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VAT Filing - Update

TaxPosted by Tony Hawkins Tue, October 14, 2014 14:07:19

On 1 April 2012, HMRC made online VAT filing compulsory for all tax registered businesses. The decision was made based on the fact that 80% of all VAT businesses already file their VAT returns online.

However, the policy was flawed from the start. It did not take into account disabilities, computer literacy and broadband access.

Therefore, it came as no surprise that the policy was challenged, predominantly by businesses that do not have access to reliable broadband, making it impossible for them to guarantee to complete their returns online. This is sometimes difficult to conceive, I know, when being based in Essex, and only minutes away from London, I can access any information I want via my computer or smartphone at any time. However, it is a reality for many small UK businesses.

Compulsory online filing was never going to be practical or achievable, not until there is 100% high speed broadband coverage across the UK.

With this in mind, HMRC have had to change their stance and introduce other routes for the filing of VAT returns. To access these alternative routes businesses must prove that it is not practical or achievable for them to file their return online. Once this has been verified by HMRC, the business can then make use of either telephone or paper filing.

These latest VAT changes are definitely for the better, as, once again, the main companies that were affected by the new rules were small businesses.



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Budget 2012 Summary

TaxPosted by Tony Hawkins Thu, April 05, 2012 10:59:32

Despite the pre-Budget "leaks" and there were plenty of surprises in George Osborne's 2012 Budget.

Please contacts Tony Hawkins with any questions you may have.

Key highlights are:

From 22 March 2012: Stamp Duty Land Tax

  • A rate 15% on properties worth £2million + sold via a corporate envelope
  • A 7% rate on properties worth £2million
  • Block on sub-sale relief

From April 2012

  • Corporation tax main rate 24% (was set to be 25%)
  • Increase in Bank Levy
  • Capital allowances: new Enterprise Zones inc in Scotland, Wales and N.Ireland
  • Capital Gains Tax - review relief where residential property is held by offshore companies.
  • A limit on all uncapped income tax reliefs.
  • Enterprise Management Initiatives (EMI) increase option limit to £250,000.
  • Increase in car fuel benefit multiplier to £20,200.

From April 2013

  • Personal allowance increase to £9,205
  • Higher rate of income tax decreases to 45%
  • Freeze on age related allowance
  • NEW TAX: Child Benefit Income tax charge
  • Corporation tax main rate 23%
  • Small firms allowed to cash account
  • Introduction of a General Anti-abuse Rule

Where something was announced in Budget 2012 we say "NEW"

Personal Allowances

From April 2012

  • £8,105 for a single person, £10,500 if you are over 65, and £10,660 if you are over 75
  • The 40% tax band starts at £34,370 (was £35,001)
  • No changes to the 50% band

NEW from April 2013

  • £9,205 for a single person
  • Age allowance frozen for new pensioners
  • top income tax rate falls to 45%

Child Benefit Tax Charge

NEW: from 7 January 2013

  • Where net income in 2012/13 (and in subsequent years) exceeds £50,000, a tax charge will apply at 1% on each £100 of income between £50,000 and £60,000.
  • For taxpayers with income of £60,000 the charge will not exceed child benefit paid.

Cap on unlimited tax reliefs

NEW: from 6 April 2013

  • Anyone seeking to claim more than £25,000 in tax relief will be capped at the greater of 25% of income or £50,000

Comment: considerable concern already expressed about how this will affect loss reliefs and Gift Aid but this is hopefully subject to consultation.

Small business tax reporting

NEW: from April 2013

  • Cash accounting optional if turnover < £77,000
  • Simplified expenses system for business use of cares, motorcycles and home

Corporation tax

NEW from April 2012

  • Main rate 24%

NEW: from April 2013

  • Main rate 23%
  • Tax breaks for the creative sector (video games, animation & and "high-end" TV)
  • Above the line R & D credits for big companies
  • Disincorporation relief for small companies

Seed Enterprise Investment Scheme (SEIS)

From April 2012:

A modified version of the EIS scheme aims to raise money for new start-ups.

Key features:

  • 50% tax relief on investments of up to £100,000 per investor, to a maximum of £150,000 per investee company
  • Available to directors - although unable to hold more than 30% of the company
  • A Capital Gains holiday for assets disposed of in 2012/13 where gains are reinvested in the SEIS in the same year.

Enterprise Investment Scheme (EIS)

From April 2012:

  • NEW: the amount that a qualifying company may receive is increased to £5 million
  • The amount that an individual may invest under EIS is increased to £1 million.
  • Loan capital will not be included when considering the 30% control test.
  • Non-qualifying trades to include those in receipt of the feed in tariff and acquire shares.

Statutory residency test

From April 2013

  • A statutory residence test and legislating split year treatment

The remittance basis

From April 2012

  • The Remittance basis charge increases from £30,000 to £50,000 for long term non-residents.
  • Certain property can now be brought into the UK and is not treated as remitted

IHT: 4% rate reduction where 10% or more left to charity

From April 2012

  • Where 10% or more of an estate is left to charity the estate will attract a 10% discount on the rate of IHT paid. This means it will attract IHT of 36% instead of 40%.
  • This relief will be given by splitting an individual's estate into three components in order to allocate reliefs.

NEW: from April 2013

  • Increase in the IHT exempt amount for a non-dom spouse or civil partner (subject to consultation)
  • Periodic charges on trusts simplication (subject to consultation)

Stamp Duty Land Tax

NEW from 21 March 2012

  • A rate 15% on properties worth £2million + sold via a corporate envelope
  • Block on sub-sale relief

NEW from 22 March 2012

  • A 7% rate on properties worth £2million

Capital Gains Tax (CGT)

Foreign currency bank accounts

From 6 April 2012

  • Gains made on foreign currency bank accounts will be exempted from CGT
  • Affects individuals, trustees and personal representatives

CGT: residential property held by an offshore non-natural person

NEW from April 2013

  • A CGT charge, subject to consultation in 2012.

CGT roll-over relief and Single Farm payments

  • S155 TCGA amended to ensure that the single farm payment qualifies for roll-over relief back dates so this affects disposals on or after 1 January 2009.

CGT annual exempt amounts

From 2013

  • Future increases will be index linked

Employees and benefits

Share schemes

  • A review is ongoing in order to see what might be done to promote wider employee share ownership.

Enterprise Management Initiatives (EMI)

NEW from April 2012

  • The limit on the value of shares over which options may be held by an employee under EMI will be increased from £120,000 to £250,000.

NEW Finance Bill 2013

  • Gains shares aquired through exercising EMI options to qualify for CGT Entrepreneurs' Relief

Car and van benefits

From April 2012

  • NEW: Car fuel benefit multiplier increased to £20,200.
  • NEW: Van fuel benefit frozen at £550
  • Security enhanced features: are not to be regarded as accessories provided tha the nature of the employment creates a threat to personal security.

Luncheon Vouchers for employees

Withdrawn from April 2013 - 15p per day no longer qualies for tax relief

Cycle to work schemes - breakfast

From 6 April 2013

  • Employer can no longer provide tax-free meals to encourage cycling to work.

Pensions

From April 2013

  • NEW: the rules will be amended to prevent employers paying pension contributions to employees' family members as part of a remuneration package.

MPs: tax free resettlement pay

New: from April 2012

  • Any MP involuntarily re-unseated will not be taxed on the first £30,000 of resettlement payment paid by the Parliamentary Standards Committee.

UK Switzerland Agreement

  • IT, CGT, IHT: a one-off levy on financial assets in Switzerland and withholding tax deducted from income and gains arising in Switzerland from 1/1/2013

Exemption from UK taxation for foreign sports stars

Football Championship League Final 2013

  • An employee or contestant of an overseas team that completes in the final will be exempt from income tax if non-UK resident at the time of the final (a similar exemption applied to the 2011 League).

Glasgow Commonwealth Games 2014

  • Foreign atheletes will be exempt from income tax if non-UK resident at the time of the final.

Capital allowances - cars

From April 2013

  • Extend First Year Allowances low emissions cars for a further two years
  • Emissions main car rate drops to 130g/km (previously 160)

Enterprise Zones - plant and machinery

From 1 April 2012

100% allowances on investment of up to €125 million in plant and machinery by UK resident trading companies for five years from 1/4/2012

  • Certain sectors excluded
  • Unincorporated businesses, partnerships of companies not eligible

Energy Saving Plant and Machinery

  • From 1/4/2012 no Enhanced Capital Allowance (ECA) for expenditure on plant and machinery that generates or produces electricity or heat under the feed-in tariff or renewable heat incentive scheme.
  • No ESC from 1/4/2014 for combined heat and power equipment installations
  • From April 2012 expenditure on solar panels is treated at the special rate
  • From April 2013 scheme extended a further five years

Fixtures

  • Changes are being made to current rules to ensure a tax write off is given only once during an asset's life
  • For expenditure treated as being incurred after April 2012 capital allowances on fixtures will be available to a purchaser provided that:
  • The seller pools expenditure prior to transfer to the purchaser
  • Seller and buyer have 2 years to fix the transfer value
  • The seller confirms the tax disposal value

Flat Conversion Allowance

  • 100% allowance on the costs of conversion of empty or underused space above shops and other commercial premises to residential use.
  • Withdrawn from April 2013

Business Premises Renovation Allowance (BPRA)

  • This 100% allowance is given on expenditure incurred on bringing redundant commercial property situated in designated disadvantaged areas back into use.
  • Extended until 2017

Gas refuelling equipment

  • 100 FYA for plant and machinery used in gas, biogas and hydrogen refuelling stations extends to 31 March 2015.

Patent Box

From April 2013

  • Corporation Tax relief: reduced rate on income deriving from the exploitation of patents

R & D

  • Enhanced deduction 100% to 125%
  • Increased relief for pre-trading expenditures to be claimed as a deemed trading loss.
  • Reduces payable credit to 11% of surrendered loss
  • £10,000 pa minimum expenditure condition removed

GAAP

With big changes expected to GAAP, new measures are designed to ensure that income will only be taxed once when there is a change in accounting practices.

VAT

NEW: changes to iron out some anomalies on:

  • Aligining approved alterations to listed buildings with repairs and maintenance to existing buildings
  • Standard rating of hot food ('pasty tax') and sports drinks
  • Standard rating of hairdressers' chairs
  • Standard rating purchase of holiday caravans
  • VAT treatment of self-storage

Business without an establishment in a member state is prohibited from benefiting from that State’s registration threshold.

Anti-avoidance

NEW: latest tax schemes are targeted involving

  • Settlement legislation: corporate settlors
  • IHT settled property
  • Stamp Duty Land Tax: sub-sale relief
  • Capital allowances: long funded leases
  • Sale of lessor companies
  • Waste disposal site restoration relief

Disclosure of Tax Avoidance Schemes – DOTAS

  • Broadened to extend to more SDTL schemes, and may require some schemes to be disclosed one more time

Sch 36 Information Powers

New power to require a 3rd party to provide details about a taxpayer.

Tax Agents: civil penalties for dishonest conduct

NEW from 1 April 2013

  • Penalties for dishonest conduct to range from £5,000 to £50,000
  • Legislation broadly drafted

General anti-abuse rule (GAAR)

NEW: to be introduced in an attempt to crack down on tax schemes which are contrary to Parliament's intentions, following further consultation from April 2013

Charities

  • Gifts to the nation: individuals and companies, reduction in IT, CGT or CT when a pre-eminent object is gifted to the nation.
  • IHT relief on charitable bequests: reduced rate of 10% from 6/2/12

Gift Aid

  • SA donate scheme dropped from April 2012 – too expensive to administer
  • No further news on Gift Aid and cash collections.
  • From 6 April 2013 the proposal to place a cap on unlimited tax reliefs will ensure that anyone seeking to claim more than £25,000 in tax relief will be capped at the greater of 25% of income or £50,000 - potential to block donations under Gift Aid by major donors.

Bank Levy

  • From 1 January 2012 0.088%
  • NEW: From 1 January 2013 0.105%.


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