Archive for April, 2016

Companies to be liable for employees who facilitate tax cheating

Thursday, April 28th, 2016

The UK will bring forward plans to introduce a criminal offence for corporations who fail to stop their staff facilitating tax evasion, the Prime Minister has announced in a statement to the Commons, ahead of next month’s summit to tackle corruption in all its forms.

For the first time, companies will be held criminally liable if they fail to stop their employees from facilitating tax evasion. At the March 2015 Budget the Chancellor said the government would be delivering on its pledge to introduce the measure in this Parliament. The Prime Minister has confirmed that the offence will be introduced in legislation this year.

The move is part of the government’s efforts to clamp down on corruption in all walks of life. The government has already confirmed plans to create a cross-agency taskforce to investigate all evidence of illegality that has emerged from the so-called ‘Panama Papers’.

Prime Minister David Cameron said:

This government has done more than any other to take action against corruption in all its forms, but we will go further.

That is why we will legislate this year to hold companies who fail to stop their employees facilitating tax evasion criminally liable.

On 12 May, the Prime Minister will host the London Anti-Corruption Summit aimed at stepping up global action to expose, punish and drive out corruption in all walks of life.

The summit will seek to galvanise a global response to tackle corruption. As well as agreeing a package of actions to tackle corruption across the board, it will deal with issues including corporate secrecy, government transparency, the enforcement of international anti-corruption laws and the strengthening of international institutions.

It will be the first summit of its kind, bringing together world leaders, business and civil society to agree a package of practical steps to:

  • expose corruption so there is nowhere to hide
  • punish the perpetrators and support those affected by corruption
  • drive out the culture of corruption wherever it exists

Tax credit renewals online

Tuesday, April 26th, 2016

 HM Revenue and Customs (HMRC) is urging people to renew their tax credits claim online and early before the 31 July deadline.

When claimants renew their claim, they must tell HMRC about any changes to their circumstances that they haven’t already reported, including changes to working hours, childcare costs or income. Once people receive their renewal pack, these changes can be reported through the GOV.UK website.

The online service proved very popular in 2015, with more than 750,000 people renewing online and around 90% of people using it saying they were happy with the service. It only takes around six minutes to renew online, depending on circumstances.

There is also a special team to support the most vulnerable customers who cannot go online. People who we know need special support will be proactively contacted by our customer support teams.

Nick Lodge, HMRC’s Director General, Benefits and Credits, said:

“Our online service means that you can renew at any time of the day or night, and on any device, without having to call us. Online help can also answer most queries you may have and a web chat facility will be available to support people renewing online. We urge everyone who can to go online.

“Our customers should check their details and renew early to ensure they get the right money. The sooner people renew their claim, the sooner we can check payments are correct, meaning we avoid paying too little money, or too much, which claimants then have to pay back.”

Online help and information on renewing tax credits is available on GOV.UK and via HMRC’s customer service Twitter feed @HMRCcustomers. Support is also available through the tax credits helpline.

HMRC has begun sending tax credits renewal packs to approximately 5.9 million households around the country. The packs are sent out from April to June.

The deadline for people to renew their tax credits is 31 July 2016. Failure to renew before the deadline will mean payments are stopped and they may have to repay the money they have received since April.

Business investment and the annual investment allowance

Tuesday, April 26th, 2016

The AIA allows businesses to write off the full cost of qualifying expenditure and in recent years the amount allowed as a deduction for tax purposes has fluctuated wildly.

From January 2016, the annual limit for AIA expenditure has been set at a new permanent limit of £200,000. Accordingly, this is the amount that can be claimed for 2016-17.

AIA is generally available on a purchase of plant and machinery that can include:

  • Fixtures and integral features
  • The alteration of land for the purpose only of installing plant or machinery
  • Vans, lorries and motorcycles

Expenditure that would not qualify for AIA includes:

  • Motor cars
  • Expenditure which would not qualify for capital allowances such as on buildings or structures.
  • Plant and machinery which was originally used for another purpose, for example, items owned personally which are subsequently introduced into the taxpayer’s business.
  • Plant and machinery acquired in the final period of business before the cessation of trade.

Also, AIA is not available to:

  • Sole traders or partners using cash accounting as from 6 April 2013 as this has modified rules in respect of deductions for plant and machinery.
  • A partnership with a corporate partner which could be a company or an LLP.

This remains a generous tax allowance, as the full cost of qualifying purchases can be written off against trading profits before calculating any tax due.

Business owners should be advised that a claim for AIA in the final period of trading prior to cessation of trade would not be allowed.

Tax on savings

Tuesday, April 19th, 2016

From 6 April 2016, if you’re a basic rate taxpayer you’ll be able to earn up to £1,000 in savings income tax-free. Higher rate taxpayers will be able to earn up to £500. This is called the Personal Savings Allowance.

Banks and building societies will no longer deduct tax from the interest they pay you.

What counts as savings income?

Savings income includes account interest from:

  • bank and building society accounts
  • accounts with providers like credit unions or National Savings and Investments

It also includes:

  • interest distributions (but not dividend distributions) from authorised unit trusts, open-ended investment companies and investment trusts
  • income from government or company bonds
  • most types of purchased life annuity payments

Interest from Individual Savings Accounts (ISAs) doesn’t count towards your Personal Savings Allowance because it’s already tax-free.

If your taxable income is less than £17,000

If your total taxable income is less than £17,000 you won’t pay tax on any savings income.

How much your Personal Savings Allowance will be

The amount of your Personal Savings Allowance depends on your adjusted net income.

The table shows your allowance from 6 April 2016, depending on whether you’re a basic, higher or additional rate taxpayer.

 

Tax rate

Income band (adjusted net income)

Personal Savings Allowance

Basic 20%

Up to £43,000

Up to £1,000 in savings income is tax-free

Higher 40%

£43,001 – £150,000

Up to £500 in savings income is tax-free

Additional 45%

Over £150,000

No Personal Savings Allowance

 

The Panama Papers

Monday, April 18th, 2016

HMRC has responded to the significant leak of information on the activities of individuals and companies that have availed themselves of the offshore advantages of using Panama as a tax haven.

 We have reproduced below part of their response:

Jennie Granger, Director General of Enforcement and Compliance, HM Revenue and Customs, said:

“HMRC is committed to exposing and acting on financial wrongdoing and we relentlessly pursue tax evaders to ensure that they pay every penny of taxes and fines they owe.

HMRC can confirm that we have already received a great deal of information on offshore companies, including in Panama, from a wide range of sources, which is currently the subject of intensive investigation. We have asked the ICIJ to share the leaked data that they have obtained with us. We will closely examine this data and will act on it swiftly and appropriately.

We have brought in more than £2 billion from offshore tax evaders since 2010 and the Government has repeatedly strengthened our powers and resources with new criminal offences and higher penalties, so we can take even tougher action against the minority who try to cheat the honest majority by hiding their money in offshore tax havens.

Our message is clear: there are no safe havens for tax evaders and no-one should be in any doubt that the days of hiding money offshore are gone. The dishonest minority, who can most afford it, must pay their legal share of tax, like the honest majority already does.”

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