June 2007 Newsletter
Business Academy
Last chance to register for our free Business Academy event on 14th June.
Back To Top
Practical Tax Tips
We have recently sent a copy of our 32 page booklet out to clients with our Summer ‘Prime Review’ Newsletter. If you do not currently receive this Newsletter, and would like to, please contact us....
Back To Top
Offshore Accounts Disclosure Facility - Further Information
You may have seen reports in the Press recently about a tax amnesty for undeclared offshore accounts which has been announced by H M Revenue & Customs (HMRC).
The following provides more information about the tax amnesty.
The Offshore Disclosure Facility is intended to enable taxpayers with undisclosed income or gains, primarily in relation to offshore accounts or assets, to make a full declaration to HMRC. If a disclosure is made using this facility, the penalty which will be payable on any tax liability will be limited to 10%. This is a lower level of penalty than would often be charged on undisclosed tax liabilities. (Penalties can be as high as 100% of the additional tax).
In order to take advantage of this facility there is a tight timetable which must be adhered to and the disclosure must be made using the set procedure announced by HMRC. Whilst it is entitled “Offshore Disclosure Facility, HMRC have announced that the same arrangement can be used to disclose tax liabilities on income, capital gains, inheritance tax and VAT which do not have any offshore connections.
The first step is to notify HMRC of the intention to make a disclosure; this notification must be made by the 22 June 2007.
HMRC will send an acknowledgment letter and Disclosure Reference Number as soon as possible and at the latest within three weeks of receiving the disclosure notification.
HMRC have received a substantial body of information from a number of banking organisations regarding offshore bank accounts. Where a taxpayer has not made a disclosure notification and HMRC have information about that taxpayer, they may well open an investigation into that person’s tax affairs and it is likely that the penalty which will be charged on any tax payable arising as a result of the investigation will be in the order of 30% or more. In exceptional circumstances HMRC may decide to prosecute the taxpayer.
Full details regarding the under-declarations of income, capital gains etc must then be collated and submitted to HMRC by 26 November 2007. HMRC have published a set of forms which should be used for making the detailed disclosure. It will be necessary to provide information regarding the offshore bank account or other offshore assets held as at 5 April 2006 and the source of funds used to acquire the assets. The tax liability and any National Insurance contributions if applicable, will need to be computed and interest will be payable on the tax and National Insurance contributions due. A penalty of 10% will be charged on the amount of tax and National Insurance contributions.
The tax and National Insurance contributions must be paid by 26 November 2007.
The procedure which has been outlined above is applicable to all UK sources of income which may not have been disclosed, for example business takings which have not been banked, rental income on buy to let properties which has not been declared (see below), PAYE liabilities (including failure to operate PAYE correctly on employees’ wages and salaries) and employee benefits in kind which have not been taxed.
Please contact Sarah Nickols in Coventry or Jan Hornby in Solihull immediately if you need to make a declaration
Back To Top
Tax Man to target Buy to Let investors
The UK tax authorities are set to crack down on tens of thousands of UK investors owning buy-to-let properties and who have not paid the correct amount of tax, it has been reported.
According to a report in the Times newspaper, HM Revenue & Customs has identified 80,000 landlords who may have claimed too much tax relief, failed to declare the full amount of rent received from a property, or not declared a capital gain on the sale of a property.
The paper also reported that HMRC will target so-called 'ghost landlords,' property owners who have not declared themselves to the tax man, in its new campaign to extract ore tax out of UK taxpayers and investors. It will supposedly use information from banks, tenants and letting adverts to find those evading their tax responsibilities.
Landlords must pay income tax at rates up to 40% on their rental income. However, it is thought that HMRC is also targeting the many property owners who may have incorrectly claimed deductions for mortgage repayments.
Tax experts are urging property owners who may not have declared their full income or capital gains to consider taking advantage of HMRC's offshore disclosure facility. Announced in April 2007, the offshore tax amnesty allows investors with offshore accounts to disclose to HMRC any income and gains not previously included in their tax returns (see above). But for a limited period, the amnesty will allow taxpayers to come forward and make a full disclosure of all undeclared liabilities, not just those connected with an offshore account.
Second home ownership in the UK has exploded in recent years with investors no longer able to rely on pensions to provide an adequate income during retirement. Research shows that there are currently around two million people in the UK who own a second home. Around half of these let out their additional properties.
Please contact Sarah Nickols in Coventry or Jan Hornby in Solihull immediately if you need to make a declaration
Back To Top
Microsoft Office 2007
Microsoft Office 2007 has been released and its use is spreading.
It introduces a new file format that Office 2003/Office XP cannot open directly.
If this causes you problems please contact Nick Ballard our IT manager who can install a small program to add functionality to your existing Microsoft Office package that will enable you to open the 2007 files.
Back To Top
National Minimum Wage penalties
The government is to target employers with new fines if they pay below the National Minimum Wage (NMW).
Proposals include fixed penalty fines, linked to the number of workers underpaid, and for the first time businesses will have to pay interest, or other payments, to underpaid workers in addition to repaying arrears. This would mean that employees would no longer be giving ‘interest free loans’ to their employers.
The main NMW rate is currently £5.35 an hour and rises to £5.52 in October 2007.
The government has helped thousands of workers recover over £22 million in unpaid wages, but up to now, employers have not been penalised, as long as they pay the arrears when they are caught. If they refuse to pay increases or back pay, employers already face fines. Typically the penalty for underpaying one employee is more than £200 with much higher penalties being possible.
If you would like further advice about this please contact Monima Das in our Payroll department.
Back To Top
Cash Declaration rules when travelling
HMRC have announced new rules applying to people coming to or leaving the UK. From 15 June 2007, people travelling to or from a country outside the European Union (EU) will need to declare any sums of cash of 10,000 Euros or more (or the equivalent in another currency) to HMRC. There is no requirement to declare cash if travel is to or from another EU country.
This change is part of the EU’s efforts to prevent money laundering and HMRC have issued a leaflet explaining the new rules. The declaration must be made on forms which will be available at ports and airports.
‘Cash’ covers currency notes and coins, bankers’ drafts and cheques of any kind, including travellers’ cheques. Penalties can be charged for failing to declare the money or providing incomplete or incorrect information and, in addition, HMRC can seize cash of £1,000 or more if they have reasonable grounds to suspect it is the proceeds of, or is intended for use in, unlawful conduct. There is a right of appeal against seizure and any seized cash cannot be kept for more than 48 hours without a court order.
Back to Top
Contact Prime if you need specific advice on these issues.
Please log onto our website regularly to check for new news items and factsheets.
Disclaimer
This newsletter is published for the information of clients and other recipients of our email newsletters. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this newsletter can be accepted by the firm.
|
