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CIOT NI Branch AGM

2011-09-08T13:15:00.001+01:00

At last evening's AGM for the Chartered Institute of Taxation, NI Branch, Brendan Morris stepped down as Chairman on the expiry of his two year term. In his outgoing adress he said that it was a personal privilege to have served as Chairman and thanked his fellow Branch officers and committee members for their support during his term. David Lynas was voted in as the new Chairman.

Brendan wished David well and said "for the remainder of my term on this committee, I now look forward to supporting my successor by continuing the good work in making the NI Branch the success that it is"

All Island Tax Seminar

2011-09-08T13:01:00.000+01:00

Brendan Morris as outgoing Chairman for the CIOT NI Branch is honoured to be hosting an All Island Tax Seminar to be held at the Crowne Plaza hotel in Dundalk on September 15th. This seminar is a new initiative and is being held jointly with the Irish Taxation Institute. It is also a unique opportunity to bring together tax professionals from north and south of the border. Further details can be found on the pdf attached.

Self Assessment - 31 July payment - statement delays from HMRC

2011-08-31T11:33:00.000+01:00

HM Revenue have acknowledged that they were late in sending out over 500,000 Self Assessment Statements which taxpayers required to make their 31 July instalments. In some instances the statements arrived after 31 July.

Where this has happended, taxpayers have now been given to 27 September to make their payment without late payment interest being applied.

Private Tutors are next in line

2011-08-31T11:05:00.000+01:00

Following the HM Revenue & Customs recent Plumbers Tax Safe Plan which saw the arrest of five plumbers, HMRC is continuing its programme of campaigns designed to tackle particular trades and professions. According to HMRC’s campaigns timetable, private tutors will be the next to be targeted, starting in the Autumn, followed, in early 2012, by those using the internet to buy and sell goods and another campaign targeting other tradespeople.

Plumbers arrested by HM Revenue & Customs

2011-08-31T11:02:00.000+01:00

HMRC said it had arrested five plumbers and was investigating about 600 others following its Plumbers Tax Safe Plan (PTSP) campaign, in which people in the industry were given until May 31 to put their tax affairs in order or face the consequences. Some of those involved owe up to £150,000.

"HMRC have had limited success with the numbers coming forward in the recent medical and plumbers disclosure opportunities, so they are getting tough with those who did not register or disclose," said Gary Ashford of the Chartered Institute of Taxation

"People should not underestimate the amount of data that HMRC is holding. What we are now seeing is HMRC starting to use that information. The net is tightening on those who break the law."

Do I need to File a tax Return??

2011-07-31T14:03:00.000+01:00

As accountants and tax advisers we are often asked the question: "Do I need to file a tax return?"

If HMRC send a notice reminding you to fill in a Self Assessment Tax Return, you should do so. But what happens if you are not presently reminded or required by HMRC to send in a return?

The following persons should notify HMRC that they need to submit a return even if HMRC are not presently asking them to do so:

If you are, or become, self-employed (this includes being a member of a partnership)
If you are a company director, a minister of religion or member of Lloyd’s

You are also required to send in a return if your income from the following sources exceeds:

£10,000 or more income from savings and investments
£2,500 or more income from untaxed savings and investments*
£10,000 or more income from property (before deducting allowable expenses)
£2,500 or more income from property (after deducting allowable expenses)

* Although there is no requirement to request a tax Return if your untaxed savings income is below £2,500, it is necessary that you advise HMRC to include the income as a deduction on your Notice of Coding

You are also required to file if you have:

income from an annual trust or settlement income on which tax is still due (even if you’re only treated as receiving this income)
income from the estate of a deceased person on which tax is still due

Other reasons:

You are 65 and receive a reduced age related allowance
You have any foreign income that is liable to UK taxation
Your annual income is over £100,000
You need to claim certain allowances or reliefs
You have capital gains tax to pay
You are a trustee
If you have lived or worked abroad or you are not domiciled in the UK
If you have untaxed income sources and are using personal allowances elsewhere

The above is quite a list, however, the responsibility for filing tax returns ultimately rests with the individual.

If you are in any doubt as to whether you should be filing a tax return, please contact BDM for guidance.

100% Tax Allowance is Only Short Term

2011-07-31T13:45:00.000+01:00

Currently, purchases of qualifying plant and equipment can be written off against your taxable profits.

One method for obtaining tax relief is to utilise the Annual Investment Allowance (AIA) which for the 2011-12 tax year allows a write-off of upto £100,000 worth of qualifying expenditure.

However, from April 2012 the AIA will be reduced to £25,000.

If you are considering replacing old equipment or buying new qualifying equipment in the next 12 months, the timing of your purchase will likely have a big impact on your tax position.

Contact BDM for more details.

VAT Amnesty

2011-07-21T17:18:00.000+01:00

HMRC has launched a new amnesty campaign targeting businesses trading above the VAT threshold without being registered. This follows previous facilities targeting those with offshore assets, medical professionals, plumbers and associated tradespeople.

HMRC is encouraging anyone who has unpaid tax to come forward and make a voluntary disclosure - the current VAT threshold is £73,000 turnover on a rolling annual basis.

It states that most disclosures will qualify for a 10% penalty, instead of the normal penalty up to 100% of the tax, as well as the likelihood of the disclosure being accepted without undergoing any follow up queries.

A deadline for registration has been set at 30 September 2011.

31 July Tax Payments

2011-07-19T09:00:00.000+01:00

Most clients should have recently received a statement from HMRC detailing any tax payments due by 31 July 2011 (second payment on account for 2010/11 tax year).

Make sure the payment is sent to HMRC in good time in order to avoid unnecessary interest and penalties.

Contact BDM for assistance

NI Corporation Tax - Treasury consultation deadline extended (again)

2011-07-05T15:06:00.002+01:00

The deadline for responses to HM Treasury's Consultation paper ‘Rebalancing the NI Economy’ has been further extended to 8 July 2011.

As Chairman for the NI Branch of the Chartered Institute of Taxation (CIOT), Brendan Morris from this firm played a lead role in surveying the views of the NI membership and formulating the attached submission on behalf of the CIOT.

Chartered Institute of Taxation submission link

P11D and Class 1A NIC submission and payment dates

2011-07-05T12:27:00.000+01:00

Clients are reminded that the due date for completion and submission of forms 2010/11 P11D "Return of Benefits and Expenses"and P11D(b) "Return of Class 1A NICs" is 6th July 2011.

Payment of Class 1A NICs is due by 19th July 2011 (or 22 July 2011 if paid electronically).

Contact BDM for further guidance

P11D Dispensations

2011-07-05T12:21:00.000+01:00

A P11D dispensation is a notice from HMRC that removes the requirement to report certain expenses to them at the end of the tax year on forms P11D or P9D. As a result, there is no requirement to pay any tax or national insurance contributions on items covered by a dispensation.

Once granted, dispensations last indefinitely, however HMRC review them regularly and you can expect a review to take place (on average) at least once in any five year period.

The expenses generally covered by a dispensation are:

Travel, including subsistence costs associated with business travel
Fuel for company cars
Hire car costs
Telephones
Business entertainment expenses
Credit cards used for businesses
Fees and subscriptions

HMRC strictly apply the dispensation from the date they accept the application, although in most cases they will agree to retrospective cover to the beginning of the current tax year.

To obtain the dispensation, you should complete and form P11DX to HMRC.

Contact BDM for further guidance

E-Traders on alert

2011-07-05T11:53:00.001+01:00

HM Revenue and Customs have recently announced that they have added etrading to its list of targets.

The online marketplaces campaign will focus on people buying and selling goods as a trade or business and who fail to pay the tax owed. HMRC software will trawl the net for traders who may have failed to pay the right tax.

There is clearly a distinction between buying and selling a few items as against more commercial efforts in trading to make a profit. If in doubt as to which side of the line you fall, take advice as to whether you should be registered with HMRC.

Belfast Telegraph article 17 June - "A power shift that will rev up the economy"

2011-06-17T11:43:00.001+01:00

Contributing to the Belfast Telegraph's week long review of Corporation Tax, BDM Tax Director, Brendan Morris writes:-

"The power to set corporation tax rates is an exciting opportunity. Ownership of a key economic lever would be an ‘early win' for the new Executive and could be seen as an indicator of its increasing autonomy and stability. A big rate cut could send a message that we see ourselves becoming a more entrepreneurial society with the private sector making up a growing share of our economy. As the shop window for a wider package of enterprise-friendly measures, it could help grab the attention of the international business community.

As I've said in previous articles in this series, it is not a one-way bet. Alongside the loss of revenue for the Executive (we still need to know the corporation tax figures to assess the economics), there is an additional administrative burden. A change in the rate would be simple for a company operating solely in Northern Ireland, but one operating across the UK would have to spend time calculating the profits earned in Northern Ireland. Then HMRC may wish to police the split closely, to make sure businesses are not wrongly assigning profits to Northern Ireland, rather than the rest of the UK, to save money.

Although driven by economics, the devolution of tax rates has political implications. It alters the balance of power between Westminster and Stormont (and indeed Westminster and the other devolved bodies, as anything Stormont gets, Holyrood and Cardiff Bay are likely to demand). For ministers at Westminster, deciding whether to grant this additional power is likely to weigh as heavily as the economic considerations."

Belfast Telegraph article 15 June - "There is a risk here"

2011-06-15T12:05:00.001+01:00

Contributing to the Belfast Telegraph's week long review of Corporation Tax, BDM Tax Director, Brendan Morris writes:-

It is one of the cornerstones of a democracy that taxes can only be raised with the consent of the people. Thus, politicians have a responsibility to make sure that people understand the implications of changes to their tax system.

Cutting corporation tax (CT) will leave a shortfall in our region’s finances. Of course, the plan is that this will be made up by increased inward investment. But there is a risk here, and people must be made aware of it. For all its attractions, a cut in the CT rate is not an automatic one-way bet.

Some will see a CT cut as a tax break for big business at a time when most households across the UK are seeing their taxes rise. There is a persuasive counter-argument to this in terms of the increased economic activity and employment a rate cut should bring, but politicians and business alike will need to keep explaining this.

The tax paid by a company on its profits is the product of the tax rate applied to its taxable profits. All discussion has been about reducing that rate. However, what if Northern Ireland had power to adjust that taxable profits figure for local companies? To give incentives for particular local actions, or additional deductions for activities we need? Perhaps politicians need to consider wider powers than just cutting the rate, though if they do there will be a complexity burden to bear in mind for companies operating beyond Northern Ireland into the rest of the UK.

Belfast Telegraph article 14 June: "First impact of cut will be to boost our morale"

2011-06-14T11:18:00.002+01:00

Contributing to the Belfast Telegraph's week long review of Corporation Tax, BDM Tax Director, Brendan Morris writes:-

"Reducing the rate of corporation tax (CT) paid by companies in Northern Ireland is likely to have a ‘slow burn’ impact on the local economy. Clearly, the plan would be that the lower rate would tempt more business to Northern Ireland. That in turn would generate more employment with associated taxes, which would hopefully more than refill any depletion of coffers from the CT cut.

However, the immediate impact would be less tangible – but more important. That immediate impact would be a morale boost for the economy, thanks to a perceived vote of confidence in its prospects. This would be the case even if a phased and/or delayed rate cut was announced. After all, the underlying message of a CT cut would be not simply ‘cheap taxes here’ – otherwise all business would migrate to some of the classic tax havens. Rather it would be: ‘we have prospects and are confident enough in our offering to make sure you take note of us’.

Of course economic competitiveness is not just about tax levels. When the CIOT surveyed our local members last year, most (70%) agreed that a cut in CT rates was the simplest and quickest way of making our region more competitive. But over a third thought that non-tax measures were even more important. Better infrastructure, including IT, and a stable NI executive were top of the non-tax list.

But none of these changes would grab the attention of the international business community in the way that a substantial CT cut would."

Tax Credits Renewal Packs

2011-06-13T13:53:00.000+01:00

HMRC are currently sending over 8m tax credit renewal packs to homes in the UK. Be sure to complete and return the claim form by 31 July to continue your claim.

Contact BDM for further advice.

Dow Jones UK asks if Northern Ireland companies should get lower corporation tax rate

2011-06-10T09:39:00.001+01:00

In an interview with Dow Jones London, Brendan Morris as Chairman for the Northern Ireland Branch of the Chartered Institute of Taxation was questioned in respect of whether there were concerns that foreign companies might take advantage of the tax regime to set up similar "brass plate" operations, which involve setting up a putative headquarters to take advantage of the tax regime but in fact providing little in the way of jobs or investment.

Brendan Morris responded that UK transfer pricing legislation already makes this difficult, and added that the tax regime in Northern Ireland could be set up with safeguards to make such profit shifting harder still.

VAT Returns and Payments

2011-06-03T10:31:00.000+01:00

From 1 April 2012 all VAT registered businesses will be required to submit their VAT returns and make VAT payments online.

If you haven't already done so, get registered with HMRC early or contact BDM for assistance.

http://www.hmrc.gov.uk/vat/start/register/signup-online.htm

3 reasons for paying your tax on time

2011-05-25T16:38:00.000+01:00

If you pay your tax late you will be subject to the following penalties:

30 days late: 5% of outstanding tax liability
6 months late: further 5% of outstanding tax liability
12 months or later: further 5% of outstanding tax liabliity

In addition to the above, interest will be applied to any late payments and will accrue on both the tax and penalties payable.

The message is simple - pay on time!

Contact BDM for further advice

Four reasons for filing your tax return on time

2011-05-19T09:08:00.000+01:00

Late filing of your 2010-11 self assessment tax return will be subject to a new penalty regime. The old £100 penalty was not the deterrent it was intended to be as too many tax payers are still filing late returns.

From October 2011, the last date for filing a paper return for 2010-11, four penalties will now apply:

From day one: £100 penalty applies even if you have no tax to pay or have paid any tax due.
Three months late: Automatic daily penalty of £10 per day up to a £900 maximum charge.
Six moths late: Additional penalties will be charged which are the greater of 5% of tax due or £300.
Over twelve months late: Further penalties based on the greater of 5% of tax due or £300. In serious cases this penalty may be increased to up to 100% of the tax due.

These penalties will be applied after 31 January 2012. As HMRC will assume that you are going to file online if you miss the 31 October 2011 paper filing deadline, you should under no circumstances post a paper return after 31 October 2011 as this will trigger the new penalties.

Contact BDM for further advice.

Tax Simplification ...could it be that simple?

2011-04-19T16:59:00.001+01:00

An interim report looking at small business taxation has been published (March 2011) by the Office of Tax Simplification (OTS). Merging Income Tax and National Insurance, the future of IR35, HMRC’s procedures and a simpler regime for the smallest businesses are all addressed in the initial recommendations. The report analyses a range of elements of small business taxation and identifies problems and suggests ways forward.

The OTS concluded that major structural changes would be needed to the UK tax system if genuine and long lasting simplification is to be achieved and this would involve a lengthy process.

So, whilst we welcome the review and the consultation carried out and performed by the OTS, it remains to be seen what the final outcome will be. Obviously, the proposals form part of a bigger consultation, with the final OTS report several months away. We will therefore keep an eye out for further detail on the proposals as they develop.