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News Bulletins

January 2010 - E-NEWS

Please browse through this month’s articles using the links below and contact us if any issues or questions arise.

• Bank Payroll Tax
• Offshore Disclosure Extension
• Changes To The Advisory Fuel Rates From 1 December 2009
• Cross-Border VAT Changes 2010

Bank Payroll Tax

In a move designed to tackle certain remuneration practices that are considered to have contributed to ‘excessive risk taking’ in the banking industry, a temporary bank payroll tax of 50% is to apply to certain bonuses regardless of how they are paid. The tax will apply to the amount of the bonus which exceeds £25,000 for any individual employee and is applicable to banks, building societies and other related financial businesses.

The bank payroll tax will apply to all discretionary and contractual bonus awards made after the announcement of the measure on 9 December 2009, except for contractual bonus entitlements which existed at the time of the announcement, where the payer has no discretion as to the amount of the bonus. The initial charging period will run until 5 April 2010. However the government has indicated that this period of charge could be extended until other relevant provisions of the Financial Services Bill come into force.

This one-off tax is payable on 31 August 2010. It will not be deductible in calculating the institution’s profit or loss for corporation tax or income tax purposes.

Internet link: HMRC bank payroll

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Offshore Disclosure Extension

HMRC is giving taxpayers with offshore investments more time to come forward under the New Disclosure Opportunity (NDO). The registration deadline, which was due to expire on 30 November 2009 has been moved to 4 January 2010 as some banks need more time to contact their offshore customers.

HMRC are reminding individuals that the NDO is the last opportunity for taxpayers to obtain ‘favourable terms’ when advising HMRC of offshore investments that they have never reported previously. HMRC are currently in the process of obtaining information from 308 UK banks regarding their offshore customers in an effort to ensure that everyone pays the right tax. 

Dave Hartnett, HMRC’s Permanent Secretary for Tax said:

“We know that some bank customers will not be contacted by their banks in good time for the original deadline of 30 November so in the interests of fairness we have decided to extend our deadline by a month to 4 January. 

“I strongly urge anyone who has been hiding taxable assets offshore to go on line and register. The NDO is voluntary but from the start of the New Year we will begin to investigate those who were eligible to use the NDO but instead buried their heads in the sand. Don’t let that happen to you.”

“This is a great way to start the New Year – with the knowledge that your tax affairs are in order and the certainty that the penalty will be capped at 10%.”

If you have any questions or concerns in this area please do get in touch.  

Internet link: HMRC press release

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Changes To The Advisory Fuel Rates From 1 December 2009

To reflect the increase in fuel prices, HMRC have issued new advisory fuel rates for employees driving employer provided cars. These take effect for all journeys undertaken from 1 December, so employers using the advisory rates should advise affected employees and update any expense forms as soon as possible.

The advisory fuel rates may be used for journeys undertaken on or after 1 December 2009.

HMRC have in the past given employers a month’s notice of changes to these rates. However, according to the HMRC guidance:

“After discussions with the relevant trade bodies, the month's notice previously given has been withdrawn for this change. Employers are not obliged to reimburse their employees for business fuel at these rates as long as they do not exceed them overall. Employers making or collecting payments at the superseded rate because they have not been able to change their systems in time may use their judgement on whether to make or require a second payment in respect of the same period in order to apply the new rate from its effective date. However, employers should note that under the normal rules, employees are only able to avoid the car fuel benefit charge if the amount they repay in respect of private fuel at least equals the amounts based on the rates as published.”

Other points to be aware of about the advisory fuel rates:

• Employers do not need a dispensation to use these rates.
• Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
• The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.

If you would like to discuss your car policy, please contact us.

Internet link: HMRC advisory fuel rates

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Cross-Border VAT Changes 2010

HMRC have issued some important guidance regarding the changes in the place of supply of services rules which take effect from 1 January 2010.

This guidance is part of a package of measures being introduced to simplify and modernise the VAT system for cross-border trading and to counter fraud across the EU. The measures include:

• changes to the basic place of supply of services rules
• changes to the time of supply rules
• European Sales List (ESL) reporting for supplies of cross-border services
• a new electronic refund procedure for VAT incurred in other EU Member States.

If you are unsure how these changes affect you or your business please do get in touch.

Internet link: HMRC cross border changes

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