News Categories >>
15/12/2009
December Newswire
December 2009 Newswire Articles:
Sage Users
As you are probably aware, the standard rate of VAT will be increased to 17.5% from the 1st January 2010. This means that from this date the standard rate of VAT you apply to your sales to customers is 17.5% instead of 15%.
If you are a SAGE user you will need to make alterations to the system, please click here to find out how.
Intrastat Thresholds
HMRC have announced significant changes to the Intrastat thresholds. Intrastat is used to report the movement of goods within the EU over certain thresholds. Those traders with an annual intra-EU trade in goods exceeding the exemption thresholds are required to provide monthly statistical returns (Intrastat Supplementary declarations).
From 1 January 2010, subject to parliamentary approval:
- the exemption threshold for arrivals will be increased from £270,000 to £600,000 and
- the exemption threshold for dispatches will be reduced from £270,000 to £250,000.
The significant change in the arrivals threshold is due to a reduction in the EU minimum requirement for Member States to collect data from 97 to 95%.
The threshold for dispatches has been reduced to £250,000 due to the current economic downturn and the consequent reduction in the number of UK businesses trading within the EU.
If you would like any advice as to how this change affects your business please do get in touch.
Internet link: HMRC Brief
VAT and New Year’s Eve Traders
If you are going to be out celebrating on New Year's Eve or indeed if your business will be operating over midnight, you will be glad to hear that the government has announced a relaxation of the VAT rules. Pubs, clubs, restaurants and other retail businesses remaining open past midnight on New Year's Eve will be allowed to continue charging VAT at 15% on their sales until they close or until 6am on 1 January 2010, whichever is the earlier.
Similar arrangements will apply to telecommunications companies in respect of calls and texts made up to 6am on 1 January.
Internet links: HMRC VAT Brief Press release
Parties for Employees
Are you planning a party for your employees? The good news is that, unlike entertaining customers, the costs of entertaining employees are generally allowable against the profits of the business.
But what is the tax treatment for the employees themselves? Is it a perk of their jobs and will they have to pay tax on a benefit?
Generally, as long as the total costs of employee annual functions in a tax year are less than £150 per attendee (VAT inclusive) there will be no tax implications for the employees themselves. In considering this limit make sure you have included all the costs, which may include not only the meal itself but also any drinks, transport and accommodation that you provide.
If the costs are above the £150 limit then do get in touch so we can advise you how best to deal with them.
Internet link: HMRC guidance
Swine Flu and SSP
Under existing rules for Statutory Sick Pay (SSP) employees can self-certify for the first seven days of their illness and employers cannot ask for medical evidence during this period. There has been no change to this requirement.
If employees are ill for more than seven days, employers can ask for reasonable evidence that they are not able to work and decide what, if any, further information they may need.
During the swine flu pandemic, employers are being asked to consider other evidence (instead of a doctor's certificate) as proof of an employee's illness. This will hopefully help to reduce the burden on GPs.
Internet link: HMRC guidance
Online Filing of VAT Returns
HMRC are reminding businesses that new rules on how VAT returns are submitted and payments are made will come into force next year. Paper VAT returns will be phased out from 1 April 2010.
As a start of this phasing out process, businesses with:
- annual turnover of £100,000 or more, and
- all businesses which register or should have registered for VAT on or after 1 April 2010
will need to submit their VAT returns online and make payments electronically from April 2010. Those businesses that are already VAT registered, with a turnover below the threshold, will have the choice to use paper returns but this will be reviewed by 2012.
Further guidance has been issued together with details of the penalties for failing to make an electronic return. The penalties will be:
- turnover £100,000 (VAT exclusive) and below - £100
- turnover £100,001 to £5,600,000 - £200
- where turnover exceeds £5,600,000 the penalties charged will be higher.
HMRC have announced a period of grace which means that penalties will not be imposed initially, however periods ending on or after 31 March 2011 will be charged. This grace period is to allow businesses to adjust to the change in procedures.
HMRC have also announced simplified procedures for agents to submit their clients VAT returns, so please do get in touch if you would like any further advice in this area.
Internet link: HMRC VAT Statutory instrument
First Aid at Work
The Health and Safety Executive are reminding businesses that the guidance for first aid at work changed from 1 October 2009.
To ensure that you are complying with the revised requirements please visit the link below.
Internet link: HSE website
Other Recent News Stories: - click a title to read more
George Osborne presented his first Budget on Tuesday 22 June 2010.
For the first time, forecasts were published in advance of the Budget. The Office for Budget Responsibility was formed in May 2010 to make an independent assessment of the public finances and the economy in advance of each Budget and Pre-Budget Report. Within the framework of these forecasts George Osborne stated that a tough but fair Budget was needed.
Many fundamental announcements have been made which affect the taxation of most individuals and these include:
- An increase in the personal allowance of £1,000 from 6 April 2011 for those aged under 65 but higher rate taxpayers will not benefit due to a reduction in the basic rate band upper limit.
- An increase in the rate of VAT to 20% from 4 January 2011.
- A new 28% rate of capital gains tax for higher and additional rate taxpayers.
- An increase in the maximum Entrepreneurs' Relief to £5 million from £2 million.
- A scheme to reduce NI contributions for new businesses in particular areas.
- Corporation tax rates to be reduced and the system to be reformed.
- The Annual Investment Allowance for capital allowances is to be reduced from £100,000 to £25,000 and the annual writing down allowances are to be reduced from April 2012.
Link: Treasury Website
A new rate of Capital Gains Tax (CGT) of 28% will be introduced. For individuals, the rate of CGT remains at 18% where total taxable gains and income, after taking into account all allowable deductions including losses, personal allowances and the CGT annual exemption, are less than the basic rate limit. The new 28% rate will apply to gains or any parts of gains above this limit.
The new rate of CGT will apply to gains arising on or after 23 June 2010.
Subject to a number of conditions, gains on qualifying business disposals by individuals and certain trustees are eligible for Entrepreneurs' Relief. This provides an effective CGT rate of 10% and works by applying a 4/9 reduction to the chargeable gain and then charging the balance at 18%. The change to the CGT rate would mean that the normal 4/9 reduction would no longer achieve 10%. The rules will be changed so that the rate of tax for gains on qualifying disposals on or after 23 June 2010 will be 10% and the previous 4/9 reduction will cease to apply from this date.
The amount of gains that can qualify for Entrepreneurs' Relief will also be raised from £2 million to £5 million for gains arising on or after 23 June 2010.
Link: HMRC Budget note
It is proposed to increase the standard rate of VAT from 17.5% to 20% with effect for any supply made on or after 4 January 2011. The rate change does not affect either zero-rated supplies nor those supplies subject to VAT at the 5% reduced rate.
Detailed guidance has been issued by HMRC for businesses on implementing the change.
Links: HMRC Budget note HMRC guidance
At the start of the tax year new late payment penalties were introduced for PAYE and other payments due from employers. The new rules apply to almost all employers and contractors, whether they employ one or a hundred employees. The rules apply to monthly, quarterly and annual periods of PAYE starting on or after 6 April 2010.
HMRC can impose late payment penalties on PAYE amounts due that are not paid in full on time, including:
- monthly, quarterly or annual PAYE;
- student loan deductions;
- Construction Industry Scheme deductions;
- Class 1 NIC; and
- annual payments of employers' Class 1A and Class 1B NIC.
HMRC have now amended their guidance to include comments on so-called 'warning letters'. HMRC state:
'The letter is only to let you know that HMRC think you have made a PAYE payment late and that a penalty could be charged. It is not a penalty notice and you can't appeal against it.
Importantly, it does not mean a penalty will definitely be charged, and you may get a penalty even if you do not get a letter.
If you agree that you have made a late payment, you should make sure you pay on time and in full in future. The next time you pay late you may become liable to a penalty. HMRC will contact you before a penalty is charged. If they charge a penalty they will send you a penalty notice.
If you believe you have received a letter in error, perhaps because you have already paid, have a time to pay agreement or have a 'reasonable excuse' you don't need to contact HMRC yet. But you may find it helpful to make a note of why you don't think a penalty is chargeable in case HMRC contact you about penalty action in future.'
If you receive a letter but have paid on time, it may worth telling HMRC that their records are currently wrong to avoid problems later on. If you are experiencing problems with paying PAYE or any other tax on time, HMRC may be prepared to defer payment and this, in turn, may avoid penalties.
Please get in touch if you would like to discuss this further.
Link: HMRC guidance
HMRC have recently issued a reminder about the various 'toolkits' that they have developed to assist agents when preparing returns. Although the toolkits are aimed at tax professionals, they highlight common errors and the steps that can be taken to reduce those errors. The first series of toolkits cover:
- marginal small companies' relief;
- capital allowances for plant and machinery;
- personal and private expenditure;
- capital gains tax for land and buildings; and
- capital gains tax for trusts and estates.
The intriguing thing about all of the toolkits is that the main area of risk for all the above areas is record keeping or the lack of it!
In addition, for capital allowances for plant and machinery the main areas of risk include:
- record keeping e.g. different proportions of non-business use during the period of ownership and detailed records of all acquisitions and disposals;
- acquisitions and disposals e.g. whether the asset qualifies for capital allowances; and
- non-business use of assets, particularly cars.
For private and personal expenditure, the main areas of risk are:
- record keeping e.g. non-business expenses being incorrectly recorded or misposted in the business records and claimed in error as allowable expenses;
- personal bills being paid by the business;
- travel and subsistence;
- entertaining, gifts, subscriptions and sponsorship; and
- drawings and capital account.
So the moral is clear - good records today keep the taxman at bay. If you would like to discuss this area in more detail, please do get in touch.
Link: HMRC website
Every year, tax credit claimants must renew their tax credit awards by 31 July or their payments may stop. Claimants on 'nil awards', and those receiving only the full family element of Child Tax Credit, will receive a statement of their 2009/10 award. If these details are correct no further action is needed and the claims are automatically renewed. However, if the details on the award statement are wrong, claimants must tell HMRC.
HMRC have launched a series of online videos to help claimants through the annual renewal process. The interactive videos take claimants through the renewal process step-by-step, offering the chance to tailor the help to their own circumstances. The videos cover key areas such as:
- providing details of the previous year's income;
- notifying HMRC of any changes in circumstances that haven't already been reported during the year; and
- checking the accuracy of the information in the renewals pack.
HMRC's Director of Benefits and Credits, Steve Lamey, said:
'These new videos are a great way of getting help and advice on renewing your tax credits, and should be able to answer any questions you may have about the renewals process.
Once you've received your pack, please don't put it off - renew straight away. The sooner you renew, the sooner we can make sure you're receiving the right money.'
Links: News release Video