Key Dates
19 June 2010 - PAYE and NIC due for the month ended 5th June 2010. Submit Construction Industry Scheme return for the month ended 5th June 2010.
22 June 2010 - The Budget 2010.
5 July 2010 - Final date for agreement of 2009/2010 PAYE Settlement Agreements. |
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Kevin Hudson Joins CW Fellowes
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CW Fellowes Limited are delighted to announce the appointment of Kevin Hudson as an Audit Associate Director in their Fareham office.
Kevin trained and qualified as a chartered accountant in 1998 with a respected independent practice in Farnham, before moving to join Grant Thornton's Audit and Assurance team in 2005.
At Grant Thornton he managed SME audit and advisory services for companies and groups with turnovers up to £50M, including, in particular, technology and entrepreneurial businesses, and worked closely with the corporate tax compliance & advisory teams.
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Kevin has spent the last spent 14 months looking after a portfolio of clients as a partner-designate for a 3-partner practice, taking responsibility for delivering uninterrupted service to all clients during extended leave of one of the firm's partners.
Adam Wilson, Managing Director of CW Fellowes says;
"Kevin is a great addition to the Fareham team and his skills will complement the vast range of expertise already present in our audit and assurance team.” |
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National Insurance - Common Sense Prevails at Tax Tribunal
CW Fellowes successfully defended their client against a significant national insurance assessment at a recent tax tribunal.
Our client company owned a helicopter which was used for both business and private purposes by its director.
The private use of the helicopter benefit was declared and subjected to both tax and national insurance.
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A standard review of the company's Pay As You Earn records was undertaken by HM Revenue & Customs (HMRC) in June 2005 which resulted in HMRC raising a national insurance assessment on the business use element of the helicopter running costs.
CW Fellowes appealed on the company's behalf, claiming that the business usage of the helicopter should not be subject to Class 1A National Insurance. The issue in point was whether the director's claim for a deduction for business use of the helicopter, which was clearly allowable for income tax purposes, was also allowable for Class 1A National Insurance purposes.
The Tribunal Judge accepted the company's contention, as advocated by CW Fellowes, that the deduction for tax purposes should apply equally to national insurance.
This positive, equitable, outcome comes at a time when there continues to be differing rules and systems for income tax and national insurance.
The Treasury is able to provide a long list of recent National Insurance Contributions (NIC's) alignments with the income tax system and the Government has stated its intention to continue to review tax and NIC legislation in order to align rules further where possible.
However, we have found our recent success to be short lived with the introduction of amended National Insurance legislation from 5 April 2007. This amendment is specifically designed to reinforce the position that national insurance (but not income tax) falls due where there is mixed business and private use of business owned assets.
The interaction of tax and national insurance remains complex, therefore, and we wait to see how far future governments are willing to progress the alignment of the income tax and national insurance systems and remove the apparent inequity which currently exists in the system.
If you would like advice on how CW Fellowes might be able to successfully assist you in defending HMRC taxation assessments, please contact Matthew Harrison on 023 80247070 or e-mail him at: mharrison@cwfellowes.com. |
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VAT News
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Changes to zero rating on caravans
As a result of a current European court case HMRC have been required to change the minimum size for zero rating of a caravan. Until 20th April any caravan with a width of 2.3m when supplied was zero rated for VAT purposes. From the 20th April 2010, caravans can only be zero rated if their width exceeds 2.55m. The reason for the change is identified in business brief 20/10
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Comment: Caravan site operators need to be made aware of this change which affects not only the sale of new caravans but the disposal of caravans second hand. |
Changes to partial exemption de minimis rules
With affect from 1st April 2010 there are some simplified tests for assessing the businesses partial exemption status. Use of these tests allows the business to avoid having to conduct a full partial exemption calculation each quarter. The two tests are:
- Total input tax occurred (excluding blocked input tax) is no more than £625 per month on average and the value of exempt supplies is no more than 50% of the value of all supplies
- The total input tax less the input tax directly attributable to taxable supplies is less than £625 per month on average and the value of exempt supplies is 50% or less of the value of all supplies.
More details of these changes can be found in VAT information sheet 04/10
Comment: Any business with exempt supplies should be made aware of these tests as they may simplify their VAT quarterly accounting. |
Online filing
Just a reminder any business registering for VAT on or after 1st April 2010, must file their VAT returns online and pay their VAT electronically. All businesses with a turnover of excess of £100,000 must now be filing their returns online.
VAT return payments by cheque
From 1st April 2010, HMRC will only consider that payments are received on the date the payment reaches HMRC’s bank account. This means smaller businesses who are still completing paper returns will need to send them to HMRC in sufficient time to ensure that any attached cheques are cleared in HMRC's bank before the due date. If they don’t do this they could become liable to late payment penalties.
Comment: Most businesses should consider making payments electronically. Any small business with a turnover less than £100,000 can sign up to file their return electronically and it may save them having to submit their return a week early. |
Time limits for assessments
The normal time limit for assessment is now 4 years. It was previously 3 years for VAT purposes.
Tour Operators Margin Scheme
From 1st January 2010 there is an alteration in the treatment of 'hotel billback' transactions. Hotel booking agents who receive invoices in their own name for hotel accommodation and recover the VAT charged must now account for VAT on their onward supplies under the TOMS and in turn their business customers will incur sticking tax. There are however, special arrangements agreed between the industry and HMRC whereby the agent can ensure that their customer is entitled to recover VAT input in respect of accommodation used for business purposes.
The details of these arrangements are set out in revenue and customs brief 21/10.
Comment: Any business involved in making supplies under the TOMS or businesses receiving supplies of business accommodation should familiarise themselves with this customs brief. |
In conjunction with Académie Fiscale
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Flexible Working – The World Cup
Acas (the Advisory, Conciliation and Arbitration Service) is advising employers to be ready for the World Cup. Some employees will be expecting their employers to be flexible about working hours so that they can watch matches. Employers may also be worrying about their employees being less productive, hung over or sick following over enthusiastic celebrations.
The World Cup kicks off in South Africa on 11 June 2010 and employers need to plan ahead to try and keep everyone happy. As matches are due to kick off at 12.30, 15.00 and 19.30 (UK time) employers will need to plan ahead to ensure they have a clear and consistent policy for those wanting to watch matches.
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Acas advice as detailed on their website is that employers should try to be:
- “Flexible, where possible - for example, by altering start and finish times during the working day or allowing longer lunch breaks
- Clear about what you expect from employees - in terms of attendance and performance during the World Cup. Managing employees’ expectations of what might be possible is key to keeping them onside
- Communicative - start talking to each other now about the World Cup and how you hope to manage leave and working hours
- Honest - if you cannot accommodate any changes to your work practices then say so. Also, you may need to remind employees that any special arrangements for watching matches are only temporary
- Fair - you need to be seen to be fair about the way you respond to requests for time off and avoid favouritism”.
For more advice visit the Acas website. For details of when the matches are being played visit the FIFA website link below.
Internet links: Acas article and FIFA website |
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State Pension Age and National Insurance Contributions
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HMRC are reminding employers to take care when deciding whether or not their employees need to pay national insurance contributions (NICs). Employees do not need to pay NICs on reaching State Pension age (SPa). Some payroll software warns employers as women approach age 60 to check their national insurance status as previously women would have been exempt from the employee contribution from age 60. This warning may now be being issued too early.
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here to view full article...
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Budget Date Announced
The new coalition government is settling into office and a date has been announced for the emergency Budget. Chancellor of the Exchequer George Osborne will present the emergency Budget on Tuesday 22 June 2010.
As a result of changes brought in by the 1995 Pensions Act, from 6 April 2010 the age at which women reach SPa will gradually rise to become the same as it is for men of 65. The change is being phased in between 6 April 2010 and 6 April 2020 on a sliding scale, and will affect women born between 6 April 1950 and 5 April 1955. All women born on or after 6 April 1955 will reach SPa at age 65.
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For more information see the latest Employer Bulletin and for a look up table of dates see appendix C following the link below.
Internet links: Employer Bulletin and DWP report |
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Changes To The Advisory Fuel Rates From 1 June 2010
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To reflect the increase in fuel prices, HMRC have issued new advisory fuel rates for employees driving employer provided cars. These take effect for all journeys undertaken from 1 June 2010, so employers using the advisory rates should advise affected employees and update any expense forms as soon as possible.
The advisory fuel rates may be used for journeys undertaken on or after 1 June 2010.
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Engine size |
Petrol |
Diesel |
LPG |
1400cc or less |
12p (11p) |
11p (11p) |
8p (7p) |
1401cc – 2000cc |
15p (14p) |
11p (11p) |
10p (8p) |
Over 2000cc |
21p (20p) |
16p (14p) |
14p (12p) |
HMRC have in the past given employers a month’s notice of changes to these rates. However, according to the HMRC guidance:
“These rates apply to all journeys on or after 1 June 2010 until further notice, allowing them to reflect fuel prices more quickly. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.”
Other points to be aware of about the advisory fuel rates:
- Employers do not need a dispensation to use these rates.
- Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
- The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.
If you would like to discuss your car policy, please contact us.
Internet link: HMRC advisory fuel rates
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Child Trust Fund To Be Cut
The government has outlined plans to make changes to the Child Trust Fund as part of plans to cut £6 billion in expenditure.
The government intends to introduce secondary legislation to scale back government payments due to Child Trust Funds from 1 August 2010. From that date, payments at birth will be reduced from £250 to £50 for better off families, and £500 to £100 for lower income families; and payments at age 7 stopped. The government intends to introduce primary legislation to stop all payments from 1 January 2011. Additional contributions for disabled children will be paid this year. From 2011/12 the money used for these additional contributions will be redirected to respite care for disabled children.
Internet links: Times online and Press notice |
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Are There VAT Increases Ahead?
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The British Chamber of Commerce are predicting that we should expect an increase in VAT to help deal with the country’s budget deficit.
David Frost Director General of the British Chambers of Commerce (BCC) said:
“…… the employer National Insurance rise, planned for 2011, should be abolished in full. Most businesses expect VAT to increase after an election to help plug the hole in our public finances. Considering companies have already said that VAT would be less damaging to their operation than a hike in NICs, it seems obvious that the tax on jobs should be scrapped and replaced by a less harmful tax on consumption.”
Internet link: BCC press release |
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Holiday Entitlement
With signs that spring is finally here many employees will be planning or longing for their summer holidays. Holiday entitlement is one of the complex areas which can cause employee dissatisfaction if not handled correctly, especially for those with part time or irregular hours. Since 1 April 2009 the minimum statutory holiday entitlement has been 5.6 weeks inclusive of Bank Holidays, the equivalent of 28 days for those employees working a five day week. Employers may of course offer more holiday if they wish.
To check either your own, or your employees minimum holiday entitlement visit the link below.
Internet link: Business link website |
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P11D Deadline Looming
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The forms P11D, and where appropriate P9D, which report employees’ and directors’ benefits and expenses for the year ended 5 April 2010, are due for submission to HMRC by 6 July 2010. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.
Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A National Insurance Contributions at 12.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.
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If you would like any help with the completion of forms P11D or the calculation of the Class 1A liability please get in touch.
Employers may wish to complete the forms electronically and submit them online. For information on this use the online submission link below.
Internet links: HMRC P11D guidance and Online submission |
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HMRC Warn Of Email Rebate Scam
HMRC are warning that taxpayers are being emailed stating that they are entitled to a tax rebate. These emails are being sent from a number of bogus email addresses. They inform recipients that they are entitled to a tax rebate and invite them to complete an online form to receive a rebate of tax.
HMRC are advising that taxpayers should not visit the website contained within the email or disclose any personal or payment information.
Email addresses used to distribute the tax rebate emails include:
- refunds@hmrc.gov.uk
- info@hmrc.gov.uk
- attached.form@hmrc.attached.gov.uk
- service@hmrc.gov.uk
- hmrcrefunds@hmrc.gov.uk
- refundsdept@ir-efile.gov.uk
- noreply@notifications.gov.uk
- customers@hmrc.gov.uk
- taxcredits@hmrc.co.uk
- notice-hm@hmrc.gov.uk
- securemail@hmrc.gov.uk
- hmrc@tax-revenue.uk
- tndrftnpcb@aol.com
HMRC have confirmed that they do not send out emails using these email addresses.
Internet link: HMRC scam email examples |
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HMRC Takes Hard Line on Time to Pay Applications
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The number of companies being refused more time to pay tax bills has doubled, new figures have revealed.
Data obtained under the Freedom of Information (FOI) Act shows that officials at HM Revenue & Customs (HMRC) are taking an increasingly hard line on businesses requesting ‘time to pay’ their taxes. |
HMRC’s Time to Pay scheme is designed to enable viable businesses to defer tax bill payments during the recession if they are experiencing cashflow difficulties.
However, the FOI figures reveal that more than 11 per cent of applications were rejected by HMRC during the first quarter of the year, compared to just 5.3 per cent for the same period in 2009.
Struggling businesses are increasingly having to take bank loans to pay HMRC VAT, although experts have warned that SMEs are still finding it difficult to do this, meaning they are more likely to be hit by HMRC’s increase in Time to Pay rejections.
Analysts have also argued that it is too early in the economic recovery for HMRC to start withdrawing help for businesses struggling as a result of the recession. |
