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July 2010 - E-NEWS
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
- HMRC amend PAYE penalties guidance
- Keep proper records!
- HMRC launch tax credit video
- Business link guidance for farmers
HMRC amend PAYE penalties guidance
At the start of the tax year new late payment penalties were introduced for PAYE and other payments due from employers. The new rules apply to almost all employers and contractors, whether they employ one or a hundred employees. The rules apply to monthly, quarterly and annual periods of PAYE starting on or after 6 April 2010.
HMRC can impose late payment penalties on PAYE amounts due that are not paid in full on time, including:
- monthly, quarterly or annual PAYE;
- student loan deductions;
- Construction Industry Scheme deductions;
- Class 1 NIC; and
- annual payments of employers' Class 1A and Class 1B NIC.
HMRC have now amended their guidance to include comments on so-called ‘warning letters’. HMRC state:
‘The letter is only to let you know that HMRC think you have made a PAYE payment late and that a penalty could be charged. It is not a penalty notice and you can’t appeal against it.
Importantly, it does not mean a penalty will definitely be charged, and you may get a penalty even if you do not get a letter.
If you agree that you have made a late payment, you should make sure you pay on time and in full in future. The next time you pay late you may become liable to a penalty. HMRC will contact you before a penalty is charged. If they charge a penalty they will send you a penalty notice.
If you believe you have received a letter in error, perhaps because you have already paid, have a time to pay agreement or have a ‘reasonable excuse’ you don’t need to contact HMRC yet. But you may find it helpful make a note of why you don’t think a penalty is chargeable in case HMRC contact you about penalty action in future.’
If you receive a letter but have paid on time, it may worth telling HMRC that their records are currently wrong to avoid problems later on. If you are experiencing problems with paying PAYE or any other tax on time, HMRC may be prepared to defer payment and this, in turn, may avoid penalties.
Please get in touch if you would like to discuss this further.
Link: HMRC guidance
HMRC have recently issued a reminder about the various 'toolkits' that they have developed to assist agents when preparing returns. Although the toolkits are aimed at tax professionals, they highlight common errors and the steps that can be taken to reduce those errors. The first series of toolkits cover:
- marginal small companies' relief;
- capital allowances for plant and machinery;
- personal and private expenditure;
- capital gains tax for land and buildings; and
- capital gains tax for trusts and estates.
The intriguing thing about all of the toolkits is that the main area of risk for all the above areas is record keeping or the lack of it!
In addition, for capital allowances for plant and machinery the main areas of risk include:
- record keeping e.g. different proportions of non-business use during the period of ownership and detailed records of all acquisitions and disposals;
- acquisitions and disposals e.g. whether the asset qualifies for capital allowances; and
- non-business use of assets, particularly cars.
For private and personal expenditure, the main areas of risk are:
- record keeping e.g. non-business expenses being incorrectly recorded or misposted in the business records and claimed in error as allowable expenses;
- personal bills being paid by the business;
- travel and subsistence;
- entertaining, gifts, subscriptions and sponsorship; and
- drawings and capital account.
So the moral is clear – good records today keep the taxman at bay. If you would like to discuss this area in more detail, please do get in touch.
Link: HMRC website
Every year, tax credit claimants must renew their tax credit awards by 31 July or their payments may stop. Claimants on ‘nil awards’, and those receiving only the full family element of Child Tax Credit, will receive a statement of their 2009/10 award. If these details are correct no further action is needed and the claims are automatically renewed. However, if the details on the award statement are wrong, claimants must tell HMRC.
HMRC have launched a series of online videos to help claimants through the annual renewal process. The interactive videos take claimants through the renewal process step-by-step, offering the chance to tailor the help to their own circumstances. The videos cover key areas such as:
- providing details of the previous year’s income;
- notifying HMRC of any changes in circumstances that haven’t already been reported during the year; and
- checking the accuracy of the information in the renewals pack.
HMRC’s Director of Benefits and Credits, Steve Lamey, said:
‘These new videos are a great way of getting help and advice on renewing your tax credits, and should be able to answer any questions you may have about the renewals process.
Once you’ve received your pack, please don’t put it off – renew straight away. The sooner you renew, the sooner we can make sure you’re receiving the right money.’
Links: News release and Video
Business link guidance for farmers
Business Link has set up a dedicated new online service for farmers and growers. Whether they are starting up or looking to expand and diversify, the service will help:
‘…focus your planning, apply best practice and meet government requirements - whatever your agricultural sector.
You can access guidance and tools, and sign up for email alerts to let you know when the rules change. The content is developed by government experts and in consultation with farmers' groups. At the moment this content only applies to English legislation.’
Link: Business Link
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Chartered Accountants, Highland House, Mayflower Close, Chandlers Ford, Eastleigh,
Hampshire, SO53 4AR.
