Tax News
February 2009
Online filing surge
The number of taxpayers filing their returns online by 31st January this year jumped to 5.75 million – a 50% increase on last year’s figure – with 67% of all self-assessment returns filed online by 31st January. The peak filing day this year was Friday 30th January, with 390,000 returns filed in one day – up from the peak day last year of 185,000. HM Revenue & Customs (HMRC) coped with almost 22,000 returns an hour, or 361 per minute – that’s six every second!
Payroll news
A new style P45 form was issued in October 2008, and HMRC has permitted ‘dual running’ in the period from October 2008 to 5th April 2009. However, from the start of the new tax year, only the new A4-size P45 will be valid, so employers and advisers will need to be ready to destroy their stock of old forms. This year will also see the start of mandatory in-year online notification for large- and medium-size employers, that is those with 50 or more staff. These employers must notify HMRC of joiners and leavers with online versions of forms P45 and P46 from April.
Meanwhile, the smallest employers will see the financial incentive for filing online reduce to £75 this year. Employers with fewer than 50 staff will not be required to file online until 2010 (although this is currently listed as a ‘planned date’), and in-year movements will not be subject to the online requirement until 2011.
Penalty warnings
After 1st April 2009, a taxpayer who submits a return or other document containing an inaccuracy which gives rise to an underpayment of tax is liable to a penalty, unless that error is made despite taking reasonable care. The new regime covers income tax, corporation tax, capital gains tax, PAYE and VAT.
Take advantage of the Business Payment Support Scheme
The Business Payment Support Scheme, launched in November’s pre-Budget report, is intended to provide an easy route for businesses in trouble to arrange extra time to pay their tax liabilities. Businesses and their advisers can contact a special support line to arrange a time to pay agreement. The helpline is open from 8 a.m. until 8 p.m. on weekdays and 4 p.m. on weekends. Staff can consider the circumstances of the business and give a quick response – often within ten minutes. The scheme is intended for viable businesses which have a specific reason for being unable to pay, and will consider all of the tax debts which will be due in the immediate future. The service should be contacted as soon as the business anticipates having trouble paying forthcoming liabilities. HMRC advises that businesses should not wait until the tax payments are overdue but should instead contact the service for help as soon as they know that they will have difficulty paying their tax. Since being launched in November, the service has dealt with calls from 20,000 businesses and made arrangements regarding the payment of £350 million in tax.
HMRC fails to tackle hidden economy
With a detection rate of less than 1.5%, the hidden economy is still doing well. Even when individuals are weeded out, penalties amount to less than 3% of tax, and in 2006/07 there were only 67 prosecutions – out of an estimated two million evaders. These findings were made by the House of Commons Public Accounts Committee in a report entitled HMRC: Tackling the hidden economy. Basically, detection is minimal, and the situation has not improved since the recommendations made in the Grabiner Report back in 2000. Giving evidence to the Commons Public Accounts Committee, HMRC’s Dave Hartnett failed to convince anyone that he or his department had a handle on the problem, which extends across all trades and professions. The Tax Evasion hotline has a backlog of calls for further investigation and it seems that, just as with the backlog of unmatched self-assessment cases and tax credits requiring manual intervention, the flagging department just does not have the resources or wherewithal to cope.
Offshore Disclosure Facility update
The Offshore Disclosure Facility (the so-called tax amnesty for those with bank accounts offshore) results are as follows: from a list of 400,000 bank accounts, some 45,000 people came forward, bringing in around £400 million at a cost of £6 million, a return of £67 for every £1 spent.
£1.9 billion tax wasted
Britons are wasting an estimated £1.9 billion on paying unnecessary inheritance tax every year, according to the comparison site Unbiased.co.uk. What’s more, the amount being paid in inheritance tax by people in the UK in 2007 rose by 24%, totalling £370 million in unnecessary tax payments.
