February 2012

HMRC are writing to taxpayers who they suspect of committing tax fraud. The letter asks the taxpayer to make a full disclosure of their wrong-doing under the contractual disclosure facility (CDF), or sign a denial letter. If you receive such a letter you should take independent advice before agreeing to or denying the fraud accusation, but you will only have 60 days to make up your mind. If you do not reply within 60 calendar days of receipt of the letter, HMRC will start a formal tax investigation, which could lead to a criminal conviction.

CLICK HERE - The contractual disclosure facility

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The helpline number for Working and Child tax credits claims has changed to 0345 300 3900. For those with hearing or speech impairments there is a new textphone number: 0345 300 3909. The old numbers, which have an 0845 code, will still work for 18 months. These new 0345 numbers are cheaper to call for the majority of callers, especially those using mobile phones.

CLICK HERE - Tax credit helpline

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Managing a property which is let as furnished holiday accommodation involves a lot of work, but HMRC regularly resist claims for business property relief (BPR) from inheritance tax on the value of the property. However, the family of a Mrs Pawson (deceased) have just had their claim for BPR upheld, reducing the inheritance tax due on Mrs Pawson’s death. The Tax Tribunal found the operation of the holiday letting amounted to a business in the two years before Mrs Pawson’s death. If you let a holiday property, talk to us about the inheritance tax implications.

CLICK HERE - NV Pawson (deceased) v HMRC TC1748

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Since 6 April 2011 all employers, with few exceptions, have been required to submit employee starter and leaver forms (P45 and P46) online. Employers who submitted paper versions of these forms to HMRC in the period 6 October 2011 to 5 January 2012, will soon receive penalties ranging from £100 to £3,000 depending on the number of paper forms submitted. Further penalties will also be issued for late submission of forms P35 for 2010/11. If you receive such a penalty, which you think is not due, be sure to submit an appeal within 30 days.

CLICK HERE - Filing in-year PAYE forms

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Income tax and capital gains tax due for 2010/11 had to be paid by 31 January 2012. If you didn’t make the full payment by this date, interest will be added to the outstanding balance at 3% until the full amount is paid. If your 2010/11 tax bill is still outstanding at 1 March 2012 a surcharge of 5% will be applied, which also carries interest until it is paid. If you can’t raise the necessary funds before March, you should arrange a payment plan with the Tax Office. Call the HMRC Business Payment Support Service on 0845 302 1435, or we can do this for you.

CLICK HERE - Interest and penalties for late paid tax

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There are many grey areas in the UK tax law. One way of resolving the uncertainty about a personal tax claim is to use the HMRC clearances procedure (CAP1). You first need to check that your particular situation is not dealt with in the HMRC manuals or other guidance, but if it is not, then submit a CAP1 request. HMRC should reply within 30 days. Alternatively you could ask one of our tax experts and receive quicker reply. 

CLICK HERE - CAP1 clearance procedure

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It is not certain that entrepreneurs’ relief will reduce the tax due on a gain when part of a business is disposed of. HMRC tend to argue that where the remaining business continues as before, albeit on a smaller scale, the assets disposed of do not form ‘part of the business’ and the relief does not apply. In Gilbert (t/a United Foods) v HMRC, the Tribunal Judge rejected HMRC’s argument, and found that the relief could apply where the assets disposed of are capable of being operated as a business together.

CLICK HERE - M Gilbert (t/a United Foods) v HMRC TC1542

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The Republic of Ireland runs a scheme for construction industry workers, similar to the UK construction industry scheme (CIS). The Irish CIS requires tax to be deducted from payments to sub-contractors unless gross payment is authorised. To receive gross payment the contractor needs a C2 certificate, which is normally issued by the Irish Revenue Commissioners. UK-based subcontractors can now obtain C2 certificates from:

HMRC Employers Office (PAYE)

BP4009

Benton Park View

Longbenton

NE98 1ZZ

CLICK HERE - Irish Revenue Commissioners

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Have you given away valuable assets, perhaps to your children, but not declared the transaction or paid the tax due? Most people think that gifts are not subject to tax, but a gift of an asset made between connected parties (such as relatives), is subject to capital gains tax as if the asset had been sold at open market value. If the person who made the gift does not pay the tax due, the recipient of the gift could be required to pay the evaded tax several years later. This is what happened in the case of Zoe Hamar v HMRC.

CLICK HERE - Zoe Hamar v HMRC TC1529

CKLG Accountants in Cambridge are here to help.