Posts Tagged ‘Tax avoidance’

Autumn Statement 2015 – future measures

Wednesday, November 25th, 2015

Future Measures……

Moving forward to the Budget 2016 and the various consultations in place here are some of the items we expect to see:

  • Salary Sacrifice – Further consultation is being sought to assess what action can be taken to combat the rise in use of these arrangements.
  • Pension Tax Relief – We expect to see further restrictions on pension tax relief currently £40,000 limit for higher rate relief to be announced.
  • ISA Tax Relief in Probate – Expecting to see legislation to allow the ISA tax relief to apply during the estate administration period.
  • Loan Relationships – Following new accounting standards being introduced further rules on corporate debt relief are expected.
  • Tax Avoidance – Various new measures are expected to penalise those who undertake these schemes.

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Closure of property sales campaign

Wednesday, September 4th, 2013

Home sellers have until Friday 6th September 2013 to make any necessary disclosures under HMRC’s Property Sales Campaign. The campaign was launched on 5 March 2013 and designed to encourage people to come forward and report any undisclosed tax liabilities to the authorities.

HMRC has targeted individuals who sold a residential property in the UK abroad that did not qualify in full for the principal private residence relief (PPR) exemption. Generally, most home-owners will not be subject to capital gains tax when they sell their main home as they are entitled to the PPR exemption. However, as part of its crackdown on tax avoidance, HMRC identified many were failing to disclose taxable property sales.

The deadline for notifying HMRC of an intention to disclose was 9 August 2013. All relevant disclosures and payments should be made by 6th September although even if you won’t make these deadlines, it is still best to approach HMRC first with any undisclosed amounts, rather than waiting for them to contact you.

After 6 September, HMRC will take a more detailed look at those who have sold properties other than their principal residence yet appear to have paid no CGT. The penalty for failure to notify and disclose is likely to be higher if HMRC comes to you, rather than if you approach HMRC voluntarily. Phone the Property Sales Campaign Helpline for guidance.

If you have undisclosed income or gains from a different source, and want to bring your tax affairs up to date, this can be done via the Voluntary Disclosure Helpline.

Previous guidance on the Property Sales Campaign can be found on HMRCs website and includes how to make a disclosure and calculate tax arrears.

We can help you to understand your tax obligations and advise on the HMRC enquiry process. Contact Julia Whelan on [email protected] for advice in this area.

Curo Chartered Accountants

September 2013

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HMRC to gain access to card payment data

Wednesday, September 4th, 2013

HMRC has recently gained new powers allowing it to find out the number and value of transaction undertaken by a specific trader by accessing information from the UK’s merchant acquirers, the companies which process card payment transactions.

This is the latest in a series of crackdowns on tax evasion and the data gathered is designed to ensure that traders have correctly accounted for all tax due.

The new powers effective 1 September 2013 will allow HMRC to access debit and credit card payment data for the last four years on card payments to all UK businesses and the first requests for data will be sent to merchant acquirers this week. This will be an annual request in the future.

The data will be analysed by HMRC using ‘sophisticated’ risk technology after having been handed nearly £1bn from the Government towards tackling fraud and evasion.

Curo Chartered Accountants

September 2013.

Tax evasion vs tax avoidance – what’s the difference?

Wednesday, June 12th, 2013

Never before in the history of taxkind has so much been written about tax avoidance and it seems that there is still a way to go before the gap between public perception and reality is closed.

Put simply, tax avoidance is legal. There are a multitude of legitimate tax reliefs and ‘schemes’ which allow individuals and companies to pay less tax than if they were to ignore these reliefs altogether. For many, morals don’t come into it; they are simply abiding by the law and are therefore doing nothing wrong, legally speaking.

Indeed it is in the remit of most companies that they maximise shareholder returns and many do this by using legitimate tax avoidance to enhance profits and thus potential dividends.

Many tax avoidance schemes have been around for years and for individuals these can be as basic as gifting money to charity, owner managers taking more out of the company in ‘tax friendly’ dividends or topping up a pension fund.

The controversy has been focused more around higher earners and large corporates; those who have large chunks of disposable income not needed to feed the family or divert a cash flow crisis. This is the money which has been caught up in the tax avoidance scandals. It has been used in legitimate avoidance arrangements which have been approved and often championed by the various governments. The Enterprise Investment Scheme is one such example, encouraging wealthy individuals to invest in risky businesses. In return for helping with potential economic growth, the individual receives tax allowance on their chunk of invested income plus they pay relatively little tax on any returns they receive. It could be argued that without tax avoidance incentives such as this, many businesses would not get the financial backing they need in order to get off the ground.

It is understandable that some do not agree with the tax arrangements of Google, Starbucks and Amazon who have participated in avoidance methods which have resulted in lower tax bills. This may be seen as morally wrong but let it not be forgotten, this is still legal. It is also interesting to note that the UK government is producing legislation in an attempt to attract corporates to these shores to avoid paying higher taxes abroad! This is the sort of behaviour Margaret Hodge, bete noire of the Big 4 accountancy practices is saying is immoral.

Tax rules are made by government and so it could be argued that anger and frustrations be directed at Chancellor Osborne and the policy makers, rather than the companies and wealthy individuals who are carrying out their business perfectly legally.

And of course, not forgetting the definition of tax evasion – put simply this form of tax arrangement is illegal. And that means prison time and/or hefty financial penalties.

Very difficult balancing act and it’s unlikely that the perfect solution will be found in the UK any time soon.

Suzanne Blundell, Curo Chartered Accountants

June 2013

 

 

 

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Is it really so wrong to pay tradesmen in cash?

Tuesday, July 24th, 2012

Today’s headlines about cash in hand payments make interesting reading, especially for those of us engaged in the business of advising on tax matters.

Paying contractors and tradesmen such as plumbers, cleaners and handymen cash in hand is still extremely common it seems but can it ever be justified?

As the buyer of services, it is not strictly your legal responsibility to ensure the tradesmen’s tax and accounting affairs are correct. Of course if you are paying an employee, such as a nanny, it is definitely your responsibility to ensure that the tax and NI records and obligations are met.

However, Treasury Minister David Gauke has different ideas for contractors and tradesmen. He claims that we have a moral responsibility to satisfy ourselves that we don’t aid the plumber if we believe he is trying to avoid tax. This could be agreeing to his request for cash “so I can lose the VAT” or “just not declare it”. By anyone’s standards, it’s hard to argue ignorance to tax avoidance under these circumstances and there may be a moral case to answer if we pay cash in full knowledge of ‘tax dodging’.

So when is it acceptable to pay in cash and not feel guilty? Perhaps when you are satisfied the tradesmen is not required to register for VAT? Or what about the weekly cleaner who can’t afford the bank charges on all those cheques and doesn’t take chip and pin? Surely there are perfectly honest tradesmen with immaculate tax records who deal in cash simply because it suits them. The Treasury isn’t losing anything so why change?

It is a complex area but make sure you don’t fall foul. Ignorance isn’t always a suitable defence against tax avoidance so make sure you understand your obligations in this area.

Julia Whelan, tax partner at Curo Chartered Accountants can be contacted on [email protected] or 01527 558539 to discuss this further and help you understand how best to handle the tricky area of cash-in-hand payments.

 

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