Category: Task Force

Will your tax return stand up to HMRC Profit Benchmarking?

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HMRC have been doing lots of research on SME businesses, the most interesting areas of research are:

Understanding Small and Medium Enterprise (SME) business life events – SME Customer Journey Mapping

Research was carried out to understand:

  • the key life events and activities that SMEs experience
  • how these relate to tax
  • what opportunities there are for the improvement of HM Revenue and Customs (HMRC) services by more closely aligning them to business lifecycles

The Transparent Benchmarking Team Statement (November 2014)

HMRC is conducting a number of pilots, focussed on SME customers, designed to explore the effectiveness of publishing benchmarks on aiding greater voluntary compliance.

Following the first pilot (benchmark net profit ratios for Painters and Decorators, and Driving Instructors) in March 2014, HMRC will run two more in the autumn. One of these will focus on self-employed taxi drivers and pharmacists, where HMRC will be writing to around 2,500 agents that have a number of clients in the target sectors. The idea is to test whether publishing benchmarks through an agent is more effective than writing to a customer directly. Letters will also be sent to a sample of represented and unrepresented customers within the selected sectors to form control groups for evaluation purposes. All represented individuals and businesses written to directly will be informed that their agent has not received a copy of the letter.

The benchmark for both sectors is the net profit ratio. Because this is a controlled pilot exercise, not all agents or businesses within the relevant sectors will be receiving a letter. (source CIOT)

The Benchmarks we know so far are:

  • Painters & Decorators range from 59% to 79%
  • Driving Instructors 31% to 67%

So the range of profits are big!

We await the ranges for Taxi Drivers and Pharmacists.

If your profit doesn’t fit then you need to know why.

Do not ignore the letter because HMRC are likely to follow it up and assume you are deliberately trying to avoid tax!

You may have some valid reasons for not fitting the benchmark and you must explain those reasons to HMRC.

A deliberate error will results in a higher penalty (up 100% of the tax) but can also open the door to HMRC going back over up to 20 years of your accounts!

The letters refer to common mistakes in:

  • Travel Expenses
  • Telephone Costs
  • Utility and insurance charges
  • Professional Fees
  • Capital Expenditure

You may find these blogs helpful

Motor Expenses

Travel Expenses

Home Office Expenses

10 Ways to Save Tax

HMRC also have some useful toolkits/checklists…..

Business Profits Toolkit

Private and Personal Expenditure Toolkit

steve@bicknells.net

HMRC Solicitors Campaign – do you have anything to declare?

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You can tell HM Revenue and Customs (HMRC) about any income you haven’t declared (this is known as ‘voluntary disclosure’).

The Solicitors Tax Campaign gives you the chance to do this if you work within the legal profession as a solicitor in a partnership or company, or as an individual.

How to tell HMRC about undeclared income

  1. Fill in a notification form by 9 March 2015.
  2. Fill in a disclosure form and pay what you owe by 9 June 2015.

Use the calculator to help work out what you owe. Only use the calculator if both of the following apply:

  • your tax affairs are straightforward
  • you’re entitled to only basic personal allowances

There’s a different calculator if you need to tell HMRC about more than 5 years of unpaid tax.

Call the helpline before 9 June 2015 if you need more time to pay.

Help and advice

You can read more about how to make your voluntary disclosure.

Call the Solicitors Tax Campaign helpline if you need more help.

Solicitors Tax Campaign helpline
Telephone: 0300 013 4749
From outside the UK: +44 300 013 4749
Monday to Friday, 8am to 8pm

https://www.gov.uk/solicitors-tax-campaign

steve@bicknells.net

Have you got undeclared Credit Card sales?

Kartenlesegerät, geld überweisen, Kreditkarte, Hand

The Credit Card Sales Campaign is an opportunity to bring your tax affairs up to date if you’re an individual or business that accepts credit or debit card payments.

Who can do this

This opportunity is for you if:

  1. you accept card payments for goods or service
  2. you haven’t declared all your UK tax liabilities

Get the best terms

You need to tell HM Revenue and Customs (HMRC) if you either:

  • haven’t registered with them
  • have failed to declare all your income

This is called a ‘voluntary disclosure’.

What happens if you should disclose but don’t

HMRC has details of all credit and debit card payments to UK businesses. This information is used to identify individuals and businesses that might not have paid what they owe.

Credit Card Sales Campaign Helpline
Telephone: 0300 123 9272
From outside the UK: +44 300 123 9272
Monday to Friday, 9am to 5pm

steve@bicknells.net

HMRC demand payment from Landlords

Mosaïque de logements

HMRC launched the ‘Let Property Campaign‘ on the 10th December 2013.

If you’re a landlord who has undisclosed income you must tell HMRC about any unpaid tax now. You will then have 3 months to calculate and pay what you owe.

The Let Property Campaign is an opportunity open to all residential property landlords with undisclosed taxes. This includes:

  • those that have multiple properties
  • landlords with single rentals
  • specialist landlords with student or workforce rentals
  • holiday lettings
  • anyone renting out a room in their main home for more than £4,250 per year, or £2,125 if the property was let jointly, but has not told HMRC about this income
  • those who live abroad or intend to live abroad for more than 6 months and rent out a property in the UK as you may still be liable to UK taxes

 

According to the Telegraph….

Fewer than 500,000 taxpayers are registered with HMRC as owning properties other than their home. And yet other sources put the number of Britain’s growing army of landlords at between 1.2million and 1.4million.

Why the discrepancy? No one can say for sure, but the taxman has his answer: not enough people are declaring – and paying tax on – their property incomes and gains.

HMRC will identify those who they believe should have made a disclosure by:

  • comparing the information already in their possession with customers’ UK tax histories
  • continuing to use their powers to obtain further detailed information about payments made to and from landlords

Where additional taxes are due HMRC will usually charge higher penalties than those available under the Let Property Campaign. The penalties could be up to 100% of the unpaid liabilities, or up to 200% for offshore related income.

If you owe tax, you must tell HMRC of your intention to make a disclosure. You need to do this as soon as you become aware that you owe tax on your letting income.

At this stage, you only need to tell HMRC that you will be making a disclosure.

You do not need to provide any details of the undisclosed income or the tax you believe you owe.

It sounds like HMRC could be in for bumper Christmas if landlords take advantage of this opportunity to pay up!

steve@bicknells.net

If you’re in health care the tax man is coming

fear of dentist

The latest HMRC Task Force has been named as ‘The Health and Wellbeing Tax Plan’.

If you work in a health and wellbeing profession such as:

  • physical therapy – eg physiotherapist, chiropractor, chiropodist, osteopath, occupational therapist
  • alternative medicine or therapy – eg homeopathy, acupuncture, nutritional therapy, reflexology, nutrition
  • other therapy – eg psychology, speech therapy, arts therapy

You have until 31st December 2013 to notify HMRC and any unpaid tax has to be paid by 6th April 2014.

Health and wellbeing tax plan helpline
Telephone: 0845 600 4507
From outside the UK: +44 1792 657 324
Monday to Friday, 8am to 6:30pm

Marian Wilson, Head of HMRC Campaigns, said:

“I urge health and wellbeing professionals to take advantage of our quick and straightforward way of bringing their tax affairs up to date. Help, advice and support is available.

“After the opportunity closes on 6 April, HMRC will use information it holds from third parties and regulatory bodies to identify people who have not paid what they owe. Penalties – or even criminal prosecution – could follow.”

Do you have anything to declare? HMRC can go back 6 years

steve@bicknells.net