Tuesday 25 October 2016

Maternity Allowance, Intermediaries reporting, VAT on meals

Last week we had three examples of how ordinary people and businesses are not well served by our incredibly complex tax system. We explained how self-employed women may lose their entitlement to the maternity allowance, and how employers can be fined for not telling HMRC that nothing was paid. We also had a cautionary tale of a business which was set up to help housebound individuals but was hit with a VAT bill.

This is an extract from our topical tax tips newsletter dated 20 October 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

Intermediaries reporting 
Since 6 April 2015 employment agencies and employment intermediaries have been required to report payments to workers they place with third parties, or find work for, if those workers are not paid under PAYE. We outlined the conditions for this reporting requirement in our newsletter on 9 July 2015. 
Note that personal service companies (PSC) who supply only one worker are not considered to be employment intermediaries for this purpose, so don't have to report. If the PSC supplies more than one worker it will fall under this reporting requirement, if it also doesn't operate PAYE on all the workers' payments. 
The report must include details of: 
  • The agency's name, address and postcode; 
  • The worker's name, address, NI number (if held) UTR number; 
  • The worker's engagement and payment details, including the customers' details in most cases; and 
  • why PAYE was not applied 
The report must be submitted online using a report template provided by HMRC, which essentially is a spreadsheet in the form of a ODS or CVS file. There may be commercial software available which can do this. 
The report can be submitted for periods to suit the agency, but it must be supplied at least for every quarter in the tax year, within one calendar month of the end of the reporting period. For the quarter to 5 October 2016 the report must arrive with HMRC by 5 November 2016. 
If the agency has not supplied any workers in the period it must submit a nil report by the deadline. Many employment intermediaries are not aware of this requirement. 
HMRC has the power to issue stiff penalties for late reports.
Our employment tax experts can advise on how to appeal these penalties and how to meet the reporting requirements.

This is an extract from our topical tax tips newsletter dated 20 October 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>





The full newsletter contained the remainder of this item plus links to related source material and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>

Tuesday 18 October 2016

MTD: quarterly reporting, MTD: software and costs, State pension top-ups

We generally don't discuss tax proposals which are still at the consultation stage in this practical tax update, but we are making an exception this week to answer some key questions about the Making Tax Digital (MTD) proposals. We also have some good news about topping-up a state pension.

This is an extract from our topical tax tips newsletter dated 13 October 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

State pension top-ups

Only individuals who have paid sufficient NIC for the requisite number of tax years can qualify for the maximum state pension. The number of tax years required depends on when the individual attained state pension age (SPA). Those that reach SPA on or after 6 April 2016 need to have paid NIC for 35 full years, but where the individual was contracted out for any part for their working life they may receive less state pension than they were expecting.
You can help your clients budget for their retirement by using the online state pension checker facility. Where NICs have been missed for certain tax years, the missing amounts can often be replaced using voluntary NIC payments, as detailed in the excellent guide from Royal London.
This top-up facility is particularly useful for individuals who have retired before they reach SPA or have missed contribution years by living overseas. Spouses and civil partners of members of the armed forces, who accompanied their partners when posted overseas, can apply for NI credits toward their state pension for tax years back to 1975/76.

The full newsletter contained the remainder of this item plus links to related source material and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>

Tuesday 11 October 2016

Requirement to send HMRC leaflet, CGT for non-residents, VAT responsibilities of online markets

We live in an interconnected world; your UK-based clients may have investments in other countries, and non-resident clients may have invested in UK property. We have tips on actions required in respect of both categories of investor. Clients who run online marketplaces also need to know about new VAT rules, which will impact their businesses.

This is an extract from our topical tax tips newsletter dated 6 October 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

VAT responsibilities of online markets 
From 15 September 2016 online marketplaces (such as Ebay and Etsy) can be held jointly and severally liable for VAT which remains unpaid by overseas businesses which sell through those sites. 
The basic VAT rule is that overseas retailers must pay UK VAT on goods they sell which are stored within the UK at the point of sale. This rule has always applied, but it has not been enforced effectively. Hence overseas suppliers have been able to undercut UK traders on price. 
In VAT terminology an overseas supplier which has no place of business in the UK is referred to as a non-established taxable person (NETP). The NETP must register for VAT from its first sale in the UK, as there is a zero VAT registration threshold for such supplies. 
Any NETP whose home base is outside the EU can now be required to appoint a UK-based VAT representative, which may in turn be made liable for any unpaid VAT due by the NETP. However, the online marketplace through which the NETP sells its goods can also be made liable for the VAT due to be paid by the NETP. HMRC say it will normally pursue the overseas business first before issuing a notice for joint and several liability for VAT to the online marketplace. The marketplace business will be given a 30-day warning to allow it to take action against the errant trader to either secure the VAT due, or ban the trader from the site. 
Businesses who run online marketplaces need to ensure that all traders who are based outside of the UK provide evidence of their VAT registered status. 

This is an extract from our topical tax tips newsletter dated 6 October 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

The full newsletter contained the remainder of this item plus links to related source material and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>

Tuesday 4 October 2016

Savings allowance, Marriage allowance, Pensions annual allowance


Last week we reviewed three forms of allowances which are available to individual taxpayers. The savings allowance looks straightforward, but it contains two alarming cliff edges. The marriage allowance should be simple, but in many instances the HMRC computer produces the wrong answer. The pensions annual allowance is now tapered for higher earners, based on a different definition of income than applies for the other allowances!

This is an extract from our topical tax tips newsletter dated 29 September 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

Savings allowance 
There is currently no HMRC guidance available on the interaction of the personal allowance, savings rate band (SRB), savings allowance, and different categories of income. This is a shame, as taxpayers need to appreciate how their savings will be taxed in the current tax year. 
From 6 April 2016 savings income (includes interest but not dividends) is taxed at 0% if it falls with the taxpayer's savings allowance or SRB. The level of the savings allowance is determined by the taxpayer's adjusted net income, not by reference to their highest marginal tax rate.
Adjusted net income is the taxpayer's total taxable income before deduction of the personal allowance, but after deduction of losses, and after the thresholds have been expanded to give higher or additional rate relief for gift aid donations and pension contributions. Thus a basic rate taxpayer may have a savings allowance of £500 rather than £1000.
Example:
Colin's adjusted net income before deduction of his personal allowance is £32,050. As his basic rate band threshold is £32,000, his savings allowance is £500 rather than £1,000. Colin's tax liability is £4,110, calculated as follows:
image
If Colin makes a gift aid donation of £40 net, (£50 gross), either within 2016/17 or before he submits his 2016/17 tax return, his basic rate band threshold is increased to £32,050. As his adjusted net income now lies within his basic rate band, his savings allowance set at £1000. Colin's tax liability is reduced to £4010, saving £100
 
This is an extract from our topical tax tips newsletter dated 29 September 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

The full newsletter contained the remainder of this item plus links to related source material and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>