Financial Monitor (April 2007)

HM Revenue and Customs (HMRC) offer an ‘amnesty’ for those with undisclosed tax liabilities
The first thing to say about this proposal by HMRC is that it is not in fact an amnesty, as all tax and interest due has to be paid but the penalties chargeable are limited to 10% which is much lower than might be applied if HMRC were to discover undisclosed tax liabilities by other means.

This initiative is focused on those who hold or have held an offshore bank account that is in any way connected with an undisclosed tax liability.  HMRC have for sometime now been gathering information from various banks with offshore offices with a view to investigating whether or not the income earned in those bank accounts has been disclosed by UK residents for tax purposes.

Those who wish to make a disclosure have until 22 June 2007 to register their intention to do so and the actual disclosure and payment of tax, interest and penalties must be made by 26 November 2007.  It should be stressed this is a ‘self assessment ‘ disclosure, the taxpayer must ensure a complete disclosure of all tax irregularities for the past twenty years is made and they must calculate the tax, interest and penalty charges.  HMRC have until 30 April 2008 to decide whether to accept the disclosure or to reject it if they think (or know!) a full disclosure has not been made.

Those who do not have undisclosed offshore income but have other tax irregularities, whether income tax, corporation tax, VAT or national insurance that they wish to ‘get off their chest’ can make a disclosure to their local Inspector of Taxes under the same terms as those above and can expect to have penalties limited to 10% of the tax due.

Where those with offshore accounts do not make a disclosure then it is likely that HMRC will already have information that will enable them to open an enquiry in due course and then the penalties charged will be much higher, with the possibility of criminal proceedings being taken in exceptional cases.

If you are concerned about the issues raised in this article please contact Peter Newsam as soon as possible, but no later than 14 May 2007 given the deadline for notifying the intention to make a disclosure.

2005/06 Outstanding PAYE Returns
HMRC have recently issued a number of penalty notices related to outstanding 2005/06 PAYE returns, requesting payment of £900.  A number of these are incorrect, because HMRC systems have not correctly recorded the receipt of construction industry scheme details for the year and some relate to misunderstandings where taxpayers had believed the returns had been successfully filed over the internet when that was not in fact the case.  If you have received one of these penalty notices please contact Peter Newsam as it is likely that a successful appeal can be made but action needs to be taken quickly.

Tenancy Deposit Scheme
From 6 April 2007 all deposits taken by landlords under Assured Shorthold Tenancies in England and Wales must be protected by a tenancy deposit scheme.  Landlords must not take a deposit unless it is dealt with under a scheme.

Deposits taken in connection with non shorthold tenancies do not have to be dealt with under the scheme.

There are two types of scheme available to landlords, a single custodial scheme operated by Computer Share Services Investor plc and two insurance based schemes operated by The Dispute Service Limited and Tenancy Deposit Solutions.

Sage Line 50 Version 8 and 9 and Sage Instant Accounts Version 8
We have been advised that Sage are withdrawing support for the above versions of their popular accounting software.  They are therefore offering discounts of 20% on those wishing to upgrade to the current versions, providing they are acquired before 30 June 2007.  We are a Sage reseller and can provide the software with additional discounts to those referred to above and can also assist with installation and training.  Please contact Paul Haresign if you would like to discuss your requirements.

Premium Bonds
Those who invest in Premium Bonds by 30 April 2007 will increase their chances of winning one of five £1 million jackpots being paid out in June 2007 to celebrate  50 years of Premium Bonds being available.

VAT Charges for Medical Services
At present medical services provided by registered GPs, dentists etc. are exempt from VAT.  As a consequence of a decision of the European Court this position will change with effect from 1 May 2007.  From that date the exemption will be restricted to services “intended to protect, maintain or restore the health of an individual”.  Some services eg. reports for medico-legal work, pre-employment medicals, some cosmetic work and some occupational health services will be subject to VAT.

Any practice which receives income in excess of the VAT registration limit (currently £64,000) from these services will need to register for VAT and others may consider it beneficial to do so.

National Insurance Refunds
In May 2006 the government announced that the number of qualifying years of National Insurance contributions needed for a full state pension would in future be cut from 44 for men and 39 for women to 30 for everyone.  So anyone who has made voluntary contributions since 25 May 2006, who will reach state pension age on or after 6 April 2010 and has already paid 30 years of contributions may now be entitled to a refund.

VAT Scale Charge when motor fuel for private use is provided
Where a business provides fuel (petrol, diesel etc) for private use, then each quarter (or month if monthly returns are prepared) a scale charge needs to be added to the output tax paid over for that period.

The current system of scale charges based on cylinder capacity is being replaced for VAT Return periods commencing after 30 April 2007 with a system based on CO2 emissions.

The charges are as follows:

For those older cars without CO2 emission figures the band to use is:

                        Cylinder capacity                         Equivalent CO2 emission

                        1400 cc or less                                 140 or less
                        1401 – 2000 cc                                175
                        Over 2000 cc                                   240 or more

Whilst every care has been taken in the preparation of these notes we can accept no responsibility for errors or omissions contained in them or for any loss arising from their use unless we have been consulted professionally prior to any action being taken.
UHY Wingfield Slater
Wellington House, 39 Wellington Street, Sheffield S1 1XB
Tel: 0114 275 1544  Facsimile: 0114 275 1366  Email: info@uhy-wingfieldslater.com  Web Site: www.uhy-wingfieldslater.com
Registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales

A member of the UHY Hacker Young Group of independent UK partnerships.  A member of UHY, an international association of independent accounting and consulting firms.

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