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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You may have been following the recent tax case involving HMRC and specialist recruiter Reed.

The long running battle revolved around the travel and related expenses incurred by temporary job candidates.

Reed’s agents made expenses payments to about half a million temps between 1998 and 2006. The daily “allowance” covered travel expenses up to £11.45 and up to £6 for lunch. These were supposed to be included in a salary sacrifice arrangement, but it turned out that no such agreement covered the period in question.

HMRC argued that the temporary workers were engaged in job-by-job contracts and not a continuous contract as claimed by Reed.

The recent tax tribunal judgement implies that Reed manipulated salary figures to make it look as if a part had been sacrificed when in fact the temps actually received their full payment. The tax tribunal also said that although there were signs that Reed received initial approval for their scheme, there may have been a ‘cock-up’ at HMRC and it was entitled to claim backdated tax.

Reed’s problem is that it is unable to reclaim the total of £158 million in National Insurance and income tax from the temporary workers. Reed Global, the owner of the company, is disputing the figure and intends to appeal the tribunal’s decision and ask for a judicial review into the treatment it has received from the Revenue.

However, the tribunal ruling sounded emphatic. The judges said they were satisfied that the allowances constituted Chapter 1 earnings, and even if that was incorrect, they classed as Chapter 3 earnings that should have been declared for tax and NICs.

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Deputy Prime Minister, Nick Clegg, hinted recently that tax breaks may be available to firms that offer employee share ownership schemes.

Mr Clegg said the government intends to reform the tax system in a way that will encourage employee ownership. As well as tax breaks for employers, the government is considering whether employees should have the right to ask for shares in the firm they work for.

The deputy PM went on to urge companies to follow the example of John Lewis. The high street department store is owned by its employees, all of whom get a share of the profits. The UK needs more people to own a stake in the firm they work for, he continued, and it has been proven that companies with employee ownership schemes often perform better.

However, employee share ownership schemes have little benefit for the vast majority of private companies, according to Sharon Bedford from James Cowper. She said staff might face higher tax charges as a result and from the firm’s perspective, employee share ownership is a tax nightmare.

She went on to explain that Gordon Brown made complex changes to the tax rules in 2003 that could leave employees facing an upfront charge as soon as they receive company shares. It’s also unlikely that share ownership would give them a greater say in the way the company is run.

Both David Cameron and Ed Miliband have called for a more responsible capitalist society in the UK. But the question is, does the coalition have courage to make the necessary changes?

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IT contractor accountants may be interested to learn that HMRC launched an alternative disputes resolution pilot scheme for SMEs in North Wales and the North West of England last week.

Under the pilot, disputes arising from Revenue compliance checks will go in front of independent facilitators for resolution. The idea being to reduce the cost of the dispute for both sides and avoid a lengthy tribunal hearing.

A pilot scheme aimed at diverting cases from a tax tribunal last year was successful in at least partially solving 60% of the disputes it handled.

The assistant director for local compliance at the Revenue, Jim Stevenson, explained that communication problems often exist between HMRC and the taxpayer. The facilitator will make sure both parties fully understand the facts and arguments surrounding the dispute. The aim is to get a satisfactory resolution to the problem, and if that is not possible, to solve as many issues as possible.

John Cassidy, a PKF tax partner, said there needs to be a guarantee that the facilitators are independent. SMEs will avoid the ADR unless they can be assured they will receive a fair hearing. He went on to suggest that entrepreneurs may have more faith in the scheme if the SME’s tax advisers mediated the resolution procedure rather than HMRC facilitators.

The CIOT’s Andrew Gotch believes the pilot is essential to the overall success of ADR and urged SMEs to take advantage of it if possible. He stressed that the process is voluntary and neither side will come out worse off. In fact, evidence suggest that participants emerge with either a resolution or at least a better understanding of the other side’s position.

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Accountants for contractors might be pleased to learn that HMRC is to review the way it conducts business records checks after MPs and small business groups criticised the initiative.

As part of the initiative, the Revenue will inspect the records of as many as 20,000 small businesses. Any that are found to be keeping inadequate records could be fined up to £3,000.

John Walker, the chairman of the FSB, has criticised the scheme saying that HMRC is still intending to proceed despite worsening economic prospects. He explained that he has expressed his concerns to HMRC on a number of occasions, but although the government says it wants to help small firms, the reality appears very different.

The scheme has also been criticised by Tory MP Priti Patel who said it was persecuting small businesses at a time when they are fighting for survival. She says HMRC is acting diabolically towards small firms when they blatantly let large organisations off paying millions of pounds.

Backbench Tory Anne-Marie Morris pointed out that HMRC used to take a sympathetic view of minor errors, but the ethos has now completely changed and businesses are treated the same regardless of size and resources.

A spokesman for the Revenue has now admitted that the project has caused a lot of concern within the tax profession and would have benefited from more detailed input from tax professionals. HMRC will now have a strategic review of the business records checks scheme, in consultation with representative and professional bodies, he added.

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Contractor accountants may be interested to learn that HMRC has extended the Liechtenstein Agreement in a further attempt to crackdown on tax evasion. The deadline for both businesses and individuals to come clean under the Liechtenstein Disclose Facility is now the 31^st March 2012.

The head of the negotiating team at HMRC, Andy Cole, said the ground-breaking agreement would ensure that British taxpayers declare domestic tax obligations on investments held in Liechtenstein.

He went on to explain that the Principality and the Revenue are committed to making sure that taxpayers with undeclared assets fulfil the requirements of HMRC as well as the Liechtenstein financial centres. Furthermore, the LDF ensures that UK taxpayers can disclose previously undeclared tax liabilities and be included in the British tax system.

In related news, HMRC has warned companies and individuals that they will be tracked down if the Revenue suspects they have been indulging in tax avoidance.

Recently, a family of five received jail sentences after an HMRC investigation uncovered a money laundering and tax fraud worth several million pounds.

HMRC’s assistant director of criminal investigation, Simon De Kayne, said the William family funded its luxury lifestyle at the expense of the British taxpayer.

The Revenue will continue to chase anyone suspected of being involved in this sort of criminal behaviour and they will find themselves in court. HMRC is now working to reclaim the monies fraudulently acquired by the family, he added.

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UK Uncut has started formal legal proceedings in a bid to reverse HMRC’s decision to let Goldman Sachs, the investment bank, off paying up to £20 million interest on its tax bill.

A few days before Christmas, the action group logged an application in the administrative court calling for a judicial review and claiming that the Revenue has tried to avoid giving details of the deal to the Public Accounts Committee.

The Revenue has admitted that a mistake was made in the agreement. According to a National Audit Office estimate, the Exchequer lost between £5 million and £8 million because of the error. However, an HMRC whistleblower said the loss was nearer to £20 million.

UK Uncut Legal Action released a statement saying a judicial review to reverse the decision was in the public interest and Goldman Sachs should be forced to reimburse UK taxpayers with the £20 million.

Law firm Leigh Day & Co is supporting UK Uncut and will be representing them on a no win no fee basis. Richard Stein explained that the lawyers wrote to the Revenue last October asking them to reverse the decision and reclaim the money from Goldman Sachs, which is one of the richest banks in the world. However, HMRC chose not to respond. The legal firm followed up their request in November and the Revenue replied saying it needed more time.

HMRC, and Dave Hartnett in particular, came under a lot of criticism last year for treating large companies more favourably than other taxpayers. If individual taxpayers are penalised for late payment, surely large corporations should receive exactly the same treatment.

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It may come as no surprise to some contractor accountants to hear that HMRC is going to have a new permanent secretary for tax next summer.

In addition to announcing the retirement of Dave Hartnett, the government has also revealed that Lin Homer, the permanent secretary at the DoT will take over as chief executive at HMRC.

Homer may find she is taking over during a period of disarray as the Revenue looks for somebody to fill board chairman Mike Clasper’s position and a successor to Hartnett.

Qualified lawywer Homer said she would benefit from the continuity and experience provided by Hartnett and Clasper as she settles into her role at HMRC. Hartnett has done great things for the UK in the battle against tax evasion, avoidance and fraud and without him, billions more tax could have been lost.

Despite his high profile stance against fraudsters, Hartnett has been involved in more than his fair share of controversy recently. His role in negotiating disputed corporate tax settlements with companies like Goldman Sachs and Vodafone brought him into the spotlight and led to calls for his resignation.

UK Uncut members last month held a protest calling for Hartnett’s resignation and ever since the HMRC coding fiasco in 2010, numerous people have been calling for changes at the top of the Revenue.

Dame Leslie Strathie, the outgoing chief executive, resigned last month for health reasons, and with Hartnett soon to go, the protesters have got their way.

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Young people wishing to become a contractor accountant specialising in audit, tax or management consulting will soon be able to join a new apprenticeship scheme backed by the government.

A consortium led by PwC will provide the Professional Services Higher Apprenticeships Programme. Other companies participating in the scheme include the Association of Taxation Technicians, BPP, the Financial Skills Partnership, ICAEW and the Management Consultancies Association. It is thought that about 1,500 apprenticeships will be in place by March 2015.

The 1,500 places will be split between the audit, management consulting and tax routes and the first apprentices will begin the programme next September.

Apprentices who opt for the tax route will aim for a level 4 QCF tax qualification, designed to bring the apprentices up to ATT professional standard. Stuart McKinnon, the deputy president of the ATT, said that getting a university degree is not the only way to forge a career in tax and the apprenticeship scheme will prove that.

The Programme will be funded in part by some of the £18.7 million the government is injecting into the Higher Apprenticeship Fund recently announced by Vince Cable, the business secretary.

The minister for skills, John Hayes, said professional services have a fundamental role to play in job creation and economic growth. In times of economic uncertainty, education providers and the government need to invest in developing the advanced skills that companies need to flourish.

The apprentices joining the Programme are expected to be school leavers educated to at least A-level standard, those who have done an Advanced Apprenticeship in a related subject and current employees of the consortium firms. Apprentices will receive a wage from the employer, but the government will fund the majority of the training costs.

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Advisors have criticised George Osborne’s decision to restrict the 100% capital allowance to specific enterprise zones.

The Chancellor said that the 100% capital allowance would be available to companies in the Black Country, Humber, Liverpool, Sheffield and the Tees Valley. Firms in the North Eastern zone will also benefit and the relief might be extended to the Port of Blyth.

In his Autumn Statement last week, Osborne also announced a second enterprise zone in the Humber estuary and one in Lancashire to bring the total up to 24.

Stephen Herring from BDO said it was regrettable that the government has only granted the 100% capital allowances to less than a third of enterprise zones. He believes this tax relief targeting is unjust and all zones should be treated the same for tax relief purposes.

The 100% tax relief will only available on depreciation of plant and machinery expenditure, a measure that Harinder Soor from KPMG says is not as generous as enterprise zones in the 1980s and 90s received when tax relief was also allowed on buildings and structures.

The Chancellor also announced a National Loan Guarantee Scheme that should reduce the cost of borrowing for small businesses and an extension of the business rates relief.

Entrepreneurs welcomed the announcement of the National Loan Guarantee Scheme. The CEO of borro, Paul Aitken, said this was a positive step towards helping small businesses access much-needed finance. However, he was concerned that larger businesses would get the most benefit from the scheme, rather than small firms looking for immediate finance.

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As if the Chancellor hasn’t got enough on his mind trying to keep the UK from dropping back into recession, lawyers from the European Commission are unhappy about the recent Anglo-Swiss tax agreement.

According to the lawyers, the deal breaches European Union laws that take a tougher stance on tax evasion. George Osborne has been told to renegotiate the recently signed deal or be sued by the EU.

The new agreement protects the secrecy of UK residents who have Swiss bank accounts in return for a withholding tax and a large percentage of their capital.  The German government has also brokered a similar deal for its citizens and has now entered into new talks with Switzerland.

However, the EU claims the deal goes against the European Union Savings Directive. The EU’s tax commissioner, Algirdas Semeta, explained that if the problem cannot be easily resolved, the EU will have to pursue the matter through the courts.

Meanwhile, the Institute of Directors has said the UK government is not doing enough to attract overseas investors. The country’s tax system needs to be more competitive and the coalition should introduce incentives to encourage foreign businesses to invest in the UK and help fuel job growth.

The IoD’s director-general, Simon Walker, said the UK should be seen as the country of choice for international investors, and somewhere with a tax system that favours enterprise and hard work.

The tax system we have at present puts us in the middle of the 34 OECD nations, not in the front, he added.

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Contractor accountants may be interested to learn that HMRC’s grants programme has increased tax yields and led to more tax repayments.

The idea behind the scheme is to ensure vulnerable people and those that are hard to reach get the correct entitlements and pay the right amount of tax. The programme is directed at co-operatives, small and large mutuals and social enterprises, as well as charities and commercial and voluntary organisations.

37 voluntary organisations, providing tax and benefits advice, got a share of £2 million from the Revenue in the 2010/11 financial year. As a result, an additional £16.8 million of tax was declared; up 68% on the previous year. The programme also enabled people to claim an additional £48.7 million in tax benefits, credits and repayments; a year on year increase of 70%.

Furthermore, the funding enabled 4,000 volunteers to receive training on tax and benefits issues, which should mean an extra 200,000 people will be able to get advice on tax-related matters.

David Gauke, the exchequer secretary to the Treasury, explained that the grant funding is distributed to independent organisations that provide trustworthy advice to low income and vulnerable individuals. He said he was delighted that the Revenue was supporting taxpayers in this way by awarding community and voluntary sector organisations with financial aid.

We hear a lot about how hard it is for taxpayers to get the advice they need and its good to see that HMRC is taking steps to address the problem.

The current financial funding programme will run until 2014/15.

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