Interesting News

News Bulletins

August 2009 - E-NEWS

In this month’s e-news we report on some forthcoming changes to the intestacy rules.

We also include our usual round up of news. Please browse through this month’s articles using the links below and contact us if any issues or questions arise.

• Are You Complying With The National Minimum Wage Rules?
• Business Payment Support Services
• Redundancy Alternative
• Scrappage Incentive Scheme Successful

ARE YOU COMPLYING WITH THE NATIONAL MINIMUM WAGE RULES?

HMRC are reminding employers that since the beginning of the current tax year automatic penalties have been introduced for those who do not comply with the National Minimum Wage (NMW) Regulations.

The penalties range from £100 to £5,000 with 50% prompt payment discounts for employers who settle within 14 days of notification.

The penalty is payable in addition to arrears owed to the workers.

The penalty notice will detail the amounts due to workers (calculated according to the formula shown below) and any penalty due on those arrears. The penalty is calculated as half the total underpayment. The underpayments are uprated to take into account the length of time the arrears have been outstanding.

For each payment period the formula is:

Original underpayment x Current NMW rate = Arrears
Original NMW rate

In serious cases of non compliance the employer may be tried in a Crown Court and in those cases the fines are unlimited.

The current NMW rates are:

• £5.73 (£5.80 from October 2009) an hour for adults aged 22 and over
• £4.77 (£4.83 from October 2009) an hour for 18-21 year olds
• £3.53 (£3.57 from October 2009) an hour for 16-17 year olds.

Internet link: Employer Bulletin article

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BUSINESS PAYMENT SUPPORT SERVICES

According to government figures, as at the end of April 2009, over 116,000 businesses have agreed time to pay tax arrangements with HMRC to the value of two billion pounds.

The Business Payment Support Service, which was introduced last autumn, provides a ‘fast track’ service that offers support to those needing more time to pay their tax bills. Terms can be quickly agreed over the phone.

If you would like to discuss the Support Service in relation to your own or your business tax affairs, please do get in touch.

Internet link: Employer Bulletin article

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REDUNDANCY ALTERNATIVE

The Confederation of British Industry (CBI) has made a proposal for an 'Alternative to Redundancy' (ATR) scheme which could be introduced as part of a package of measures to reduce job losses.

Under the proposal employers would be able to use current redundancy procedures or place employees on the ATR scheme for a period of up to six months. The employees would not work during the ATR period but could seek employment elsewhere. They would receive an allowance of twice the rate of Job Seekers Allowance, which is currently approximately £50 and £65 a week dependent on age.

The proposal is that half of the allowance would be paid by the government and the other half by the employer. The employees could then go back to work once the ATR period expires or the business improves.

John Cridland, CBI Deputy Director-General, said:

"The worst of the recession may be over, but businesses still face a long convalescence and the dole queues will continue to grow. The alternative to redundancy scheme could save jobs by giving businesses more leeway as the economy recovers.

We considered various forms of wage subsidy and support for short-time working, but this approach is better. Businesses will be more able to cope with sharp drops in demand and prepare for recovery, while workers benefit from improved financial support and a door that is kept open for six months.

This is not about businesses ducking their redundancy responsibility - in fact if a scheme runs for six months and a redundancy is still made then the business will end up paying more.”

For information on the calculation of statutory redundancy pay use the Department for Business Innovation and Skills link below.

Internet links: CBI press release and BIS website

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SCRAPPAGE INCENTIVE SCHEME SUCCESSFUL

According to the Society of Motor Manufacturers and Traders (SMMT) 29,796 vehicles have been registered under the scrappage scheme since it started on 18 May 2009. This accounted for 9.7% of June’s new car registrations a total of 17,014 units. In addition to cars 323 vans were also registered in June under the scheme (1.9% of van registrations).
 
Paul Everitt, SMMT chief executive said:

“The scrappage incentive scheme is working well and has encouraged a lot more people back into showrooms. In the coming months, we will see an increase in the rate of deliveries and this will confirm further progress on the industry’s long road to recovery.”

The vehicle scrappage scheme is a voluntary scheme for motor dealers. Participating dealers will give buyers a £2,000 discount off the purchase price of a new car (or small van) in exchange for scrapping their old qualifying vehicle which must, amongst other criteria, have been registered on or before 31 August 1999.

The scheme is expected to run until March 2010, unless funds are exhausted before then. For general information on the £2,000 scrappage discounts and the qualifying conditions for vehicles visit the Directgov link below. For HMRC’s views on the business tax and VAT implications of the car and van scrappage scheme use the HMRC link below.

If you have any queries on the tax implications of the scheme please do get in touch.

Internet links: SMMT article, Directgov website and HMRC Brief

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