by Acuaccounts | Oct 11, 2018 | accounting, latest news
Plans have been revealed that the Treasury is due to overhaul tax rules which allow self-employed people to avoid paying national insurance contributions. The move will be targeted at people who set themselves up as private Limited companies to take on work.
As announced on the BBC today, this reform could be announced in the October Budget.
The Treasury believes a third of people claiming self-employed status as a “personal service company” are actually full-time employees and should be paying more tax. It says without reform, high levels of non-compliance with tax rules could cost HM Revenue and Customs, which collects taxes, £1.2bn a year by 2023.
It is now looking at demanding that firms which use personal service company contractors take legal responsibility for ensuring “off-payroll” contractors stick to the tax rules known as IR35. A similar move in the public sector on “synthetic” self-employed has raised £410m extra in taxes since 2016, HMRC estimates suggest.
Full employees pay higher levels of national insurance compared with these Contractors. Personal income tax allowances could be frozen, despite a Tory pledge at the 2017 election that they would rise to £12,500 for lower rate taxpayers and £50,000 for higher rate taxpayers by 2020. Freezing them could raise up to £2bn a year. Reform of the IR35 rules is questionable whether it would raise as much.
Source – BBC UK News https://www.bbc.co.uk/news/business-45822650
by Acuaccounts | Oct 10, 2018 | accounting, latest news
Penalties for Filing a Tax Return late have remained pretty much the same for the last 20+years. Filing a date late beyond the 31st January, there will be an automatic £100 fine. Fail to file in another six months a further £100 is added. The real penalty was in the 5% charge that HMRC could charge if you had not paid a month after the deadline.
However, this is now likely to change. Under the new Making Tax Digital regulations that will form the basis of the Budget later this year. It has been drafted that HMRC has outlined a significant change to the way they will be levying tax return penalties for late filing breaches under the new regulations. Rather than base penalties on each return, taxpayers will receive a penalty point per event, and when these penalties reach a certain amount the taxpayers will be required to pay a fixed penalty.
So, if you miss a deadline a point will be applied, a specified number of points that are accrued will result in a penalty. Accordingly, the number of points required for a penalty depends on the filing frequency of the return.
Furthermore, HMRC is also introducing an amended penalty for deliberately withholding information from HMRC. They will have the power to charge penalties where a taxpayer deliberately withholds information which would enable HMRC to assess their tax liability. These penalties are based on a percentage of the tax due and can be reduced based on the taxpayer’s willingness to correct past disclosure.
Sounds like a similar system? It seems like HMRC are adopting ones given by the DVLA for driving offences. Of course, there is no suggestion that if you gather enough points in tax return penalties you will then be banned from paying tax…! More to follow once the Autumn Budget has been announced.
by Acuaccounts | Aug 21, 2018 | accounting, tax
The Making Tax Digital (MTD) for VAT deadline is drawing closer. It’s less than a year until UK businesses that are VAT registered and above the threshold will be required to keep their records digitally, and submit VAT returns to HMRC using MTD-compatible software.
Even so, there’s still plenty of confusion in the market around which online accounting software will be compliant with MTD for business’. And what it’ll mean for businesses and accountants. So we’re here to answer some of those frequently asked questions and make sure you’re kept fully up to speed with what is changing.
Difference between filing VAT returns now & the MTD method?
MTD VAT will be a different experience to the current VAT experience being submitted today. The VAT return is the same, but e.g HMRC will provide the returns to software, rather than people choosing dates for a return themselves. We will also make sure you’ll be able to make any required adjustments to the return before submitting to HMRC. There are other changes and differences too, so we’ll make sure you’re fully up to speed as soon as we are clear on the process from HMRC.
What else should you be aware of?
MTD for VAT is due to commence for VAT periods starting on or after 1 April 2019. So all businesses will need to comply with the new process from this date onwards. This means that many businesses will need to make a decision about their accounting software soon to avoid facing the complication of changing part way through their accounting year.
For example, a business with a 30 June 2018 year-end will need to use MTD-compatible software from 1 July 2018 to allow for the MTD requirements that will be required from April 2019.
by Acuaccounts | Aug 21, 2018 | accounting, tax
Making Tax Digital (MTD) will fundamentally change the administration of the UK tax system. On 13 July 2017 the government announced a new timetable and changes to the implementation, which mean that MTD will not take effect until April 2019 and will only be mandatory at that time for businesses over the VAT threshold.
Making Tax Digital is a government initiative that sets out a bold vision for a digital tax system to ‘make it easier for individuals and businesses to get tax right and keep on top of their affairs – meaning the end of the tax return for millions’. The aim of the initiative is to make tax administration more effective, more efficient and easier for taxpayers, through the implementation of a fully digital tax system.
What’s changing?
The current plans, in brief, are:
- The smallest businesses will be exempt from MTD – the “smallest businesses” will be businesses with annual turnover of less than £10,000.
- Taxpayers will send in summaries of their income and expenditure at least four times a year.
- More taxpayers will be able to use the cash basis of accounting.
- Businesses to use only Accountancy Software to control their records
For more details on this upcoming change speak to our Tax Experts.
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