SME Tax Crackdown – £468 million generated from Investigations

We were interested to read recent analysis showing that compliance investigations into self-assessed business taxes by HMRC’s local teams generated £468 million in tax and this was largely driven by targeting small and mid-sized businesses (SMEs).

“An additional £486m in tax was generated by Tax Investigations, year ending March 31 2016”
UHY Hacker Young (information obtained via a freedom of information request)

It seems that facing pressure to boost tax receipts HMRC has turned it’s attention away from better prepared larger businesses and towards smaller targets.

This means that there maybe an increased chance of your business facing a tax investigation from HMRC. They may be incorrect and select the wrong targets! Investigations often come at any time at random, the stress and cost of an investigation can be considerable.

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Protect Yourself with our Tax Investigation Service

  • our fees will be paid for if HMRC investigate you
  • for limited companies and partnerships, the tax investigation fee protection service provides inclusive cover for all relevant individuals
  • for a summary of the protection afforded by our service (including the indemnity limits) please refer to our Service Summary.

Get more information on our dedicated mini-site or contact us with any questions…
http://davisgrant.clientweb.site/

Congratulations to our Trainees – another 100% pass rate!

The most recent batch of ACCA examination results are in and everyone at Davis Grant is proud to report that all our trainees taking part in this sitting stormed their exams! Congratulations to Adam, Katie and Ryan for passing their modules.

Sunil also passed his last exam and is now fully ACCA qualified. Massive congratulations to him as he moves on with his career at Davis Grant!

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For more details about working and qualifying at Davis Grant check out our careers page…
https://www.davisgrant.co.uk/why_us/careers.php

 

Are you ready for tax changes in 2017?

It may be time to take an accountancy health check. There are crucial changes in the coming months that may affect you and your business.

Happy New Year and welcome back. It may be time to take an accountancy health check. There are crucial changes in the coming months that may affect you and your business.

Also remember that Personal Tax returns and payments deadlines are at the end of this month!

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

Please contact us for advice on your own specific circumstances. We’re here to help!

News this Month

  •  Changes to the VAT flat rate scheme
  • Abolition of Class 2 NICs
  • Company cars: ultra-low emissions vehicles
  • Disguised remuneration and the self-employed
  • January questions and answers
  • January key tax dates

Changes to the VAT flat rate scheme

In a surprise announcement in the 2016 Autumn Statement, the Chancellor announced that changes are to be made to the existing flat rate scheme for VAT (FRS) in order to tackle perceived ‘aggressive abuse’. The changes, which will take effect from 1 April 2017, are designed to ‘reduce the incentive for firms and agencies to move employees to self-employment to exploit VAT simplification aimed at small businesses’. The subsequent HMRC policy paper published on 5 December sets out the details of the changes, which will affect any users, or prospective users, of the FRS.

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Abolition of Class 2 NICs

Originally announced at Budget 2016, the 2016 Autumn Statement confirmed that Class 2 National Insurance Contributions (NICs) will be abolished from April 2018, hopefully achieving the desired effect of simplifying National Insurance for the self-employed and making the system fairer for employed and self-employed individuals.

At the same time as the abolition of Class 2 NICs, the system for Class 4 NICs will also be reformed to include a new threshold – to be called the ‘small profits limit’ (SPL). The amount of the SPL for 2018/19 is yet to be confirmed but is likely to be around £6,025.

Payment of Class 2 NICs by the self-employed – a standard weekly contribution of £2.80 per week in 2016/17, rising to £2.85 per week from April 2017 – gives eligible individuals access to certain contributory benefits such as contribution-based employment and support allowance, basic state pension and bereavement benefits.

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Company cars: ultra-low emissions vehicles

At Budget 2016, the government said it would consult over the summer on changes to the ultra-low emission vehicles (ULEV) bands for taxing company cars to ‘focus incentives on the very cleanest cars’. As a result of the consultation, HMRC have now published details of eleven new bands, which will be introduced for ULEVs with emissions below 75gCO2/km from 2020/21, including a separate zero emission band.

Some of the lowest CO2 bands are based on the ‘electric range’ of the vehicle, as well as the CO2 emissions. This is the maximum distance the vehicles can travel in pure electric mode without recharging the battery or using the combustion engine of the plug-in vehicle. The aim is to distinguish between ULEV’s with different plug-in hybrid technologies and improved battery range, which will focus incentives on the very cleanest cars that allow most journeys to be zero emissions.

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Disguised remuneration and the self-employed

Following the announcement in the Autumn Statement, HMRC have published the details of a measure designed to tackle the future use of avoidance schemes currently being used by some self-employed people to avoid paying income tax and NICs on their income.

The measure will also tackle the existing use of schemes involving loans with a new charge (a ‘loan charge’) on outstanding loans taken out as part of avoidance arrangements. This charge will apply if tax is not paid on the loan and the loan is not repaid by 5 April 2019.

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January questions and answers

Q. I am thinking of renting out a small outbuilding that I own to a friend so that he can store his work equipment in it when he’s not using it. The rent is likely to be less than £1,000 a year. Will I have to declare this income to HMRC on a self-assessment return? My tax affairs are quite straight-forward – I am employed and currently I don’t need to send in a tax return.
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Q. Several of my employees have expressed an interest in purchasing electric cars but have pointed out that as our office is situated in a remote location they will be unable to make their whole commute without charging. If the business pays for an electric charging point to be installed at the business premises, would capital allowances be available for the expenditure incurred?
Answer

Q.Ten years ago my husband inherited a share of his father’s property when he died as a joint owner with his partner. My father-in-law’s will specified that his surviving partner could continue living in the property for as long as she wanted. Both my husband and my deceased father-in-law’s partner are on the deeds for the property. The partner has recently died and the property is empty. Will my husband have to pay capital gains tax on his share when it is sold, even though he could not live there because the partner was in residence?
Answer

January key tax dates

1 – Due date for payment of Corporation Tax for the year ended 31 March 2016
14 – Return and payment of CT61 tax due for quarter to 31 December 2016
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/1/2017 or quarter 3 of 2016/17 for small employers
31 – Deadline for filing 2016 Self Assessment personal, partnership and trust Tax Returns – £100 first penalty for late filing even if no tax is due or tax due is paid on time
– Balancing self assessment payment due for 2015/16
– Capital gains tax payment due for 2015/16
– First self assessment payment on account due for 2016/17
– Interest accrues on all late payments
– Half yearly Class 2 NIC payment due
– Further penalty of 5% of tax due or £300, whichever is greater for personal tax returns still not filed for 2014/15
– 5% penalty for late payment of tax unpaid for 2014/15 self assessment

Need Help?

Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.

New Clients Welcome

If you are not already a client and are interested in becoming one, we would love to come to meet with you to discuss how we can help and provide you with a competitive quote for our services.

All new client consultations are provided free of charge and without obligation.

Davis Grant Team Member in bid for Christmas #1

Our very own Linda took part in this single along with the Royal Opera House Thurrock Community Chorus as part of the Friends of Jo Cox

linda-stewartWe are proud that Linda Stewart our Bookkeeping Supervisor can be heard on a unique protest single released today by a group of music stars and MPs as a tribute to the late MP Jo Cox and her outstanding public service.

Sales from the song, a cover of the Rolling Stones classic You Can’t Always Get What You Want will raise funds for the launch of the Jo Cox Foundation established after her death. The song was chosen as it called for multiple singers and choirs, reflecting a message of togetherness. During a time of growing worldwide political upheaval and uncertainty, the song marks the need for unity and tolerance.

Linda took part along with the Royal Opera House Thurrock Community Chorus to form Friends of Jo Cox featuring MP4, Steve Harley, Ricky Wilson, KT Tunstall and David Gray.

At Davis Grant we couldn’t be prouder and encourage you all to support this single and this remarkable cause in honour of Jo Cox MP’s legacy and work.
http://www.pledgemusic.com/projects/friends-of-jo-cox

Lawrence Davis Closes his Office

There were emotional scenes at the Davis Grant offices today as Lawrence Davis took the step of closing his office. He told the team how he had joined his father’s Accountancy Firm in 1971…

“I joined just for a few months to see whether I liked it” he quipped 45 years later, “I’ve decided now that I DON’T! So I’m going!”

Lawrence’s role giving occasional consultancy to the practice in recent years has been valued, especially in the area of resolving HMRC investigations for our clients.

He later wrote:

I would like to thank you all very much for your kindness and generosity, not in the financial sense, but the spirit in which I am always greeted.

During one’s lifetime we can all look back on decisions which were misguided or wrong. In my instance however the choice of work colleagues, friends and partners has been faultless and I am extremely grateful for the immense good fortune which I have encountered.

I have been extraordinarily fortunate. I wish you all continued happiness and success in the future.

Barry Chernoff, Director presented him with gifts to show the Teams appreciation but hinted that Lawrence wouldn’t be able to stay away. The prediction seems to be holding true as he will be lending us his experience again next month!

Learn More about the Team at Davis Grant…
https://www.davisgrant.co.uk/why_us/meet_the_team.php

Tax Investigations can be expensive!

Subscribing to our Tax Investigation service means in the event of a costly investigation by HMRC you are protected from paying the professional fees required to resolve the matter (up to £100,000 per claim unless otherwise indicated).

Our Service could save you thousands of pounds and lots of stress!

Top 5 reasons for acting now

  1. Investigations are often at random and come at any time.
  2. With a public focus on tax evasion, HMRC are stepping up the number of tax investigations.
  3. New software used by the authorities traces even the smallest discrepancy in spending or earnings, prompting an investigation. They may be incorrect and select the wrong targets!
  4. The stress and cost of an investigation can be considerable.
  5. Our expertise can save you time and money in the long run.

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Get more information on the types of investigation you may be at risk from and how best to protect yourself…
Visit our tax investigation site for more details.