Glasgow Accountancy

HMRC are testing a scheme to ‘understand how email could be used more effectively’. In response to requests from taxpayers, the Revenue is offering to communicate electronically while it assesses how the medium could improve tax services and the taxpayer experience.

The pilot covers corporation tax, VAT, and employer-compliance issues with taxpayers who have a customer relationship manager or a customer co-ordinator.

HMRC say they see email ‘as an alternative channel of communication’ and there is no intention of making use obligatory for taxpayers, who are free to opt out at any time. They are asked to tell the Revenue in their consent message about any restrictions as to with whom the department should exchange emails.

Information about the test scheme includes the sentiment that taxman hopes to ‘conduct most of business with you, and/or your agent if appropriate, electronically’. It adds the caveat that sometimes the tax authorities will have to use paper communications ‘for legal reasons’

H M Revenue and Customs have issued a reminder today of the new penalties for  late filing and late payment of Income Tax Self Assessment (ITSA) Tax Returns.

During April, your clients within ITSA will receive 2010/2011 notices and paper returns which will include information on the new penalty framework and how it will significantly increase penalties for those who file and pay late.

Late filing penalties:

• When any return is late, an initial £100 fixed penalty arises the day after the filing date. This applies even if there is no tax to pay or the tax due has been paid on time.
• Individuals are notified they will be liable for a further daily penalty if the return is not submitted within three months of the filing date. The penalty is calculated at £10 per day, until the return is filed, for a maximum of 90 days (up to £900).
• After the daily penalties, and if the return is still outstanding six months after the filing date, a further penalty arises, calculated at five percent of the tax liability on the return or £300 if this is higher.
• Where the return is still outstanding after 12 months, a further penalty arises, calculated at five percent of the tax liability on the return or £300 if this is higher.
• If a determination has been made because the return has not been received, the penalties at 6 and 12 months will be based upon the estimated amount in the determination, and then adjusted retrospectively when the self-assessed amount is returned.

Late payment penalties:

-           At thirty days late there will be charged an initial penalty of 5% of the tax unpaid at that date.

-           At six months late and there will be charged a further penalty of 5% of the tax that is still unpaid.

-           At twelve months late there will be charged a further penalty of 5% of the tax that is still unpaid.

-           These penalties are additional to the interest that will be charged on all outstanding amounts, including unpaid penalties, until payment is received.

These penalties will be issued automatically to all those in ITSA who do not file and pay on time. Taxpayers will be able to appeal against any penalty on the grounds that they have a reasonable excuse for not complying on time and all penalty notices will include an appeal form and details on how to appeal.

After having time to evaluate the impact of the 2011 budget by chancellor George Osborne, the main areas which will interest clients are:

The reduction in Corporation Tax rates for Limited Companies to 20% from 21% from April 2011.

The increase of personal allowances to £7,475 but the higher rate of tax at 40% comes in at the next £35,000 plus personal allowances down from £37,400. For those clients lucky enough to be there 50% income tax starts at personal allowances plus £150,000.

For vat registered business and businesses approaching the vat registration threshold the limit has been raised from £70,000 to £73,000. Businesses whose turnover will reduce to £71,000 from the previous de-registration limit of £68,000.

Benefits for business mileage is increasing from 40p for first 10,000 miles to 45p per mile.

So in summary, nothing surprising and what they give with one hand they take away with the other. For detailed queries contact our Tax Department on tax@callanaccountancy.co.uk.

Make their day and ask them a question. The exciting lives we accountants and tax advisors lead.

Enjoy your weekend everyone.

When selling a second residence which has previously been your residence, take into consideration PPR relief which is Principal Place of Residence relief. This affect the calculation and in some instances people who think they will have a large capital gain find they do not have any tax to pay due to this relief. Contact our Tax team on 08450507613 or via e-mail at tax@callanaccountancy.co.uk. Planning in advance before the sale is always recommended especially when the potential sale is close to end of a tax year. Capital allowance rates are changing for higher rate tax payers.

Consider the benefits of incorporating or setting up a limited company from commencement of trading. Realise benefits of saving effectively the payment of national insurance by taking monies from the business by dividends. Also get company to pay for insurance to cover the key members and claim it as a expense against profits.

Something to consider and feel free to call, e-mail or post on blog and I will assist you.

Remember to complete form P85 before leaving UK for a period of non residency.

Client has confirmed he will be leaving UK on 8th April 2011. I have confirmed if you leave UK in previous tax year ie 3 days earlier he will qualify for non residency status as long as visits to UK are less than 183 days in a tax year and average less than 91 days in a tax year over a maximum of four consecutive years.

Client has decided to cease company due to things now working with other shareholder. This highlights importance of a shareholder agreement when a limited company is setup

New client based abroad discussed requirement for Self Assessment tax return for non resident UK individuals. Highlights need for return as non-resident landlord.