An EZS is where members buy buildings in an industrial area deemed by the government as being in need of regeneration.
Normally, the syndicate member will put will pay around 40% of their share and then use limited recourse bank funding to finance the remaining 60%.
The syndicate member can reduce his tax liability for the current year in which the investment is made based on qualifying costs of between 90% and 98% of the purchase price.
The property can be disposed of after a minimum of seven years whereby the outstanding loan is repaid from the proceeds. If there is a surplus then it is returned to the syndicate members. Any shortfall is NOT funded by the syndicate members.
The reliefs end on the end of the 2010/11 tax year (i.e. 5th April 2011). So you will need to act quickly if you want to go down this route.
One company who invest in EZS is Chancery who can be contacted here.
http://www.truemanbrown.co.uk/
Friday, 11 March 2011
Thursday, 3 March 2011
HMRC issue new phishing scam warning
www.They are, in fact, fraudulent.
The emails provide a click-through link to a replica of the HMRC website. The recipient is then asked to provide their credit card details. Fraudsters use the information to try to strip funds from the person's account.
In the last three months, HMRC has shut down 99 websites that were responsible for sending out the fake tax rebate emails.
Chris Hopson, director of customer contact at HMRC, said that, as a matter of policy, HMRC will only ever contact customers who are due a tax refund in writing by post.
He added: "If anyone receives an email offering a tax rebate claiming to be from HMRC, we recommend they send it to mailto:/phishing@hmrc.gsi.gov.uk before deleting it permanently."
Should anyone receive a suspicious email claiming to be from the tax authorities, HMRC has advice on how to deal with it.
People should check details published at http://www.hmrc.gov.uk/security/ to see if the email is listed there.
Suspicious emails should be forwarded to HMRC at mailto:/phishing@hmrc.gsi.gov.uk and then deleted from recipients' computers and mail accounts.
Nobody should click on the websites or on the links contained in suspicious emails, or open any attachments.
If anyone has reason to believe that they have been the victim of an email scam, they should report the matter to their bank or card issuer as soon as possible. If in doubt, check with HMRC at www.hmrc.gov.uk/security/fraud-attempts.htm.
http://www.truemanbrown.co.uk/
The emails provide a click-through link to a replica of the HMRC website. The recipient is then asked to provide their credit card details. Fraudsters use the information to try to strip funds from the person's account.
In the last three months, HMRC has shut down 99 websites that were responsible for sending out the fake tax rebate emails.
Chris Hopson, director of customer contact at HMRC, said that, as a matter of policy, HMRC will only ever contact customers who are due a tax refund in writing by post.
He added: "If anyone receives an email offering a tax rebate claiming to be from HMRC, we recommend they send it to mailto:/phishing@hmrc.gsi.gov.uk before deleting it permanently."
Should anyone receive a suspicious email claiming to be from the tax authorities, HMRC has advice on how to deal with it.
People should check details published at http://www.hmrc.gov.uk/security/ to see if the email is listed there.
Suspicious emails should be forwarded to HMRC at mailto:/phishing@hmrc.gsi.gov.uk and then deleted from recipients' computers and mail accounts.
Nobody should click on the websites or on the links contained in suspicious emails, or open any attachments.
If anyone has reason to believe that they have been the victim of an email scam, they should report the matter to their bank or card issuer as soon as possible. If in doubt, check with HMRC at www.hmrc.gov.uk/security/fraud-attempts.htm.
http://www.truemanbrown.co.uk/
VAT Loophole Review Could Help Smaller Internet Traders
This has led to the practice of some larger firms opening warehouses on the Channel Islands. Items are transferred in bulk to the Islands before being re-packaged as orders for individual customers and sent back to the UK.
There is nothing illegal about the operation, which was first introduced to help Channel Island businesses sell flowers to the UK market. But some large firms have taken advantage of the loophole to sell a whole range of consumer goods.
Smaller firms have claimed that the practice places them under unfair pricing pressure, arguing that firms with the operational muscle to shift warehousing to the Channel Islands enjoy a 20 per cent cost advantage.
Richard Allen, from the Retailers Against VAT Abuse Schemes pressure group which submitted evidence to the European Commission, said: "The Commission are taking it seriously because this is a major distortion of competition within the Common Market where there is supposed to be a level playing field.
"And there certainly is not a level playing field on internet retailing in the UK. It's an internal market - it's supposed to be protected from this type of behaviour."
But the Treasury has now suggested that it is to investigate whether the Low Value Consignment Relief should cease.
http://www.truemanbrown.co.uk/
There is nothing illegal about the operation, which was first introduced to help Channel Island businesses sell flowers to the UK market. But some large firms have taken advantage of the loophole to sell a whole range of consumer goods.
Smaller firms have claimed that the practice places them under unfair pricing pressure, arguing that firms with the operational muscle to shift warehousing to the Channel Islands enjoy a 20 per cent cost advantage.
Richard Allen, from the Retailers Against VAT Abuse Schemes pressure group which submitted evidence to the European Commission, said: "The Commission are taking it seriously because this is a major distortion of competition within the Common Market where there is supposed to be a level playing field.
"And there certainly is not a level playing field on internet retailing in the UK. It's an internal market - it's supposed to be protected from this type of behaviour."
But the Treasury has now suggested that it is to investigate whether the Low Value Consignment Relief should cease.
http://www.truemanbrown.co.uk/
New Penalties For Undeclared Offshore Accounts
As from 6 April 2011, penalties for offshore non-compliance on income tax and capital gains tax will be linked to the tax transparency of the country involved.
The penalties could climb to as high as 200 per cent and will apply to both businesses and individuals who under-declare income and gains from territories which do not automatically share tax information with the UK.
David Gauke, Secretary to the Treasury, said: "The game is up for those going offshore to evade tax. With the risk of a penalty worth up to 200 per cent of the tax evaded, they have a great incentive to get their tax affairs in order.
"We have given HMRC an extra £900 million to tackle tax cheats because we are prepared to act against the minority who refuse to pay what they owe."
Dave Hartnett, Permanent Secretary for Tax at HMRC, added: "We are serious about tackling offshore evasion. Hiding tax liabilities offshore believing that you will never be discovered is no longer a realistic hope.
"These new penalties will increase the deterrent against offshore non-compliance. They build on other activity, including signing tax information exchange agreements, requiring information about offshore bank accounts and disclosure opportunities, including the Liechtenstein Disclosure Facility (LDF)."
The new penalties classify territories into three groups, which determine what level of penalty will apply for non-compliance.
The first self-assessment returns to which the penalties would apply are those concerning the 2011/12 tax year (to be filed by January 2013).
http://www.truemanbrown.co.uk/
The penalties could climb to as high as 200 per cent and will apply to both businesses and individuals who under-declare income and gains from territories which do not automatically share tax information with the UK.
David Gauke, Secretary to the Treasury, said: "The game is up for those going offshore to evade tax. With the risk of a penalty worth up to 200 per cent of the tax evaded, they have a great incentive to get their tax affairs in order.
"We have given HMRC an extra £900 million to tackle tax cheats because we are prepared to act against the minority who refuse to pay what they owe."
Dave Hartnett, Permanent Secretary for Tax at HMRC, added: "We are serious about tackling offshore evasion. Hiding tax liabilities offshore believing that you will never be discovered is no longer a realistic hope.
"These new penalties will increase the deterrent against offshore non-compliance. They build on other activity, including signing tax information exchange agreements, requiring information about offshore bank accounts and disclosure opportunities, including the Liechtenstein Disclosure Facility (LDF)."
The new penalties classify territories into three groups, which determine what level of penalty will apply for non-compliance.
The first self-assessment returns to which the penalties would apply are those concerning the 2011/12 tax year (to be filed by January 2013).
http://www.truemanbrown.co.uk/
Tuesday, 8 February 2011
Yet another IR35 case lost by HMRC!!!
An engineer working on a contract basis for Airbus UK won his appeal against HMRC’s determination that he should be taxed as an employee under IR35 rules rather than as self-employed.
Following a hearing in Bristol in November, the First Tier Tribunal found in favour of MBF Design Services. The owner/director of the company, Mark Fitzpatrick, appealed against HMRC’s decision that his employment status for the years 2001-07 fell within the terms of the Social Security Contributions (Intermediaries) Regulations 2000 and Income Tax (Pay As You Earn) Regulations 2003.
In April 2003 Airbus took on MBF under a contract, via intermediaries, at an hourly rate that increased if he worked more than 35 hours in a week. The tribunal noted that the “request for services” to which the contract related included a seven-day notice period and a stipulation that substandard service or attendance would give Airbus a legitimate claim to withhold payment.
The tribunal notes that the contract agreed between one intermediary,Morson, and Airbus named 53 individuals and appeared to be based on one normally used for the purchase of goods, with MBF’s “quanity” indicated as 42,500 hours at his usual hourly rate.
The third contract between Morson and Airbus also included a clause setting out the client’s right to immediate cancellation of the contract, which was crucial to the tribunal’s decision that the terms were inconsistent with the mutuality of obligation that exists between employee and employer.
Noting that in the theoretical circumstances of a contract existing between MBF and Airbus, the judges ruled that the arrangements were typical of a contract for services. On site working was not a conclusive indicator of employment, the judges ruled. The nature of MBFs design work meant it had to be done computers at Airbus’s premises computers, in a similar way that electricians or plumbers frequently work on client sites.
Airbus’s right to cancel the contract without notice indicated a lack of mutuality of obligations, as did a series of occasions during computer failures where contractors were sent home without pay and employees had to remain on-site. Rather than seeking promotions, the contractor had to renegotiate with Airbus if he wanted better terms.
The tribunal concluded there was insufficient control to demonstrate a contract of service. Any checking and approval of design work was an inevitable necessity of the project work MBF had undertaken.
http://www.truemanbrown.co.uk/
Following a hearing in Bristol in November, the First Tier Tribunal found in favour of MBF Design Services. The owner/director of the company, Mark Fitzpatrick, appealed against HMRC’s decision that his employment status for the years 2001-07 fell within the terms of the Social Security Contributions (Intermediaries) Regulations 2000 and Income Tax (Pay As You Earn) Regulations 2003.
In April 2003 Airbus took on MBF under a contract, via intermediaries, at an hourly rate that increased if he worked more than 35 hours in a week. The tribunal noted that the “request for services” to which the contract related included a seven-day notice period and a stipulation that substandard service or attendance would give Airbus a legitimate claim to withhold payment.
The tribunal notes that the contract agreed between one intermediary,Morson, and Airbus named 53 individuals and appeared to be based on one normally used for the purchase of goods, with MBF’s “quanity” indicated as 42,500 hours at his usual hourly rate.
The third contract between Morson and Airbus also included a clause setting out the client’s right to immediate cancellation of the contract, which was crucial to the tribunal’s decision that the terms were inconsistent with the mutuality of obligation that exists between employee and employer.
Noting that in the theoretical circumstances of a contract existing between MBF and Airbus, the judges ruled that the arrangements were typical of a contract for services. On site working was not a conclusive indicator of employment, the judges ruled. The nature of MBFs design work meant it had to be done computers at Airbus’s premises computers, in a similar way that electricians or plumbers frequently work on client sites.
Airbus’s right to cancel the contract without notice indicated a lack of mutuality of obligations, as did a series of occasions during computer failures where contractors were sent home without pay and employees had to remain on-site. Rather than seeking promotions, the contractor had to renegotiate with Airbus if he wanted better terms.
The tribunal concluded there was insufficient control to demonstrate a contract of service. Any checking and approval of design work was an inevitable necessity of the project work MBF had undertaken.
http://www.truemanbrown.co.uk/
Sunday, 21 November 2010
How to survive a PAYE and NIC Inspection
However confident you are that your records are complete and well maintained, a PAYE/NIC inspection might still catch you unawares. Here are some pointers to help you:
General
You are required to retain all records and information relating to payroll, benefits, etc. for three years after the tax year end - but keep them for six years, the period for which the HM Revenue & Customs has powers to investigate your business accounts.You are now more likely than ever to be subject to a full review of your compliance systems and procedures, so don't leave anything to chance.
Make sure you are not vulnerable to the risk of PAYE/NIC liabilities, penalties, and problems - sort them out now.
HM Revenue & Customs visit will be to your business premises and is likely to check:
- PAYE deduction working sheets for completeness and accuracy
- Correct use of employee codes
- Reconciliation of the records with the P35 (Employer's annual statement)
- Correct treatment of new employees and leavers
- Cash payments where PAYE has not been operated
- Expense payments, employee benefits, and their correct disclosure on forms P11D or P9D
- Compliance with terms of any dispensation
- Compliance with sub-contractors' rules
- Compliance with NIC regulations
Problem areas
The following are the main areas where problems may arise:- Gross payments to casual employees
- Payments to alleged 'self employed' persons
- Lump sum expenses
- Private petrol
- Spouse's travel and subsistence
- Travel to work from home and vice versa
- Trips for purposes other than purely business, e.g. trade fairs, golf, social outings
- Home telephone
- Entertaining
- Expenses for use of home as office
- Club subscriptions
- Goods and services provided free or below market value
- Luncheon expenses
- Clothing
- Accommodation
- Work undertaken at an employee's home
- Medical expenses
Casual labour
Any employer paying £1 a week or more to any employee without a form P45 must request a form P46 to be completed. If the employee signs that it is his or her only or main employment, then PAYE and national insurance need not be deducted unless the payment is in excess of the national insurance primary threshold, currently £110 per week. HM Revenue & Customs is applying this procedure strictly and, where forms P46 have not been completed, charging employers for tax and NI contributions on the grossed-up amount of these payments, often regardless of whether or not any tax has actually been lost to HM Revenue & Customs.Whether or not tax or NI is payable, you must keep proper records of payments and persons paid.
P11Ds
Your records must provide details of all relevant benefits for the tax year to 5 April.Even if you are registered for VAT, your P11D records have to be VAT inclusive.
You must include travel, subsistence, and entertaining in the information you enter on annual forms P11D, even if incurred for business purposes (unless you have an official HM Revenue & Customs dispensation).
HM Revenue & Customs are likely to challenge all doubtful claims in regard to business mileage limit. This is relevant where you have a company car but have made arrangements to exclude a benefit in kind arising on fuel. Keep full mileage logs for every vehicle, whether owned privately or by the company - an inspection team would ask for evidence of business mileage.
The fuel scale charge is an 'all or nothing' benefit, so if the business pays for any private fuel and is not fully reimbursed by the employee, the employee must accept the corresponding private fuel benefit and you must report it on a P11D.
For all categories of expense/benefit, pay careful attention to anything incurred in the name of an individual director/employee, but paid or reimbursed by the business. NIC problems will arise if you do not treat this properly.
Because HM Revenue & Customs seeks to concentrate its resources in areas where it considers tax is being lost, it has in recent years increased the nature and scope of compliance visits.
Settlement
The majority of compliance visits result in some discrepancies being uncovered, and HM Revenue & Customs will usually calculate the 'lost' tax and NI over a period of six years plus the current year. This period may be extended if they suspect that deductions have been withheld deliberately. HM Revenue & Customs may also seek penalties, although these will normally depend on the gravity of the discrepancy and the degree of co-operation and disclosure from the employer. Often the audit investigator will be looking only for tax and possibly national insurance on the 'income' not taxed, instead of effecting a gross position. Amounts treated as benefits would not be grossed up or included in the assessment of NI underdeduction.How can we help?
We can assist in reviewing your wage and salary records with a view to identifying possible areas of non-compliance with PAYE & NI regulations. If a visit is made we can advise on, and assist in, negotiating a settlement with HM Revenue & Customs.Do contact us if you would like further help or advice on this subject at 01708 854943 or http://www.truemanbrown.co.uk/
National Insurance Planning
Class 1
A two-part payment by both the employee and employer, the contributions are based on a percentage of earnings including most benefits. The employees' contributions are deducted from wages and salaries together with PAYE deductions, but are not allowable against income tax. The employer's contribution is eligible for tax relief.The principal difference between 'earnings' for national insurance contribution purposes and 'pay' for income tax purposes is that for NI there is no deduction in respect of contributions to a registered pension scheme. Earnings include:
- Commissions
- Salaries
- Bonuses
- Certain benefits in kind
- Reimbursed business expenses actually incurred by the employee, and for which a proper receipt is available
- Redundancy payments
- Use of employer-owned or leased assets, e.g. houses
- Medical insurance (e.g. BUPA) arranged by the employer
| Payment period | Weekly £ | Monthly £ | Yearly £ |
| Employees | |||
| Nil on first | 97 | 421 | 5,044 |
| 0% on next | 13 | 55 | 671 |
| 11% on next | 734 | 3,180 | 38,160 |
| 1% over | 844 | 3,656 | 43,875 |
| Employers | |||
| Nil on first | 110 | 476 | 5,715 |
| 12.8% on balance | (no upper limit) | ||
Earnings between the lower earnings limit and the earnings threshold protect and entitlement to basic state pension and other contributory benefits without incurring any actual national insurance liability. Details of such earnings must be kept on Form P11 and reported at the end of the year on Form P14.
Class 1A
Special rules, and a special class of NICs, apply to benefits in kind. Class 1A contributions are payable by employers only. These contributions apply to those taxable benefits which do not attract Class 1 contributions in respect of 'P11D employees' (employees earning £8,500 or more per annum, (including benefits), and directors).The charge is worked out on an annual basis using the cash equivalent of the benefit (as for income tax). The amount of Class 1A contributions is calculated by using information on recorded of Forms P11D and applying the Class 1 employers' contribution rate for the relevant year (12.8% for 2010/11).
Once the amount of Class 1A contributions has been calculated it must be declared using form P11D(b). This form, and the related payment, must be received by HM Revenue & Customs by 19 July following the end of the tax year to which it relates. In most cases a special Class 1A payslip will be sent to relevant employers in the first week of April.
Dividends instead of salary
You should consider paying dividends rather than salary. Where directors are in receipt of a salary from a company, the NIC cost may be such that part of the payment could be more cost effectively made as a dividend. There are special rules for some companies providing personal services.The decision on whether to pay a dividend or not is complex because the payment of a dividend may influence the value of the company's shares and therefore increase the liability to capital gains tax and inheritance tax There is also a maximum amount that may be paid, based on the company's results.
Further strategies for minimising national insurance
Clearly there is more need than ever to mitigate NICs. Strategies are limited, but we can help you with ideas for saving employer and / or employee NICs including;To save NICs:
- Increasing the amount the employer contracts to contribute to company pension schemes
- Share incentive plans (shares bought out of pre-tax and pre-NIC income)
- For small companies, disincorporation and instead operating as a sole trader or partnership
- Paying less by the way of salary, more as a bonus to reduce employee (not director) contributions
- Paying dividends instead of bonuses to owner-directors (This strategy requires careful consideration in view of the possibility of challenge by HM Revenue & Customs).
- Provision of childcare
Actions unlikely to save NICs:
- Giving employees benefits in kind, except for 'non-P11D' employees
- Round sum allowances - any profit element will attract NIC
- Employees contributions to pension scheme.
Contact us if you would like further help or information on this subject at 01708 854943 or http://www.truemanbrown.co.uk/
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