HMRC Crack Down On VAT Car Crime

HMRC Crack Down On VAT Car Crime

HMRC has launched a new online system to tackle criminals who evade VAT on road vehicles they bring into the UK.

The new system will allow the DVLA to check HMRC’s online records which will show whether the correct VAT has been paid on vehicles brought into the UK. VAT must be paid by law before a vehicle is registered for use on UK roads. Despite this legality failure to pay the correct vehicle VAT in these circumstances is common. It is estimated that VAT fraud from vehicles being brought into the UK costs the Exchequer around £110 million a year.

HMRC’s new system aims to tackle this fraud and also simplify the rules for legitimate users, making it easier to notify HMRC and register vehicles brought into the UK from abroad.

The new system is named the online Notification of Vehicle Arrivals (NOVA) system. It replaces the old process which was a manual system and saw people deal with HMRC and the DVLA separately.

Talking about the new online system, Sally Beggs, Deputy Director for VAT fraud at HMRC, explains: “Criminal gangs abused the old system in the past by bringing vehicles into the UK and registering them with the DVLA without accounting for VAT. That stops today. The new online collaborative system means people will get the green light from the DVLA only where their vehicle has been notified to HMRC for VAT purposes. Any attempt to cheat the system will stall.”

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HMRC Warns Landlords

HMRC Warns Landlords

HMRC are targeting landlords who are not declaring their rental income.

If you are a landlord or non resident landlord you should make sure you are declaring all of your rental income to avoid penalties and an HMRC investigation.

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Mummy Tax

Labour criticise ‘mummy tax’

Labour MPs have warned that more than a million people, including working women will be affected by a new tax being introduced.

More than a million people are going to be affected by a “mummy tax” on working women, Labour have stated. Research has been conducted by the Commons library into the coalition’s plans to cut maternity pay. The research has shown that, in real terms, these cuts mean that 1.2 million people, including fathers and children, will feel the knock-on effect of their family finances changing.

The figures brought to light by the research show that the 210,000 new mums who rely solely on statutory support will be hit hardest. This group makes up 60 per cent of the total people affected.

The Government’s plan is to cap statutory maternity pay and maternity allowance at a 1 per cent annual increase. Previous years would have seen these payments increase in line with inflation. It is estimated that, as a result of this cap, new mums will lose £180 annually by 2015.

The Labour party has launched a campaign against the planned maternity pay cuts. They called on Mr Cameron to “help mums not millionaires and delivered a “mothers’ day card” to the Prime Minister comparing the “mummy tax” with the coalition’s plans to give thousands of millionaires a tax cut worth £100,000.

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Council Tax Rise Affects Poorest Households

Poorest households affected by council tax rise

An anti-poverty think tank has told that it is the poorest households who have to pay more council tax now that the benefit changes have come into force.  The Joseph Rowntree Foundation has said that more than 2 million low income families face an increase in the council tax they pay, and that this increase is, on average, £140 a year.

The abolishment of council tax benefit went ahead on April 1st. Ministers have called for councils to protect the most vulnerable from the increases but have left it up to them how they do this. Council tax benefit is being replaced by a new system – council tax support – and responsibility for it is being moved from central government to councils. At the same time, the total spent on the benefit is being cut by 10% – and each council in England has had to decide whether to pass on the reduction to residents.

Most councils have chosen to increase council tax bills for low income families.

The report, written by the New Policy Institute (NPI) for the foundation, found 232 local authorities had devised schemes that would demand council tax from everyone regardless of income; only 58 have retained previous levels of support for families who received housing benefit.

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2013 Budget Changes To Encourage Investors

2013 Budget changes to encourage investors

Some of last month’s Budget announcements were more welcome than others. Of those changes that could be classed as positive, many are designed to encourage investors. These changes include; a consultation on the merging of Child Trust Funds (CTFs) and Junior ISAs, the abolition of stamp duty for AIM share purchases, the increase of personal income tax allowance and the single-tier state pension being brought forward to 2016.

Child Trust Funds (CTFs) and Junior ISA merger consultation

No change is expected before April 2014, but the Chancellor has announced that he is looking into options for transferring Child Trust Funds to Junior ISAs. If such transfers are authorised, parents of approximately 6.1 million children will be given much greater freedom to choose the best option when saving and investing for their child (ren).

Abolition of stamp duty on AIM shares

Again this change will not take place until April 2014 but when it does, stamp duty (and stamp duty reserve tax) on shares in companies quoted on growth markets, including the Alternative Investment Market (AIM) and the ISDX Growth Market, will be totally abolished.

Single-tier state pension brought forward to 2016

It was announced during the Budget that the introduction of the single-tier state pension has been brought forward to 2016.

This news will be welcoming to many women especially, who would otherwise have suffered a double disappointment with both the sudden rise in their retirement age and then missing out on the new pension.

New tax allowances announced

The Budget also saw announcements of new tax allowances, a lot of which will be beneficial for those wishing to invest money. Some of these new tax allowances include; The ISA annual allowance, which has now  increased from £11,280 by £240 to £11,520, The Junior ISA allowance which increased by £120 to £3,720, Capital Gains Tax allowance which rose to £10,900 and a planned future increase for Inheritance Tax which is set to increase to £329,000 in 2019.

Alongside these, income tax allowances have also changed. The additional rate will be reduced from 50% to 45%, the personal income tax allowance for those aged under 65 will increase to £9,440 and the higher rate threshold, (the sum of the personal allowance and the basic rate limit) will decrease to £41,450 in 2013/14, then rise to £41,865 in 2014/15 and £42,285 in 2015/16.

Pension annual allowance changes

Currently the annual allowance for pensions is £50,000. This will reduce to £40,000 in 2014/15.  A lifetime allowance of £1.5m (tax year 2013/2014, reducing to £1.25m in 2014/15) applies. If you are a higher rate tax payer it’s always worth remembering that if you have a private pension to make sure you are receiving all the tax relief you are entitled to. If you are not you could be due a pension tax rebate.

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PAYE shake up has begun

PAYE shake up has begun

The biggest change the Pay As You Earn (PAYE) system has ever seen since it began- Real Time Information – was introduced recently.

From now on employers are required to move to a new way of reporting PAYE in real time, sometimes called Real Time Information (RTI). This system sees employers report to HMRC each time they pay their employees, rather than annually, as had previously happened. The idea behind this drastic change is to update the PAYE system to a quicker, easier and more accurate tool. The introduction of RTI has been advertised by HMRC as being beneficial to employers as reporting requirements for HMRC will now be much simpler. Employers are told they will also benefit from the abolition of the extensive annual tax return that the old system required.

Speaking of the new RTI system, David Gauke, Exchequer Secretary to the Treasury, said: “For employees, particularly the 1 million people in the UK with multiple jobs, RTI will bring benefits as HMRC starts to get details of their tax every time their wages are paid, rather than just once a year. This will make HMRC’s records more accurate and up-to-date and will reduce the number of cases where someone is found to have under or overpaid tax during the year.”

Ruth Owen, HMRC’s Director General Personal Tax, said: “This will be a year of transition. Employers will start to report PAYE in real time from their first payday on or after 6 April. We understand it may take some time before all employers will get into the routine of real time reporting. But HMRC is here to give help and support, including offering free software for employers with nine or fewer employees, regular live Twitter Q&As, YouTube videos and roadshows across the country.”


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HMRC helplines to be made cheaper

HMRC helplines to be made cheaper

Currently taxpayers, who ring HMRC helplines for advice regarding their tax affairs, have no choice but to use expensive 0845 numbers. Phone calls to these numbers often result in high phone bills, particularly for those using mobile phones, in these cases costs can be up to 41p a minute. This price per minute rate, combined with the fact that many using the helplines have reported being on hold for over 10 minutes, has been classified as unacceptable by some MPs.The average waiting time for the HM Revenue and Customs (HMRC) helplines is six minutes, including a two-minute recorded message.

In response to criticism from the Commons Public Accounts Committee regarding the cost of the phone calls and the  length of time customers have to wait to talk to an advisor, HMRC has promised to switch its helplines to a cheaper 03 prefix.Ruth Owen, director general of personal tax at HMRC told MPs; “We are renegotiating the contract now but we are going to move ahead of that because that renegotiation will take some time”. HMRC has assured the Commons Public Accounts Committee that all customer calls will be switched to the 03 prefix by the end of summer.

The first helpline that will be changed will be that which directs people for advice regarding Child Benefit, a number that will probably be used by increasing numbers of people over the coming weeks as the benefit is taken away from high earners. Tax credit enquiry lines already use the cheaper 03 numbers.

As well as changing the numbers of the phonelines, HMRC is setting itself a new target of making 80% of people wait no longer than five minutes to speak to a real person, including recorded messages. This target comes after a recent National Audit Office report calculated that taxpayers were losing £136m a year in call charges and wasted time.


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Despite recession ‘Middle Britain’ is wealthier than ever

Despite recession ‘Middle Britain’ is wealthier than ever

Recent figures have suggested that the ‘middle fifth’ of households in the UK pay less tax, own more properties and are wealthier than they were 35 years ago.

The Office of National Statistics found that those households classed as the ‘modern middle’ had an inflation-adjusted disposable income of £24,400 in 2011, compared to £13,800 in 1977. This group also pay less tax than they did in the 70s and two-thirds now own their own home, compared to just over half 35 years ago.

Personal tax allowance increases have contributed to a reduction in the amount the middle fifth now pay in tax, which for direct taxes (income tax, council tax) stood at 19.2 per cent of gross income in 2010/11, compared to 23.5 per cent in 1977.

Despite this positive news, incomes of the middle class have still fallen since the recession hit. On average people in this bracket earn more than £3000 less than they did before the financial crash. A fall of almost nine per cent in earnings occurred between 2007-2008 and 2010-2011 for middle income earners, taking the average salary to £33,200 down from £36,400.

These latest statistics come from a survey carried out by the ONS which focused on households halfway between the UK’s poorest and richest.

The survey showed a sign of Britain’s ageing population by highlighting the fact that 31 percent of the ‘median households’ surveyed consisted of retired people. This figure was only 9% in 1977.


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Sugary Drinks Tax

Will taxing sugary soft drinks curb childhood obesity?

Health experts are suggesting that a 7p-a-can ‘fat tax’ on sugary soft drinks should be introduced to try and tackle the rising rates of childhood obesity.

Experts from 61 organisations, including the country’s most distinguished doctors and patrons from the Royal Society for Public Health, are arguing that taxing fizzy drinks could help cut consumption in the same way that tax is used to deter smoking and drinking.

If the move were to go ahead, a regular 330ml can of fizzy drink would be increased in price by 7p. The estimated £1billion a year that will be raised from the tax will be used to promote healthy eating initiatives.

The alliance that is advocating the tax on fizzy drinks has been brought together by Sustain, the campaigning food and health group. If the tax goes ahead, most of the money raised through the extra charges will be used specifically in the Children’s Future Fund, which would be spent on improving children’s health by, for example, providing free school meals or free fruit and vegetable snacks. Responsibility to control how the money raised will be spent would be given to an independent body, if the initiative goes ahead.

Currently Britain is the fattest country in Europe. One in four adults here are classed as obese and, by the time they leave primary school, one child in three is already obese or overweight. Treating diet-related illnesses, such as Type 2 diabetes and heart disease, costs the NHS £6billion a year. This figure is predicted to rise to £50billion by 2050.

A number of other countries in Europe such as Finland, France and Hungary, have already added a further tax to unhealthy foods, as have some states in the US.

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US investment bank Morgan Stanley lose HMRC court battle

US investment bank Morgan Stanley lose HMRC court battle

HMRC have won in a court case regarding a tax avoidance scheme involving US investment bank Morgan Stanley and FTSE 100 company Land Securities. HMRC’s victory will save the UK at least £60 million.

Under the scheme, Land Securities plc sold shares in one of its group companies to a Cayman Island subsidiary of Morgan Stanley. Morgan Stanley then inflated the value of the shares by pumping money into the subsidiary before the shares were bought back by Land Securities at the inflated price. Land Securities then claimed that they had made a “loss” of £200m which they, in turn, used as a deduction against tax.

Despite the Land Securities company claiming in court that disallowing the loss would be unfair, as they would be out of pocket if they sold the shares in the future, the tribunal did disallow the loss.

In reference to the Morgan Stanley case, Exchequer Secretary David Gauke said: “At a time when we must all pay our fair share, it is increasingly unacceptable for individuals and businesses to try to avoid or evade paying their taxes”

HMRC’s Director General for Business Tax, Jim Harra, explained that the scheme Morgan Stanley and Land Securities had carried out was ‘flagrant tax avoidance that provided finance to a FTSE 100 company that appeared cheap because the UK taxpayer was expected to pick up a £60 million bill’. He stressed that HMRC will not tolerate tax avoidance stating that by taking Morgan Stanley to court they are “sending a clear message that indulging in tax avoidance is now a very high risk and expensive strategy, because HMRC will continue to challenge avoidance at every turn.”


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