Tag Archive | "taxpayer"

LITRG springs to the Revenue’s defence

HMRC has been widely criticised over its PAYE assessment errors for the tax year 2011-12, but the LITRG has leapt to the Revenue’s defence saying the errors are actually reconciliations.

The LITRG made its comments after HMRC announced it was starting the PAYE reconciliation process and as many as 3.5 million taxpayers could receive a refund, whilst 1.6 million will get a letter telling them they have not paid enough income tax.

John Andrews, the chairman of the LITRG, explained that there are three sides to PAYE; the employer, HMRC and the taxpayer. Although most of the system is computerised, it was never intended for PAYE to collect the correct amount of tax in 100% of cases. It does do so in the majority of cases where somebody has just one job, or one pension, but if someone has changed jobs, has more than one job, or multiple pensions, their ‘account’ needs to be reconciled at year-end.

He went on to say that changes need to be reflected in PAYE codes and in order for the system to generate the correct code, it needs accurate information from the relevant quarters. If an employer for example does not forward data about new starters or leavers, the system is unable to amend its records.

The Real Time Information system should do away with a lot of these problems but that will not be fully implemented until April 2014. If HMRC invests wisely in IT capability and customer support, we should all receive a better service.

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

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Deadline to appeal late filing penalties extended till 31st March

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.

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

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HMRC doubles corporation tax take from large business investigations

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.

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

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Do contractor accountants want to know how their tax is spent?

Last week, Ben Gummer, the Conservative MP for Ipswich, called on the government to introduce statements that explained how it intended to spend the tax it collects from contractor accountants.

Under Gummer’s proposal, UK taxpayers would receive an annual statement detailing the amount of tax they would need to pay in both the current financial year and year after. In addition, the statement would show how the money would be split between individual government departments.

The data in these statements would be based around tax returns, P60s and budget statements. He also said that when it came near to an election, the statement could include information after opposition proposals.

Ben Gummer, the son of John Gummer, the former Tory agriculture minister, believes the current tax system contains too much obscurity. Providing taxpayers with information on exactly how their taxes are spent will make it much more transparent and shift public debate, he said.

Whilst this might sound like a feasible idea in principle, is there really a need to send out printed statements? If taxes are allotted to government departments on a percentage basis, maybe the coalition could publish the data on its website; x% of your tax will be spent on defence, y% on education etc.  At least that would cut down expenditure on paper and printing.

We would all like to see a more transparency in taxation, but it has to be possible to achieve that without additional cost to the taxpayer.

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

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Who said we need to import skills to ensure success…?

I was somewhat taken aback this week to read that someone in government had had a fit of the vapours and said something sensible. Even more confusing was that this was from the Labour side of the House. Although, just to restore my faith in human nature, he’s been shouted down by the rest of his side.

This was Lord Glassman, who has said that we need to put a freeze on immigration. Not a cap or a phased reduction, but a total stop, with the sole exception of the small number of skilled people we actually need to encourage to come over.

Of course none of this would be an issue if we had a better history of controlling who’s coming in, but we are where we are. At least we have some much more effective rules in place to bring a bit of sanity to the ICT system these days, which is the bit that really concerns us IT people. And for which, let us not forget, we owe a debt to the work the PCG has been doing over the years.

But as usual, nothing is as it seems.

There’s a bit of a debate going on about the new rules, centring of all stupid things on payable expenses, that well known fiddle factor beloved of the umbrella companies and assorted MPs…

But I digress. The rules set a minimum salary for the ICT candidate. However, with the usual stunning clarity of purpose, they haven’t actually defined how that salary should be made up. So you can include, for example, the costs of bringing your worker over here and giving them somewhere to live while they’re here.

Then we get into the Kafkaesque realms of do we include expenses paid for travel and accommodation while working somewhere else? I mean, let’s just think about that for a moment. You ship someone into the country, pay for their accommodation and give them a living wage. Then they have to go somewhere else on your behalf, for which you are paying the bills (or damned well ought to be). So how can that be part of their gross salary? Because I’m willing to bet that they never see any of it; if they did, their payslips wouldn’t be subject to the same level of secrecy as those nice people at GCHQ.

And just to pile on the ineptitude, the rules are being arranged so that “the taxpayer is not disadvantaged”. Excuse me? Taxpayer? The taxpayer, to the man on the Clapham omnibus, is someone who has a life here, a permanent address, is known to the gentlemen at HMRC. He’s not just popped over to perform a limited engagement (much of which seems to be to learn how to do the job so he can take those skills back home). And since his prime purpose is to take away work that could be done by someone who does live here, I’m afraid I’m not all that minded to be fair in how he gets paid.

Other countries have twigged this. Canada, for one, is taking positive action. How typical of our team that we try to treat them fairly and actively assist them in their efforts, less we tread on someone’s toes.

Talking of treading on toes, let’s give a small Hurrah for the PCG. Actually no, let’s make that a very large one. They have won not one but two trade awards, for electronic communication and membership success, against some much bigger (and older) organisations. Bearing in mind this is a very small team, the impact their work is having where it matters is out of all proportion.

Who said we need to import skills to ensure success…?

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited

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