Friday 30 September 2011

IR35 only collects £220000 in tax

The Professional Contractors Group (PCG) has called on the government to explain why IR35 was retained after it yielded just £220,000 in the last tax year.
HMRC admitted, in response to a freedom of information request, that IR35 status enquiries fell from 158 in 2006/2007 to 23 in 2010/2011. The tax yield also highlights a dramatic reduction from more than £1.9m five years ago to £219,180 this year.
John Brazier, managing director of PCG, referred to IR35 as an unwarranted measure introduced by the previous government. He said: “These figures confirm what PCG has always said, that the tax yield from IR35 is minimal and that the stress and damage done to the UK’s 1.4m genuine freelance businesses is completely unnecessary.
“It is now time for the decision makers to explain more clearly to freelancers and the public why the risk to the exchequer would be simply too great if IR35 was abolished or suspended," Brazier added.
As directed in the Budget this year, the administration of IR35 is being reviewed and it is hoped that the government will address the issue later in the year.
Chris Bryce, PCG chairman and IR35 Forum member, added: “He [the Chancellor] has a great opportunity in the November statement to release businesses from this ridiculous burden and free up HMRC resource to work on better things."
IR35 status enquiries: 6 April 2006 to 5 April 2011
HMRC confirmed that the number of reviews opened in the last five years, where the Intermediaries Legislation (IR35) was identified as a risk, was:
  • 6 April 2006 to 5 April 2007: 158
  • 6 April 2007 to 5 April 2008: 104
  • 6 April 2008 to 5 April 2009:   25
  • 6 April 2009 to 5 April 2010:   12
  • 6 April 2010 to 5 April 2011:   23
The Revenue also provided the tax yield received for the requested years:
  • 6 April 2006 to 5 April 2007 = £1,906,619
  • 6 April 2007 to 5 April 2008 = £1,730,640
  • 6 April 2008 to 5 April 2009 = £1,430,358
  • 6 April 2009 to 5 April 2010 =    £155,502
  • 6 April 2010 to 5 April 2011 =    £219,180
HMRC is expected to continue investigations but possibly taking a more targeted approach, focusing on 'high risk' areas.

Full article at:

http://www.accountingweb.co.uk/article/pcg-ir35-completely-unnecessary/519174

Thursday 29 September 2011

Pre registration VAT

Great advice on pre registration VAT:


http://www.peninsula-uk.com/bottomlineexpress/447/Ask-The-Taxwise-Expert.html

Tax return filing penalties

HM Revenue & Customs recently issued the following as a reminder of the late filing penalties for Self-Assessment Tax Returns for the 2010/11 years and onwards. Accountants and Tax Advisors should take note of the initial £100 penalty applying regardless of whether the taxpayer has paid their tax on time or not!

HM Revenue & Customs (HMRC) is reminding individuals and businesses about new Self Assessment penalties for late returns and payments, which come into effect this autumn.

The changes will affect Self Assessment returns for 2010-2011 and all future financial years.
The new penalties for late Self Assessment returns are:
- an initial £100 fixed penalty, which will now apply even if there is no tax to pay, or if the tax due is paid on time.
- after 3 months, additional daily penalties of £10 per day, up to a maximum of £900.
- after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater; and
- after 12 months, another 5% or £300 charge, whichever is greater. In serious cases, the penalty after 12 months can be up to 100% of the tax due.

New penalties for paying late are 5% of the tax unpaid at:
- 30 days,
- 6 months, and
- 12 months.

Interest will also be charged on top of these penalties. Further information on the new penalties is available from the HMRC website at
www.hmrc.gov.uk/sa/deadlines-penalties.htm

Employment law

I wanted to share an interesting document produced by the British Chamber of Commerce (BCC). It is a timeline looking at forthcoming employment legislation for the next four years, calculating the cost to employers. Given the squeeze on public sector jobs, it’s more important than ever that the private sector creates jobs. However, the BCC argues that the tremendous costs involved in complying with red tape are holding back growth and job creation in the private sector.

The Government has said that it wants to reduce the burden posed to business by employment legislation. It has committed to reforming the Employment Tribunal system, a necessary step which we support. But the reality is that there is a raft of UK and EU legislation coming down the pipeline which will add further costs and complexity to the already hefty burdens posed on management.

In 2012, the Parental Leave Directive, Pensions Reform; National Minimum Wage Increase; in 2013 Gender Pay Reporting under the Equality Act; in 2015 Shared Parental Leave – to name but a few. And the cost? According to the British Chamber’s calculations, the cumulative cost to business of this legislation between 2011 and 2015 is £22.17 billion.

Wednesday 28 September 2011

The new blog

Welcome to our new blog.

We hope to be able to use the blog to post interesting and useful stuff to help our clients grow their businesses and so achieve their maximum potential.

Harris & Co