Monthly Archives: August 2018

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Documents reveal HMRC plans to secretly access bank account information

Documents published online have revealed HM Revenue & Customs’ (HMRC) plans to secretly access bank account information.

The planned new powers come in the form of information orders, which are used by the Revenue to determine that taxpayers are paying the correct amounts of Income Tax, Corporation Tax, Capital Gains Tax and VAT.

Banks, building societies, accountants, lawyers and estate agents can all be ordered to divulge financially sensitive information.

These groups are currently able to notify their clients if HMRC requests access to this information, but would not be able to under the new plans.

HMRC can only make such a demand with the permission of a Tribunal if a taxpayer refuses access to the information, but officials are calling to have this relaxed so that only secretly accessed accounts would need Tribunal approval.

James Daley, the Managing Director of Fairer Finance, said: “The system we have got contains essential protections for taxpayers’ privacy and rights. The idea that HMRC can request information from people’s banks, from estate agents and other third parties without notifying the individual is shocking.

“They are bypassing checks and balances that are there to protect people. Of course we want to crack down on people who aren’t paying their taxes, but there has to be a balance between that and breaching privacy. This can’t be a lazy shortcut for the taxman.”

A spokesman for HMRC said: “We are simply consulting on updating existing powers to obtain account information to help establish the right tax has been declared.

“Nothing has been decided. If these powers became law, we expect they would only apply to a few hundred cases each year and of course there will be safeguards in place to protect taxpayers.”

Link: Taxman will now have ‘shocking’ new powers to raid bank accounts with NO warning

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Tens of thousands of fake HMRC websites taken down

Figures published by HM Revenue & Customs (HMRC) show that 20,750 malicious websites have been taken down over the last year – 29 per cent more than in the previous year.

Although it has brought in cutting-edge technology to tackle the problem, the Revenue is warning the public to remain alert, as substantial amounts of money could be lost by anyone who fall victim to such a site.

Neither HMRC nor banks will ever contact people out of the blue to ask for their PIN, password or bank details.

Mel Stride MP, the Financial Secretary to the Treasury, said: “The criminals behind these scams prey upon the public and abuse their trust in Government. We’re determined to stop them.

“HMRC is cracking down harder than ever, as these latest figures show. But we need the public’s help as well. By doing the right thing and reporting suspicious messages you will not only protect yourself, you will protect other potential victims.”

In addition to fake websites, HMRC is also warning of text message and email scams, which purport to be from HMRC, offering refunds. It has said that it never notifies taxpayers of refunds in this way.

An email verification system has been in place since November 2016 to verify that emails actually are from HMRC – it has reportedly already blocked half a billion phishing emails reaching taxpayers.

The Revenue is also trialling technology that detects text messages that suggest they originate from HMRC and stops them being delivered.

Link: Record number of fake HMRC website deactivated

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HMRC collects more than £30 billion worth of extra tax in last financial year

New figures from HM Revenue & Customs (HMRC) have revealed that the tax authority brought in a total of £605.8 billion in the year to April 2018 – an increase of nearly £30 billion on the previous year.

This 5.4 per cent increase in the Revenue’s tax collection over the previous year includes:

  • £186 billion in Income Tax (2016/17 £173 billion)
  • £130.5 billion in National Insurance Contributions (2016/17 £122.5 billion)
  • £128.6 billion in VAT (2016/17 £124.4 billion)
  • £53.3 billion in Corporation Tax (2016/17 £51.1 billion).

The latest data was revealed in HMRC’s annual report and accounts, which shows that compliance yield went up over the year by £1.4 billion to £30.3 billion

Of the areas of taxation covered in the report, only Capital Gains Tax saw a decrease – falling by 7.1 per cent. This was primarily the result of the reduction in the tax rate from 18 per cent to 10 per cent for non-higher rate taxpayers.

“Every year, through our compliance work, we collect or protect billions of pounds that would have otherwise been lost to the UK through fraud, tax avoidance, evasion and non-compliance,” a HMRC spokesperson said.

“We’ve strengthened our grip on those who deliberately cheat the system and continue to pursue those who refuse to pay what they owe, applying civil and criminal sanctions as appropriate to this dishonest minority.”

Looking at its investigation and tax cases, HMRC recorded a 90 per cent success rate in tax prosecutions, which along with the 78 per cent of successful outcomes for appeals heard in the tribunals and courts, accounted for £37 billion worth of tax being collected.

Looking at its crackdown on offshore evasion, the report said: “Last year, over 140 individuals were the subject of criminal investigation for offences associated with offshore tax evasion, including four arrests and a further six interviews under caution relating solely to the Panama Papers.

“Since 2010, we’ve brought in more than £2.8 billion from domestic and global initiatives to tackle offshore tax evaders. Since June 2012, 26 individuals have been successfully prosecuted, resulting in over 100 years of custodial sentences and 12 years of suspended sentences.”

The report also includes information on HMRC’s digital activities. It reports that the number of taxpayers using digital tax accounts grew throughout the year and that ahead of the introduction of Making Tax Digital for VAT, there are currently around 15 million individuals using personal tax accounts and three million businesses using business tax accounts.

Link: HMRC annual report and accounts: 2017 to 2018

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MTD for VAT clarified in new communication from HMRC

HM Revenue & Customs (HMRC) has finally issued a new notice on Making Tax Digital for VAT in which it has clarified many of the questions that businesses had.

VAT notice 700/22: Making Tax Digital for VAT has been created to act as a point-by-point guide to the new regime and includes new advice from HMRC to help fill the gaps where the policy has previously been unclear.

Within the document, HMRC confirms that VAT-registered businesses with annual VATable turnover under the VAT registration threshold (currently £85,000) do not have to comply with MTD, but can voluntarily sign up by informing the tax authority in writing.

Exemptions will also be offered to businesses on the grounds of religion, insolvency, or because it is not reasonably practicable to use digital tools.

Exempt companies will have to contact the general VAT helpline to ask HMRC to approve the exemption or seek “digital assistance”.

HMRC has also confirmed the information that each business will need to submit in regards to each VATable supply made by the business, this includes:

  • time of supply (tax point)
  • value of the supply (net value excluding VAT)
  • rate of VAT charged.

Partially exempt businesses or those that use a VAT scheme may not be able to report how much VAT they can reclaim on each individual invoice. In this instance they can record:

  • all the VAT paid; or
  • none of the VAT; or
  • the estimated amount of the recoverable VAT.

Once the partial exemption or other scheme calculation is completed, an adjustment will be made to the digital VAT records.

Some permanent information about the business must also be recorded digitally, such as the name, address, VAT number and any VAT accounting scheme used.

However, businesses will not have to keep a digital image of each purchase invoice.

HMRC has also announced that it has seen demonstrations of various MTD software and tested online accounting products within the HMRC test environment. It has produced a list of tested software, although it is likely that additional providers will be added to this list at a later date.

The VAT notice confirms that the full MTD service won’t be available from HMRC when MTD for VAT goes live in April 2019.

This will mean that businesses won’t be able to submit voluntary updates or supplementary data to support their VAT return initially, although these will be added at a later date.

Link: VAT notice 700/22: Making Tax Digital for VAT

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More than 100,000 first-time buyers benefit from Stamp Duty Land Tax reforms

HM Revenue & Customs (HMRC) has published data which reveals that more than 100,000 first-time buyers have benefited from Stamp Duty Land Tax (SDLT) reforms announced at the last Budget.

During the period until 30 June this year, 121,500 first-time buyers saved a combined total of £284 million according to HMRC.

First-time buyers who purchase homes of £300,000 and below pay no SDLT, while those purchasing properties up to £500,000 pay no SDLT on the first £300,000.

It is estimated that the policy will help more than 1 million people make the step onto the first rung of the housing ladder over the next five years.

Mel Stride MP, the Financial Secretary to the Treasury, said: “Once again, we can see that our cut to SDLT for first-time buyers is helping to make the dream of home ownership a reality for a new generation – exactly as we intended.

“In addition, we’re building more homes in the right areas, and have introduced generous schemes such as the Lifetime ISA and Help to Buy.”

As well as the cut to SDLT, first-time buyers are also able to benefit from schemes such as the Help to Buy equity loan, Help to Buy ISA and Lifetime ISA, which can be used to save for a first home purchase or for later in life.

Meanwhile, it has also been announced that the window for making SDLT payments following the completion of a property purchase will be shortened from 30 to 14 days with effect from 1 March 2019.

However, the move is unlikely to have a significant impact on individual homebuyers as it is thought that fewer than 500 homebuyers each year file an SDLT return without the assistance of a professional advisor.

Link: 121,500 households benefit from stamp duty cut saving £284 million

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Taxpayers warned of Requirement to Correct as deadline approaches

Taxpayers with undeclared offshore tax liabilities, including Income Tax, Capital Gains Tax or Inheritance Tax, are obligated to disclose these liabilities to HM Revenue & Customs (HMRC) on or before 30 September 2018 under HM Revenue & Customs’ Requirement to Correct (RTC) regime.

The same rules apply to taxpayers with undeclared UK tax liabilities that involve offshore matters or transfers.

Taxpayers who fail to disclose these liabilities to HMRC on or before this date will result in the person becoming liable for penalties that are likely to be much higher than the existing penalties, with a minimum penalty of 100 per cent of the tax owed.

Where tax is due as a result of non-compliance involving either an offshore matter or an offshore transfer, the unpaid tax is charged on or by reference to:

  • income arising from a source in a territory outside the UK
  • assets situated in a territory outside the UK
  • activities carried on wholly or mainly in a territory outside the UK or
  • anything having effect as if it were income, assets or activities of a kind described above.

This includes income or sale proceeds in the case of Inheritance Tax or any part of the income received or transferred abroad prior to 6 April 2017.

Taxpayers will be liable to the following, tougher Failure to Correct (FTC) penalties if the person fails to disclose this information before 30 September 2018.

There will be a standard penalty equal to 200 per cent of the tax liability due that was not disclosed to HMRC under the RTC.

Where the tax involved exceeds £25,000 in any tax year, and the taxpayer knew that they had relevant offshore non-compliance and didn’t correct it, the asset-based penalty at Schedule 22 to Finance Act 2016 will apply.

This is a penalty of up to 10 per cent of the value of assets connected to the failure to disclose. This is in addition to the standard penalty detailed above.

There is also an additional Offshore Asset Moves Penalty, which is equivalent to 50 per cent of the amount of the standard penalty and is charged in addition to the standard penalty.

This enhanced penalty provision applies to the RTC rule and will be equivalent to 50 per cent of the FTC penalty.

In more serious cases, if more than £25,000 of tax per investigation is involved and the individual knew that they had relevant offshore non-compliance and didn’t correct it, HMRC may share their name and details publicly, as part of its ‘naming and shaming’ policy.

Link: Requirement to Correct tax due on offshore assets

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Reminder on changes to Corporation Tax notices

On 19 September 2016 HM Revenue & Customs (HMRC) decided to stop sending out paper copies of several important documents relating to Corporation Tax.

Despite this move taking place nearly two years ago, a quick search online indicates that many taxpayers are not aware that HMRC has changed some of its administration procedures for Corporation Tax returns.

The changes implemented by the Revenue, as part of a cost-cutting exercise, saw it stop sending out paper versions of:

  • acknowledgement of receipt of a Corporation Tax return (CT620 ACK)
  • letter showing the key corporation tax filing and payment dates (CT610/CT610A)
  • Budget insert which shows the changes to Corporation Tax following the Budget and is usually issued with the notice to deliver a company tax return – this will be made available online instead
  • authorising your agent form (64-8) which used to be issued with the “Information for new companies letter” (Form CT41G)
  • filing reminder letters which used to be issued 28 days before the return due date
  • notes issued with Corporation Tax return
  • various other Corporation Tax forms such as the notice of amendment to a return.

Following these changes, companies and agents are now expected to check Corporation Tax via the Online View Liabilities and Payments section of HMRC’s website to see details of their return.

Link: Corporation Tax