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Draft Finance Bill 2014 to be Published Tuesday 10 December Print E-mail
HMRC
Written by Lee Sharpe   
Monday, 09 December 2013 00:00

HMRC has advised that draft clauses of the 2014 Finance Bill will be published on Tuesday 10 December, on HMRC's section of the .GOV website

 
TaxationWeb Update on Autumn Statement 2013 Print E-mail
HMRC
Written by Lee Sharpe   
Thursday, 05 December 2013 00:00

The 5thof December 2013 may well linger in the public consciousness for reason more momentous than the Chancellor’s latest Autumn Statement. But to the matter at hand.

With party politics clearly much in his mind, the Chancellor had a difficult balancing act to perform with this year’s Autumn Statement: try to woo voters with some popular measures but avoid giving too much away or they’ll relax and let someone else in, come the day.

  1. Revival (of sorts) of the transferable Married Couples’ Allowance - £1,000 of one spouse’s Personal Allowance from April 2015 but worth no more than £200 in real terms because it will not be available if either spouse (or civil partner) is a Higher Rate taxpayer. Nor is it really news because it was formally announced in the Conservative Party Conference in October.
  2. Personal Allowance to be £10,000 from April 2014. Although it would not be a great surprise if it were increased again in the 2014 Budget as further evidence of the success of the Chancellor’s economic policy.
  3. Non-resident owners of residential property will be exposed to Capital Gains Tax on future capital gains on disposals from April 2015. “Future gains” suggests that there will be a baseline date and gains attributable to prior ownership periods will not be charged. Which should avoid a cataclysmic rush to sell before April 2015. Foreign ownership of expensive London property is much publicised but it really so widespread as to warrant so specific an intervention?
  4. Property owners have long benefited from the generous “Only or Main Residence” tax relief on the sale of their former home in that the last 36 months’ ownership are almost always exempt from Capital Gains Tax; this is set to change and, from April 2014 this period will be halved to just 18 months.While there are many property owners who have benefited from the regime as it currently stands, the provision was aimed squarely at people who were struggling to sell their old home in a difficult market. Perhaps the Chancellor reckons homeowners no longer need such help. Or perhaps he is making one or two surreptitious changes to encourage property sales over the next year or so, to lessen the chance of upward pressure on house prices from the “Help to Buy” Scheme forcing an embarrassing U-turn on his flagship policy. It might be helpful if the rules for employment-related absences were relaxed to help those who are obliged to work away from home and ultimately to sell up and relocate.
  5. Small Business Rate Relief will be extended again, through to 2015.  From April next year, it will also remain available for one year, when a business takes on an additional property. In addition, there will be new discounts for businesses occupying some retail and “food and drink” premises, and extra relief for those occupying retail property that has been standing empty for a year or more, from April 2014. These last two measures have a two-year eligibility period from 1 April 2014. Perhaps more importantly, the government has committed to resolve 95% of the many outstanding rateable value appeals by July 2015.
  6. Employers’ NIC will be abolished for wages paid to under-21s from April 2015, up to the Higher Rate threshold of £813 per week. This should serve as a useful boost to encourage recruitment of the younger end of the workforce spectrum. Although it does seem a little at odds with the general policy on age discrimination.  
  7. The government is threatening to continue its sterling work on anti-avoidance and evasion. While it may be fair for HMRC to insist on disputed tax being paid “up front” in cases where it feels it has already successfully challenged the scheme in point, a particularly unsavoury further measure is that there may soon be special penalties for those who refuse to back down from tribunal, (when HMRC has won a similar case), and then lose. The odds seem unfairly stacked against the taxpayer. But at least the government’s appetite for further meddling with the “loans to participators” regime appears to have diminished.
  8. One goal that appears to have lost its appeal is simplification. I noticed it in only two places:
    1. “Simplifying” the BPRA regime to deter avoidance schemes …trying to avoid tax on a measure designed to… …reduce tax
    2. “Simplifying” trusts apparently includes new measures to add trust income to capital (at least when it comes to calculating the 10-year anniversary charge) if it hasn’t been distributed after 5 years. With simplifications like these… 
 
Free Help for New Businesses from HMRC on Small Business Saturday Print E-mail
Business Tax
Written by HM Revenue & Customs   
Tuesday, 26 November 2013 00:00

Business start-ups can take part in four free live tax webinars run by HM Revenue and Customs (HMRC) on 7 December as part of Small Business Saturday.

The day has been set up as a chance for small businesses to promote themselves and generate trade.

HMRC Start-up Saturday webinar programme, between 10am and 5pm, is aimed at new and prospective businesses. Each live webinar lasts an hour and gives the opportunity for questions.

There are 4.8 million small businesses in the UK and more than 14 million people work in them.

The HMRC webinars are:

 

Self-Employment and HMRC – What You Need to Know

10am to 11am Saturday 7 December

This session concentrates on the information sole traders or partnerships need when they start. It covers registration, National Insurance, Self Assessment and record keeping.

Register for Self-Employment webinar

 

Company Directors – Your Responsibilities to HMRC

12pm to 1pm Saturday 7 December

This webinar is aimed at businesses considering setting up as limited companies. It provides the basics on incorporation and registration with Companies House and HMRC. It also looks at when companies become an employer, and the timetable for paying Corporation Tax online. 

Register for Company Directors webinar

 

Business Expenses for the Self-Employed

2pm to 4pm Saturday 7 December

Sole traders or partnerships need to know which day-to-day expenses they are able to claim for tax relief. They also need to start keeping records of these as soon as the business starts. This webinar provides an overview of the most common expenses, including motoring costs.

Register for Business Expenses webinar

 

VAT Awareness

4pm to 5pm Saturday 7 December

New businesses are often worried about VAT, what it is and when they need to register. This webinar answers these questions and explains in simple terms how VAT works.

Register for VAT Awareness webinar

 

More information about Small Business Saturday:

Twitter  @SmallBizSatUK  

 
VAT and Barter Transactions Print E-mail
VAT & Excise Duties
Written by Rob McCann   
Tuesday, 26 November 2013 00:00

“Cashbacks” and trade-ins are not the same thing for VAT, as Rob McCann of the VAT People explains.

It is quite common for businesses to exchange goods or services with each other. This is sometimes an exchange of goods or services with a like for like value, or sometimes payment is made for a supply by part cash payment and part reciprocal services/goods. It is equally common for the same businesses to assume that there are no VAT consequences for such an arrangement as there is no money changing hands, however, this is not usually the case. This is highlighted by the recent case of AV Concepts, which involved a supply of goods in return for a cash payment and obsolete goods. The hearing should have been a fairly simple case involving a dispute with HMRC about VAT of only just over £1,000, however it looked at some complex issues relating to how the value of a supply is determined when a barter transaction occurs.

The business supplied technically advanced white boards to schools, which teachers could write on and print off notes for the pupils. The boards were almost invariably supplied to the schools in return for cash and obsolete projectors or other equipment. HMRC allow a discounted amount to be used where a fixed allowance is offered, where amongst other points, no attempt is made to value the traded-in goods and there is no reason for the goods to be accepted other than for trade promotion (which would not apply where prior arrangements have been made for the traded-in goods to be reconditioned or sold). The business had sought to rely on this policy, however, the discounts it offered were not fixed amounts and the obsolete equipment was subsequently serviced and sold on eBay. In addition, the new equipment was not actually sold to the schools but sold to a lease business BNP Paribas who then leased it to the school and it was not clear if any schools had actually paid the business cash for the supply.

The dispute with HMRC related to establishing the value of the supply by AV Concepts, that is :

  • were the white boards supplied for cash and barter goods (the obsolete equipment) that AV Concepts might later sell? If so VAT would be due on the total cash and barter goods value, or
  • if the obsolete item had no value and the business was offering a discount on the sale price of the white board, would the VAT be due on the cash payment received?

The chairman ruled that the value of the supply was established by the contract price of the item supplied by AV Concepts. This meant that if the sales price had been £100 and it was reduced to £90 when items were taken in part exchange, the non monetary value of the part exchange items was £10. VAT therefore should have been paid on the total of the cash element of the consideration and the value of the part-exchange item. VAT would therefore be due on the £100 total consideration received by AV Concepts.

The VAT People’s Rob McCann commented, “The well-known Elida Gibbs case [Elida Gibbs Ltd v C & E Commissioners] demonstrated that retailers may reduce their VAT when “cashback” discounts are offered, however in this case the tribunal was satisfied that this was not a discount, but a combined sale for cash and goods for value – and as such, the business was required to account for VAT on both the cash consideration and the goods received in exchange.”

 
HMRC Warning: Up to 6 Weeks to get an SA Tax Reference Print E-mail
HMRC
Written by Lee Sharpe   
Tuesday, 26 November 2013 00:00

HMRC has published Central Agent Authorisation Team Turnaround Times, warning that posted 64-8s should be sent to HMRC no later than 23 December, and applications for a Self Assessment registration should be sent by 20 December, so as to give CAAT sufficient time to process and/or issue the tax reference necessary in order to make a valid tax return online.

This is, of course, one of the busiest times of the year for agents in the run up to the filing deadline of 31 January.

TaxationWeb’s Mark McLaughlin observed,

HMRC is saying it will take up to 2 weeks to process an online agent authorisation, but up to 5 weeks to process the alternative paper 64-8. I am struggling to see why it should take an extra three weeks to process what is essentially the same information and a relatively simple form, unless perhaps HMRC has set up separate teams for each process, and expects there to be many more paper forms. If that is the case, it seems quite unfair to penalise paper registrations, particularly when agents are trying to help people to get their tax returns in on time – something which HMRC has frequently said is much more important to them than raising penalties.”

 
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