Archive for August, 2016

Child benefit changes

Wednesday, August 31st, 2016

If you’re a parent and receiving Child Benefit, you need to inform HM Revenue and Customs of your child’s educational status before 31 August.

If you are receiving Child Benefit and Child Tax Credits and your child is 16 , you need to update HM Revenue and Customs of your child’s educational status before 31 August, otherwise payment will stop. The reminder comes as many students across the country receive their GCSE results today.

You must contact HMRC to confirm the eligibility of your 16 child if they are:

  • continuing in full-time, non-advanced education
  • moving into employment
  • undertaking approved training

If a young person leaves full-time education or training, for example, to start full-time work or because their course has ended, parents must report this change straight away to prevent an overpayment, which they will have to pay back.

Nick Lodge, Director General of Benefits and Credits, said:

This is an exciting time for teenagers and their families as they decide which path they want to choose next. But it’s important that customers let us know what education their son or daughter is undertaking after they turn 16 so that we can ensure they receive the correct benefits.

This can be done simply and quickly using the Personal Tax Account which is available 24 hours a day, seven days a week. That means that parents can let us know their child’s education status at a time that suits them ahead of 31 August.

What is Bona Vacantia

Thursday, August 25th, 2016

Bona Vacantia is a Treasury Solicitor’s department that manages unclaimed estates. This includes not only the estates of individuals who die without any heirs, but also the residual assets of limited companies that are liquidated or otherwise wound up.

Many small company directors may not know that if they apply to strike off their company from the Companies House active list, any assets still owned by the company when the removal process is completed will be claimed by this department.

This often happens if directors forget to close bank accounts for the company, or transfer other assets out of the company before it is struck off.

Assets may include, but are not limited to:

  • land and interests in land in England and Wales
  • bank accounts
  • other forms of cash (such as insurance policies, tax refunds or sums paid into court)
  • copyrights
  • trademarks
  • patents and other intellectual property
  • the benefit of mortgages where sums are owed to a dissolved company
  • the benefit of other assets or agreements that the company entered into

Incredibly, if you make a genuine mistake, and forget to transfer an asset before winding up a company, there is no guarantee you can get it back. The Bona Vacantia department say:

“It is the responsibility of the directors and shareholders to deal with the property and assets of a company before it is dissolved. Bona vacantia can be avoided by ensuring assets or property are transferred or dealt with before a company is dissolved.

You should ensure this happens as the role of the Treasury Solicitor is not to correct mistakes or negligence.

If you are a former member, shareholder or liquidator of a company and you want to get an asset back from the Crown you will need to restore the company or buy it from BVD for open market value.

There is no guarantee that BVD will sell it back to you or at all – they may want to sell it on the open market if that would get better value for the Crown.”

Going digital

Tuesday, August 23rd, 2016

The government have backed down from their proposal to dump a new raft of compliance activity (red tape) on smaller businesses. In their efforts to digitise each businesses’ records with HMRC it was intended that firms be required to keep their books and records online and update HMRC’s data quarterly.

 

Having consulted with various trade bodies, notably the FSB – Federation of Small Businesses – this requirement has been lifted; at least from the smaller firms. Here’s what the FSB and government sources have to say:

The Financial Secretary to the Treasury, Jane Ellison MP, said:

“We are committed to a transparent and accessible tax system fit for the digital age, and Making Tax Digital is at the heart of these plans. This new system will make the UK’s tax administration more efficient and straightforward, and will offer businesses greater clarity when it comes to paying their tax bills.

By replacing the annual tax return with simple, digital updates, businesses will be able to concentrate on putting people and profit, not paperwork, first.”

Mike Cherry, FSB National Chairman, said:

“Today’s announcement by the Financial Secretary to the Treasury Jane Ellison MP on quarterly tax reporting proposals is incredibly important. Together with the Chief Secretary David Gauke MP, we have seen real dialogue with the business community. The government has listened to FSB representations on behalf of small businesses up and down the UK.

Removing small firms and the self-employed with modest turnovers altogether from the proposals will now mean that in addition to the 1.6 million small businesses and landlords that were already excluded, as a result of these changes announced, a further 1.3 million small firms and landlords will no longer be in scope. This means that half of the UK’s 5.4 million small businesses will not be affected by quarterly tax reporting. The expansion of cash accounting, a longer lead-in time for implementation and the offer of direct financial assistance will also help.

FSB will be submitting new evidence into the consultations announced today, and look forward to working with the government and contributing to its Making Tax Digital agenda.”

Edward Troup, Executive Chair, HMRC, said:

“Making Tax Digital represents very significant change. It will bring the tax system into the 21st century and help make HMRC one of the most digitally-advanced tax administrations in the world. Going digital will abolish the annual tax return as we know it by 2020, replacing it with a personalised digital service through which taxpayers will be able to send and receive information to HMRC at the click of a button.

There is still a lot to design and develop, and it’s important that we do this hand-in-hand with our customers and their representatives; these consultations are the next step in this process.”

HMRC wins major tax avoidance cases

Thursday, August 18th, 2016

One tax avoidance scheme, by Ingenious Film Partnership, tried to use artificial losses arising from investments in a range of movies, including the blockbusters Avatar, Life of Pi and Die Hard 4.

Users of the Ingenious scheme were given the opportunity to settle on similar terms nearly four years ago and now face big bills for interest and legal fees on top of the £434 million in unpaid tax resulting from the scheme.

Director General of Enforcement & Compliance Jennie Granger said:

“These were some of the biggest films of all time, and the schemes involved people claiming far more in tax than they invested in the first place. We always say that if something is too good to be true then it probably is. And in this case the long legal battle will mean that investors face even bigger bills for interest and legal costs.”

The second scheme saw Icebreaker attempt to create artificial losses from investments in limited liability partnerships.

For both schemes users claimed more in tax relief than they had invested.

The Icebreaker decision is HMRC’s second win against the scheme, following a victory in the First Tier Tribunal in 2014. The total tax at stake was £134 million.

This means that HMRC has now secured more than £1.2 billion in disputed tax from wins in avoidance litigation since the beginning of April.

It also comes on the back of HMRC’s continued success tackling tax avoidance through the Accelerated Payments regime. In the two years since the legislation was introduced, more than £2.5billion has been paid on Accelerated Payment Notices, and more than 50,000 notices have been issued.

Buy to let red tape

Tuesday, August 16th, 2016

Beset by a range of potentially, disastrous tax changes (primarily the withdrawal of finance charges as an allowable deduction – reduced instead to a basic rate tax credit), landlords of buy-to let residential accommodation also have to contend with a growing list of red-tape. We have listed below a number of compliance issues that are backed by legislation. Failure to comply with these can lead to penalties. Obligations include:

 

·         Building and landlord insurance

·         Gas Safety Certificates

·         Energy Performance Certificates

·         Electrical Installation Reports and Certificates

·         Smoke detectors on each floor

·         Carbon monoxide detectors if required

·         Copies of tenants references

·         Tenants agreement to receive communications by email

·         Proof that tenant has right to rent in the UK (copy passport for example)

·         Household inventory

·         Register your property business with HMRC

·         Tenants contact details

·         Protect deposit within 30 days of receipt

·         You are required to respond to written complaints within 14 days of receipt, in writing

·         Inform tenants prior to a property inspection

Provide tenant with:

·         How to Rent – the checklist for renting in England

·         Guarantors Agreement – if required

·         Assured Shorthold Tenancy Agreement

·         Information regarding Deposit Protection Scheme

·         Serve the correct form of notice to end tenancy

·         Tenant should sign a list of deductions made from rent deposits

·         Return whole or balance of deposit at end of tenancy

This list is by no means complete. Landlords that use the services of letting agents will no doubt have these points covered as part of their contract with the agent.

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