If any of your Construction Industry (CIS) returns are filed one day late, HMRC will charge an initial fixed penalty of £100.

 Additionally, if they have still not received that return:

• two months after the date it was due, they will charge a second fixed penalty of £200
• six months after the date it was due, they will charge a further penalty of £300 or 5% of any liability to make payments, that should have been shown in the return
• 12 months after the date it was due, they will charge a second further penalty. The amount of this penalty will depend on why your return was late. The amount charged will be either £300 or 5% of any liability to make payments, or a ‘higher’ penalty of up to 100% of any liability to make payments, or a minimum penalty of £1,500 or £3,000.

 Confused?

There are also occasions when HMRC will consider a reasonable excuse for not filing a CIS return, and if they accept your reason for the late filing then penalties will not be applied.

HMRC will not normally accept that lack of funds to pay (unless due to circumstances outside your control) or reliance on someone else to file your returns, as a reasonable excuse.

To further complicate matters there are circumstances when penalties may be capped at a lower amount.

Obviously, the best way to avoid penalties is to file your CIS returns on time. If you are presented with a bill for penalties it is well worth getting your tax advisor to check it out for you, and if necessary, appeal.

This month sees the launch of a new service that provides a personalised written estimate of what you can expect to receive under the new State Pension system. This will be based on your work history and National Insurance (NI) contributions to date.

Initially, the estimate will be available to the approximately 2.5 million people who reach State Pension age in the first 5 years of the new scheme – currently between April 2016 and August 2021 – the service will be expanded gradually over the next 18 months, eventually becoming available to all working age contributors.

Minister for Pensions, Steve Webb MP, said:

“The new statement service means that for the first time we can give those people closest to State Pension age personal information on how they will be affected by the reforms. Over the next 18 months, this will be rolled out further until eventually it is available to everyone of working age.

The introduction of the new State Pension marks the biggest reform of the State Pension in a generation. At its heart is the concept of a clearer, fairer, single-tier payment, the full rate of which is set above the basic means test, but which remains contributory in nature.

Over time, the various complexities which have built up in the present system will be swept away and replaced by a much more straightforward weekly payment. Those people with 35 qualifying years of National Insurance contributions will receive the full rate, which will be set above the basic level of means-tested support (currently £148.35 a week).

In future, the option for people to ‘contract out’ of paying full NI contributions will be removed, so that everyone pays a standard rate. Those who have contracted out in the past will have an appropriate deduction made to their starting amount.”

Farm animals are usually dealt with for tax purposes as trading stock: the costs of animals are deducted from monies received when the animals are sold and any resultant profit taxed as income.

However, farmers can elect to treat qualifying “herds” of animals in a more tax efficient way, they can apply the Herd Basis (HB).

HMRC advise:

“Some farm animals are kept by farmers not primarily for resale but for the sake of the products (for example, milk or eggs) or offspring (for example, lambs or piglets) which they produce. These are in many ways more like the farmer’s capital assets. Tax law recognises this by giving farmers the option of dealing with such `production animals' under the herd basis.”

From the farmer's point of view, the main benefits are likely to be that:

• the cost of maintaining the herd can be charged against tax, and
• any profit on its eventual disposal will be tax-free.

Once an election to adopt HB is applied it cannot be revoked and farmers who make an HB election cannot calculate profits using the cash basis.

If an election is made basic rules apply. In summary they are:

• The initial cost of the herd is not an allowable deduction, nor is the cost of any subsequent increase in herd size.
• The net cost of replacing animals in the herd is an allowable deduction.
• Where the odd animal, or just a few animals, are sold from the herd and not replaced, the resulting profit or loss is taken into account in arriving at the farming profits.
• Where the whole herd, or a substantial part of the herd, is sold and not replaced, the resulting profit or loss is not taken into account.

The last point covers the major tax advantage. Effectively, any profit made when a herd is sold is tax free. Without a HB election this profit would be taxable.

The legislation, although expressed in terms of farmers, applies to any person who keeps a production herd for the purposes of a trade even though that trade may not be farming. Accordingly, the herd basis also applies, with necessary adaptations, to animal or fish breeding.

Not all production herds are covered by this election. Farmers are advised to seek advice to see if this would be a strategy they could employ and, of course, we would be delighted to do this for you.

A move by the US Treasury to close loopholes that encourage US companies to merge with foreign firms and relocate their tax residences offshore could stifle takeovers announced this year worth hundreds of billions of dollars. In particular, it will probably throw into doubt the agreed £32bn takeover of UK listed Shire by AbbVie of the US and it is less likely that Pfizer will revive its interest in AstraZenica.

The Treasury said it was moving after Congress failed to act on the issue.

The measures aim to counter schemes that allow a company, after an inversion, to avoid US taxes on earnings accumulated and held by the US partner offshore. Currently many US companies retain substantial foreign earnings offshore to avoid taxes they would have to pay upon repatriating them into the United States.

The “Inversion” process allows the US company to re-domicile itself to the home of the other partner in the deal, ostensibly allowing the new "foreign" firm to take control of those earnings and use them, even in the United States, without paying taxes on them.

The new rules aim to block this process. The new foreign parent of the company will be deemed as owning shares in the former US parent, making it liable for taxes on the old offshore earnings.

If a property is let furnished – with sufficient furniture, furnishings and equipment for normal residential use – landlords can only claim tax relief for the furniture and equipment by way of the WTA. Prior to April 2013, landlords had the option of claiming the cost of replacement furniture instead.

 The WTA is calculated as 10% of the gross rents less any tenant’s costs (e.g. water rates and council tax) met by the landlord.

WTA does not cover repairs, which continue to be tax deductible. The question is then raised can replacement of an item be counted as a repair? In this respect, landlords that let furnished property need to distinguish between:

1. Replacement of items that are integral to the building, and
2. Replacement of items that are not integral to the building.

 Needless to say there are grey areas!

 Replacement of items that are integral to the building

 Fixtures integral to the building are those that are not normally removed by either tenant or owner if the property is vacated or sold. Examples include:

• Baths
• Washbasins
• Toilets
• Immersion heaters
• Fitted kitchens and fitted white goods.

This list is not intended to be complete but gives an idea of the assets that are integral to the building and fall outside the wear and tear allowance. As these items are integral to the building, the cost of replacing these items is normally an allowable expense as a repair to the building.

 Replacement of items that are not integral to the building.

 Expenditure of this type will be covered by the WTA. Examples given on HMRC’s website in this category include:

• movable furniture or furnishings, such as beds or suites,
• televisions,
• fridges and freezers,
• carpets and floor-coverings,
• curtains,
• linen,
• crockery or cutlery,
• beds and other furniture

Unfortunately, these examples are not definitive: is a carpet glued to the floor a permanent fixture, or not part of the integral features?

 1 October 2014 – Due date for Corporation Tax due for the year ended 31 December 2013.

 19 October 2014 – PAYE and NIC deductions due for month ended 5 October 2014. (If you pay your tax electronically the due date is 22 October 2014.)

 19 October 2014 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2014.

 19 October 2014 – CIS tax deducted for the month ended 5 October 2014 is payable by today.

 31 October 2014 – Latest date you can file a paper version of your 2014 Self Assessment tax return.

 1 November 2014 – Due date for Corporation Tax due for the year ended 31 January 2014.

 19 November 2014 – PAYE and NIC deductions due for month ended 5 November 2014. (If you pay your tax electronically the due date is 22 November 2014.)

 19 November 2014 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2014.

 19 November 2014 – CIS tax deducted for the month ended 5 November 2014 is payable by today.

HM Treasury has announced that this year’s Autumn Statement will be made on 3 December 2014. Historically, this has been used to showcase the Government’s expected tax changes in the following year’s finance act.

If you have any suggestions the Government is seeking your views on what you would like to see in the Statement. According to the GOV.UK website:

“In the interest of open and transparent policy-making, the Government welcomes original and innovative ideas, which will be considered by HM Treasury as part of the policy-making process.

Business, charities and members of the public can submit these views via email to autumnstatementrepresentations@hmtreasury.gsi.gov.uk

For information on the correct procedure for submitting your representation, please view the guidance.

To allow for full consideration in advance of the Autumn Statement, any submission should be sent to HM Treasury by 17 October.”

The clock is ticking!

There are a number of reliefs available to owners or tenants of smaller business premises. This article lists a number that can be claimed.

Small business rate relief:

You’ll get 100% relief (doubled from the usual rate of 50%) until 31 March 2015 for properties with a rateable value of £6,000 or less. This means you won’t pay business rates on properties with a rateable value of £6,000 or less.

The rate of relief will gradually decrease from 100% to 0% for properties with a rateable value between £6,001 and £12,000

Retail relief:

Some local councils will give you up to £1,000 off your business rates if you occupy a retail property with a rateable value of £50,000 or less. To be eligible the property must mainly be used as a shop, restaurant, cafe or drinking establishment.

You’re usually not eligible if your business provides financial services, medical services or professional services like legal advice or accounting.

Empty properties re-occupation relief

 You may get 50% off your business rates if you start occupying a retail premises that’s been empty for one year or more.

Rural rate relief:

 You may qualify for the rural rate relief if your business is in a rural area with a population below 3,000. The relief is between 50% and 100% off your business rates.

 You can get rural rate relief if your business is:

• the only village shop or post office with a rateable value of up to £8,500
• the only public house or petrol station with a rateable value of up to £12,500

 Local councils can also:

• top up the mandatory 50% relief to 100%
• give relief to other rural retail businesses of up to 100% (for properties with a rateable value under £16,500)

 The availability of the various reliefs will depend where you business is based. If you think you may qualify for any of the rates relief discuss your options with your local council.

From 6 October 2014, HMRC was due to include smaller employers in the penalty regime for late filing of Real Time Information (RTI) payroll returns for 2014-15.

HMRC have announced that this penalty process will be delayed for a number of smaller employers.

They will now start from:

• 6 October 2014 for employers with 50 or more employees
• 6 March 2015 for employers with fewer than 50 employees

The size of the late filing penalties depends on the number of employees within the PAYE scheme.

HMRC will use the latest information available to determine the number of employees, and the size of the filing penalty for each period where a return is late.

If a property is let furnished – with sufficient furniture, furnishings and equipment for normal residential use – landlords can only claim tax relief for the furniture and equipment by way of the WTA. Prior to April 2013, landlords had the option of claiming the cost of replacement furniture instead.

 The WTA is calculated as 10% of the gross rents less any tenant’s costs (e.g. water rates and council tax) met by the landlord.

WTA does not cover repairs, which continue to be tax deductible. The question is then raised can replacement of an item be counted as a repair? In this respect, landlords that let furnished property need to distinguish between:

1. Replacement of items that are integral to the building, and
2. Replacement of items that are not integral to the building.

 Needless to say there are grey areas!

 Replacement of items that are integral to the building

 Fixtures integral to the building are those that are not normally removed by either tenant or owner if the property is vacated or sold. Examples include:

• Baths
• Washbasins
• Toilets
• Immersion heaters
• Fitted kitchens and fitted white goods.

This list is not intended to be complete but gives an idea of the assets that are integral to the building and fall outside the wear and tear allowance. As these items are integral to the building, the cost of replacing these items is normally an allowable expense as a repair to the building.

 Replacement of items that are not integral to the building.

 Expenditure of this type will be covered by the WTA. Examples given on HMRC’s website in this category include:

• movable furniture or furnishings, such as beds or suites,
• televisions,
• fridges and freezers,
• carpets and floor-coverings,
• curtains,
• linen,
• crockery or cutlery,
• beds and other furniture

Unfortunately, these examples are not definitive: is a carpet glued to the floor a permanent fixture, or not part of the integral features?