HMRC Overthrows Car Warranty Tax Avoidance Scheme

HMRC overthrows car warranty tax avoidance scheme

A tax avoidance scheme designed to avoid VAT on car repairs has been successfully challenged by HMRC.

The scheme in question saw a group selling car warranties restructure themselves so that they could reclaim the VAT on car repair services. The group succeeded in this scheme by transferring the insurer’s responsibility to repair cars to a claims handler at reinsurers in Gibraltar.  This particular tax avoidance strategy would have potentially cost the tax office £600 million a year.

The scheme, which had been running since 1998, was unanimously ruled against in The Supreme Court after it was taken there by HMRC.

Explaining HMRC’s decision to challenge the car warranty tax avoidance scheme, The Exchequer Secretary to the Treasury, David Gauke, said: “HMRC’s success in defeating this scheme sends a clear signal – the Government will relentlessly pursue those that try to avoid their responsibilities, no matter how long it takes, and win. While most businesses and individuals pay the tax they owe on time, HMRC has received additional resources to make sure the minority are challenged when they attempt to avoid paying what is due.”


The ruling in this case was given by the Supreme Court on 1 May 2013. The overthrown scheme was designed by the tax avoiders to ensure that VAT could be recovered on car repair work done under warranty. Insurers cannot normally recover VAT on car repair work, because they do not have to charge VAT on the insurance premiums they receive. 

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Married Couples Tax Break

Prime Minister to announce tax break for married couples

It is thought that David Cameron could publish plans to introduce a tax break for married couples as early as November. Senior Downing Street sources have suggested that the Prime Minister will announce a new married couple tax break within six months and that he is planning on discounting Chancellor George Osborne’s advice not to introduce any tax breaks for the married this soon. The Prime Minister himself has confirmed that he will definitely recognise marriage in the tax system before the general election in 2015.

When the coalition came to power three years ago a pledge was made to recognise marriage in the tax system but so far nothing to fulfil this pledge has been included by George Osborne in any of his budgets or autumn statements. An official from Downing Street though has told that Cameron’s plans to make measures to recognise marriage, in the form of providing married couples with a tax break, will be announced in the Chancellor’s next statement in November.                         

The Prime Minister is thought to have been advised by Tory MPs and Cabinet Ministers, including Iain Duncan Smith, not to wait any later than the end of this year to introduce the marriage tax relief measures. This way the Government’s promise to be the most family friendly ever will be reinforced. This strategy is thought by many to be being suggested in order to appease Conservative voters who may not have agreed with the introduction of gay marriage, and to win over stay-at-home mothers who will not benefit from the introduction of new state support with childcare bills.

The exact details of Cameron’s plan for marriage tax breaks have not yet been made known. Many are presuming that the tax change will be similar to the plans the Conservatives had in place before the 2010 general election .The manifesto from the Conservatives at that time proposed a transferable tax allowance that would apply to all married couples – and gay couples in civil partnerships – who pay the basic rate of income tax.

If this system is to come into play, one party of a married couple who is not using all of their tax-free personal allowance, either because they stay at home or work part-time and earn less than the threshold for basic rate income tax, would be able to transfer £750 of their benefit to their working partner.

An eligible couple, that is a married couple where one partner is not using all the tax-free personal allowance and the other earns up to £44,000, would be up to £150 a year better off if this tax break is introduced.

 

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PPI Refund and Tax

Do I need to pay tax on my PPI refund?

Currently, anyone who has successfully reclaimed a PPI payment, is required to pay tax on any interest added to their claim.

HMRC have confirmed that no tax will be due on any compensation received as part of a PPI refund, only on the additional interest paid.

It is usual that PPI refunds automatically include interest and therefore, if you are thinking about claiming a refund on mis-sold PPI, you should take into consideration the fact that you may face a tax charge.

The average PPI refund has been quoted as being over £3000. This sum will include added interest and so a significant amount of tax could be due if you are awarded this amount of money.

Why do I have to pay tax on a PPI Refund?

Interest is usually added on to a PPI refund automatically. This interest is intended to reimburse the claimant the amount of money that would have been paid as interest had the money been used as savings rather than paid on PPI. Apart from in special circumstances, interest on savings always incurs tax charges. The tax you pay on any added interest in a PPI refund therefore will equal the amount of tax you would have paid if your money had been placed in savings rather than paid on a PPI policy.

I have already reclaimed a PPI Refund how do I know if I have paid tax?

If you have received a PPI refund from a bank it is worth checking with them whether they deducted tax from the repayment amount or not. Some banks will automatically deduct tax from the interest added to a PPI refund but they are under no obligation to do this.

All companies other than banks have an obligation to deduct tax from the interest added to a PPI refund before the payment is made to the claimant. In these circumstances the company are required to declare that tax has been deducted and provide you with a breakdown of the gross and net interest amounts.

 If you have used a third party to help you reclaim a PPI refund, and you have not been notified on whether tax has been deducted from the interest, it is advisable to contact the company to clarify the situation.

What should I do if I owe tax on my PPI Refund?

If, after contacting the company who repaid you PPI, you discover that the tax due on the added interest has not been deducted, you should contact HMRC directly to declare the tax due and arrange payment.

If you have already paid tax on your PPI refund interest you do not need to take any further action.

What if I don’t pay tax and I have paid tax on my PPI Refund?

If you are not eligible to pay tax but you have had tax deducted from your PPI refund interest, you can reclaim the tax by contacting HMRC.

 

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Car Tax Online

How to pay your car tax online

All vehicles, unless they have a Statutory Off Road Notification (SORN) certificate, are required, by law, to display a tax disc.

An easy way to obtain a tax disc for your vehicle is by applying online.

To buy a new tax disc or renew your current tax disc online, you must be the registered keeper of the vehicle and all your details (your name, address and vehicle details) must be up to date with the DVLA. You can renew your car tax online any day from the 5th of the month that it is due to expire.

How Do I Pay Online?

To pay for your car tax online you should visit www.taxdisc.direct.gov.uk.  You will need your V11 reminder letter or V5C registration certificate and you must ensure that you have valid insurance and an MOT certificate that will be valid when the tax disc starts. You will need a credit or debit card to pay for your vehicle tax online. There will be a £2.50 service charge if you use a credit card but no charge for using your debit card.

After applying for your tax disc online you should receive your new tax disc in the post within 5 working days.

How to claim disability car tax exemption online

You can renew a disabled car tax disc online in the same way you would a regular car tax disc, by visiting www.taxdisc.direct.gov.uk. You will not need a debit or credit card as a tax disc is free in these circumstances, however you will need your Certificate of Entitlement, or exemption certificate DLA404, MHS330 or WPA0442.

You’re entitled to a Certificate of Entitlement or exemption certificate if you receive either the higher rate of the mobility component of Disability Living Allowance (DLA) or War Pensioners Mobility Supplement. If you receive either of these but do not have a certificate of entitlement or an exemption certificate you should contact the disability benefits helpline or the Disability Living Allowance Unit.

Unfortunately it is not possible to use the online service if you’re taxing a particular vehicle in the disabled tax class for the first time. To do this you will have to visita Post Office branch that issues tax discs.

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HMRC closes down Illegal filling station

HMRC closes down Illegal filling station

An illegal filling station and fuel laundering plant in County Tyrone has been discovered and disassembled by HMRC recently. The bootleg station was allegedly selling prohibited fuel for only £1.11 per litre.

Inndustrial units in theMountfield area of Omagh were searched by Officers from HMRC and the Police Service of Northern Ireland after receiving reports of the illicit set up. Officers discovered a large-scale fuel laundering plant capable of producing nearly six million litres of illicit diesel a year inside one of the industrial units. Inside a second storage unit a storage tank and a fuel pump was discovered. HMRC suspects this second unit was being used to sell the black-market diesel.

Speaking about the discovery in Northern Ireland, Pat Curtis, National Oils Co-ordinator for HMRC, said: “This site was selling fuel at a price that is not economically viable. Anyone thinking of buying this fuel needs to consider where their money is going, instead of funding public services. Buying this fuel is financing and encouraging criminality in their own communities. Buying fuel at this price is an offer that seems too good to be true, and that’s exactly what it is. Every illegal laundering operation typically generates tonnes of toxic waste which, as taxpayers and ratepayers, we are all paying to clean up and dispose of. At this site eight tonnes of toxic waste had to be recovered. I would urge anyone with information on fuel misuse in their area to contact our free telephone hotline on 0800 59 5000 and contribute to the fight against this criminality.”

During the dismantling of the illegal plant around 14,000 litres of fuel, a forklift truck and 14 metal cylinders were removed. Investigations into how and what happened in County Tyrone are continuing.

 

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HMRC Basic PAYE Tools Error Messages

HMRC Basic PAYE Tools Error Messages

The new PAYE real time system is apparently undergoing some teething issues. HMRC have been issuing advice after a number of customers who are trying to submit PAYE information in real time have reported that they are receiving error messages.  Anyone who receives these messages upon trying to submit information should be aware that their submissions will not have been received by HMRC.

The following information has been provided by HMRC listing the error messages that may appear and how their customers should rectify the problem;

Error Message; Accounts Office reference or Employer PAYE reference is incorrect.

When this message appears the customer should check both their Employer reference and/or Accounts Office reference as one or both are incorrect. The correct reference numbers will be found on HMRC paperwork.

Error Message; You have not been invited to submit this submission type.

There are two pieces of advice from HMRC regarding this error message, which advice customers should follow depends upon when they received the message. If you received the message before 7 April, try to resend the submission. If you received this message on or after 7 April, telephone the Employer Helpline on 0845 71 43 143 and tell them what this message says.

 

Error Message; This submission cannot be accepted as a Full Payment Submission has not been received and successfully validated for this scheme reference.

Customers faced with this error message have tried to submit a National Insurance number verification Request (NVR) too early. You cannot send a NVR for any employee until two weeks after your first successful Full Payment Submission (FPS). You can resubmit the NVR when two weeks has passed.

 

Error Message; <html xmlns=’http://www.w3.org/1999/xhtml/’><body><p>Content of element <span class=’XQuery-keyword’>{http://www.govtalk.gov.uk/taxation/PAYE/RTI/FullPaymentSubmission/13-14/2}HoursWorked</span> does not match its type definition: String content is not listed in the enumeration facet..</p></body></html>

If this is the error message you experienced you need to add ‘Hours Worked’ for each of your employees. For help in doing this you can refer to the Existing users: switching to Basic PAYE Tools PDF, and work through the guidance under the ‘Employee data’ heading on page 18. You should ensure that this has been completed for all employees and not just the ones being paid in this pay period.

 

Error Message; url = <html xmlns=’http://www.w3.org/1999/xhtml/’><body><p>Content of element <span class=’XQuery-keyword’>{http://www.govtalk.gov.uk/taxation/PAYE/RTI/FullPaymentSubmission/13-14/2}AORef</span> does not match its type definition: String content does not match the length facet…</p></body></html>

For this error message customers need to correct the Accounts Office reference that they have entered because it is not the right length. For help in doing this they should refer to the Existing users: switching to Basic PAYE Tools (RTI) PDF, and work through the guidance under the ‘Employer data’ heading on page 17.

 

If you have received an error message that is not included in this guidance you should telephone the HMRC Online Services Helpline on 0845 60 55 999.

 

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HMRC Helplines

HMRC Helplines

Several of HMRC’s helplines have been switched from expensive 0845 numbers to cheaper 03 numbers. HMRC has promised that by the end of summer none of their helplines will still use the 0845 prefix.
 
Unfortunately though, the changes in phone numbers did not occur early enough to benefit the thousands of customers who needed to contact the tax office at the start of the new tax year. Real time information (RTI) for PAYE began this spring  and calls from taxpayers and advisers attempting to file RTI returns for the first time flooded HMRC helplines, the majority of which were still 0845 numbers. Many customers reported they could not get through to an advisor but were rather greeted by a recorded message asking them to try again later. Numerous customers who did get through to a real person said they were put on hold for lengthy periods.

The tax credits helpline has been an 0300 number since the start of 2013. In the most recent changes HMRC has moved the following helplines to cheaper prefixes:
 
Child benefit helpline: 0300 200 3100
Guardian’s allowance helpline: 0300 200 3101
Online services helpdesk: 0300 200 3600
BillPay plus: 0300 200 3601
Employer helpline: 0300 200 3200
New employer helpline: 0300 200 3211
 
The former 0845 numbers will still remain active for 18 months with recorded messages explaining the switch and advising customers of the new numbers.
 
The change in phone numbers was announced after HMRC was forced to reveal, in answer to questioning from the Public Accounts Committee (PAC) at a meeting in January, that their phone-line provider, Cable & Wireless, made almost £1m in profit from HMRC helpline calls alone.

An HMRC spokesperson said of the switch: “We want customers to be able to access our services at the lowest cost possible. For most customers, a 0300 number is cheaper to call than a 0845 number”

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40,000 applications made by HMRC to view customer’s private data

40,000 applications made by HMRC to view customer’s private data
 
A freedom of information request has revealed that HMRC has made over 40,000 applications to view people’s private communication details, over the past three years.

Information appealed for by HMRC in the 41,351 requests it made, include access to text messages, emails and phone calls.
 
According to civil liberties campaign group, Big Brother Watch, only two other organisations made more applications for private data, these being two police forces, the Met and Merseyside.
 
A spokesman for HMRC said: ‘HMRC uses Regulation of Investigatory Powers Act (RIPA) powers in support of its investigations into criminal attacks on the UK tax system.’ He explained that HMRC only uses RIPA powers, ‘where we have a criminal investigation underway which is where we suspect a fraud has been committed’; adding that of the 14,381 interventions in 2011, all of them related to ‘5,005 individual communications information requests’.

HMRC has reported that it has won more than 50 tax avoidance cases since 2010.

A recent publication from the government entitled, ‘Levelling the Tax Playing Field’ sets out the progress made in its enterprise to tackle tax avoidance. The document reports a number of successes including the closing of six corporate tax loopholes, a move which the government claims has protected over £1bn in revenue and yielded over £500m.

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HMRC collect a record £220m owed by wealthiest taxpayers

HMRC collect a record £220m owed by wealthiest taxpayers

A specialist section of HMRC known as the High Net Worth Unit (HNWU) collected their highest ever amount of tax last year. HNWU handles the tax affairs of the UK’s richest tax payers, that is the 5,800 people whose assets exceed £20 million. Last year the amount of extra tax collected by the unit reached £220 million, a ten per cent increase from 2011/2012.

HNWU began in 2009 and has successfully increased its proceeds from the nation’s wealthiest taxpayers each year. A total of £665 million additional tax has been collected since the unit was established. This tax is extra to the normal payments received from this group of tax payers and is obtained as a result of HMRC enquiries.

Speaking about the specialist unit, Exchequer Secretary to the Treasury, David Gauke, explained: “HMRC’s High Net Worth Unit provides the specialist attention they require in ensuring the wealthy pay the tax they owe. This Government has reinvested almost £1 billion in HMRC and expects them to deliver almost £22 billion in 2014-15. Since 2010, the unit has raised £582 million, increasing its revenue year on year which, at a time when the Government is focused on reducing the deficit, is delivering real results for the country.”

Head of the High Net Worth Unit, Martin Randall, said: “The tax affairs of the richest people in the country can be complex as they have large tax bills, and that’s why we’ve focused resources on getting their tax right. The majority of the wealthiest taxpayers play by the rules, paying the right tax at the right time, but we take action against the minority who don’t.”

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HMRC Urge Tax Credit Claimants To Renew Early

HMRC Urge Tax Credit Claimants To Renew Early

All tax credit customers must renew their claims by 31 July or see their payments potentially stop. HMRC is already sending out renewal packs to all Tax Credit recipients along with the advice to renew as soon as the pack is received.

Around 5.8 million people will be posted the renewal packs between now and the end of June. By encouraging customers to renew as soon as they receive the packs, HMRC is hoping that fewer claimants will miss the deadline than the ten per cent who renewed late last year.

Tax Credit claimants are also being reminded by HMRC to check the accuracy of the information in the pack and to tell HMRC about any changes to their circumstances that they haven’t already reported. Such changes could include alterations to working hours, childcare costs or pay. Customers must also provide details of the previous year’s income if such details are requested.

This year the amount a claimant’sincome can change before HMRC must be told for Tax Credit purposes was reduced to £5,000.

Those renewing a Tax Credits claim are advised to have the correct documents to hand when filling out the form, for example payslips, end of year P60 forms and childcare payment details.

Help and information on Tax Credit renewals is available from the tax credit website:
https://www.gov.uk/browse/benefits/tax-credits or via the helpline: 0345 300 3900

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