Just in case you have missed the news – that HMRC are stepping up their campaigns to stop tax avoidance and evasion – you may be interested to read the following quotes from HMRC and the Treasury: 

“Issue

The difference between the revenues that in HM Revenue & Customs’ (HMRC) view should come in, and the total actually collected by HMRC, is known as the ‘tax gap’. Tax evasion and tax avoidance by businesses and individuals contribute to the tax gap, along with error, failure to take reasonable care, non-payment, legal interpretation, the hidden economy and criminal attacks on the tax system.

The tax gap in the 2010 to 2011 financial year was estimated to be £32 billion – 6.7% of the total tax that HMRC estimates was due – and tax evasion and avoidance together accounted for £9 billion of this.

Actions

We are working to prevent evasion and avoidance, detecting it early where it arises, and counteracting it effectively through investigation and legal challenge.

We are investing in HMRC to prevent tax avoidance and evasion. In 2010 the government allocated HMRC £917 million from efficiency savings to reinvest in generating additional compliance revenues of £7 billion a year by 2015.

Prosecuting more people who break the law

HMRC is taking swifter legal action against those who don’t come forward and sort out their taxes. We are also allocating more resources to increase the pace and number of tax evasion cases being brought before the criminal and civil courts.

We are setting up local task forces to identify and deal with tax cheats, using criminal and civil powers.

We are prosecuting more people who break the law by evading tax. We have recruited an additional 200 criminal investigators to increase the number of people prosecuted for tax evasion from 165 in 2010 to 2011, to 565 in 2012 to 2013, and to 1,165 in 2014 to 2015.

Using data and new technology

We are investing in our ability to use data and new and advanced technology to identify fraud and evasion risks. We have already brought in an extra £1.4 billion of tax revenue by investing £45 million in these activities.

We are improving HMRC’s CONNECT analytical computer system, so that the department is better able to identify areas of compliance risk. This will allow HMRC to act swiftly in identifying and investigating fraudulent behaviour.”

In summary

For professionals advising clients about opportunities to minimise their tax payments and tax payers who are keen to take this advice HMRC’s activities in this area are creating problems. In many cases it is necessary to interpret the Government’s intention when it formulated tax legislation in order to counter the accusation that a particular tax claim is “artificial” and should be withdrawn.

We live in interesting times…

According to Gov.uk you can get small business rates relief if you only have one business property and its rateable value is under £12,000.

Here’s a summary of the relief on offer:

Current relief on offer:

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.

What if you have other properties?

You could still 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.

Larger businesses

If your property has a rateable value below £18,000 (£25,500 in Greater London) you’re considered 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. You can view a list of current multipliers on the Valuation Office Agency (VOA) website.

Contact your local council to apply for small business rate relief.

Speculation is rife that George Osborne is under pressure to pre-empt possible interest rate increases next year by offering tax cuts in the forthcoming Budget announcements on 19 March.

Polling day for the 2015 general election is 7 May so an announcement to increase the basic personal allowance (presently £10,000) may be an option as this would feed into taxpayers’ pockets before polling day.

MPs are keenly aware that any increase in mortgage interest rates, prior to the next election, would have unfortunate associations with the coalition, even though the Bank of England is responsible for setting rates.

Many of the other tax changes for the 2014-15 year are disclosed in draft legislation released by HMRC last month. These include:

Personal Tax:

• Individuals born after 5 April 1948 will be entitled to a personal tax allowance of £10,000.
• Employees will be able to increase the maximum value of shares acquired under Share Incentive Plans (SIP) and Save As You Earn (SAYE) schemes. The increased limits will be: SIPs – £3,600 on the free shares that can be awarded to employees and £1,800 on the partnership shares employees can purchase; SAYE – the monthly amount that employees can save will be increased to £500.
• It is proposed that the annual exemption limit for employer-related loans, to be treated as earnings, will be increased from £5,000 to £10,000.

 Capital Gains Tax:

• The annual exempt amount is to be increased to £11,000.
• The rule that exempts the final 36 months of ownership of a private residence from CGT is to be reduced to 18 months. The 36 months will still apply if the owner is disabled or moved into a care home.

 Business Tax:

• HMRC are introducing new legislation affecting Limited Liability Partnerships. Members of LLPs who satisfy the new criteria as “salaried members” will effectively lose their self employed status and be taxed under the PAYE legislation. There will also be restrictions on the way in which mixed partnerships, those with individual and typically corporate members, allocate profits and losses. 

George Osborne has also announced that from 5 April 2015 married couples and civil partners will have a limited ability to transfer personal allowances.

Whilst it is unlikely that we will see a return to direct tax relief for mortgage interest payments, the historical mortgage interest relief at source (MIRAS), Mr Osborne may be tempted to offer something to his back-bench MPs to placate their concerns.

The government has already published certain draft clauses for the Finance Bill 2014. We have listed below some of the more topical changes disclosed.

 Changes for the tax year 2014-15:

 Personal Tax:

• Individuals born after 5 April 1948 will be entitled to a personal tax allowance of £10,000.
• Employees will be able to increase the maximum value of shares acquired under Share Incentive Plans (SIP) and Save As You Earn (SAYE) schemes. The increased limits will be: SIPs – £3,600 on the free shares that can be awarded to employees and £1,800 on the partnership shares employees can purchase; SAYE – the monthly amount that employees can save will be increased to £500.
• It is proposed that the annual exemption limit for employer-related loans, to be treated as earnings, will be increased from £5,000 to £10,000.

 Capital Gains Tax:

• The annual exempt amount is to be increased to £11,000.
• The rule that exempts the final 36 months of ownership of a private residence from CGT is to be reduced to 18 months. The 36 months will still apply if the owner is disabled or moved into a care home.

 Business Tax:

• HMRC is introducing new legislation affecting Limited Liability Partnerships. Members of LLPs who satisfy the new criteria as “salaried members” will effectively lose their self employed status and be taxed under the PAYE legislation. There will also be restrictions on the way in which mixed partnerships, those with individual and typically corporate members, allocate profits and losses. 

 Changes for the tax year 2015-16:

It is proposed that spouses (including civil partners) will be able to transfer up to £1,000 of their personal allowance to their spouse (or civil partner). This will be a useful, although somewhat limited, tax planning device that will allow couples to partially equalise their taxable incomes. It will only apply where neither party is a higher rate tax payer.

For employers with between 50 and 249 employees auto-enrolment of employees into a pension scheme starts 1 April 2014. Smaller employers, under 50 employees, will need auto-enrol on a staged basis between 1 June 2015 and 1 April 2017.

Employers who are still unclear what their responsibilities are under this new regulation should take a look at the Pensions Regulator website:

https://www.thepensionsregulator.gov.uk/employers/does-automatic-enrolment-apply-to-me.aspx

The key points listed on the site are:

• Automatic enrolment affects all employers with staff in the UK.
• You must enrol certain staff into a pension scheme.
• You must start doing this from your staging date, though there is an option to postpone automatic enrolment for up to three months.
• You must write to all your staff to tell them how they’ve been affected.

The regulator further advises:

“People are living longer yet too many people are under-saving or not saving at all for what could be a long retirement. The law on workplace pensions has changed to make it easier for millions more people to build up a pension, particularly those on lower incomes.

Automatic enrolment means that, rather than having to actively choose to join a pension scheme, staff are put into one by their employer as a matter of course. If they don’t want to be in the pension scheme, they must actively choose to opt out. It’s to encourage people to stay in pension saving.”

This is a further raft of regulation that all employers must comply with. Whenever possible automate the compliance processes by using payroll or HR software that includes the new pensions' auto-enrol steps.