Agent Update August-September 2009 Issue 13
Tax
Compliance checks and penalties
New guidance published on failure to notify penalty
HMRC has published a new chapter in the Compliance Handbook, CH 7000, which covers how the new failure to notify penalty will apply to almost all the department’s taxes from 1 April 2010. The law requires a person to tell HMRC when certain events happen. These events include: where a person has Income Tax, Capital Gains Tax or Corporation Tax to pay but has not been given notice to make a tax return for the period when a person starts a new taxable activity, when the turnover from an existing activity has reached a certain level, or when the nature of the activity changes.
New guidance published on changes to time limits
HMRC has published a new chapter in the Compliance Handbook, CH 5000, which covers how changes for the time limits in assessing taxes will work. Separately, to prevent clients from missing out on payments they are due, HMRC has published information for Self Assessment and PAYE taxpayers to remind them that the time limits to make claims are also changing. To find out how to claim you can use the link below.
Getting your tax claim in on time
New guidance published on the VAT and Excise wrongdoing penalty
HMRC has published a new chapter in the Compliance Handbook, CH 9000, which covers how the new VAT and Excise wrongdoing penalty will operate. From 1 April 2010 this penalty regime applies where a person makes an unauthorised issue of an invoice showing or including VAT, misuses a product so that a higher rate of Excise Duty is payable, or handles goods that are subject to unpaid Excise Duty.
Information to help your clients understand HMRC’s new penalties system (PPT 529K)
Extra help in explaining new penalties to clients is available to download as a PowerPoint presentation to use when talking to businesses or clients. It will help to explain the fundamental changes that HMRC is introducing to the penalties system. The presentation can be personalised on the editable pages, includes speaker notes and highlights how the new system will affect taxpayers. Please also look for additional info in the Tax and HMRC Service sections of Agent Update.
Corporation Tax
Legislation to counter tax avoidance schemes involving Capital Allowances on plant or machinery will be included in the 2010 Finance Bill. The proposed legislation will prevent tax avoidance through the transfer of an entitlement to benefit from Capital Allowances on plant or machinery, where a company changes hands for this purpose.
Large businesses serviced by local compliance - delivering a new relationship (PDF 34K)
This publication explains the significant changes that local compliance offices are making to ensure HMRC meets its commitments to the 2006 Review of Links with Large Business (RLLB).
Income Tax
ISA subscription limits are increasing
As announced in the 2009 Budget, ISA limits are being increased to £10,200, of which up to £5,100 can be invested in a cash ISA with the balance in a stocks and shares ISA. Investors who will be aged 50 by 5 April 2010 can subscribe up to the new limits from 6 October 2009. All other investors can access the new limits from 6 April 2010.
Trusts - UK tax credit on foreign dividends: revised guidance for 2008-09
This Notice provides guidance to clarify advice about the treatment of the new UK tax credit on foreign dividends.
Inheritance Tax
New requirement on Inheritance Tax clearance service for business owners
This notice amends guidance on submitting applications - it details new requirements regarding Disclosure of Tax Avoidance Schemes (DOTAS) and clearance applications, amendments to checklists, instructions on heading applications and gives an update on appeals and reviews.
Insurance Premium Tax
Insurance Premium Tax guidance (V2-01) now published
The Insurance Premium Tax guidance (V-series V2-01) used by HMRC staff is now available for the first time on the HMRC website.
New disclosure opportunity
New disclosure opportunity - podcast
A podcast detailing the new disclosure opportunity will be available from 1 September 2009.
Final chance for clients to declare all outstanding tax and duties
From 1 September 2009 your clients will have a final chance to declare all outstanding tax and duties. If they notify HMRC between 1 September and 30 November 2009, they could be charged a reduced penalty rate on the tax they owe. Otherwise, they could face a 100 per cent penalty or criminal prosecution. This will be particularly relevant to clients with offshore accounts or assets. Please check the HMRC website for the latest information, available from 1 September 2009.
PAYE
Employer CD-ROM - June 2009 now updated with downloadable file to correct fault in previous edition
The Employer CD-ROM contains most of the forms and guidance you will need to run your payroll throughout the year. There are also calculators and forms you can fill in on screen and save to an employer/employee database. We apologise that some errors have been identified in the updated edition of the recently issued CD-ROM (June 2009). We have provided a downloadable file to correct these faults on our website.
PAYE and CIS payments
New penalties for late in-year PAYE payments
From May 2010 we intend to implement new penalties for late payment of PAYE. From then on, employers and contractors may have to pay a penalty if they do not pay the PAYE due each month, on time and in full. There will be more information about this in Employer Bulletin Issue 33, which will be published at the end of September.
HMRC are changing the way we process PAYE records and are aware of three specific issues that will affect tax agents as a result of the introduction of the new PAYE service which we are working hard to resolve.
Self Assessment
This notification sets out HMRC’s process when a Self Assessment return submitted online is not accepted, and a penalty arises. It details the options available to submit a Self Assessment return, including time limits and links to the downloadable form to submit a claim for reasonable excuse to mitigate the penalty.
Changes to Self Assessment registration processes for the self employed
We are changing the self employed registration process and will no longer be able to register anyone as self-employed without a verifiable National Insurance Number. If your client does not have a National Insurance number, they should telephone the Department for Work and Pensions on 0845 600 0643 to arrange to attend an Evidence of Identity interview at a Jobcentre Plus or Social Security office.
This year’s tax return (Opens new window)
This year’s tax return may be filed on paper by 31 October or online by 31 January.
Tax avoidance
The tax avoidance disclosure regime: Pension savings - the Special Annual Allowance Charge (SAAC)
Regulations SI 2009/2033 have been laid before the House of Commons. They extend the disclosure of tax avoidance schemes regime to require the disclosure of schemes which seek to avoid the SAAC on pension provisions announced in the 2009 Budget (Budget Note 47 provides details). These Regulations (‘the 2009 amendment regulations’) amend the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2006 (SI 2006/1543) (‘the principal regulations’), to insert a new description concerning pension arrangements. The amendment regulations will come into force on 1 September 2009.
VAT
On 1 January 2010 there will be major changes to the VAT rules for businesses that supply services to or receive services from overseas businesses, supply goods to other European Community (EC) countries or reclaim VAT incurred in another EC country. These changes affect where, how and when VAT is accounted for, as well as the completion of EC Sales Lists and reclaiming VAT incurred in another EC country. All these changes mean that businesses now have to consider whether the changes affect them and what they need to do to prepare for them.
The ‘Fleming’ VAT case: updated guidance (PDF 204K)
The ‘Fleming’ VAT case brought about changes relating to repayment claims. Updated HMRC guidance is now available.
Where development land is sold to registered social landlords (RSLs), it is normal for a deposit to be paid at the time of exchange of contracts when construction has not commenced and the plot is still 'bare land'. In many cases this deposit will be held by a stakeholder and will not create a tax point for VAT purposes until it is released to the vendor (or vendor's agent), normally at the time of completion. Completion of the sale will in most cases occur at a time when construction of the dwellings has commenced and progressed beyond what is commonly known as the ‘golden brick’, that is, beyond foundation level. This means the supply can normally be zero-rated.
It has, however, become increasingly common for the deposit to be made available to the vendor at the time of exchange when the land is still bare land. This has raised questions about the VAT treatment of the deposit, and in particular, whether it can be treated as part payment for the future zero-rated supply.
HM Revenue & Customs brief 39/09 - change in zero-rating for charitable buildings use
There has been a change in HMRC’s interpretation of the legal provisions that apply when allowing new buildings used for charitable purposes to be zero rated. Extra Statutory Concession (ESC) 3.29 and two related concessions will also be withdrawn.
HM Revenue & Customs brief 41/09 - setting out the three-year cap for VAT claims
This notification sets out the three-year cap for VAT claims, relating to CRC versus Scottish Equitable plc (unreported), the Order of the Inner House of the Court of Session. This brief sets out HMRC's position on the judgment of the Court of Session in this case and tells claimants and appellants how to proceed.
Revised VAT Notice 700/06 detailing new requirements for tax avoidance disclosure issues
This Notice has updates to VAT Notice 700/06. It details new requirements regarding DOTAS and applications for a ruling and gives an update on appeals, reviews and complaints.
