- HMRC changes bank 05th December 2015
Bank details. HMRC is moving its banking arrangements to Barclays in February 2016. The good news is that if you make electronic payments of tax, VAT and NI you won’t need to take any extra steps because of this.
Payslips. However, if you use Giro Pay or Transcash payslips you should check that payments you make after the end of January 2016 go to the new HMRC account. You can check the details on its website. Payments that go to the wrong account will result in delays in being allocated against your tax bill
HMRC’s bank details are changing in February 2016. If you pay using a payslip, make sure that it shows the correct bank details before you make a payment. These can be found on HMRC’s website.
- Business records checks to go 05th December 2015
HMRC has decided to scrap its controversial business records checks. What implications might this have for your business?
Just checking! In 2011 HMRC started its business records checks (BRCs) claiming it wanted to help businesses identify shortcomings in their bookkeeping. It suggested that this was the root cause of many incorrect tax returns and so wanted to help businesses get it right.
Suspended. BRCs came under fire from the accountancy and taxation professions because it was seen as a backdoor way for HMRC to start investigations. To make matters worse, it soon became clear that its officers were inadequately trained to carry out the checks. Because of these problems BRCs were put on hold while HMRC refocused. They were subsequently restarted later in 2012.
Scrapped. On 20 October 2015 HMRC announced that it was scrapping BRCs, although checks that were already scheduled will go ahead. The reason given for the cancellation of the scheme is that it wasn’t cost effective and didn’t identify as many problems as expected.
What now? HMRC says that it will continue to strive to ensure businesses improve their record keeping where needed, although it doesn’t state how it will do this.
- Celebrity Tax Avoidance 02nd June 2015 Yet another TV celebrity is being criticised for using a tax-saving scheme. What’s involved, is it legitimate and might it be something worth considering?
BBC tax dodger. In March 2015 the press revealed that BBC presenter Jeremy Vine was using a tax-avoidance arrangement. As is often the case the reports were wide of the mark and, frankly, almost certainly inaccurate in their accusations.
What’s the plan? We can’t be sure what Mr Vine or his advisors had in mind, but what’s got the press hot under the collar is that his wife and daughter own shares in his company Jelly Vine Productions. What the reports we saw fail to mention is that several years back the Law Lords confirmed that share ownership by a spouse as a means of saving income tax was legitimate. Plus, as far as the daughter’s shares are concerned it’s unlikely these involve income tax avoidance but rather shrewd and entirely legitimate financial planning.
Spouse’s shares. Income received by Jelly Vine from Mr Vine’s activities could be diverted to his wife by paying her dividends on her shares in the company. If she pays tax at a lower rate than Mr Vine, income tax would be saved.
Daughter’s shares. Firstly, we can explain why we don’t think income tax avoidance is involved in the arrangement. Where a parent gives or buys shares in their company for their child who’s aged 18 or under, any income generated by those shares, i.e. dividends, will be taxed on the parent as if it were theirs. This is a well known anti-avoidance rule that Mr Vine’s advisors would be very familiar with.
Tax planning. The tax advantage Mr Vine’s advisors might have had in mind was to create a ready source of tax-efficient income when his daughter reaches 18.Shares in the presenter’s company are owned by his wife and daughter. This is entirely legitimate and is a safe way to shift income to a spouse and child, but only after the offspring reaches 18.
- Mortgages – proving your income 02nd June 2015
Proof of income. Anyone who has a mortgage will know that lenders require proof of income before they approve a loan. If you can’t quickly put your hands on the required documents it can lead to delays.
Documents. Directors and employees must usually provide a P60 for the last tax year, but if all or part of your income is from self-employment you’ll need a statement from your accountant. If you don’t have one or don’t want to incur the expense of them writing to the lender, you can instead provide details of income plus an HMRC statement known as an SA302 . This can take weeks to obtain.
Tip. In January 2015 HMRC created a new service for those who file their tax returns online. You can log in and print your own HMRC statement of income. It’s not an SA302 , but the Council of Mortgage Lenders recommends its members accept it in place of one.If you need to prove your income for the purposes of a mortgage, and all or part of it comes from self-employment, you can now print an HMRC statement using its online service. This will be accepted by most lenders instead of HMRC’s SA302, which can take weeks to obtain.
- It’s P11d time! 02nd June 2015 HMRC has released its 2014/15 benefits and expenses Form P11D plus updated guidance to go with it. Is there anything new to watch out for?
P11D deadline. It’s that time of year when you need to turn your attention to preparing the dreaded Forms P11D . A form is needed for each director and employee who earned £8,500 or more if you paid them expenses or provided benefits in kind. The forms must be submitted by 6 July 2015.
HMRC pointers. As in previous years, HMRC has spotlighted several trouble areas that employers need to watch out for.
- a new tax and NI exemption came into force on 1 January 2015. It applies to the cost of medical treatment to help employees return to work. These payments don’t have to be reported
- where an employee started to work from home in 2014/15 and they were already paying for broadband, reimbursements you made for all or part of the cost must be reported on the P11D . This is because the exemption which applies to the payment of homeworking expenses of up to £4 per week doesn’t apply
- if you submit your forms online, don’t follow this up by sending HMRC hard copies
- when completing a paper version of Form P11D make sure you use the 2014/15 version and not one for an earlier year
- ensure you tick the “director” box if appropriate
- in the company car section don’t complete the “from” and “to” dates if the car was available throughout the whole of 2014/15.
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- HMRC changes bank Bank details. HMRC is moving its banking arrangements to Barclays in February 2016. The good news is that if you ... read more
- Business records checks to go HMRC has decided to scrap its controversial business records checks. What implications might this have for your business? Just checking! In ... read more