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The Government has confirmed that with effect from 1 April 2007, the threshold under which businesses may elect to use the cash accounting scheme (CAS) for VAT is to be raised to £1.35 million.Broadly, the CAS is intended to permit small businesses to account for VAT by reference to payments made and received, rather than the time when supplies are made and received. It is currently available to businesses with annual taxable turnover up to £660,000 (from 1 April 2004). Once in the scheme, ... Continue Reading

The Low Incomes Tax Reform Group (LITRG) is pressing HMRC to compensate pensioners who are continuing to overpay tax through incorrect application of PAYE codes.From April 2007, tax on retirement annuities will be collected via PAYE. LITRG believes that if handled properly, this would have made life simpler for pensioners on low incomes, but because of inefficient systems within HMRC, the switch is beginning to look like a shambles. LITRG has been campaigning for many years, for deduction of tax ... Continue Reading

Further to announcements made in the 2006 Pre-Budget Report, the Government has published details of plans to tackle perceived tax and NIC avoidance by managed service companies (MSCs).Draft legislation has been issued for consultation, along with the consultation document itself entitled Tackling Managed Service Companies. According to the guidance, personal service  companies (i.e. those concerned with the existing "IR35" rules) will not be within the scope of these measures - the ... Continue Reading

The new advisory fuel rates for company car drivers, which HMRC originally announced would be effective from 1 February 2007, were published at such short notice that they have now agreed a transitional period for employers to implement the necessary changes to their expense systems.Where employers have practical difficulties implementing the new lower rates they can continue to use the older higher rates for a further month, i.e. to 28 February 2007, without having to take account of the income ... Continue Reading

A quick guide to recent additions to the HM Revenue & Customs website.Week ending 2 February What’s new? HMRC Brief 06/07 - VAT: Changes to the exemption for medical services from 1 May 2007VAT Notice 701/57 Health Professionals - Revised notice January 2007, which cancels and replaces Notice 701/57 (March 2002)Summary of responses to the Government’s consultation document VAT: A review of the scope of the exemption for medical servicesRegulatory Impact Assessment : VAT: Liability ... Continue Reading

Former Tax Inspector James Bailey provides some pointers for taxpayers concerned about the potential liability on their homes.  The family home and the 'nil rate band' For most people, the family home is their most valuable asset. Unfortunately, it is also often the asset that admits them to what was once a very exclusive club – the Inheritance Tax club.Inheritance Tax (“IHT”) is charged on a person’s “estate” (broadly, assets less liabilities) ... Continue Reading

Steve Allen, Director of VAT Solutions (UK) Ltd, describes the approach for partially exempt businesses when reclaiming input VAT.  VAT recoveryThere have been rumours that there has been a recent change that has made it more difficult to recover VAT.  This seems to be based on changes in the Budget to the authorisation process for partial exemption special methods.So what exactly is partial exemption, and what is a special method? Input VAT cannot normally be recovered on the costs associated ... Continue Reading

Sarah Laing, News Editor of TaxationWeb, outlines a useful tax relief for individuals renting accommodation in their own homes.About the relief The Rent-a-room scheme is an optional exemption scheme that lets people receive a certain amount of tax-free ‘gross’ income (receipts before expenses) from renting furnished accommodation in your only or main home. The current annual exemption is £4,250 a year (£2,125 if letting jointly).Individuals can choose to take advantage ... Continue Reading

Online filing of self assessment tax returns increased this year by 40%, according to statistics released today (2 February 2007) by HM Revenue & Customs (HMRC).According to HMRC, 150,000 self-assessment returns were filed in the 24 hour period running up to the midnight deadline on Wednesday 31st January. During the filing peak the HMRC website was processing more than 6,000 returns each hour - more than a hundred every minute, almost two per second - as almost 2.9 million (2,895,482) people ... Continue Reading

Despite claims that they are illegal, the revised rates of Air Passenger Duty (APD) announced in the 2006 Pre-Budget Report came into force today (1 February 2007).According to the Association of Chartered Certified Accountants (ACCA), a legal expert has claimed that the revised rates of APD are not legal until they are approved in the Finance Bill, due to be published in the spring. However, many air passengers are already being asked to make payment at airports, over the web or automatically ... Continue Reading