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HMRC are sending letters to 50,000 electricians around the country this month warning them to declare and pay any undisclosed taxes.  

Under this time-limited tax scheme, electricians can pay the tax they owe, with lower penalties including those who have made mistakes in the amount of tax they owe.

If a full disclosure is made, the penalty will be reduced to a rate of 10%, with a maximum of 20%. HMRC are making it clear that those who do not choose to make a disclosure will face substantial penalties and potentially even criminal prosecution.

HMRC are using a variety of intelligence sources to target electricians who have not declared their full income. 

Under the scheme, electricians must advise HMRC between 14 February 2012 and 15 May 2012 that they want to take part. They then have until the  14 August 2012 to make full disclosure and arrange for payment of the taxes outstanding.

HMRC are reminding VAT-registered businesses that all VAT returns must be submitted online from 1 April 2012. 

Currently, only newly-registered businesses and those with turnovers of more than 100,000 have to submit their VAT online, as well as pay electronically. Anyone else can send HMRC a paper VAT return, if they wish.

From April, all 1.9m VAT-registered businesses in the UK will have to submit their VAT returns online, and pay electronically, for accounting periods beginning on or after 1 April 2012.

Every VAT-registered trader not already required to submit online will receive a letter from HMRC in February, advising them of the change, and what steps they need to take.  Early registration on the HMRC website is advisable to ensure that those traders who are not already submitting their returns online traders are prepared for the change over.

Please feel free to contact us if you need any help or have any questions on this subject.

In order to make sure that taxpayers are not disadvantaged if they cannot contact HMRC's call centres on 31 January 2012 due to strikes, HMRC have advised that they will not impose any late filing penalties for people who file their Self Assessment returns on 1 and 2 February.

The SA deadline remains midnight on 31 January. But HMRC will treat all returns that come in by midnight on 2 February as though they were submitted by 31 January.  Interest will not be charged on payments due on 31 January that are paid on 1 or 2 February.

Sage 50 Accounts 2012 offers advanced budget management and is ideal for small to medium-sized businesses and charities. The software is packed full of features to help save time when managing day-to-day finances – from online VAT filing to batch reporting.

Improvements in 2012 now include:-

Please feel free to contact us for further information.

HM Revenue & Customs (HMRC) have launched their latest campaign targeting evasion called the ‘Tutor and Coach Tax Catch-up Plan’.

This campaign is targeted at anyone providing private and/or self-employed tuition and coaching, on which the correct tax has not been paid because it has not been declared to HMRC. The deadline of declaring an intention to make a disclosure is 6 January 2012. By making a disclosure individuals will benefit from what HMRC refers to as ‘the best possible terms’ though these are not currently outlined in the campaign information.

After 6 January 2012, when the deadline to notify has passed, HMRC will use data from an extensive range of sources to identify those who have failed to come forward and notify their intent to make a full declaration. Those identified could face substantial penalties or even criminal prosecution.

Further information here.

National Minimum Wage

The Minimum Wage is changing on the 1st October 2011. The new amounts are shown below:

6.08 per hour for those aged 21 or over
4.98 per hour for those aged between 18 and 20
3.68 per hour for those aged 16 or 17
2.60 per hour for apprentices meeting the qualifying conditions
 

HM Revenue and Customs have introduced a new penalty regime which will affect self assessment returns for 2010/11. The deadlines for filing returns remains unchanged -- October 31 for paper returns and 31 January for online returns. The deadline for paying tax due is still 31 January.

The new penalties for late Self Assessment returns are:

•     An initial £100 fixed penalty, which will now apply even if there is no tax to pay, or if the tax due is paid on time;
•     After three months, additional daily penalties of £10 per day, up to a maximum of £900;
•     After six months, a further penalty of 5% of the tax due or £300 whichever is greater
•     After one year, another 5% or £300 charge -- whichever is greater. In serious cases the penalty after 12 months can be up to 100% of the tax due.

New penalties for paying late are 5% of the tax unpaid and will be applied at 30 days, six months, and 12 months. Interest will also be charged on top of these penalties. 

HM Revenue and Customs has launched a VAT Initiative Campaign aimed at offering an amnesty for all those businesses who haven't yet declared their requirement to register for VAT, or who have underpaid in the past. 

VAT registration is currently required if your annual turnover exceeds £73,000.  Businessess identified trying to avoid registration will incur penalties or possibly criminal prosecution.

Businesses taking part in the initiative will only face a 10 per cent penalty on any under‑declared VAT liability – a lot lower than the potential penalty if discovered by HM Revenue & Customs - up to 100 per cent of the tax outstanding. 

Businesses have until 30 September 2011 to declare their intention to register to use the scheme.  They will then have until 31 December 2011 to file a return of the tax payable and pay in full. 

After the 30 September 2011 has passed, HM Revenue and Customs will be comparing future details submitted with existing tax returns to identify businesses that still haven't registered and looking to take further action against those businesses. 

HMRC has announced trials of a single compliance process for enquiries across a range of different taxes.

The trials of the new process will run for six months from 1 June in 10 different locations across the UK, including Belfast. HMRC then intend that the new process will be rolled out nationally from January 2012, subject to the results of the trials.

The single compliance process will focus solely on risks and behaviours identified in cases and throughout the life of the compliance check, irrespective of the head of duty (VAT, Income Tax, Corporation Tax and PAYE) involved. The intention is that the process will be capable of addressing lower risk cases at an appropriate level, but will also increase in intensity should the approach be warranted.

The new process will eventually bring the UK’s enquiry regime much closer to the multi-tax head approach of the Republic of Ireland’s long-standing audit enquiry system. 

Among the changes to tax and national insurance from 6 April 2011, the following will be particularly relevant to a number of taxpayers:-

1.  NATIONAL INSURANCE LIMIT FOR EMPLOYEES

 The weekly limit at which National Insurance starts to be deducted from 6 April 2011 increased by more than the rate of inflation to £139 per week.

 It may be appropriate to review salaries paid at the rate which applied in the 2010/11 tax year.

2.    HMRC APPROVED MILEAGE RATE

From 6 April 2011, the HMRC approved mileage rate increased from 40p per mile to 45p per mile for the first 10,000 business miles in a tax year.

 The rate for business miles in excess of 10,000 remains at 25p per mile.

3.     RESEARCH AND DEVELOPMENT

The rate of tax deduction for expenditure on Research and Development which is broadly defined as the advancement of scientific or technological information increased from 6 April 2011 to 200% of the allowable expenditure.

4.  ENTERPRISE INVESTMENT SCHEME

The rate of income tax relief for investment in shares qualifying for EIS Relief will increase to 30% for shares purchased after 6 April 2011.

HMRC have launched their latest Tax Amnesty aimed at plumbers, gas fitters and heating engineers who they believe have under-declared their income. 

HMRC has obtained information from Gas Safe and Corgi registers and compared it to advertising directories and Health & Safety prosecutions to build up a database to help it identify people who, they believe are not fully declaring their income.  

Under the terms of the scheme, initial notifications of an intention to make a disclosure need to be made by 31 May 2011. The full disclosure then has to be made by 31 August 2011. Such disclosures will qualify for a lower penalty rate, up to a maximum of 20%.

 After 31 August 2011, HMRC has stated its intention to launch enquiries into those it believes should have made a disclosure and have failed to do so.

The previous Labour government introduced plans to restrict the amount of tax relief on pension contributions of those with high income, broadly £130,000 or more.

This announcement led to the introduction of complex rules from April 2011 onwards, with even more complicated anti-forestalling rules for the tax years 2009/10 and 2010/11.

Whilst there have been no changes to the rules for 2009/10 and 2010/11, the current government is looking at simpler ways of achieving this restriction. 

It has introduced the concept of an Annual Allowance (AA) (set at £50,000), which would be the maximum contribution attracting tax relief in a tax year.  Any contributions in excess of the AA would be charged to tax on the individual as their top slice of income. Contributions include contributions made by an employer.

The rules will apply for the 2011/12 tax year. 

In October the government announced the introduction of a new tax free children's savings account (so called Junior ISAs) following the end of Child Trust Fund.

The government intends the new accounts to be available by Autumn 2011.

The new account will have the following key features:

• all returns will be tax free
• funds placed in the account will be owned by the child and will be locked in until the child reaches adulthood
• investments will be available in cash or stocks and shares
• annual contributions will be capped
• there will be no government contributions into the account.

With effect of 4 January 2010 the standard rate of VAT has increased from 17.5 per cent to 20 per cent.  For a step by step guide on how to change your the VAT rate in your Sage Accounts program, please following the links below:-

Standard VAT Accounting - click here

VAT Cash Accounting - click here

HMRC has issued an alert urging taxpayers filing a tax return online or via their accountant for the first time to get registered now, in good time before the 31 January deadline

For completing online for the first time, it is necessary to register for online filing at www.hmrc.gov.uk/online. A User ID will be immediately be received followed by an Activation Code in the post. Once an account is activated, the relevant tax return can be completed and the tax return submitted online.  This will also be the case if the Return is to be submitted by your accountant. 

HMRC advise that it’s important to register as early as possible as it can take up to seven working days to receive an Activation Code – so they are urging taxpayers to register in December, to avoid a last-minute rush in January. 

The coalition government have significantly changed the rules for Capital Allowances, which will see a reduction in the rates at which allowances can be claimed.  

From April 2012 the Annual Investment Allowance will reduce from its current level of £100,000 to £25,000.  The rate to be claimed on all other expenditure will decrease from 20% and 10% to 18% and 8%.  This will have a significant effect on the tax relief available for capital expenditure. 

If you are planning a major capital spend, now is the time to plan and discuss ways to ensure that you are able to maximise your claim for capital allowances. 

Care should also be taken when receiving your invoice for capital expenditure on buildings.  Capital allowances maybe available on integral features of the building (e.g. ventilation, electrical systems etc). 

Please feel free to contact us regarding any of the above. 

There are two VAT changes that will take place in January 2011.  These are the increase in the standard rate of VAT from 17.5 per cent to 20 per cent on 4 January 2011 and changes to the place of supply rules for cultural, artistic, sporting, scientific, educational, entertainment or similar activities supplied to relevant business customers on 1 January 2011.

The rate change only applies to the standard VAT rate - there are no changes to sales that are zero-rated or reduced-rated for VAT. Similarly, there are no changes to the VAT exemptions. Any sales made at these rates are unaffected by this change. 

HMRC have published a Business Brief which provides additional guidance on the changes - http://www.hmrc.gov.uk/briefs/vat/brief5210.htm . 

Please feel free to     contact us for any further advice. http://www.davidlyttle.co.uk/contactus.php

This release of Sage's award winning software sees a host of new features added which will save time, and help you to improve productivity. Sage 50 Payroll 2011 has been developed with your time in mind, in line with changing technology and current legal requirements.

Benefits include:

• Automatic, easy-to-find backups are taken each time you update your records
• Create or add payments, deductions, attachments or loans for employees. This can be done even when the payroll is being run
• Simply tick a box and specify the level of salary sacrifice for pensions. All amounts are then automatically calculated
• Incorporates an automatic version checker to ensure you are using the right version for the tax year you are processing
•  To set up new employees, simply use our new ‘Quick Link’. This can also be used for leavers

HMRC have recently issued a reminder to businesses about paying VAT by cheque.

From 1 April 2010 all VAT-registered traders with a turnover of £100,000 or more (exclusive of VAT), plus any newly registered traders (regardless of turnover) must submit their returns online and pay electronically.

As of 1 April 2010 all cheque payments sent to HMRC by post will be treated as being received by HMRC on the date when cleared funds reach HMRC's bank account - not the date when HMRC receive the cheque.

This means you must allow sufficient time for the payment to reach HMRC and clear into HMRC's bank account, no later than the due date shown on your VAT Return. A cheque takes three bank working days to clear. Bank working days are Monday to Friday excluding bank holidays.

The Minimum Wage is changing on the 1st October 2010. The new amounts are shown below

£5.93 per hour for those aged 21 or over
£4.92 per hour for those aged between 18 and 20
33.64 per hour for those aged 16 or 17
£2.50 per hour for apprentices meeting the qualifying conditions 

Businesses that have started trading after 22 June 2010 can take advantage of the Regional Employer National Insurance Holiday scheme to save up to £50,000 on employers' National Insurance payments. 

The scheme is managed by HM Revenues & Customs to support businesses starting up between 22 June 2010 and 05 September 2013. Qualifying businesses can benefit from a payment holiday on employer National Insurance Contributions (NICs) of £5,000 for the first ten employees, saving a potential £50,000.

Sage have launched Sage 50 Accounts Version 2011 with many new features including:-

Bank reconciliation

All the details you need are now on one printable screen. Complete customer and supplier receipts and refund without leaving the bank reconciliation to save you time.

Sage services

Find out exactly which Sage Services you can access with the new Services Toolbar in Sage 50 Accounts 2011. Update your Sage account details and access Sage software downloads.

Flat rate VAT

Set up and manage businesses on both invoice and cash-based flat-rate VAT schemes. Calculate the savings or losses to your business of flat-rate compared to standard VAT.

Charities

Manage your reporting by fund, produce Profit and Loss and Balance sheets without the need to export data. 

Web store integration

Integrate your web store with your accounts. Using Sage Pay you can create new customers and products, sales invoices and receipts. Payments are downloaded automatically from your web store, saving you time. 

George Osborne presented his first Budget on 22 June 2010.

The Chancellor had indicated that a tough but fair Budget was needed. Many of the announcements made affect the taxation of individuals and companies and these are in addition to recent tax changes already made by the previous government, such as the 50% tax rate and changes to the tax relief available for pension contributions, which have been retained.

I have listed below some of the main points which affect us, both as individuals and small businesses:-

Income Tax

The personal allowance for those aged under 65 will be increased by £1,000 to £7,475 from 2011/12.

The basic rate limit will be reduced so that higher rate taxpayers do not benefit from the increase in the personal allowance.

Corporation Tax

The main rate of Corporation Tax will be reduced by 1% to 27% for the financial year commencing 1 April 2011; and by 1% in each of the following years until it reaches 24%.

The small profits rate of Corporation Tax for profits up to £300,000 in a year will also be reduced by 1% to 20% from 1 April 2011.

Capital Allowances: Plant & Machinery

From April 2012, the Annual Investment Allowance (100% Capital Allowance) limit will be reduced from £100,000 to £25,000.

The rates of writing down allowances on plant and machinery will be reduced from 20% to 18% per annum for expenditure in the main rate pool and from 10% to 8% per annum for expenditure in the special rate pool. These rate changes will also take effect from April 2012.

Businesses will receive a 100% deduction for the cost of any new electric goods vehicles purchased from April 2010 for 5 years.

National Insurance

The primary and secondary thresholds, which are the points at which employees and employers start to pay Class 1 NIC are to be increased by £21 per week over indexation in 2011/12 and this will partly offset the 1% increase in employers and employees National Insurance already announcedby the previous government.

VAT

The standard rate of VAT will increase to 20% on 4 January 2011. Zero rated supplies, such as basic foodstuffs, children’s clothing and books; exempt supplies, such as education and health; and supplies subject to VAT at the reduced rate of 5%, such as domestic fuel and power, are not affected by this change.

Insurance Premium Tax

The standard rate of Insurance Premium Tax will increase by 1% to 6% from 4 January 2011.

New Businesses

New business set up outside of London and the South East of England after 22 June 2010 will be exempt from up to £5,000 of Employer NIC payments for each of the first 10 employees hired. Further details of this scheme are to be announced at a later stage.

Capital Gains Tax

From 23 June 2010 there will be two main rates of Capital Gains Tax, 18% and 28%, in place of the current single rate of 18%. The rate paid by individuals will depend upon whether the amount of their total taxable income is more or less than the basic rate income tax band. Gains qualifying for entrepreneurs relief will be taxed at a rate of 10% and the lifetime limit of gains qualifying for entrepreneurs relief will be raised to £5 million (from the previous figure of £2 million). Gains of trustees or personal representatives of deceased persons will be charged at 28%. The Annual Exemption remains at £10,100 and will continue to be indexed.

ISA Limits

From 6 April 2011, ISA limits will increase in line with the Retail Price Index (RPI) on an annual basis.

Requirement to Buy a Pension Annuity

From April 2011, the requirement to use a pension fund to purchase an annuity by age 75 will be removed and replaced by age 77.

Furnished Holiday Lettings

The plan to abolish the Furnished Holiday Lettings scheme has been scrapped and the scheme will continue in 2010/11 tax year for holiday letting activities.

Benefits & Tax Credits

Child Benefit will be frozen for the next 3 years.

Tax Credits for families with income over £40,000 will be reduced from April 2011, with further changes planned for 2012/13.

The baby element will be removed from the Child Tax Credit from April 2011 and from April 2012 the 50+ element will be removed from the Working Tax Credit.

The level of in-year rises in income that will be disregarded from calculations of tax credit entitlement from April 2011 will decrease from £25,000 to £10,000 and from April 2013 this will be reduced to £5,000.

From April 2012, the period for which a tax credit claim and certain changes in circumstances can be backdated will be reduced from 3 months to 1 month and a disregard of £2,500 will be introduced in the tax credit system for in-year falls in income.

Lone parents whose youngest child is over 5 will be moved onto Jobseekers Allowance rather than receiving Income Support from 2011/12 to help them to move back into work.

Bank Levy

A bank levy based on banks’ balance sheets will be introduced following consultation, effective from January 2011.

EnterpriseFinance Guarantee

The Enterprise Finance Guarantee will be increased by £200 million to support additional lending of up to £700 million for small businesses until 31 March 2011.

Disclaimer:-

This summary is published for information purposes only. It provides only a brief overview of the main proposals announced by the Chancellor in his Budget statement, 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 within this document can be accepted by the authors or the company itself.  

With effect from 2^nd November 2009 Stephen McGeagh has been admitted as a Partner to David Lyttle & Co.

 Stephen is a graduate of the University of Ulster, a member of the Institute of Chartered Accountants in Ireland and the Chartered Institute of Taxation. 

 He has been employed with David Lyttle & Co since April 2005.  Prior to that he completed his ICAI training contract with PricewaterhouseCoopers. 

Since joining David Lyttle & Co, Stephen has worked with many clients in the areas of accounts, management accounts, business planning and the implementation and training for Sage Accounts Systems, specialising in Management Reporting.  He has also dealt extensively with the Revenue Authorities in the UK and ROI, particularly within the construction industry. 

Speaking about the appointment David Lyttle said:-

 "I believe that Stephen’s admission as a partner further strengthens our ability to work with you, our clients, to improve your business. 

 Since the practice was formed in 1993, most of the growth has come from new clients referred to us by our existing clients and business contacts, like you, and for this we are deeply grateful.  We thank you for your custom over these years and look forward to many more.

 This appointment leaves our practice well placed to progress to its next phase and we look forward to working with you in the years to come."

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