Wednesday 4 September 2013

HMRC formally launches the Alternative Dispute Resolution Service, but why do we still need it?


Contractor UK has reported that a scheme designed to help small companies and individuals at loggerheads with the taxman has been upgraded from a trial to standard practise, HM Revenue & Customs said on 3rd September 2013.

Following the two-year trial, HMRC says it has now created the Alternative Dispute Resolution Service a new national team to help resolve tax disputes using the scheme.

Since last June, businesses and individuals in dispute with HMRC have been able to use the ADR to request the involvement of a ‘facilitator’ – an HMRC official unrelated to the dispute - to help both parties understand each other and work towards an agreement.

“Our customers have told us that they like the speed and flexibility of ADR,” Richard Summersgill, HMRC’s director of local compliance, said yesterday. “Evidence has shown that by using the simple ADR service many disputes can be significantly shortened and resolved without recourse to Tribunal.”

The scheme’s expansion was welcomed by The Association of Taxation Technicians, whose members provide accountancy services to business owners, but not unreservedly.

“We will be following developments very closely to ensure that ADR lives up to expectations,” said ATT’s president Yvette Nunn.

Angelina Morlacci of SAIL Business Solutions noted that many disputes with HMRC were down to poorly communicated advice and bad timing. “So many clients have never been told the importance of timely submissions for tax when dealing with HMRC. This is true for clients in work, but equally so when a client’s contract ends. There is still a reporting and administrative burden to fulfil. Finding a good accountancy firm is about getting the basics right, and ultimately having complete peace of mind to avoid these disputes.”

Wednesday 21 August 2013

To claim or not to claim - baffled by subsistence expenses?


Travel and subsistence expenses

We are not alone at SAIL in reporting that one of the most frequently asked questions by contract and freelance workers are regarding the rules defining a 'temporary workplace'. The key concern is to ensure people are correctly accounting for their travel and subsistence expenses.

Queries often arise concerning the perceived inequalities of subsistence expenses such as food and accommodation. An example is of an individual who is out for the day travelling for business can claim a tax deduction for a lunch they purchase on the go but someone who prepares a packed lunch at home to take with them can claim nothing.

The special foreign travel rules which allow deductions beyond the basic travel rules are complicated and very subtle. HRMC notes that ‘in many cases a deduction is due’ without listing the examples. It goes on to list contradictory sections where travel may or may not be deductible.  

But there is no need to leave our shores to see examples of the travel rules confusion. Some employers have received some unhelpful decisions from HMRC with regard to workplaces in London. HMRC have declared that all of London (within the M25 perimeter) is one workplace even though two workplaces could be one-two hours apart yet still within the London conurbation.

The Office of Tax Simplification (OTS) has recently published 'Review of employee benefits and expenses:  Interim report' as part of their remit to report areas of complexity and recommend priorities for further review.

The OTS were struck by the number of relatively minor things that are proving problematic. It believes that making a number of relatively small changes could make a big difference. Some ideas on how to effect change would need legislation but others just need a change in approach by HMRC. With this in mind the OTS have come up with 43 'quick wins' including:

Area
Proposed Solution
Needs Legislation?
Trivial benefits
HMRC should publish a list of benefits they consider to be trivial, presumably with limits on the amounts.
No
Mileage rates
Align tax and NIC treatment of mileage rates over 45p.
Yes
Mileage rates
HMRC should not require retention of fuel VAT receipts for expenses claims where only a mileage rate has been claimed.
No
Subsistence rates
HMRC should give better guidance on what qualifies for subsistence expenses.
No
Subsistence rates
HMRC should reinstate the practice of having a 'friends and family' scale rate.
No
Travel and subsistence
HMRC should commit to revising and updating the booklet 490 to fit better with modern working patterns.
No
Travel expenses
HMRC to publish guidance on temporary workplace rules for projects carried out in phases.
No
Travel expenses
HMRC should stop treating London as one workplace regardless of travel time.
No

 

The OTS and Treasury Ministers have been in discussion over the summer with plans to publish their recommendations in stages before the end of the year and early into 2014.

The key as users is results. Discussion is good, but the proof of the pudding is in the eating. We at SAIL Business Solutions will be keeping our clients aware of updates and ensuring that they are fully compliant with the changing legislation.

As ever, if you are not getting the service you should be from your contractor accountant, contact us and find out why 96% of our clients say and do recommend SAIL.

Tuesday 6 August 2013

Declare unpaid capital gains tax from the sale of a second property in the UK, or overseas, or face fines from the Revenue

Home owners who haven't paid capital gains tax (CGT) from the sale of their second homes could face a penalty of 30 to 100 per cent of overdue tax - or even a prison sentence - if it is not declared by Friday reported the Daily Telegraph today (6th August, 2013).

Taxpayers who come forward by the deadline then have until September 6 to pay. Those who do declare any unpaid tax will be charged a penalty of 10 to 20 per cent of overdue tax.

HM Revenue & Customs have sent letters to 35,000 taxpayers during the past month who had not yet registered to pay CGT from the sale of a second home, holiday home or buy-to-let property. The Revenue will target anyone who hasn't paid tax going back as far as 20 years.
Property which is the owner's main residence is free of capital gains tax. But other property falls within the CGT net, including those abroad.

The Telegraph reports that almost 1.6 million people have a second home in England and Wales, with 820,000 owning a second property abroad, according to the 2011 consensus.
CGT is charged at 18pc for basic-rate tax payers and 28pc for people in the higher and top-rate income tax bands.

Marian Wilson, head of HMRC campaigns, said: “Some people will not understand that selling a second home, a holiday home or a property disposed of as a gift could attract capital gains tax. They need to look at our website or contact us.
"It is better to come to us before we come to you.”

The CGT campaign by HMRC, which began in March, is also targeting those who rent out a second property and have so far failed to pay income tax on the rent.

Buy-to-let investors have faced stricter tax rules from a HMRC special task force in recent months to clamp down on the sector.


____________________________
Edited and adapted from an article by Sophie Christie in The Telegraph, 6th August, 2013. 

Wednesday 31 July 2013

CHANGING MESSAGES FROM HMRC

Confused by RTI? You’re not alone.

PAYE real time information (RTI) is causing quite a debate among contractors and personal service accountants.

How is RTI working for you? Is it a huge cost or administrative burden? Have you been dogged by unanswered questions and uncertainty by the forever changing guidance issued by HMRC?

Just last week HMRC issued further guidance extending the relaxation to the ‘on or before’ provision for employers to send their RTI returns to HMRC that has been in place since April 2013 until 5 April 2014. This change will allow employers with 49 or fewer employees to send in their RTI returns by the end of the tax month in which they pay their employees.

The debate is lively, and the ICAEW has a dedicated RTI webpage which both carries formal help sheets and advice as well as a forum of members discussing the issues, and benefits they are experiencing. Impossible deadlines, software that doesn’t do what it should, RTI submissions not happening and HMRC’s helplines not being very helpful or understanding the issues have all been mentioned on the downside. Yet some report only positive experiences.

What has become clear is the importance of seeking good and timely advice on payroll matters. As contractors work in a competitive market place, to tight deadlines and often long hours the added burden is proving to be a strain. Using a dedicated contractor’s accountant has never been more important.

Join SAIL today, and remember if you’re an existing client you can earn John Lewis vouchers for referring friends and colleagues to us.