Tag Archive | "chartered institute of taxation"

CIOT members should defend HMRC says new president

Patrick Stevens, the newly appointed president of the Chartered Institute of Taxation, has urged his members to defend the UK tax system when it comes under unfair criticism.

He made his comment at the CIOT’s AGM last week adding that negative headlines about HMRC could give taxpayers the impression that the tax system is broken. This undermines confidence and could reduce compliance. He called on members to continue representing taxpayers and advisers to the Revenue, but also to challenge exaggerations that the system is failing.

Stevens explained that in his previous role with Ernst & Young he visited tax colleagues in Europe to find out how they coped with local tax systems. One of the countries he visited was Greece and he discovered that the majority of people there do not pay the right amount of tax. It appeared that overseas companies were the only ones contributing close to the correct tax and as a result the country has no money.

UK citizens tend to be law abiding and our laws normally produce a sensible result, he continued. However, we’ve seen a lot of headlines in the last couple of years about inefficiency in HMRC, tax avoidance by large companies and the deals the Revenue makes with them. These headlines give the impression of a broken tax system and people start to question whether they need to take part in it.

The CIOT needs to help HMRC get it right, but it also needs to support the department when journalists and campaign groups level unfair criticism against it. The system is over-complex and it could definitely be improved, but it is not broken, he concluded.

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HMRC gets something right at last!

It’s unusual for anybody to praise HMRC these days, but contractor accountants may be interested to learn that the Chartered Institute of Taxation recently did exactly that.

Last year the Revenue took down its online filing system at the same time as the deadline for filing April’s VAT returns became due. This caused wide scale pandemonium and the CIoT was quick to express its concerns.

This year, HMRC has decided to take the filing system down between the 8th and 11th of April – directly after the 7th of April deadline.

Simon Newark, the vice-chairman of the VAT and Indirect Taxes Sub-Committee at the CIoT, said the Institute congratulated the Revenue on making a sensible decision this year. Along with other professional bodies, the CIoT has been putting concerted pressure on HMRC to rethink when it upgrades its systems.

He went on to explain that the Revenue’s complex systems need a certain amount of downtime when upgrades are being implemented but this needs to be timed so as not to adversely affect businesses that are trying to file their returns. Providing companies file their February VAT return online by the 7th of April, they should not be affected by the upgrade downtime.

He also suggested that HMRC might want to follow the lead of Companies House and send email notifications of future downtimes so that businesses can plan in advance.

Last year was the first time when businesses were penalised for late filing and the downtime caused huge problems for a lot of firms and advisers. The Revenue scheduled downtime for the 7th of March this year and some businesses were annoyed that HMRC gave very little advance notice of this.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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Chartered Institute of Taxation hits out at HMRC

The Chartered Institute of Taxation has hit out at the government’s new disguised remuneration legislation, saying it is far too complex.

The new regulations were announced in the Finance Bill and run to 59 pages. They target third party arrangements which avoid or defer income tax on employment rewards, such as bonuses, or avoid the restrictions on pensions tax relief.

The CIoT claims that the scope of these new rules is very wide, and says the new exclusions, which were added after the original plans were disclosed, are ‘intricate and heavily qualified.’ The regulations include 14 different tax avoidance tests that govern how and when the new exclusions apply.

The chairman of the Institute’s employment taxes sub-committee, Colin Ben-Nathan, said the new legislation was penal and overrides the longstanding rules for taxing benefits in kind.

He went on to say that some pension schemes, employee share plans, smaller businesses, joint ventures and international businesses looking to relocate employees to the UK could all be impacted by these regulations. A lot of employers will turn to HMRC for clearance of their arrangements but it is not clear whether the Revenue has the resources to cope or how long it will take for them to make a decision.

Ben-Nathan concluded by saying employers could face real difficulties in assessing where they stand with these new regulations. HMRC may not agree with their view and employers will be left uncertain as to their tax liabilities.

It will probably come as no surprise to learn that the relationship between the CIoT and HMRC is at an all time low.

The incoming president of the Institute, Anthony Thomas, says he hopes to turn this situation around and return to the healthy tension that used to exist between the two bodies 10 or 20 years ago.

As well as complaints about the disguised remuneration legislation, the CIoT is dissatisfied with the Revenue’s stance over the registration of tax agents and its desire to indirectly regulate the tax community.

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HMRC wants to claim county court costs from defaulters

At present, HMRC cannot claim costs from people when they take them to county court to recover unpaid taxes. But if it gets its way, that will change as from next April.

Up until April 2010, the Revenue had lodged 10,905 cases against people, including limited company contractors, who had not settled their tax bills and it is now asking for the court costs to be tacked on.

A lot of business groups and advisers are behind the move, but they want to see safeguards included. The main concern is that any changes to the current regime will not add court costs onto the existing debts of people who are genuinely not able to pay.

Bodies such as the FSB, PCG and Chartered Institute of Taxation say it would be inappropriate for the Revenue to be awarded costs in cases where a taxpayer is in real hardship or if the case involves tax credit overpayment.

Business groups only want reasonable and genuinely incurred costs to be included in the awards, but not the cost of HMRC wages. They also warn against basing the award based on the percentage of the sum contested.

With the current system, the state covers some costs but the taxpayer has no right to costs. There are concerns that people who feel they have a genuine grievance against the taxman will be discouraged from proceeding if costs are likely to be awarded to the Revenue.

An HMRC spokesman said that they were not trying to force people into further debt, merely recover what is legally owing to them from taxpayers who have the funds to pay. The taxman does not knowingly pursue court action against somebody he knows cannot pay.

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