Morris Crocker - Chartered Accountants

HMRC has announced the suspension of the Business Records Check (BRC) program until the new tax year (2012/13) when they will implement a new approach.

Any new BCR appointments will be postponed until then.  However HMRC will continue to undertake visits already booked (including follow up visits) to those already identified as having seriously inadequate statutory records.

The pilot programme conducted 2,437 Business Records Checks and found that 28% of businesses had some issue with their record keeping.  An additional 11% had issues serious enough to be followed up.

 We can arrange tax investigation insurance cover for any compliance visit (maximum £1000).  See our Tax Planning and Investigation page for more details.

New coding notices, due to be issued between January and March 2012, will be used against your pay from April 2012 onwards.

Please check these carefully as accountants and agents no longer receive a copy from HMRC.  Also don’t forget the state pension is taxable if you are starting to receive your pension.

If you are unsure that your coding notice is correct and would like some further guidance please do get in touch.

Good news for many

The majority of taxpayers will see an increase in their tax code as the personal allowance for those under 65 increases from £7,475 to £8,105.

Those individuals with simple tax affairs (just one employer with no reliefs or benefits or tax underpayments brought forward) will generally not receive a coding notice. Their current coding of 747L will be automatically uplifted to 810L following general instructions to employers.

Although the personal allowance is increasing, the point at which taxpayers start to pay the higher rate of 40% tax on their taxable income is decreasing (from £35,000 to £34,370). This means that basic or higher rate taxpayer will generally benefit from the same tax saving of £126.

The withdrawal of the personal allowance for those with income over £100,000 income limit applies for 2012/13. The reduction in the personal allowance is by £1 for every £2 of adjusted net income above the income limit. Adjusted net income for these purposes is broadly all income after adjustment for pension payments, charitable giving and relief for losses. Individuals with adjusted net income of at least £116,210 will not be entitled to a personal allowance for 2012/13.

HMRC have announced that they will not impose late filing penalties on taxpayers who file their Self Assessment returns on 1 and 2 February 2012. The announcement has been made amongst fears that taxpayers would not be able to get through to HMRC’s call centres on 31 January 2012 where strike action by some employees is anticipated.

 HMRC have also advised that:

 ‘The SA deadline remains midnight on 31 January. But HMRC will treat all returns that come in by midnight on 2 February as though they were submitted by 31 January. No customer will have to pay interest on payments due on 31 January that are paid on 1 or 2 February.’

 Acting Director General Personal Tax, Stephen Banyard, said:

 ‘We’ve always been very clear that we want the returns – not the penalties. For that reason, we don’t want anyone who can’t get through for help and advice on 31 January to be disadvantaged in any way.’

Since April 2010 most VAT registered businesses have been required to submit their VAT Returns online and pay any VAT due electronically. From 1 April 2012 all VAT registered businesses will be required to meet these requirements, apart from a very small number who will be exempt.

 Exemptions from doing your VAT online

 Businesses may not have to comply with the requirement if:

 they are subject to an insolvency procedure – but if the business is subject to an approved Voluntary Arrangement, administration or trust deed, an online submission may be made

•  HMRC is satisfied that the business is run by practising members of a religious society, whose beliefs prevent them from using computers.
•  If you believe either of these exemptions apply then it is important to confirm the position with HMRC and not assume that the exemption applies.

 Paying your VAT electronically

 Businesses which submit their VAT Returns online, must also pay any VAT due electronically. This generally gives businesses up to seven extra calendar days to submit their return and pay their VAT. There are some exceptions to this rule, for example businesses which file annual returns and make payments on account.

 HMRC advise:

 ‘The extended due date will be shown on your online return and you must ensure that cleared funds reach HMRC’s bank account by this date. If your payment clears later than this, you may be liable to a surcharge for late payment’.

 ‘There are various ways to pay including by Direct Debit, online and telephone banking. You can also pay by cheque at a bank or building society using a Bank Giro paying-in slip which can be obtained from HMRC. Since some of these methods can take a little time to set up, you should choose which method you want to use, and set it up, well in advance of the filing and payment deadline’.

HMRC are reminding taxpayers that the deadline for filing self assessment tax returns is fast approaching. According to their website:

‘You must send your online tax return by midnight on Tuesday 31 January 2012.

The deadline is only later than this if you received your tax return, or the letter telling you to complete a tax return, after 31 October 2011. In this case you’ll have three months from the date you received that letter.

If your online tax return is late, you’ll have to pay a penalty. This applies even if you have no tax to pay or if you pay all the tax you owe on time.’

The following illustrates that missing the deadline and failing to submit the return online may result in significant penalties.

‘What happens if you miss the deadline?

If you miss the 31 January deadline for online tax returns, you will have to pay a penalty.

The penalty is £100. You’ll still have to pay this even if

• your return is just a day late
• you have no tax to pay
• you pay all the tax you owe before 31 January 2012.

The longer you delay, the more you’ll have to pay. If your tax return is three months late, you’ll have to pay a penalty for each additional day it is late. If it’s six months late, you’ll have to pay a further penalty and another final penalty if it’s 12 months late. Together these could add up to a penalty of £1,600 or more.

Don’t send a paper tax return now – the deadline was 31 October 2011. You’ll have to pay a £100 penalty straight away if you do and the daily penalties above will start even earlier. Send it online instead.’

Keep up to date with our latest newsletter for business.  Includes news of the pension reforms starting next year and tips for making the most of tax saving opportunities before year end, as well as some useful ‘dos and don’ts’ regarding VAT and advice on extracting income from a family company. 

Business Newsletter Winter 2011

HMRC have for many years notified individuals of their National Insurance number (NI No) for the first time by sending them a plastic NI No card.

Last year, as part of the Government’s Spending Challenge, it was announced that HMRC would stop issuing NI No cards and send letters instead. The government estimate this will save approximately £1 million per annum.

Late last year HMRC introduced a system of notification by letter for those requesting a reminder of their NI No, and in July this year adults requesting a number for the first time will be issued with one by letter by Jobcentre Plus.

HMRC have confirmed that they will stop sending NI No cards altogether. Anyone needing a number (adults and juveniles approaching age 16) will now receive their NI No on a notification letter.

HMRC are advising employers that new employees may now have a letter or a card with their NI No information and that either is acceptable.

HMRC have announced that they are extending their Business Records Checks programme.

These checks were piloted earlier this year and involved checks on the adequacy of Small and Medium Sized Entities’ business records. The pilots apparently found that around 44% of businesses visited had issues with their record-keeping, while around 12% of those visited had seriously inadequate records.

HMRC are now extending this activity from mid-September to cover a number of key areas across the UK. As part of this, the number of full-time staff employed on the programme will rise from 30 to 120.

HMRC are planning to complete up to 12,000 checks by the end of the current financial year, with 20,000 provisionally planned for 2012/13. HMRC are increasing the number of visits so it can refine the process, before final decisions on a national roll-out are taken in the New Year.