January 2012

Late payments of PAYE trigger an automatic penalty of up to 4% of all the PAYE paid late during the full tax year. Employers are allowed to make one late payment during the tax year, but two or more late payments and a penalty will arrive after the end of the year. There is some evidence that penalties are not being issued where the total PAYE due is less than £1500 for the quarter, but that could change. If you receive a penalty for late paid PAYE ask us to check it, as some penalty notices contain errors.

CLICK HERE - Penalties for late paid PAYE

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If you are self-employed you may well have renewed your tax credit claim for 2011/12 using estimated profit figures from your business accounts taxed in 2010/11. Such estimates must be revised to actual and provided to the Tax Credit office by 31 January 2012. Where the actual figures are lower or even a loss, you may be due more tax credits. If the estimate is left in place and HMRC enquire into the claim, overpaid tax credits could be clawed-back. 

CLICK HERE - Final figures needed for tax credit claims

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If you administer the pension scheme for your business, are you aware that the pension scheme tax must submit a tax return (form SA970) by 31 January 2012? Like other tax returns this form must now be submitted online, and the pension trustees must register with HMRC by 13 January 2012 in order to submit online. A late return attracts an automatic £100 penalty, plus an additional £300 if the return is six months late.

CLICK HERE - Pension scheme returns

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HMRC have confirmed they will not impose penalties on businesses for poor record-keeping following business records check visits (BRC) made during the pilot phase of the BRC project. However, if the business has no business records, or all records have been destroyed, HMRC reserve the right to impose penalties. The whole BRC project is currently under review, and may well change focus from April onwards. If you receive a letter requesting a BRC appointment, please ask us to be present during the visit, to help you answer the questions posed by the HMRC inspectors.

CLICK HERE - HMRC announce review of BRC

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Exporters are required to submit EC sales lists (form VAT 101) to HMRC, generally quarterly. But businesses who export goods totalling more than £70,000 (excluding VAT) per quarter must complete a monthly EC sales list. This threshold for monthly returns has been cut to £35,000 from 1 January 2012, but only for exported goods. Businesses who export only services can continue to submit quarterly ES sales lists, but they can opt to submit monthly lists if they wish. 

CLICK HERE - EC Sales list changes

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HMRC now accept payments made by the faster payments service (FPS) into all of their bank accounts, for tax and VAT payments. Payments made with FPS are supposed to arrive in the bank account of the payee on the same day as the funds leave the payer’s account, or the next day. However, different banks set their own daily and transactional limits for FPS. BACs payments will still take three days to reach the recipient bank account. 

CLICK HERE - Faster payments introduced

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The lifetime allowance will soon be cut from £1.8 million to £1.5 million. Bear in mind that a fund of £1.8 million produces an indexed linked pension of around £75,000 per year for a man retiring at 65. If you already have a pension fund worth more than £1.5 million you may need to apply to HMRC to ring-fence your existing fund for tax purposes, under what is called ‘fixed protection’. Talk to us about this soon, as your fixed protection application must reach HMRC by 5 April 2012.

CLICK HERE - HMRC guidance on lifetime allowance

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If you let furnished property, you can claim either a deduction for wear and tear for the furnishings, or the cost of renewing individual items. Ask us to work out which would be better for you. You cannot claim capital allowances for the cost of fixtures, fittings or furniture used in let residential property, also known as ‘dwelling houses’. The Tax Office is clear about this, and recently clarified what it means by dwelling houses in Brief 45/10. There are different rules for property let as furnished holiday accommodation.

CLICK HERE - R&C Brief 45/10

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If you have recently set up a new company beware of letters asked for a payment of £320 to register on the ‘Intercom VAT registry’. This is a scam so do not respond. If you have fallen for a similar scam in the past, you can report the fraud on the Action Fraud website. This lists all the scams it is aware of, and lots of useful advice for avoiding fraudsters.

CLICK HERE - Action Fraud: advice and how to report

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This universal benefit will be frozen in from April 2012 at the 2011/12 rates. However, child benefit will cease to be universal from April 2013, when it will be withdrawn if either parent pays income tax at the 40% or 50% rates. The income threshold for 40% tax has also been frozen at the 2011/12 level (£42,475 before allowances), so it may remain stuck there from April 2013. If your family contains one partner who pays a higher marginal tax rate than the other, you may be able to save your child benefit if your income sources are rearranged. Talk to us about how this could be achieved.

CLICK HERE FOR - Tax and tax credit rates and thresholds 2012/13

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If your business arranges for goods to be sent from the Channel Islands to save VAT for your customers, you should be aware that the value of the package covered by this low value consignment relief (LVCR) was reduced from £18 to £15 from November 2011. HMRC have just announced that the LVCR will be removed altogether from 1 April 2012 for goods imported from the Channel Islands.

CLICK HERE - Reduction and removal of LVCR

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HMRC are writing to pensioners who have not had sufficient tax deducted under PAYE from their pensions in 2010/11, due to an error made by the HMRC computer. HMRC have confirmed that the tax due will be automatically collected through the taxpayer’s PAYE codes over three tax years, not one year. There is no need for the pensioners concerned to take any action.

CLICK HERE - HMRC briefing on underpaid PAYE

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