC’s achievement means that tax credits are being paid to those entitled, whilst waste is swiftly cut out.”

    He added that this year, high-risk tax credit claimants face more checks than before when they renew.

    As part of a clampdown on claimants who represent the greatest risk, HMRC is examining claims for error or fraud. The risks will cover claimants’ statements on employment, self-employment, hours worked, childcare and children as well as any details that have changed since previous years’ claims.

    Tax issues? Need Help? Call us today – 0845 519 7683

     
  • taxmedic 4:53 pm on May 13, 2011 Permalink | Reply
    Tags: Employers, , PAYE   

    Urgent Reminder for Employers 

    Urgent Reminder for Employers

    HM Revenue & Customs (HMRC) is issuing an urgent reminder to employers – file your annual return online by the 19 May deadline, or you could face a penalty.

    Employer Annual Returns must be sent to HMRC by the 19 May filing deadline. Failure to do so will almost certainly result in a late-filing penalty. In previous years, an extra-statutory concession gave employers extra time before HMRC charged a penalty, but this has now been withdrawn.

    And from this year, employers will be liable to a penalty if they file their annual return on paper (with some very limited exceptions, such as certain individuals who employ their own carer). Last year, no penalty was charged for employers with five or fewer employees, but these transitional arrangements have now ended.

    Smaller employers, or their agents or bureaux, can file their employee data securely online using HMRC’s ‘Online Return and Forms – PAYE’ product. And employers with fewer than 10 employees can use HMRC’s Basic PAYE Tools (formerly Employer CD-ROM) to file their Employer Annual Return online.

    To help you get your return right first time, HMRC has published a list of common errors to avoid on its website at http://www.hmrc.gov.uk/paye/payroll/year-end/errors.htm.

    Further help can be obtained by contacting taxmedic on 0845 519 7683 or by email to medic@taxmedic.co.uk

     
  • taxmedic 7:07 am on May 6, 2010 Permalink | Reply
    Tags: ACCA, , IFS, medic@, , ,   

    Where will the tax rises fall? 

    Where will the tax rises fall?

    Despite a damning report by the Institute of Fiscal Studies, none of the three main party leaders has outlined the full extent of the cuts and tax rises they will need to make

    As we assess the election results, the big question still to answer is where will the cuts or the tax rises fall?

    Last week a report from the Institute of Fiscal Studies (IFS) revealed that each of the three main parties had gaping holes in their economic plans amounting to tens of billions of pounds worth of, as yet, unexplained savings.

    The IFS concluded that the size of these holes was a indication that, whoever forms the next government, there would have to be “greater reliance on tax increases and welfare cuts after the election than the parties are willing to admit to beforehand”.

    Given that the IFS identified holes of £52bn in Tory plans, £44bn for Labour and £34bn for the Liberal Democrats, it is beyond doubt that the so far unplanned or unarticulated actions to fill them will have to be significant.

    Even though the last Prime Ministerial debate followed the IFS report all three candidates failed to address what these undeclared rises or cuts might be. As one expert told us: “None of the parties came clean about where the bulk of their tax rises need to come from.” But, if it is to be tax rises, which ones will go up?

    Experts and observers believe a big hit to VAT rates is on the way.

    Tom Scott, UK chairman of the International Fiscal Association, said: “It’s got to be an increase in indirect taxes. It’s VAT and employment taxes that attract the most revenue earnings.”

    Scott is right. If the new government wants to raise money fast the clear option is to hike the rates on income tax, national insurance or VAT. For 2008/09, VAT raised £78bn for the exchequer, down on the previous year’s £80bn but still higher than anything previously.

    Yet the parties have avoided any real comment on VAT.

    Anne Redston, visiting professor of tax law at Kings College London, anticipates a rise to 20% from the current 17.5%. That may not be all at once however. Some see the rise coming in stages, up to 19% this year and another rise the year after.

    A modest rise would bring in large sums immediately but VAT is also seen as target because the rate is low compared to Europe – Germany charges 19%, France 19.6% and in Sweden the rate is 25%.

    Some however believe the reduced rate of 5% might also see change. More revenue could be raised by restricting its use or hiking up the rate. This could potentially hit domestic fuel consumption heavily.

    Bill Dodwell, tax partner at Deloitte, warned against rushing in the change this year for fear of derailing recovery.

    Perhaps the most likely tax change would be another hike in the National Insurance rate. Both employers and employees will see the rate rise next year (described as a tax on jobs by the Conservatives), but because it raises so much revenue, £97bn for 2008/09, a further rise would also bring in significant sums.

    Some experts see this as a possibility, despite controversy over National Insurance during the election campaign.

    The Lib Dems, in particular, have ruled nothing in or out, leaving room for another hike, if they get into power.

    Chas Roy-Chowdhury, tax director at ACCA, suggests that the 1% band for earnings above £844 a week could be targeted. This would be another blow to the better-off because it translates into salaries of £43,000, though it only affects the margin.

    Another tax in line for change is likely to be capital gains tax. The Lib Dems have committed themselves to a hike in their manifesto, but it would not be a stretch to see the other parties ensure they capitalise on reform.

    The issue is the differential between CGT at 18% and the higher rate of income tax at 50%. Experts believe the gap has to close or the 50% rate for those earning more than £150,000 will drive more people to convert income into capital to avoid the bigger hit.

    But capital gains tax raises roughly £7.8bn per year. A rise to 25% would increase the take but will do little to reduce the deficit.

    One area advisers believe large sums will fail to be recovered from is through an attack on tax avoidance. Labour Budget’s from 2008/10 estimated anti-avoidance measures would bring in £4.5bn over five years.

    The Lib Dems believe they can recoup £4.6bn through closing down schemes in their first year in office.

    Bill Dodwell said: “It’s not realistic to raise that amount of money in a year. If you look at the history of tax avoidance, there’s never been anything like that figure made in a year.”

    He also casts doubt on the Lib Dem pledge to bring in a general anti-avoidance measure suggesting that it would provoke so much legal action that the chances of recouping funds quickly would be undermined.

    Concerned about your taxation position, past, present & future? Call Tax Medic on 0845 643 5293 or email medic@taxmedic.co.uk

     

     
  • taxmedic 6:59 am on May 6, 2010 Permalink | Reply  

    General election: the party’s over 

    General election: the party’s over

    Once the celebrations die down over winning the general election, the victor will soon find that the trouble stored up in the UK economy could result in one massive hangover.

    The general election should (with any luck) sort out who will be taking up the reigns of power for the next few years. But, for all the spectacle and ceremony, one thing remains constant: the gaping hole in the UK’s finances and widespread unhappiness with our tax system.

    Whichever party takes on these responsibilities will have to tread carefully in order to avoid nasty clashes with advisers and businesses while attempting to plug this hole.

    Looking at the obvious changes to the tax landscape that will be required and the potential for further political uncertainty, it’s easy to see how such arguments could flare up.

    Francesca Lagerberg head of tax at Grant Thornton says: “Clients and advisers want to know exactly how the land lies, and what the timeframe for changes are. It’s all about consistency and knowing where you’re going. If you have a hung parliament, who’s going to drive this change?”

    On the ground, one of the most concerning issues is the fate of the taxman as public spending cuts are pushed through.

    “The big one for us is that whatever political party is in place there needs to be sufficient quantity and quality of people in the government agencies for us to co-ordinate with,” says Lagerberg. “One of the biggest changes going through is what’s happening at HMRC. They are being asked to do a lot more with fewer people, which will put a huge demand on its resources. That would be a massive worry." “

    PUBLIC SECTOR

    Leslie Strathie, HMRC’s chief executive, says the next financial year is set to be a tough one for the department as it continues to respond to changing demands impacting the way the taxman collects revenue, while also making the payments people are entitled to. “I am confident we will rise to these challenges as we continue to focus on closing the tax gap.

    Although we still need to reduce the size of our workforce, I want our people to feel that HMRC is an exciting place to work,” says Strathie.
    The chief executive also says that while HMRC has a talented and hard-working group of staff who meet these challenges head on, there is still a clear need to up their game.

    “As we become smaller, we need a more highly-skilled workforce if we are to deliver what is expected of us by government and our customers,” she says HMRC has been forced to provide an olive branch to businesses by letting them put off the payment of tax bills currently – to the tune of £5bn – but businesses of all sizes, from the sole traders to the multinational giants continue to suffer. Lingering problems have still not been resolved. If anything, the financial crisis just aggravated weeping sores already plaguing companies.

    BUSINESS

    Recent research shows that during the second half of 2009, 28% of business owners were forced to approach friends, relatives and company directors to provide funding for their business. A further 8% meanwhile, found themselves having to turn to their own personal credit cards to finance their business.

    Martin Williams, managing director of credit referencing agency Graydon UK, believes the recession has highlighted the vital need for additional sources of funding to be made available for established small and medium-sized businesses. “It beggars belief that, in a developed economy, over a third of business owners have had to take on personal financial risk because of a shortage of alternatives to bank funding. This is proof that the current system cannot be relied upon to do its job during times of economic stress.”

    GLOBAL

    At the global level, countries are still mulling plans to hit banks with a tax while trying to keep the economy from falling apart.

    The tax think-tank at the OECD says cross-country consistency is critical. This is also recognised in the G20’s Mutual Assessment Process and in international discussions of financial sector reform and taxation.

    “We welcome the ongoing work within the G20 and the IMF on options to impro ve the global financial safety net based on sound incentives,” states the OECD, IMF and others jointly – a thinly –veiled threat that this issue is not going to go away.

    Banking taxes formed a key part of the election spin, but advisers have been quick to pick holes in the fledgling plans.

    The banking industry’s stance is clear. “All taxes have an impact and more tax has more impact,” the British Bankers Association says.

    “The [IMF] recommendations need to be carefully examined but we remain concerned about moves which would place the UK industry at a competitive disadvantage internationally. We also need to see all the detail of what is proposed – and how any new levy and tax would apply – to determine the effect it would have.”

    Deficit-busting proposals were also taken with a pinch of salt by the Institute for Fiscal Studies, which unveiled the massive shortfall in the parties’ proposals.

    The major political parties are at odds over how to deal with this shortfall, the Conservatives insisting that tax rises could be prevented by slashing public waste, with Labour countering that the rich must pay their share to drive economic recovery.

    The parties were forced to reveal more detail following on from the rushed Financial Bill “washout” process.

    Labour, said it has taken “tough choices on tax” citing the bankers’ bonus tax, reduced tax relief on pensions for the well off, a new 50p tax rate on earnings over £150,000 and 1p on National Insurance Contributions as its main planks on taxation.

    But everyone shied away from a rise in VAT – one of the biggest money spinners. Advisers flagged up the extra £12bn that would be generated by VAT going up to 20% as an obvious revenue raiser.

    Lest we forget, the money brought in from penalties and the various tax a mnesties are also set to have an effect. However, the powers introduced to underpin it is of concern to the profession.

    POWERS

    HMRC now has powers which cut across all taxes, allowing the department to carry out checks on current records of all businesses, and, controversially, visit business premises without giving advance notice in some cases.

    Baker Tilly’ tax cjief George Bull issues a stark warning about the uncertainty in the penalty regime and the powers behind them. “The penalty rules in taxation are in danger of becoming like those in rugby union: highly numerous but not properly understood by players (the taxpayers) or consistently applied by officials (HMRC). Or perhaps like football; often awarded, or not, arbitrarily and without full, if any, explanation.”

    Bull says piecemeal implementation of the penalty regime that has already been embodied in statute, with some penalties still to be brought into effect and more still to be legislated for, would cause serious problems. “Time for the refrain ‘you don’t know what you’re doing’,” Bull adds.

    THE FUTURE

    With a new administration about to take its place at the seat of power, the profession’s representatives also made a final plea to whichever party (or parties) takes control to use the election as a chance to iron out the kinks in the UK’s tax system.

    “In the next parliament, the UK needs to develop a much more straightforward and stable tax system,” says the ICAEW.

    The institute called for an overhaul of the way tax law is formulated in order to encourage “clarity, fairness, effectiveness and certainty”.

    It has also warned that the structural problems with the UK tax system – such as the length of the tax code – have to be met head on if the UK is to improve the environment in which businesses can grow, create wealth and generate tax revenues as a result.

    “It’s not just the deficit, both business and private taxpayers would benefit hugely from the certainty that long-term tax policy can bring,” says Richard Mannion, national head of tax at Smith & Williamson.

    “Such certainty helps provide businesses with the framework and confidence to plan for the future.”

    Advisers, their clients and taxpayers will hope that now the election is done and dusted , the fact that the UK is still a long way from recovery will not be forgotten when the celebrations die down.

    Concerned about your taxation position, past present & future? Call TaxMedic on 0845 643 5293 or email medic for further guidance.

     
  • taxmedic 9:20 am on April 29, 2010 Permalink | Reply
    Tags: , Conservative, , IR35, , , , , Tories, Tory   

    Conservative Party Promise to Review IR35 

    Shadow Business Minister Mark Prisk has said that the Tories will conduct a review of small business taxation, in particular rule IR35 that affects small businesses and freelancers, should they win the forthcoming general election.

    Writing to the Chairman of the Professional Contractors Group (PCG), the UK’s largest organization representing the interests of freelancers, the Tory Shadow Business Minister said that “…a Conservative government would undertake a fundamental review of small business taxation matters, including IR35”.

    The Tories have said that a new Office of Tax Simplification will be set up if they win power and Prisk added in his letter that “…we recognise and value the contribution of freelancers and we are well aware of the way in which the current government has treated them. We want to deal with this problem comprehensively, in a way which provides us all with a lasting solution, not a short term fix.”

    The Tory pledge follows persistent lobbying by the PCG to review the controversial IR35 rule.

    According to statistics obtained from HM Revenue and Customs by the PCG last year, GBP9m in taxes was raised from contractors and freelancers caught out by rule IR35 between in the 6-year period up to 2008. This compared to an estimated take of GPB900m when the rule was introduced in 1999.

    Assistance on IR35, amongst any other taxation matters is available from TaxMedic. Please call 0845 643 5293 or email medic@taxmedic.co.uk for more information.

     
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