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Key Dates

Businesses Share Common Concerns on Tax

• the volume and frequency of change
• the difficulties caused by different rules for income tax and national insurance
• IR35 and problems over the dividing line between employment and self-employment.

John Whiting, tax director for the Office of Tax Simplification said: “Some points we had already identified, but others provided real food for thought – it’s important we consider all ways to making taxation for small businesses in particular a little easier.”

The OTS started work in September last year, initially looking at simplifying tax reliefs and small business taxation. It will report to Chancellor George Osborne in advance of the 2011 Budget, which takes place on 23 March.

LINK: Office of Tax Simplification

SMEs Count Fraud Toll

The public sector bore the brunt of the losses, estimated at £21 billion, with the private sector losing a further £12 billion.

The NFA also worked with the Federation of Small Businesses (FSB) to produce a figure for how fraud affects small businesses.  They put the figure at £780 million lost by SMEs, adding up to around £2,800 per business, per year.
 
FSB policy chairman Mike Cherry says: “These costs can hamper enterprise for small firms when in fact the Government are looking to them for economic growth and job creation.”

He urged small businesses to report fraud to Action Fraud, the national fraud reporting centre run by the NFA.

Private sector areas seriously affected by fraud include the financial services industry, which lost £3.6 billion to fraudsters, mortgage fraud (£1 billion), insurance fraud (£2.1 billion) and online banking (£60 million). Charities lost a further £1.3 billion.

LINK: NFA press release

Tax Appeals May Be Worth Pursuing

According to figures released under a Freedom of Information request, over the last 18 months, HMRC completed 28,912 reviews of technical decisions and VAT penalties imposed on businesses, of which 16,270 – 56 per cent – were subsequently ruled incorrect.

HMRC says that the process is designed to provide a more consistent approach to the way it seeks to resolve disputes with people who disagree with appealable tax decisions that it makes. Reviews are carried out by a trained review officer, who has not previously been involved with the decision.

The figures were revealed following a Freedom of Information request by the UHY Hacker Young Group.

LINK: Appealing against an HMRC decision

HMRC Denies National Insurance Problem

HM Revenue & Customs (HMRC) has hit back at suggestions that more than £1.3 billion in national insurance contributions (NICs) has been lost. HMRC spoke out after Ian Liddell-Grainger, chair of the All Party Parliamentary Taxation Group, said that a kitty of unaccredited contributions for more than nine million people had built up over the past five years.

But the BBC reported that HMRC had denied that there was a problem, quoting a spokesman as saying: "No-one should have a reduced pension. We write to people where we see there is a gap in their contributions and if they contact us to report a gap we deal with the situation immediately.”

Figures, obtained by Mr Liddell-Grainger showed that between 2004 and 2009, around 9.3 million national insurance payments had been collected but were not matched to worker records.

HMRC receives around 48 million P14 forms each year from employers, which contain the details of the tax and national insurance paid by their employees, which it matches to individual national insurance records.

Where records cannot be matched – for example, because of an incorrect national insurance number – HMRC staff work to resolve the problem, with the contributions kept in a separate account in the meantime.

Employees can check their annual P60 to ensure that their national insurance number is correct, which means that they will be credited with the appropriate contributions.

LINK: HMRC national insurance guidance

Tax Experts Offer Help on Underpayment Letters

The letters could come on top of notices already received for the 2008/09 and 2009/10 tax years.

LITRG chairman John Andrews said: “It is perverse that HMRC have sent out calculations for 2008/09 and 2009/10 yet are now reviewing the earlier year, adding to the anxiety of those who are unused to dealing with HMRC and may well have thrown away records for 2007/08.

“HMRC chose to delay reconciling taxpayer records for 2007/08, although they had sufficient information in their possession to do so at a much earlier stage.

“We therefore urge P800 recipients showing an underpayment to take action as they should have an even better case for the tax to be written off.”

LITRG’s guidance can be found at http://www.litrg.org.uk/News/2011/2007-08-paye-under.

Employers Offered Guidance on Pension Changes

Employers are being offered extra help to get to grips with new responsibilities under workplace pensions reform. As part of its work to maximise compliance with new employer duties to automatically enrol eligible staff into workplace pension schemes, the Pensions Regulator has issued a new edition of a leaflet explaining work-based pension schemes.

This will be followed by a set of detailed guides aimed at audiences including large employers in spring 2011.

Further new content will be produced in the summer for small and micro employers, providing easy-to-use tools covering the key points of what employers will need to do, when they need to do it and the processes involved.

Later in the year the regulator will publish details of its compliance and enforcement strategy, setting out how it intends to maximise compliance with the new employer duties and the circumstances in which it might be expected to use its powers.

Between October 2012 and September 2016 employers will be required to automatically enrol all their eligible jobholders into a qualifying pension scheme and make a minimum contribution of a jobholder's qualifying earnings into the scheme.

LINK: Guidance for employers

Consultation Begins In Bid to Cut Employment Tribunals

Business Secretary Vince Cable said:  “Disputes in the workplace cost time and money, can affect morale, reduce productivity and hold back businesses.

“We often hear that knife-edge decisions about whether to hire new staff can be swung by concerns about ending up in an employment tribunal if things don’t work out. [Our] proposals address these concerns and should help give employers more confidence.” They include:

• increasing the qualifying period for employees to be able to bring a claim for unfair dismissal from one to two years

• encouraging parties to resolve disputes between themselves as early as possible,  requiring all claims to be lodged with Acas (the Advisory, Conciliation and Arbitration Service) in the first instance to allow pre-claim conciliation to be offered

• speeding up the tribunal process

• tackling weak and vexatious claims.

The consultation runs until 20 April 2011.

LINK: Workplace dispute reforms press release

The Employer's Charter is designed to dismiss some of the myths about what employers can and cannot do in managing their workforce.

It tells employers what they are reasonably entitled to ask and know about employees and what action they can take if there are problems.

LINK: Employer’s Charter

New Parental Leave Plan Unveiled

The government has announced more details of shared parental leave arrangements designed to help families balance work and life commitments. Announcing the plans, Deputy Prime Minister Nick Clegg said: “Despite the fact fathers can request flexible working, many feel reluctant to do so. And, when a child is born, men are still only entitled to a paltry two weeks of paternity leave.

“These rules patronise women and marginalise men. So in the coming weeks we will be launching a consultation on a new properly flexible system of shared parental leave that we aim to introduce in 2015.”

As an interim measure, Additional Paternity Leave and Pay regulations agreed by the last government will cover parents of children due on or after 3 April 2011.

Eligible fathers will be able to take up to 26 weeks’ additional paternity leave. The leave may be paid if taken during the period of the mother or partner’s Statutory Maternity Pay, Maternity Allowance or Statutory Adoption Pay. Leave taken after this period has ended would be unpaid.

Paid leave is payable at 90 per cent of earnings up to the same standard rate as Statutory Maternity Pay, which is currently £124.88 per week (rising to £128.73 from April).

Employed mothers currently receive up to 52 weeks of maternity leave, 39 of them paid.

LINK: Parental rights at work