HMRC delays RTI penalties

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.

 

Number of employees

      Penalty per PAYE scheme

1 to 9

£100

10 to 49

£200

50 to 249

£300

250 or more

£400

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.

Wear & Tear Allowance (WTA)

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?

International tax avoidance

Britain is to take the lead in the clamp down on international tax avoidance, Financial Secretary to the Treasury David Gauke announced Saturday 20 September. UK-based multinationals will have to report to HMRC where they make profits and pay taxes around the world.

The UK is the first of 44 countries to formally commit to implementing the new country-by-country reporting template, which was this week unveiled by the OECD.

The template is designed to help tax authorities gather information on multinational companies’ global activities, profits and taxes, enabling them to better assess where risks lie and where their efforts to counter tax avoidance should be focused.

The UK initiated the country-by-country reporting template during its G8 Presidency last year, calling on the OECD to develop the template as part of its project to strengthen international standards on Base Erosion and Profit Shifting (BEPS).

The OECD will present the reporting template to G20 Finance Ministers this weekend.

Financial Secretary to the Treasury David Gauke said:

“The UK has been at the forefront of tackling international tax avoidance. We believe that country-by-country reporting will improve transparency and help identify risks for tax avoidance – that’s why we’re formally committing to it.

In time improved transparency between business and tax authorities will also help developing countries in dealing with compliance, as they often lack the capacity to collect this information themselves. Reporting high level information using a standardised format across all jurisdictions will ensure consistency, give tax authorities the information they need and minimise the additional administration burden on business.”

VAT registration dilemma

James is very industrious gent’s hairdresser. He just manages to keep his turnover below the VAT registration limit. Apart from his rent, which was not subject to a VAT charge, his overheads are minimal.

He is considering the purchase of his first home and needs to raise a deposit. To do this he calculates that he can just about fit in enough additional clients to bring in an extra £5,000 a year in income without increasing his costs.

If he pursued this plan, James would need to register for VAT (the current VAT registration threshold is £81,000) and add 20% to his prices. This would be a problem. He works in a competitive market and if he had to increase his prices by 20%, to cover VAT, he would not be able to maintain his turnover: clients would go elsewhere. James was fairly certain that if he started to charge VAT he would lose more clients in the short term than he would be able to take on and therefore his profits would likely decrease.

The only solution seemed to be absorbing the VAT: keeping his prices at the present level and treating any VAT payable as an overhead. He decided he’d better have a chat with his accountant to see what effect this would have on his profits.

His accountant said that he could use the VAT Flat Rate Scheme and in his first year of registration he would pay over 12% of his VAT inclusive sales. As his turnover was planned to be £85,000, including VAT, (so he didn’t have to increase his prices) this would mean a payment to HMRC of £10,200. James was not impressed. By increasing his takings by £5,000 he was paying out £10,200 in VAT and would actually, be £5,200 worse off. His accountant advised that he would save on income tax but not enough to compensate for the VAT payable.

This example illustrates the value of planning. If James had gone ahead with his increase in sales without considering the VAT consequences, he would have taken a step back not a step forward financially.

£1,000 business rates discount for High Street.

In her first major speech new High Streets Minister Penny Mordaunt tells retailers that business rates support is now helping all parts the country.

Six months after it was introduced the £1,000 business rates discount for local shops, cafes, restaurants and pubs (up to a rateable value of £50,000) is estimated to be giving nearly 300,000 premises more than £272 million of tax relief this year.

The minister called on all local authorities, businesses and citizens to follow this example and use government tax breaks as a springboard to shaping the future of Great British high streets across the country so they can remain a vibrant, viable part of the community where people live, shop, use services, and spend their leisure time.

High Streets Minister Penny Mordaunt said:

“We must help all respond to the needs and wants of the consumer so the high streets remains at the heart of our communities – more than simply places to shop.

We announced the biggest package of business rates support in over 20 years to support local shops, pubs, cafes, and restaurants. Overall, this is worth £1 billion to business with half of that backing high street shop and retailers in England.

Around 300,000 retail premises are getting our new £1,000 retail discount and our comprehensive list shows where those shops are located in the country. A typical small business could now be saving 30% extra or more compared to last year’s bill.”

The full list of the present business rate support measures are:

  • a new reoccupation discount of 50% for 18 months for new occupants of retail premises that have previously been empty for a year or more
  • allowing businesses to pay their bills over 12 months (rather than 10), which will help every firm with their cash flow
  • a 2% cap on business rate inflation increase
  • the new £1,000 business rates discount for local shops, cafes, restaurants and pubs (up to a rateable value of £50,000) estimated as more than £272 million of tax relief this year
  • the doubling of the extension of the small business rate relief until 31 March 2015, which will mean 360,000 business properties pay no bill at all

&pound1,000 business rates discount for High Street.

In her first major speech new High Streets Minister Penny Mordaunt tells retailers that business rates support is now helping all parts the country.

Six months after it was introduced the £1,000 business rates discount for local shops, cafes, restaurants and pubs (up to a rateable value of £50,000) is estimated to be giving nearly 300,000 premises more than £272 million of tax relief this year.

The minister called on all local authorities, businesses and citizens to follow this example and use government tax breaks as a springboard to shaping the future of Great British high streets across the country so they can remain a vibrant, viable part of the community where people live, shop, use services, and spend their leisure time.

High Streets Minister Penny Mordaunt said:

“We must help all respond to the needs and wants of the consumer so the high streets remains at the heart of our communities – more than simply places to shop.

We announced the biggest package of business rates support in over 20 years to support local shops, pubs, cafes, and restaurants. Overall, this is worth £1 billion to business with half of that backing high street shop and retailers in England.

Around 300,000 retail premises are getting our new £1,000 retail discount and our comprehensive list shows where those shops are located in the country. A typical small business could now be saving 30% extra or more compared to last year’s bill.”

The full list of the present business rate support measures are:

  • a new reoccupation discount of 50% for 18 months for new occupants of retail premises that have previously been empty for a year or more
  • allowing businesses to pay their bills over 12 months (rather than 10), which will help every firm with their cash flow
  • a 2% cap on business rate inflation increase
  • the new £1,000 business rates discount for local shops, cafes, restaurants and pubs (up to a rateable value of £50,000) estimated as more than £272 million of tax relief this year
  • the doubling of the extension of the small business rate relief until 31 March 2015, which will mean 360,000 business properties pay no bill at all

�1,000 business rates discount for High Street.

In her first major speech new High Streets Minister Penny Mordaunt tells retailers that business rates support is now helping all parts the country.

Six months after it was introduced the £1,000 business rates discount for local shops, cafes, restaurants and pubs (up to a rateable value of £50,000) is estimated to be giving nearly 300,000 premises more than £272 million of tax relief this year.

The minister called on all local authorities, businesses and citizens to follow this example and use government tax breaks as a springboard to shaping the future of Great British high streets across the country so they can remain a vibrant, viable part of the community where people live, shop, use services, and spend their leisure time.

High Streets Minister Penny Mordaunt said:

“We must help all respond to the needs and wants of the consumer so the high streets remains at the heart of our communities – more than simply places to shop.

We announced the biggest package of business rates support in over 20 years to support local shops, pubs, cafes, and restaurants. Overall, this is worth £1 billion to business with half of that backing high street shop and retailers in England.

Around 300,000 retail premises are getting our new £1,000 retail discount and our comprehensive list shows where those shops are located in the country. A typical small business could now be saving 30% extra or more compared to last year’s bill.”

The full list of the present business rate support measures are:

  • a new reoccupation discount of 50% for 18 months for new occupants of retail premises that have previously been empty for a year or more
  • allowing businesses to pay their bills over 12 months (rather than 10), which will help every firm with their cash flow
  • a 2% cap on business rate inflation increase
  • the new £1,000 business rates discount for local shops, cafes, restaurants and pubs (up to a rateable value of £50,000) estimated as more than £272 million of tax relief this year
  • the doubling of the extension of the small business rate relief until 31 March 2015, which will mean 360,000 business properties pay no bill at all

Landlord redress schemes

Letting agents have until 1 October 2014 to register with 1 of 3 redress schemes, to ensure tenants and leaseholders have a straightforward option to hold their agents to account.

Anyone who feels they get a poor deal from their letting agent will then be able to take their complaint to the redress scheme, and could receive compensation.

The schemes are run by The Property Ombudsman, Ombudsman Services Property and the Property Redress Scheme.

Housing Minister Brandon Lewis has recently advised:

“Most tenants and landlords are happy with the service they get from their letting agent, but in the small number of cases where people have complaints these should be addressed quickly and effectively.

That’s why from 1 October letting agents will need to belong to 1 of 3 approved redress schemes. This will mean that anyone who feels they are not being treated fairly will have somewhere to go with their concerns – and could receive compensation.

I’m pleased to see that already the vast majority of letting agents have signed up – but with 1 month to go before it becomes a legal requirement, I would urge those who haven’t done so yet to follow suit.

Other measures being introduced to protect tenants include:

  • a new voluntary code of practice to set standards for the management of property in the private rented sector
  • a new Help to Rent guide, which helps tenants understand what they should expect from their rental deal and how they can take action if they are the victim of poor standards of accommodation
  • the introduction of a model tenancy agreement, which landlords and tenants can use for longer tenancies if they wish, which will provide extra security and stability for families
  • extra guidance for local councils on how to tackle the small minority of rogue landlords, protect tenants from illegal eviction and how best to push for harsher penalties before magistrates for housing offences where these have a real impact on peoples’ lives

Any letting agent not signed up to one of the three approved redress schemes will face a fine of up to £5,000.

Autumn Statement 3 December 2014

The Chancellor of the Exchequer George Osborne has announced that he will give his annual Autumn Statement to Parliament on 3 December 2014.

The statement provides an update on the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility. These forecasts will be published alongside the Autumn Statement on 3 December.

Full details of the announcements will be available following the Chancellor’s statement to Parliament.

This year the government is seeking your views on what you would like to see in Autumn Statement 2014. If you would like to make a suggestion here’s the instructions released on 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

In order to inform policy development for the Budget or Autumn Statement, your representation should contain policy suggestions for the upcoming fiscal event and explain the policy rationale, costs, benefits and deliverability of proposals. It should also be evidence based, providing clear arguments on how it contributes to the aims of the Budget or Autumn Statement.

You may wish to consider:

  • likely effectiveness and value for money
  • revenue implications for the Exchequer
  • wider macroeconomic implications (for economic stability and growth)

Such as:

  • sectoral impacts
  • distributional impacts
  • administrative and compliance costs and issues
  • legislative and operational requirements
  • environmental impact

HM Treasury will not consider representations which are not practicable and/or that violate HM Treasury’s legal obligations, including but not limited to State aid, human rights and diversity. HM Treasury will delete representations which are inappropriate or offensive.

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

New e-Exporting programme to boost exports

UK Businesses will have access to a new suite of services to help boost their international trade through UKTI’s new e-Exporting Programme.

  • new suite of services and support to help UK companies take advantage of online selling, forecast to reach £60 billion by 2018
  • UK Trade and Investment (UKTI) is working with the world’s leading e-marketplaces to help UK companies fast-track international sales
  • UKTI has detailed information for more than 400 of the world’s e-marketplaces, to help companies plan their sales strategies

Businesses of all sizes from across the UK will have access to a new suite of services to help boost their international trade through online channels.

Trade Minister Lord Livingston will launch the government support package on Monday 8 September 2014 at the Autumn Fair at the NEC in Birmingham.

UKTI’s new e-Exporting Programme has been created to ensure UK companies are best placed to tap into the huge opportunities that exist online. The growth of technology has dramatically changed consumers’ purchasing habits with Britons now spending approximately £91 billion a year online making the UK one of the world’s leading e-commerce countries.

UKTI is working with a number of international e-marketplaces including Tmall China, Amazon China, Japanese e-commerce platform Rakuten and Harper’s Bazaar. Operating through these e-marketplaces presents a cost-effective way for companies – particularly small and medium-sized businesses – to increase their reach in terms of both numbers and geography. The programme encourages UK exporters to reach out to the generation of digitally-capable consumers who are increasingly influenced through online channels.

The programme is the first of its kind in the world – UKTI is the only organisation to hold the operational information of global B2C and B2B e-marketplaces with the central aim of using the information to revolutionise exporting.