The new HMRC QR Code Scam is catching a lot of you

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.

 

 

The new HMRC QR Code Scam is catching a lot of you

We have seen this many times recently so we know many people are getting caught.

This is a new email scam as fraudsters develop new ways to try and obtain your personal details.

The email appears to be HMRC and it encourages you to scan a QR code but this takes you to a page where you will be asked for various personal details.

In a post on social media, HMRC said:

“HMRC will never ask you to submit personal information via a QR code”.

If you have received this email, do not engage, and just delete it.

HMRC does use QR codes in letters and correspondence, but the QR code will usually take the recipient to guidance on Gov.uk.

The taxman says recipients will be told if the QR code takes them anywhere else, and they will never be taken to a page where they have to input personal information.

Also, when you are logged into your HMRC account, HMRC may use QR codes to redirect you.

Fraudsters have been known to send text messages supposedly informing the recipient that they are owed hundreds of pounds in tax by HMRC. The message includes a website link, which is entirely fake and designed to harvest personal and financial information.

HMRC will not ask for personal or financial information when sending text messages.

 

 

Claim Child Benefit

 In the budget, Hunt announced changes to the high income child benefit charge (HICBC).

The HICBC was introduced as a quick way of stopping higher rate families from benefitting from child benefits.

The income threshold was set at £50,000. Taxpayers affected by the HICBC had their child benefit clawed back at a rate of £1 for every £100 of income over the £50,000 threshold, meaning full clawback occurred once income hit £60,000.

At that time the UK higher rate threshold was £42,475, but now it is £50,271. Some basic rate taxpayers therefore find themselves within the scope of the HICBC.

From 6 April 2024, the HICBC only applies where the higher earning parent/guardian in a household has an adjusted net income of £60,000 or more. Basic rate taxpayers are once again safe from HICBC, but many higher rate taxpayers will be better off too.

The rate at which the HICBC claws back child benefits has also been halved. For the current tax year onwards, £1 of child benefit will be repayable for every £200 of income over the £60,000 threshold, so full clawback won’t apply until the higher earning parent or guardian’s income reaches £80,000.

You may have previously opted out of child benefit payments rather than deal with the HICBC but you should consider restarting your payments. Families who have never claimed child benefit should also consider doing so.

Child benefit provides financial support to families – the rates for the current tax year are £25.60 per week for the first child, and £16.95 for each additional child.

Child benefit also provides entitlement to state pension credits until the youngest child is 12 years old, which is especially valuable if a parent or guardian has little or no income of their own. Claiming child benefit also means the child will automatically be issued with a national insurance number at age 16.

Nearly half a million families could be better off because of these changes.

 

 

£10 a Day Self-Assessment Late Filing Penalty

From 1 May, if you have not yet filed your overdue self-assessment tax return for 2022-23 you will face an additional late filing penalty of £10 per day, up to a maximum of £900. This is in addition to the £100 late filing penalty for missing the deadline for filing self-assessment tax returns online by 31 January.

An estimated 1.1 million taxpayers missed the 31 January deadline this year, a windfall for HMRC of £110m in revenue.

Additional penalties are charged for late payment of the tax due with 5% of the tax due at 30 days, six months, and 12 months on top of interest charged on the unpaid tax at 7.75%.

Give us a call if you find yourself in this position.

 

 

Chancellor Running All Day

The Chancellor joined 50,000 runners to take part in the world’s biggest marathon through the streets of London from Greenwich to Buckingham Palace.

He completed the race in five hours and 40 minutes.

 

 

Commuting Costs For Working From Home

Generally, an employee, although largely working from home, will have a base office and journeys from home to that location will be ordinary commuting’. These trips are not eligible for tax relief.

The place where an employee lives will ordinarily be down to their personal choice. The expense of travelling from their home to any other place is a consequence of that personal choice; not an objective requirement of the job.

So, even if it is a condition that you must work in the office at specified times, you cannot claim tax relief for these journeys.

HMRC will not accept that working at home is an objective requirement of the job if the employer provides appropriate facilities in another location that could be practically used by the employee, or the employee works from home as a matter of choice.’

However, some of the HMRC guidance is confusing. They say that if an employee is required to work remotely one day a week while the rest of the working week must be in the office, they would be entitled to tax relief on travel costs as they are travelling between two workplaces.

 

 

Umbrella Companies

Nigel Huddleston, financial secretary to the Treasury, has said that the government is minded to introduce a statutory due diligence regime for businesses that use umbrella companies and will continue to engage with the recruitment industry and other key stakeholders on the details of this.

The government remains concerned about the scale of non-compliance in the umbrella company market, and the detrimental impact that this has on workers, taxpayers and the labour market.

Some time ago, the government proposed measures to strengthen protection for contractors who use umbrella companies by creating a legislative framework and reviewing employee pay processes and tax liability. They wanted to put the agencies on a statutory basis with a clear definition to ensure they are covered by any relevant legislation.

The government estimated that there were up to 1.7m temporary workers in the UK, many of whom use employment intermediaries to secure work. The contractors receive payment in ways contrived to avoid tax.

Everybody is awaiting further announcements.

 

 

Buying Out a Fellow Director / Shareholder

One of the most efficient ways, if you can do it, is for the company to buy back the shares of the other director/shareholder, leaving you as the remaining director/shareholder.

In these circumstances, there is the “income” treatment of an acquisition and the “Capital” treatment. The latter is preferable but the transaction must fall within certain conditions.

The ‘normal’ treatment for a company purchase of its own shares is the income treatment, meaning the difference between the amount paid by the company and the original subscription price of the shares is treated as an income distribution to the outgoing shareholder. From a tax point of view, this could be quite painful.

Under the capital treatment, the amount received by the shareholder is a capital distribution on the disposal of their shares and hence subject to Capital Gains Tax.

The general conditions that need to be satisfied include:

  • A The trade benefit test
  • A requirement as to the residence of the shareholder
  • A requirement as to the period of ownership of the shares
  • A requirement as to the reduction of the seller’s interest as a shareholder
  • An ongoing connection test

There is a way to sell the shares in tranches through a “multiple completion contract” but this has implications for both the trade benefit test and the ongoing connection test.

Trade benefit test

The trade benefit test will only be satisfied if the company’s sole or main purpose in the acquisition of the shares is for the benefit of its own, or a 75% subsidiaries, trade.

HMRC believes this test is not satisfied if you retain a shareholding after the purchase and /or a directorship or consultancy with the company.

There are various exceptions to this rule, including where a retiring shareholder maintains a holding of not more than 5% for sentimental reasons.

It is also possible to still meet the trade benefit test where the company purchases as many shares as it can afford, with the intention of buying the rest of the shares at the earliest possible date.

So, you would pass this test where the company buys as many shares as reserves permit now but with a clear intent to acquire the rest at a later date.

Ongoing connection test

You must not be connected with the company, or a member of the same group, immediately after the purchase of your own shares meaning you must not possess or be entitled to acquire, more than 30% of:

  • the issued ordinary share capital of the company;
  • the loan capital and the issued share capital of the company; or
  • the voting power of the company.

If a multiple completion contract is used it will be relevant to ensure that you are immediately taken below the 30% limit after the first tranche is disposed of.

It is possible to obtain advance clearance from HMRC for any proposed buyout.

If you are interested in a buyout, get in touch.

 

 

P11D Processes Changing

The deadline to send P11Ds to HMRC and employees who need one is 6 July.  Additionally, a P11D(b) must be sent to HMRC by the same date, which confirms the amount of class 1A national insurance contributions (NICs) due from the employer. The date by which those class 1A NICs must be paid is 22 July if paying electronically, or 19 July if paying by cheque.

From 6 April 2023, the forms could only be submitted online and not in paper format, except in circumstances where the employer was deemed as being digitally excluded.

From 6 April 2026, the payrolling of benefits in kind (BiKs) will be made mandatory.

Not all benefits can currently be processed via the payroll. P11Ds must be submitted for those benefits even where employees have other benefits processed in real time through the payroll.

This means you could be carrying out two separate processes for the same person, payrolling certain benefits for an employee, while also producing a P11D for them for those benefits which can’t be put through the payroll in real time.

Those benefits are:

  • living accommodation provided by the employer; and
  • interest-free and low interest (beneficial) loans.

Before making payrolling mandatory, a way needs to be found to allow for the real time reporting of these types of benefits.

Also, as the change will mean that tax is due on benefits in real time, this could impact some employees who are used to receiving their benefits one tax year and then paying the associated tax through their tax code in the following tax year.

In the transition, they could have to pay taxes on both year’s benefits all in one year.

Hopefully, HMRC will make announcements in due course on how such issues are to be accommodated in the new regime.

 

 

Questions?

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 alan.long@thelongpartnership.co.uk.

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