Every week we take a look at what is trending in the accountancy and tax press and share items that we think will interest you. However, these are only outlines and where they relate to tax planning should not be acted upon without looking into them more completely as everyone’s circumstances are particular to them. You need to take specific advice appropriate to your own circumstances.
While every effort is made to deliver accurate, informative and balanced articles this content is general in nature and should not be used as the sole basis for making decisions.
So Many Scams!
I don’t think a day goes by without either receiving a dodgy email, text or phone call. This week I took a call purporting to be from OPUS, our electricity supplier. Apparently, they had a problem in their system and they needed to confirm the supply number for our Thurso office. This guy had a strong Indian accent, and I was struggling to understand him anyway. He wanted me to get a recent bill from OPUS. I started to look. They are all stored online. But there was something about this call that did not ring true. I said that he would need to put his request for information in writing, which he was not keen to do as all the information that he needed was details off one bill. I hung up.
Helen and I were in different offices so I gave her a call. She had a similar call recently and she hung up on them as well. So, either we are both smart or we now have two black marks against our account at OPUS.
There are countless scams that use HMRC as a pretext, usually chasing money but sometimes wanting bank details so they can pay a refund.
One such scam has been highlighted this week involving threats of legal action from HMRC following the January personal tax payment deadline.
The pre-recorded message (with an HMRC type accent) says a letter that was sent to you has been returned and that HMRC are launching legal proceedings against you. Press 1 to speak to our legal officer.
Some of these callers use premium rate lines so that even if they do not get anything else out of you, they earn money just by keeping you on the line. Their real goal is a payment or even just your bank account details.
Some are really sophisticated and give you a menu of choices , so press 1 to speak to an adviser.
HMRC advises, if you cannot verify the identity of the caller, it’s best not to speak to them.
What happens if you press 1 to speak to an adviser? This adds your phone number to a subset of the database they’re using (marked as something like ‘potentially gullible’), so you can then expect many more calls.
An administrator of a fraudulent website pleaded guilty to charges at Southwark Crown Court for his involvement in running a fraud website that caused the loss of £100m.
The site known as iSpoof, allowed fraudsters to appear as if they were calling from tax offices, banks and other official bodies in an attempt to defraud victims.
He received at least £1.3m from the fraudulent site for his role in the frauds.
There were over 200,000 victims and the total losses to victims of the iSpoof fraud in the UK exceeded £43m, with global losses estimated to be at least £100m.
Around 20 people every minute were being contacted by callers,.
Accountants Jump Ship
A recent survey suggests that 83% of financial services workers have thought about changing jobs as a result of their mental health, with nearly half already taking action.
The majority said flexible working was one way organisations could better support their mental health at work.
Around 60% of accountants said their employer could be doing more on workplace mental health and wellbeing. 41% wanted more flexibility, choosing when and where they work.
There are some interesting accounting jobs out there at the moment.
The long-time treasurer of the Scottish National Party has resigned as treasurer following his arrest so there is a job opportunity for someone.
Beattie, who has been the SNP MSP for Midlothian North and Musselburgh since 2011, said he was resigning as party treasurer and leaving his role on the Scottish parliament’s public audit committee.
The auditor of the SNP, Johnston Carmichael, has also resigned after more than 10 years of handling the audit. They earned £57,235 in audit fees for the year-end 202. Should we apply for that vacant position as auditor.
HMRC is highlighting changes to the taxation of termination payments that have come into effect in the last 5 years.
A Class 1A NICs charge has been imposed on qualifying termination payments above the £30,000 exemption for tax.
Post-employment notice pay was introduced in 2018, to ensure non-contractual payments in lieu of notice were subject to tax and NICs, the same as contractual and customary payments.
The amount within the termination payment calculated as post-employment notice pay, is now chargeable to income tax and NICs as general earnings, and no longer benefits from the £30,000 exemption.
Non-resident individuals are now charged to UK tax as earnings on the post-employment notice pay to the extent that they would have worked during their notice period in the UK.
Finally, if the wrong amount of tax and National Insurance has been paid, corrections can be made via a Full Payment Submission, using the ‘Data item box’ (Class 1A year- to-d date) for amendments to the Class 1A NICs.
2.25% Interest Rate Hike
In spite of the recent increase in interest rates, directors’ loans are still taxed at just 2.25%.
The Bank of England base rate is now 4.25%, but employees and directors in receipt of loans from their companies pay the lower rate in calculating the taxable benefit where they do not pay interest on the loan at an appropriate rate.
HMRC’s official rate of interest has only increased by a modest 0.25%, from 2.0% to 2.25% per annum. A very attractive rate compared to borrowing from a commercial lender.
Having such a low beneficial loan rate could mean that where the director is also a shareholder, the company might consider a loan instead of a dividend which would be taxed at up to 39.35%.
However, it would need to be recognised that this is a loan and so would need to be repaid at some point and until then the annual income tax charge would be incurred.
Also if the loan remains outstanding then the company would have a tax liability of 33.75% of the loan balance; but this is repaid to the company when the loan is repaid.
Expenses – Definition of Van
In 2020 the Court of Appeal made a decision that related to the Coca Cola company and looked at 3 “vans”.
The case centred around the classification of crew cab vehicles, including a Vauxhall Vivero and a VW Transporter T5, with the court ruling that they had to be treated as company cars and were therefore subject to higher company car tax rates.
It is the construction of the vehicle when it is first made available to the employee that dictates the benefit position, not the use to which it is put.
It ruled that it would only be accepted as a van if the predominant suitability of the vehicles in question was for the conveyance of goods and that multi-purpose vehicles can have no primary suitability at all.
Budget Payroll Issues
- an increase in the pensions annual allowance, from £40,000 to £60,000, from 6 April 2023; and
- the abolition of the pensions lifetime allowance (currently £1,073,100).
12 new investment zones will be created, and there will be benefits for employers in designated areas in those investment zones including a zero-rate of employer National Insurance contributions (NICs) on the earnings of new employees, up to £25,000 per year.
The relief will be available on eligible employees’ pay if they work in the investment zone for a minimum of 60% of their time and is available to up to 36 months per employee.
- HMRC will review tax guidance and forms for small businesses over the course of the next two years;
- tax agents will be able to register to payroll benefits on behalf of their clients.
- a tax and administration maintenance day will be held in spring 2023, and will see the release of numerous consultations and calls for evidence, based on the tax system; and
- a consultation has been published which explores how HMRC can ‘simplify and modernise’ the income tax system.
Landlords Selling Property
We are seeing a lot of ex rental properties being sold off
Since 6 April 2020 a return must be made within a tight timeframe following the completion of the sale of a UK residential property if tax is payable (currently 60 days). The return is known as a CGT on property disposal (CGT PPD) return and is filed digitally using HMRC’s UK property service.
Typical data required for the return and tax calculations will include:
- address of property, including the postcode;
- purchase date (generally exchange of contracts);
- purchase price including stamp duty, legal and any other deductible acquisition costs;
- cost of improvements reflected in the state or nature of the property at the time of sale;
- if the property has ever been used as the owner’s main residence, the dates when that was the case;
- in due course, the sale proceeds and date of sale (exchange to determine into which tax year the disposal falls, and completion to determine when the CGT PPD return needs to be submitted by);
- costs of sale such as legal expenses and estate agent’s fees; and
- an estimate of taxable income for the year (to determine the applicable rate of CGT).
You first need to register to use the UK property service and then you can grant us access and we can then complete the return for you.
So, you will need a Government Gateway user ID to set up your CGT UK property account, so that may need to be created first.
Existing agent authorisations are irrelevant as there is a specific process to enable you to authorise an agent to access your property site.
Once the authorisation is in place, we can manage your UK property account, and complete the CGT PPD return. The return itself is relatively straightforward provided all the required information has been collected.
After the return has been filed, the agent and client will receive an email confirmation from HMRC. The client can then log into their property account and pay the amount due. The payment must be into your UK property account (not your self-assessment account), using the payment reference that has been provided in relation to the property account.
Is a self-assessment return required too?
If you are not within self-assessment and the disposal reported on the CGT PPD return is correct nothing more needs to be done. If you are within self-assessment, you report the gain on your tax return.
Individuals in self-assessment should report the total of gains and losses from their CGT PPD returns in the capital gains pages of their self-assessment return, along with the total tax paid/refunded. The CGT PPD return references should be entered into the white space.
Once a self-assessment return has been submitted for a tax year, the UK property system will prevent any CGT PPD returns from being submitted online. So if you has failed to submit a CGT PPD return previously, you will need to complete a paper return (notwithstanding you have already reported the disposals on your self-assessment return).
If your disposal is quite late in a tax year and you manage to submit your self-assessment return within 60 days of completion, no CGT PPD return will be required. This also means that the CGT will not be due until the following 31 January.
If you have any questions about any of these, you know where to find us. If you prefer, just give me a ring on 07770 738770 or email me at firstname.lastname@example.org.