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October 2010 - E-NEWS
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
- HMRC issues guidance on tax underpayments
- £900m to fight tax non-compliance
- New businesses benefit from NI holiday
- Cd-rom alert for employers
- Businesses get helping hand on awards
- Comments invited on bribery act guidance
HMRC issues guidance on tax underpayments
HM Revenue & Customs (HMRC) has issued guidance for up to 1.4 million taxpayers who have underpaid PAYE due to incorrect tax codes.
It has been widely reported that around 1.4 million people had underpaid £2 billion through PAYE, an average of £1,500 each. Around 4.3 million people will receive a rebate from £1.8 billion in overpayments between April 2008 and April 2010.
The problems have arisen after HM Revenue & Customs (HMRC) implemented its new National Insurance and PAYE Service, allowing it for the first time to combine its records of individuals' national insurance contributions with their income tax paid through PAYE. A computerised system introduced in 2009 has allowed more discrepancies to be identified.
People who have underpaid tax of less than £2,000 will generally be expected to pay what they owe via extra tax deductions via PAYE from April 2011 onwards. Those owing larger sums will need to make arrangements to pay the amount outstanding.
HMRC chief executive Dame Lesley Strathie has confirmed that people who owe more than £2,000 in tax would not have to pay interest if the tax authority gave them extra time to pay.
Before the concession, people had three months to pay up after which point they would be charged interest on the money owed.
Guidance issued by HMRC also says: “In cases of genuine hardship HMRC will allow payments to be spread across a period of three years.”
However, the guidance says that following media reports that underpayments of tax could be written off, “HMRC can consider writing off the underpayment only in certain circumstances”.
People who have overpaid will receive a full refund, HMRC says.
LINKS: HMRC guidance and BBC news
£900m to fight tax non-compliance
HM Revenue & Customs (HMRC) has issued new guidance on correcting VAT errors.
HMRC says it has found that many mistakes reported to its Error Correction Team could have been corrected by customers and that as there is currently a six to eight-week delay in processing corrections, it makes sense for customers to correct errors themselves if possible.
The guidance, contained in a notice issued in July, cancels and replaces Notice 700/45 dating from July 2009 and includes advice on how to:
- amend VAT records if errors are discovered
- correct errors discovered on VAT returns already sent to HMRC
- claim a refund if VAT has been overpaid or not enough credit has been claimed on a return
- complete VAT returns or make a claim if there is disagreement with an HMRC decision on the VAT treatment of a supply.
LINKS: Correcting VAT errors
New businesses benefit from NI holiday
A new regional national insurance (NI) holiday for start-up businesses has come into effect.
Businesses setting up outside London, the South East and East of England will be eligible for a NI holiday worth up to £5,000 for each of the first ten employees they hire in their first year of business. This means a maximum saving on their national insurance payments of up to £50,000.
The scheme will run for three years. It is estimated that 400,000 new businesses will benefit by having a lower tax bill from employing new staff.
The regional holiday, announced in the June Budget, is designed to encourage the creation of private sector jobs in regions with high public sector employment.
The NI holiday, announced in the June Budget, is available to new businesses starting between 22 June 2010 and 5 September 2013.
However, as the scheme itself did not begin until 6 September 2010, eligible businesses can only deduct employer NICs due on earnings paid on or after that date (but before 5 September 2013).
More details of the scheme are available via Business Link website.
HM Revenue & Customs (HMRC) has issued an alert to employers who use its Employer CD-ROM to help run their payroll systems.
Employers using the CD-ROM must update it now, to ensure it has the most up-to-date guidance and calculators.
HMRC will be replacing the Employer CD-ROM for employers with a new downloadable application – ‘Basic PAYE Tools’ – in February 2011, and downloading the September update will ensure that employers can take full advantage of this new product.
LINK: The September update can be downloaded free from the HMRC website at www.hmrc.gov.uk/employers/cdrom
LINK: HMRC is urging employers to register for its email alert service, which notifies employers when new information is available on the HMRC website. To register, visit www.hmrc.gov.uk/paye/forms-publications/register.htm
Businesses get helping hand on awards
Businesses looking for opportunities to raise their profile are being given a helping hand by Business Link.
A searchable database of awards now available on the Business Link website allows entrepreneurs and firms to search for awards appropriate to their business sector and will identify both national awards and those relevant to their location.
Business Link says that while business recognition award may not always involve a financial reward, winning one can help to boost profile and reputation.
LINK: Business awards finder
Comments invited on bribery act guidance
Businesses are being invited to have their say on guidance designed to help them implement legal measures designed to strengthen the UK’s stance against bribery.
The Bribery Act, which will take effect from April 2011, will encouragebusinesses to adopt robust anti-bribery safeguards. Its measures include:
- introducing a new corporate offence of failure to prevent bribery by persons working on behalf of a business, anywhere in the world. A business can avoid conviction if it can show that it has adequate procedures in place to prevent bribery.
- making it a criminal offence to give, promise or offer a bribe and to request, agree to receive or accept a bribe either at home or abroad. The measures cover bribery of a foreign public official.
- increasing the maximum penalty for bribery from seven to 10 years’ imprisonment, with an unlimited fine.
Ahead of the Bribery Act coming into force, the government has launched a consultation exercise on guidance on procedures that commercial organisations can put in place to prevent persons associated with them from bribing. The consultation runs until 9 November.
Businesses that export goods or have a presence overseas are among those being advised to start preparing now for the Bribery Act.
The UK is currently a respectable 17th out of 180 countries and territories ranked in Transparency International’s Corruption Perception Index (CPI), which measures perceived levels of public sector corruption.
However, it is a major exporter and UK companies and subsidiaries are also present in many countries well down the CPI. The World Bank estimates that more than £1,000 billion is paid annually in bribes worldwide and industries in which UK businesses are involved – including aerospace, construction, defence and extraction – are known as high risk areas for bribery.
LINKS: Bribery Act Consultation
HWB
Chartered Accountants, Highland House, Mayflower Close, Chandlers Ford, Eastleigh,
Hampshire, SO53 4AR.
