Consider the following facts:

• The filing deadline for a Stamp Duty Land Tax return was a Sunday.
• A member of the advisor’s staff forgot to file the return by the end of the Friday – two days before the deadline.
• Realising their mistake, the staff member took the file home with the intention of filing over the weekend.
• Due to problems with internet access it was impossible to file the return before the deadline expired.

The return was subsequently filed the next working day, a Monday – one day late.

HMRC charged a late filing penalty and the tax payer appealed.

The court decided that the penalty had been charged in accordance with legislation and the tax payer had no grounds to appeal. The fact that internet access was not available did not affect the issue. The First-tier Tribunal noted that “leaving matters to the last minute was a recipe for disaster” and that it did not have jurisdiction to decide on the fairness of a penalty.

In a recently decided tax case a self-employed air conditioning engineer, David Keyl, was denied a claim for AIA. He had purchased a van in July 2008 and on 31 March 2009 (the end of his trading year) he transferred his sole trader business to a limited company.

Unfortunately, the legislation setting up the AIA includes a provision that relief will be denied in the year in which a trade discontinues.

In the case of David Keyl his sole trader business ceased to trade 31 March 2009 and therefore no claim could be made for AIA in the tax year 2008-09. The fact that Mr Keyl had continued to provide maintenance under existing contracts made no difference to this judgement.

The lesson to be learned here is that a decision to incorporate a business should not be taken lightly. If Mr Keyl and his advisors had reviewed the larger transactions he had entered into during 2008-09, they may well have delayed incorporation to the following year.

Many employers pay their employees a monthly car allowance to compensate them for the business use of their private vehicles. In most cases this car allowance is treated as remuneration and is subject to PAYE and National Insurance deductions.

 Additionally, employers may also pay a nominal amount per mile as a contribution to fuel costs.

 Employers are entitled to pay their employees a tax free mileage allowance for the business use of their private vehicles. The rates are:

• 45p per mile for the first 10,000 miles in any tax year, and
• 25p per mile for any additional use.

In a recently decided case, an employer that paid less than the 45p (25p) tax free rates, was enabled to deduct the difference between the actual rate paid and tax free rates available, from the monthly car allowance, before working out any employer’s or employee’s National Insurance Contributions due on the monthly car allowance.

 If the amount being paid for business use of fuel is nominal, this can make quite a difference to National Insurance Contributions that are due.

 Employers reading this article, whose circumstances match the following criteria, may be able to claim refunds for overpayment of past NIC deducted from car allowance payments. The outcome of such claims will depend on how closely their circumstances mirror the decided case mentioned above, and HMRC’s interpretation of the ruling:

 The criteria are:

• You pay or have paid employees a regular car allowance.
• You have also paid nominal mileage rates to cover business related fuel costs, below the current tax free rates of 45p (25p) per mile.

Please note that in the decided case discussed in this article, the allowance was only paid to employees travelling more than 2,500 business miles each year though the mileage rate they received was correspondingly reduced to 12p per mile from 40p. It was thus aimed at compensating those incurring additional costs for using their cars substantially for business purposes.

Internet fraudsters are using ever more intricate messages to trick you to part with private information. For example: your bank details and passwords. They may also hide viruses in email attachments that will give them access to your personal computer files. The viruses will usually be activated if you open the attached files.

The best way to combat this activity is to adopt a rigorous system for opening emails. We suggest:

1. Never open attachments on an email from an unrecognised source.
2. Government departments should never ask for personal information in an email. Follow their guidance, see below.
3. It is never wise to send personal information by email. If you get a request from your bank or other, ostensibly genuine source call them to confirm the approach is authentic.
4. If an email is obviously from an unknown or unreliable source add the sender address to your “Junk mail” filter in Outlook or similar software.
5. Scan your PC on a regular basis to make sure that any suspicious files are quarantined.

A summary of advice from GOV.UK follows:

Misleading websites

Some websites can look like they’re part of an official government service or that they provide more help than they actually do. This might mean you pay for services that you could get cheaper or for free if you used the official government service.

Search on GOV.UK to find official government services – e.g. if you want to apply for a driving licence or a European Health Insurance Card (EHIC). Use the GOV.UK contact form to report misleading websites. You must include:

• the website address or URL
• how you found the website
• why you thought it was an official government website

HMRC phishing emails and tax scams

HM Revenue and Customs (HMRC) will never use texts or emails to:

• tell you about a tax rebate or penalty
• ask for personal or payment information

Forward any suspicious emails to phishing@hmrc.gsi.gov.uk or call one of the help lines.

Report a disclosure of personal details to HMRC

Contact HMRC at security.custcon@hmrc.gsi.gov.uk if you think you’ve given any personal information in response to a suspicious email or text. Include brief details of what you disclosed (e.g. name, address, HMRC User ID, password) but don’t give your personal details in the email.

Visas and immigration

You’ll never be asked to pay for a visa using:

• cash
• money transfer

Use the GOV.UK contact form to report visa and immigration scams. You should include:

• a copy of the suspicious email you received, the sender’s email address and the date and time it was received
• details of what you sent in a reply, if you replied – e.g. whether you sent your bank details, address or password

Contact Action Fraud

You can also report suspicious emails, letters or telephone calls to the police through Action Fraud.

Certain property, whether occupied or out of use for a period, may be eligible for exemption from payment of business rates. The GOV.UK website lists the following as potentially eligible:

Exempted buildings – certain properties are exempt from business rates. Exemptions include:

• agricultural land and buildings, including fish farms

• buildings used for training or welfare of disabled people

• buildings registered for public religious worship or church halls

Empty properties – you don’t have to pay business rates on empty buildings for 3 months. After this time, most businesses must pay full business rates. Some properties can get extended empty property relief:

• industrial premises (e.g. warehouses) are exempt for a further 3 months

• listed buildings – until they are reoccupied

• buildings with a rateable value under £2,600 – until they are reoccupied

• properties owned by charities – only if the property’s next use will be mostly for charitable purposes

• community amateur sports clubs buildings – only if the next use will be mostly as a sports club

If you are concerned that you may be missing on these exemptions contact your local council to find out more.

HMRC have determined that you must complete a self assessment tax return if any of the following circumstances apply to your personal, financial circumstances:

     1.    You're a company director, minister, Lloyd's name or member.

2. Your annual income is £100,000 or more.

3. You have income from savings, investment or property. 

If you are an employee or a pensioner and already pay tax through a PAYE code, you can sometimes ask for tax that you owe on income, such as savings and property, to be collected through your code number. You'll need to complete a tax return instead if the income you receive is:

• £10,000 or more from taxed savings and investments
• £2,500 or more from untaxed savings and investments
• £10,000 or more from property (before deducting allowable expenses)
• £2,500 or more from property (after deducting allowable expenses) 

If you don't pay tax through a PAYE code you’ll need to complete a tax return if all of the following apply:

• you have income to declare, for example income from savings, trusts or abroad, rental income from land or property
• your total income exceeds your total allowances and reliefs
• you have tax to pay on this income 

4. You need to claim expenses or reliefs.

5. If you or your partner or spouse receives Child Benefit and either of you has income over £50,000.

6. You get income from overseas.

7. You have income from trusts, settlements or estates.

8. You have Capital Gains Tax to pay.

9. You’ve lived or worked abroad or aren’t domiciled in the UK.

10. You’re a trustee.

 Quite a list…

 One benefit of submitting a return is an automatic reconciliation of your overall tax position for the tax years affected.

For those tax payers that are not required to submit a tax return, and who have a number of income streams – all taxed at source – HMRC should send you a tax calculation at least once a year, showing your various income sources, tax paid and any balance of tax owing or due back to you.

Whichever situation applies to your circumstances take care to check HMRC’s calculations, either yourself or by seeking professional advice, HMRC do not always get it right.

All active building contractors and building subcontractors are subject to HMRC regulation. The rules they have to abide by are set out in the Construction Industry Scheme (CIS). Essentially, contractors cannot pay their subcontractors without stopping tax. Only in specific circumstances can payments be made without deduction of tax.

The scheme operates a little like the PAYE system with one important difference – contractors are not required to deduct National Insurance Contributions from the payments they make to subcontractors.

Unfortunately, your business can still be considered a contractor (and therefore subject to the CIS) even if your main business is nothing to do with construction. Under the CIS rules you are a contractor if:

• you run a business that engages subcontractors for construction operations – a 'mainstream' contractor
• you run a business that spends an average of £1 million or more a year over a three year period on construction operations – a 'deemed' contractor

Businesses that are deemed to be engaged in construction include:

• businesses like manufacturers or retailers
• local authorities
• government departments
• housing associations and 'arm's length' management organisations (ALMOs)

If your business or organisation becomes a deemed contractor then it'll remain one until it can show HMRC that its spending on construction work has fallen below £1 million a year for three years in a row.

The normal CIS rules for contractors also don't apply when:

• a deemed contractor pays for a small construction contract of less than £1,000 – excluding materials costs – and has authorisation from HMRC to exempt it
• a contractor pays a subcontractor less than £1,000 – excluding materials costs – to do construction work on the subcontractor's own property – or on any agricultural property where the subcontractor is the tenant – and has authorisation from HMRC to exempt it
• the governing body or head teacher of a local education authority maintained school pays for construction work on behalf of the local education authority
• a charitable body or trust – but not its trading subsidiary – pays for construction work

Private householders are never treated as CIS contractors, no matter how much they spend on construction operations.

In March 2014 the European Commission published a report entitled Macroeconomic Imbalances United Kingdom 2014. The text includes a few observations on the UK property market that have been greeted with less than enthusiasm by the UK Government.

The report includes the following introduction:

“The United Kingdom continues to experience macroeconomic imbalances, which require monitoring and policy action. In particular, developments in the areas of household debt, linked to the high levels of mortgage debt and structural characteristics of the housing market…”

The report points out that:

• House price inflation continues to outstrip the Consumer Price Index by a wide margin.
• The main driver of house price inflation is demand for properties outstripping supply.
• The Government Help to Buy scheme and continuing low interest rates have increased availability of mortgage funding.
• House price inflation is highest in London and the South-East. Property owners in other areas of the UK would be particularly vulnerable to interest rate increases.

Recommendations to deal with the potential over-heating in the UK property market include:

• Increase the supply of housing.
• Reform of the Council Tax system
• Release of more land for development

The concluding statement of risks associated with the property market are reproduced below:

“In conclusion, levels of activity remain below previous peaks.  Nevertheless, house prices are rising and the increase in prices and level of activity is likely to be reflected in rising levels of mortgage debt (and that rise is occurring from an already elevated base). The main risk on the demand side is households' vulnerability to a rise in the cost of borrowing while the response of the authorities has mitigated risks associated with an excessive lowering of credit standards. The main risk on the supply side is that reforms to the planning system and other initiatives to increase supply do not deliver increases in new housing of the amount required, or do so sufficiently quickly, to forestall further rises in house prices and mortgage indebtedness.”

You can get small business rate relief if you only use one property and its rateable value is less than £12,000.

Until 31 March 2015 you’ll get 100% relief (doubled from the usual rate of 50%) 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.

If you have more than one property you could get small business rate relief if the rateable value of each of your other properties is less than £2,600. The rateable values of the properties are added together and the relief applied to the main property.

You will need to contact your local council to apply for small business rate relief.

If your property has a rateable value below £18,000 (£25,500 in Greater London) you are considered to be a small business. Even if you don’t qualify for small business rate relief, your business rates will be calculated using the small business multiplier instead of the standard one. This is the case even if you have multiple properties.

The multiplier shows the percentage (pence in the pound) of the rateable value that you pay in business rates. A list of current multipliers is on the Valuation Office Agency (VOA) website.

A member of the one of the UK’s biggest tobacco smuggling gangs, who fled to Spain to avoid prison, has been returned to the UK to begin his sentence.

John Sabin, 58, from Doncaster, was part of an eight-strong gang that transported millions of smuggled cigarettes across the north of England to warehouses, storage yards and farms with the intention of selling them at a profit and evading duty.

He escaped justice after being convicted for his part in a £26 million tobacco smuggling operation which involved more than 150 million illicit cigarettes and tonnes of low-quality tobacco. He was subsequently sentenced in his absence to two years and nine months in prison.

Sabin was added to HM Revenue and Customs’ (HMRC) list of Most Wanted tax fugitives. After a public appeal for help by HMRC last month, he was tracked down by Spanish police to Malaga, on the Costa del Sol, where he was working in a bar.

HMRC’s specialist Fugitive Unit worked with the Spanish police and Interpol to return Sabin to the UK. He appeared at Derby Crown Court yesterday (15 May 2014) and was sentenced to an additional three months in prison for absconding and has now begun his time in jail.

Jennie Granger, Director General Enforcement and Compliance, HMRC, said:

“John Sabin thought he could flee the country to avoid paying for his crimes. He was wrong. We have tracked him down and, in co-operation with the Spanish authorities, have brought him before the UK courts so justice can be served.

Tobacco smuggling of this size is organised crime on a global scale. It supports criminality within our communities and denies our country millions of pounds of vital revenue every year to fund public services.

We really appreciate the role that the public and other law enforcement agencies play in helping us to bring people like Sabin to justice and would encourage anyone with information about any of HMRC’s Most Wanted tax fugitives to come forward.”

As well as his jail term, Sabin also faces having to repay the illegal proceeds of his criminal activity. Four other members of his gang have already been ordered to pay back over £480,000.