Contractor accountants are warned that HMRC will be carrying out upgrade work to its website this weekend.

The Revenue website was down at the beginning of last month to enable essential maintenance and upgrade work. However, it now appears that thus work was more complicated than expected.

Luckily the work will not affect employers who need to submit their payroll end of year returns before the May 19 deadline. Corporation tax, self-assessment and CIS will not be affected either, but it will not be possible to register for HMRC’s online VAT service while the upgrade work is taking place.

HMRC likes to give taxpayers as much notice as possible of any proposed disruption to its services.

Although the VAT online registration service will be offline from 16:00 on Saturday until 01:00 on Sunday morning, businesses will still be able to file their VAT returns. Anyone who wants to enrol for VAT Online during the downtime will be able to do so through the Government Gateway. http://www.gateway.gov.uk/

The VAT on e-services page will also be unavailable for 10 minutes while the upgrade takes place. HMRC has not revealed which ten minutes.

The other services that will be affected are obscure ones such as Electronic Binding Tariff Information and the Rebated Oils Enquiry Service.

It’s obviously important for HMRC to keep it’s services up-to-date and weekends are probably the most sensible time to do upgrades and maintenance. Let’s hope that everything goes to plan and the work doesn’t cause widespread disruption.

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Most contractor accountants probably agreed with the FPB when it criticised the Revenue for closing down its online services throughout the Easter holidays.

Just before the holiday, the Forum of Private Business said the shutdown showed HMRC did not understand the needs of businesses. The Revenue only announced it would close down the entire online network a few days before the 2011-12 financial year came to an end. Its IT systems were to be out of action throughout the holiday so that upgrade and maintenance work could be carried out.

Although the majority of services should have been back online by 6am on the 10th April, some would not be available until the 11th.

This shutdown affected anybody wanting to file PAYE, Self Assessment, Corporation Tax and CIS returns, as well as those submitting stamp taxes, pension schemes and Child Trust Funds.

The online VAT filing service remained online until midnight on the official deadline date and was then taken offline for a few days.

A Revenue spokesman said systems had to be taken down so the department could ready them for the new tax year and more scheduled maintenance might need to take place in October.

Phil Orford, the FPB’s chief executive, said the work took place at a totally inappropriate time and businesses will struggle to understand why HMRC is upgrading its systems at such a critical time in the tax calendar. The fact that the Revenue only gave businesses a few days notice of the shutdown showed it did not understand their needs.

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It’s payroll year-end time again and some accountants will have a list of key tasks that need to complete for their clients.

HMRC has published a checklist of all the various PAYE deadlines for this year on its website. The first important deadline is April 19th. This is the date by which postal payments of outstanding PAYE and Class 1 national insurance contributions must reach HMRC.

People who use electronic payments must make sure their payment reaches HMRC’s bank account by the 22nd of April. However, HMRC has warned that because the 22nd falls on a Sunday this year, payment will need to be in its account by the 20th unless your bank operates a faster payments system that allows transactions to clear on Sundays.

The next date for the diary is the 19th of May. This is the deadline for submitting Employer Annual Return P14 and P35 forms. Employees should be given their P60 form no later than the last day of May.

The majority of employers are required to file their end of year returns online. Similar to the system of online self-assessment filing, the first step of the process is to register on the Revenue’s website. This needs to be done at least a week before the deadline date in order to leave enough time for the activation code to arrive.

People who use accounting software to process their payroll will find that their program does most of the work for them. Employers should already have received information about any changes they need to implement to their payroll package and it would be a good idea to check these over as soon as possible.

The major software providers, such as Sage, keep their telephone support lines open longer during the payroll year-end period but even so, the lines are often extremely busy and there can be problems getting through to somebody if you have a problem.

Don’t let yourself get caught out at the last minute. Start preparing for payroll year-end as soon as possible!

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According to a recently published report by Unbiased.co.uk, British taxpayers will pay an average £421 too much tax this year.

Contractor accountants will want to make sure they are not included in the 85% of Brits who gift a total of £12.6 billion to the Revenue in the form of unnecessary tax. Over the last ten years, British taxpayers have created a tax waste mountain worth £88.6 billion.

Unbiased.co.uk’s report discovered that £7.26 billion in income-related tax credits will go unclaimed and people failing to claim tax relief on their pension contributions will gift a further £2.45 billion to the Treasury. People who filed their self-assessment tax returns late will contribute £307 million to HMRC’s coffers, while about £83 million will be lost in unclaimed personal allowances and income tax.

The website’s study also discovered that 85% of taxpayers have taken no action to reduce their tax bill in the last 12 months. Half of them believe there is nothing more they could do to make themselves more tax efficient.

Of the 15% that have done something to reduce their tax liability, 40% have made changes to the way they invest or save their money and 22% said they had made a purchase or investment specifically as a tax efficiency measure.

Karen Barrett, Unbiased.co.uk’s chief executive, said British taxpayers should be devoting some time towards ensuring they are as tax efficient as possible. Of those people who have already done so, about 25% of them made use of the services of an accountant or other professional adviser, she added.

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The government had hoped to raise additional revenue when it introduced the higher rate 50p tax rate, but it now transpires that the move is having the opposite effect.

In January this year, income tax receipts only increased by 2.4% year-on-year, compared to a 9.3% increase in the take from corporation tax. Recent data from HMRC indicates that the wealthy are turning to contractor accountants to help them with tax planning. Revenue from people submitting self-assessment tax returns totalled about £10 billion in January, down £500 from the corresponding month last year.

Francesca Lagerberg, Grant Thornton’s head of tax policy, explained that history shows that higher tax rates frequently fail to rake in as much as expected because they trigger a change in behaviour. Business owners, for example, may have speeded up their dividend payments before the tax rate changed and it may be some time before they pay another large dividend.

The Treasury now says it will publish figures showing the 50% tax take within three months, but this is later than originally expected.

Richard Mannion from Smith and Williamson said HMRC should already know how many people paid tax at the 50% rate simply by looking at the tax returns and it should be easy to produce the requisite figures.

The 50p tax rate is only meant to be a temporary measure and it will probably be removed before the end of the current parliamentary term in 2015. According to Stephen Herring from BDO, the top rate is deterring foreign companies from setting up in the UK. The UK is making good progress reducing the rate of corporation tax but that good work is being counteracted by an uncompetitive high rate of income tax.

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Contractor accountants may want to inform their clients that HMRC has extended the final deadline for appealing against self-assessment late filing penalties until the 31st of March.

Under normal circumstances, recipients of penalty notices are only allowed a 30 day window in which to appeal, but this year the Revenue has decided to make an exception and grant the extension because it believes its phone lines are going to be unusually busy over the next few weeks.

As well as appealing by phone, taxpayers can lodge an appeal against their penalty in writing, again before the March 31st deadline. If the taxpayer can show a reason why he should not be included in the income tax self-assessment system, the Revenue will cancel the fine.

HMRC last week once again stressed the importance of submitting tax returns on time. A spokesman for the department explained that the longer the delay, the higher the penalty.

Taxpayers who failed to submit by the 2nd of February will receive an automatic £100 penalty. If the Revenue is still waiting for the return after three months, an additional penalty of £10 a day will be imposed – up to a maximum of 90 days. After six months, the taxpayer will face another penalty and once a return is 12 months overdue, yet another fine will be levied.

Anyone who believes they have received a penalty notice in error may want to contact an accountant for advice.

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Contractor accountants who missed the deadline for filing their self-assessment tax return are likely to receive a penalty notice from HMRC in the next few days.

HMRC said it would start sending out penalty notices on the 17^th of February to inform late filers that they need to pay an automatic penalty of £100. The Revenue has implemented a new penalty structure this year that could lead to fines of up to £1,600 for people who persistently refuse to file.

However, the ICAEW has been informed that HMRC will cancel tax returns and remove penalties from taxpayers who should not be included in the self-assessment system. Taxpayers who think they are not liable to file self-assessment should call the HMRC helpline and answer a few questions to establish their tax status.

The new penalty system has been widely publicised and there is really no excuse for missing this year’s deadline, especially as it was extended by 2 days due to industrial action at Revenue call centres. For the first time, HMRC said people would face the £100 penalty even if they had no tax to pay. It appears that the government has now had a change of heart and is prepared to remove those individuals from its penalty system.

Earlier this month the Revenue announced it was to clamp down on people who failed to file, especially those who should pay higher rate tax. It is therefore vital that anyone who believes they should not be included in self-assessment contacts HMRC and gets their name removed as soon as possible.

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HMRC raked in an additional £4.06 billion through its investigations into corporation tax last year.

The Large Business Service compliance unit has doubled the amount it raised in just five years. According to McGrigors this proves that the coalition is not giving into the needs of big business as some people have implied.

Jason Collins, a partner at the law firm, the Revenue is trying to get as much money as they can from investigations into big corporations. UK Uncut and other tax lobbying groups in the UK claim the government has gone soft on large businesses, but these figures prove this is not true.

The Treasury is trying to make Britain a more attractive place for companies to operate in by reducing the rate of corporation tax. However, big businesses might think twice about setting up here if they believe HMRC has a strategy to squeeze large corporations dry, he added.

Meanwhile, the LITRG has issued guidance so that taxpayers can check their new PAYE code is correct.

By early March, HMRC will have issued about 18 million coding notices to pensioners and employees informing them of their PAYE code for the tax year beginning in April.

There are sections in the guide explaining the basics of PAYE codes, how to check your code online if you are a self-assessment taxpayer and how to contact HMRC by phone if you have problems.

There have been problems with Revenue coding notices over the last couple of years and every taxpayer should check their code carefully and query anything they do not understand. Failure to do so could mean you pay more or less tax than you should do and this can lead to problems further down the line.

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A record number of people met HMRC’s self-assessment deadline this year.

Official figures from the Revenue showed that 90.4% of taxpayers – 9.45 million people, filed before the deadline this year. Of that figure, 7.65 million used HMRC’s online filing facility.

The Exchequer Secretary to the Treasury, David Gauke, said he was delighted to see an increase in the number of people filing online and remarked that this proves the system is quick, easy and secure. He went on to explain that HMRC is interested in returns rather than penalties and the 2 day extension will have prevented taxpayers from receiving an unfair penalty if they were unable to contact the Revenue on the 31^st of January.

The Revenue took the unusual step of extending the deadline this year due to industrial action by the PCS that threatened to disrupt HMRC call centres.

HMRC said the self-assessment department witnessed a “rush hour” between 4 and 5 pm on the 31^st when it received a total of 37,460 returns. More than 200,000 people did take advantage of the extended deadline. 87,000 returns were received on February 1^st and 120,000 on the 2^nd.

Despite the record number of returns received before the filing deadline, about a million people will still face an automatic £100 penalty for non-compliance. Taxpayers receiving one of these penalty notices will need to prove they had a “reasonable excuse” for the delay if they want the fine to be quashed.

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Today really is the last day that you can file their self-assessment returns without receiving a late filing penalty from HMRC.

Normally, returns should be filed by midnight on January 31^st, but this year the Revenue extended the deadline to February 2^nd because members of the Public and Commercial Services Union were taking industrial action on the 31^st and members of the public would struggle to get through to HMRC call centres.

The Union hailed the strike as a success, saying 14,500 members of staff did not report for work. Volunteers staffed revenue enquiry centres and there were huge backlogs at call centres.

At first glance it seems a sensible move for HMRC to extend the filing deadline. It gave a bit of extra time to the estimated 90,000 individuals who were expected to phone asking for help with their tax returns on Tuesday. And these people would have swamped the Revenue will letters of complaint if they had been unable to do and as a result, received an automatic fine.

However, the extension will not help those people who had not already applied for the unique reference number they needed to enable them to complete their return online. This is sent out by mail and can take up to 7 days from date of application to arrive.

HMRC has been having major problems with their admin system over recent months. It takes weeks, sometimes months for people to get a written response to their queries, so a further deluge of mail would have swamped an already hard-pressed department.

The extension will probably will be seen as a compromise that should suit everybody. The extension has been widely publicised so there is really no excuse for filing late. Taxpayers have been given an extra couple of days to file, but the Revenue will no doubt still rake in the fines from people who had not received their URN and those who purposely ignore their filing requirements.

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January, and the vexed question of self-assessment rears its head again. My accountant friends have said good bye to the family until February and closeted themselves with quill pens and envelopes of receipts. Others have burned the midnight oil trying to complete their online returns. Still others – like me for example – pay the bill to the accountant, send off a small corrective payment to HMRC and wonder what all the fuss is about.

In my case that cheque is for precisely eighty pence. Can’t pay that online so a cheque it will have to be. Which will cost the drones in HMRC around £30 to process but basic economics was never really their strong point. And it’s only outstanding in the first place because last year I ignored a similarly trivial underpayment and this year got rightly stung for the interest.

Meanwhile, away from the distractions of the self-assessment merry-go-round, a rather more invidious tax change has crept in, largely unannounced and unremarked. As of now, there is a limit on how much cash you can take out when closing your company under the provisions of Extra-Statutory Concession 16 of just £25,000. Anything over that attracts Capital Gains tax at the relevant rate. Great. More taxes you never knew you owed.

There is a way around it; you simply have to liquidate your company. That means using the services of a liquidator who, incidentally, can’t be your current accountant. And it seems that such a service comes in at around seven grand a pop. Until, that is, Liquidators-R-Us get up and running and the cost comes down, so defeating the whole purpose.

But if you think about it, if the idea is to increase the CGT take from closing companies, why leave the Liquidation loophole in the first place? Joined-up thinking? Not at all, merely another excuse to get taxes imposed by relying on people not knowing the detail.

But what really irritates me about this is the underlying assumption by HMRC that a company’s sole purpose is to grow into an eternal corporate body and any that don’t are not to be taken seriously. There is no acceptance or understanding that if you are working in a world where income is variable and frequently non-existent, using a company to store and distribute your income evenly across the year is the best way to do it. And when you finally stop grinding away at the coal face you want to get your money back as efficiently as you can while paying whatever levies are due to the Treasury, not to some pointless corporate leech.

It’s exactly the same mindset that got us IR35 in the first place. We have companies. We don’t have 300 employees and a pile of plant and machinery so we must be cheating the taxman, else why have the company? Well there’s S44-47 for one thing and the idiot tax liability transfer rules it embodies. But hey, that’s no excuse.

I have to conclude that the increasingly rapacious predations of HMRC are the single biggest inhibitor to the recovery we can think of. It’s all very well the Government saying we need a vibrant and flexible workforce, and we’d love to give them one, but getting constantly cut off at the knees by a body that has absolutely no experience or expertise in the real world is getting more than a little wearing.

And finally it’s the next meeting of the infamous IR35 Forum soon. There is a hope that they will come up with a final answer to the IR35 question. Personally, I’m not hopeful. Can’t imagine why…

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Whilst the majority of people, including contractor accountants, were tucking into their Christmas turkey, more than a thousand people were otherwise occupied, filing their online self-assessment income tax returns.

Data from HMRC also reveals that 102 people celebrated the dawning of 2012 submitting their tax returns. The fact that New Year’s Eve fell on a Saturday may explain why a total of 11,648 returns were filed that day, while 8,935 taxpayers decided to fulfil their obligations to the taxman on January the first.

Time is running out for people who have not yet taken the plunge and logged on to the Revenue’s self-assessment website. The deadline for both submission and payment is on January 31^st and anyone who misses it will receive an automatic £100 penalty, even if they do not owe any tax.

Taxpayers who have not used the online system in the past are reminded of the need to register in plenty of time as it can take up to 7 days for their authorisation code to arrive. Furthermore, as the deadline approaches and more and more people log onto HMRC’s website, there is a risk of the system becoming overloaded.

Anyone who has problems completing their tax return should contact an accountant as soon as possible or get in touch with HMRC’s telephone helpline on 0845-900-0444.

Self-employed individuals are also reminded that Class 2 National Insurance contributions for the 26 weeks ending the eighth of October also fall due on the last day of January.

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