You, and I, are getting an extra 2 days to file 2011 Tax Returns.

This is due to a planned strike on January 31 by the Public and Commercial Services Union (PCSU) over contracts being given to private sector companies. As many as 7,000 HM Revenue and Customs staff are planning to walk out at its four call centres on 31 January, the deadline for people to file their annual self assessment tax returns.

A HMRC spokesperson said “We’re hoping that the strike will be resolved but there’s a good chance it may not be so we may not be able to provide the level of service we would like on the deadline day.

“Because these people are trying to do the right thing and because we can’t provide them with the kind of support we should, we won’t ask these people to pay a penalty. They’ll have a reasonable excuse under the existing provisions.”

If you haven’t got yours in yet, call me, it may not be too late after all.

It was reported this week that there are now a record 4.1 million of us classed as self – employed.
I took the plunge over 25 years ago. There are downsides, like holiday and sickness pay becoming
a thing of the past, but the freedom you get, and the release from the feeling that you are working all hours so
your boss can buy a new ivory backscratcher is empowering.

If you have an idea for a business, and want to talk about the practical side of self – employment,
let us help you set things up properly.

As a man is jailed for avoiding £420,000 in VAT by selling goods on eBay without registering, HMRC have announced a crackdown on those who trade on the internet as a business, without paying tax or VAT.

HMRC will use cutting-edge tools such as “web robot” software to search the internet and find targeted information about specified people and companies. Using the software, the department can pinpoint more accurately people who have failed to pay the right tax. The “web robot”, used with the department’s Connect computer system, also helps find people who are trading without telling HMRC.

To quote from HMRC’s website:

This will cover those who are using e-marketplaces to buy and sell goods as a trade or business and who fail to pay the tax owed. People who only sell a few items and who are not traders are unlikely to be liable to tax and will not be targeted by this campaign.

If you are trading regularly on the net, you may need professional guidance on whether you need to make a full disclosure now, and how to go about it. Don’t wait until a brown envelope drops through your letterbox! Waiting for them to find you could cost you dearly in penalties.

Regular trade is defined through specific criteria known as the “badges of trade”, including regularity, buying and selling for profit; profit motive and the quantity of goods or services sold. Registering with HMRC is compulsory but does not mean you will pay tax or NIC automatically – it depends on the profit which you make, after allowable expenses.

A new taskforce to combat tax evasion by landlords was announced today by HM Revenue & Customs (HMRC).

The taskforce will target tax evasion amongst landlords who own and/or rent more than three properties, focusing on North West England and North Wales.

A taskforce has also been set-up to target self-employed builders who suppress sales or over-claim expenses in the same areas of the UK.

Source: Daily Mail 7 Nov 2011

If you are renting out property, and not completing a Self Assessment Tax Return, you should contact us now and put your affairs in order before you are approached by HMRC.

HMRC have also announced a crackdown on restaurants.

BOSSES at 150 restaurants in the North West have been investigated for tax evasion since the launch of a new taskforce.

Blackpool Citizen 7/11/11

We have experience of these cases, and can tell you what to expect, and how to put things right, whether you are being investigated or not.

Following earlier clampdowns on plumbers, doctors and dentists designed to encourage them to hand over any unpaid income tax, the latest HMRC initiative targets private tutors, which could include music and language teachers, horse riding instructors and fitness coaches. Many full time schoolteachers work as private tutors to supplement their incomes.

As with earlier schemes, if you are taking money as a tutor and not declaring it at present, HMRC said those who came clean would face a lower penalty than if it found out itself. A spokesman said the “vast majority” of those who could be classed as private tutors were “fully law-abiding citizens” who pay what they owed. But, he added, there was a “significant enough minority” for it to be concerned.

Marian Wilson, head of HMRC campaigns, said: “Our campaigns are designed to ensure tax is paid so that the money is available to spend on public services used by everyone. We are making it as easy as possible for people offering tuition and coaching to use this unique opportunity to put their tax affairs in order by making a full disclosure, and benefit from the best possible terms.

“We are using various intelligence sources to identify and then target those who do not take advantage of this opportunity to declare their full income. The message is clear: contact us before we contact you.“

HMRC will employ cutting-edge tools such as “web robot” software to search the internet and find information about specified people and companies, and their financial affairs. It will then use this information “to pursue people who choose not to use the opportunities we provide for them to put their affairs in order on the best possible terms”.

Online traders are also in HMRC’s sights. If you are a tutor, plumber, online trader, or anyone who is earning but not declaring their income, contact me to learn how to make a full disclosure before the Taxman sends you an ominous brown envelope…

Under the Swiss-UK tax deal, coming into force in 2013, the Swiss will tax the bank accounts of UK citizens and transfer the money directly to the Treasury, but without revealing the identity of account holders.

A one-off levy of between 19% and 34% will be applied to all Swiss accounts held by UK residents to settle tax liabilities. The rate depends on how long the account has been held. Taxes on future income will be withheld at a rate of 48% per cent, in line with the top 50% income tax rate for Britain’s highest earners.

Taxpayers with money in Swiss accounts have three choices: do nothing and pay the withholding tax in 2013; come clean about undeclared assets by using the Lichtenstein Disclosure Facility, which charges a fixed 10% penalty on undeclared income (significantly lower than normal penalties), and potentially clearing up your tax position and liabilities by 2013, or transfer money to another tax haven.

If you are in this position, get in touch with a financial advisor now, not when a letter from HMRC arrives.

HMRC proposes that from 1 April 2012, it will be compulsory for VAT registered businesses with a turnover below £100,000, to file VAT returns online and pay VAT due by electronic payment.

Some people just can’t, or won’t go online, and won’t be made to. I can think of one or two for whom it really wouldn’t be a good idea.

If this includes you, you should start taking steps now to have an agent do it for you. The only proposed ‘getouts’ at the moment are where there are insolvency procedures, or businesses ‘run by people who are practising members of religious societies or orders whose beliefs are incompatible with the use of electronic communications (that is, forbid the use of computers).’

It might be more trouble than its worth to start your own cult, just to keep paper VAT returns, so let us do it for you.

Remember the post about the amnesty for plumbers?

HMRC has announced that five ‘ghost’ plumbers have been arrested and a further 600 are under civil investigation for failing to pay the right amount of tax.

If you are one of the 600, or are worried that you might become number 601, get in touch urgently.

John Pointing, assistant director at HMRC Criminal Investigation, said the raids and arrests of ‘ghosts’ – people who have not declared income from the work they do – are the culmination of months of work by HMRC.

“We provided a chance for those we have arrested, and the 600 we are investigating, to come forward voluntarily and put things right” said Pointing. “These arrests send a clear message that HMRC will take action against those who choose not to come forward and pay the tax they owe” he added.

This is the start of co-ordinated action and more raids are expected to take place over the coming weeks across the UK, including Yorkshire, Kent, Cambridgeshire, Tyne & Wear, Midlands and South Wales.

Mike Wells, director at HMRC Risk & Intelligence Service, added: “These arrests are just the start. HMRC is considering hundreds of further cases for criminal investigation in the plumbing and medical professions. Some people may have thought we were bluffing when we said we have information that we will use to prosecute tax evasion.”

Source – accountingweb

http://www.accountingweb.co.uk/article/hmrc-ghost-arrests-are-‘just-start’/517635

A little known benefit, introduced in April 2009, self employment credit is available for people who are claiming JobSeeker’s Allowance and are looking to move into self employment or start a business, working at least 16 hours per week on average, and expect your work to last at least 5 weeks.

It is only available if you have been claiming JobSeeker’s Allowance for six months and agree to stop claiming it and move on to the credit instead. It is worth £50 a week, and can be claimed for 16 weeks while you set up as self employed. It also comes with additional, unspecified training.

In order for a person to gain the new self-employment credit, they will need to:
Stop claiming JSA.
Move into self-employed work of 16 hours per week or more.
Provide information to their Jobcentre Plus personal adviser on the self employed work/business they are undertaking.
Show that the work will last at least five weeks.
Register with Revenue and Customs as self-employed.
Not be claiming any other in-work credit payments, ie, the return to work credit or the in-work credit.

However, the claimant will be able to claim the more long-standing tax credits, such as child tax credit (if they have children and earn less than about £58,000 a year) and working tax credit (if their income from self-employment is low enough). Not only that, but the self-employment credit won’t count as income when those benefits are calculated, which does make it a useful source of additional income.

It doesn’t count as income when housing and council tax benefit are calculated either.

Self-employment credit will also be disregarded for the purposes of income tax and national insurance contributions (except class 2 contributions).

After a very quick consultation process, HMRC Business Records Checks are now a reality – I arranged to attend one today, they are being piloted in several parts of the country already.

The idea is to review your current records for completeness and accuracy, not to enquire into a specific Tax Return already submitted.

If your records are found wanting, as well as the risk of further enquiries, you are likely to receive more visits in the future looking into other aspects than Income Tax, such as VAT and PAYE.

If you are worried about the current state of your records NOW IS THE TIME TO ACT.  Call me – it is better I look at your records first and give you time to put things right than to have HMRC do it for you!