Government proposes replacing self assessment penalties with new points-based system

The £100 penalty regime for filing a late tax return could be scrapped and replaced with a new ‘driving licence-style’ points system, HMRC has revealed.

Under the current system, taxpayers who fail to submit their tax return by the 31 January deadline are liable to an instant £100 fine, with further penalties applying for prolonged delays.

Under new plans being considered by the tax authority, taxpayers who miss the self assessment filing deadline could receive points instead of an immediate fine. Only those taxpayers accruing too many points would then be penalised. Individuals would also see points wiped from their record after a set period of time.

It is thought that around 840,000 taxpayers missed the filing deadline in the last tax year.

The new ‘holistic’ approach is intended to focus on taxpayers who persistently break the rules rather than those who make genuine errors of judgement.

The proposals are included in the Treasury’s Red Book, which states: ‘The government will reform the penalty system for late or missing tax returns, adopting a new points-based approach. It will also consult on whether to simplify and harmonise penalties and interest due on late payments and repayments’.

HMRC intends to consult on the plans, and must seek approval from Parliament. If approved, the new points-based system could undergo a phased introduction for different taxes.

However, some experts have warned that the abolition of the £100 late filing penalty could have ‘unintended consequences’.

The Association of Taxation Technicians (ATT) warned that a new points system could generate anomalies, and has urged the government to ensure that the consultation details exactly how the new system would work, in order to avoid such anomalies.

We can help to ensure that your tax returns are filed accurately and on time – please contact us for further assistance.

Backdated ‘staircase tax’ bills branded unfair to small firms

The Head of the Treasury Select Committee, Nicky Morgan, has branded the sending of backdated business rates bills to small businesses in England and Wales as ‘particularly unfair’.

Dubbed the ‘staircase tax’, businesses which occupy space on multiple floors of a communal commercial property now receive separate business rates bills for each floor they occupy, where the areas separating the offices are communal (for example lifts, corridors and stairs). Some firms in England and Wales have seen their business rates rise significantly as a result.

The Valuation Office Agency (VOA) determines business rates for firms in England and Wales, and made the changes as a result of a previous Supreme Court ruling which considered how different storeys under common occupation in the same block are assessed for business rates purposes.

Business rates are calculated separately in Scotland, using the rateable value which is set by a local assessor, and the ‘poundage rate’ which is set by the Scottish government. For 2017/18, a Large Business Supplement of 2.6p is being added to all business properties with a rateable value of £51,000 or more.

Commenting on the so-called staircase tax, Ms Morgan said: ‘It seems unfair to tax businesses differently depending solely on whether the staircases between their rooms are communal or private.

‘It seems particularly unfair for the increase in rates to be backdated.’

Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: ‘No small business should receive a sudden tax hike of 5,000% simply because a workplace has been separated, for years, by a communal area, stairway or lift.

‘Some small business owners are discussing whether to knock holes in their walls or stick a staircase on the outside of their premises.

‘This is no way to run a tax system in the 20th century, let alone the 21st. Ministers have the power to provide relief, and they should do this urgently – to correct this defect in the UK tax system.’

Finance Bill confirms Dividend Allowance reduction

The publication of Finance Bill 2017-19 ushers back in a raft of measures that had previously been dropped from Finance Bill 2017.

One such measure is the forthcoming reduction in the Dividend Allowance, which is set to fall from £5,000 to £2,000 next April. With 2.7 million individuals in receipt of dividend income, many are likely to feel the effects of the change.

Chancellor Philip Hammond stated that the cut would help to ‘address the unfairness’ that may be associated with the tax advantage enjoyed by director-shareholders.

The Chancellor initially announced the plans in the 2017 Spring Budget, but the measure was dropped from Finance Bill 2017 to pave the way for the General Election.

The reduction is likely to affect director-shareholders who opt to take dividends on top of a salary. It may also have consequences for savers with investments in stocks and shares worth £50,000 or more outside of an Individual Savings Account (ISA). According to HM Treasury, the average loss is expected to be around £315 – but it could be significantly more for individuals paying tax at the higher or additional rate.

Other measures reintroduced to Finance Bill 2017-19 include the planned reduction in the pensions Money Purchase Annual Allowance (MPAA), which has fallen from £10,000 to £4,000. The measure is being enforced retrospectively, and has been backdated to the beginning of the 2017/18 tax year.

The Finance Bill also outlines a framework for VAT reporting, under the government’s new Making Tax Digital initiative.

Recommended App – TAX READY

TAX READY

With cloud-based technology becoming a feature of everyday life, businesses are wise to implement good, modern software and apps where possible. The right apps can simplify your life and work; improving efficiency and profitability (time is money)!

So, continuing with our regular app recommendations, this month we’d like to recommend TAX READY – our very own, brand new app!

What is it?

Tax Ready is a smartphone app (available on Apple, Android and Windows devices). It has been designed with business owners and managers in mind; providing a range of useful tools to help with the operational aspects of running a business.

How much does it cost?

£0 – it’s free!

What are its features?

  • Tax calculators – there’s a calculator for almost everything but, as an example, the income tax and NI calculator enables you to work out the gross cost of employing a new staff member – or help your employees to understand their net pay.
  • Tax tables – quick access to up-to-date tax rates.
  • Key tax dates – keep track of deadlines and easily add them to your phone’s calendar (just one-click and the reminder’s there) .
  • News – regular news articles on a variety of useful topics.
  • Mileage and expense recording – keep track of your mileage and expense claims whilst on the move, then download them as a spreadsheet when required.

Why do we recommend it?

Although somewhat biased, we genuinely believe the app is a useful resource for our clients and contacts. We think it’s easy to navigate, has a fresh, modern design, and it’s free!

How do I get the app?

To add the app to your device, search ‘Tax Ready’ in your app store … then download and enjoy exploring the features.

 

 

 

Our new app – Tax Ready – is now available to download!

Our brand new smartphone app – Tax Ready – is now available to download on Apple, Android and Windows devices!

Created with business owners and managers in mind, Tax Ready provides key tax rates and convenient access to a range of useful tax tools, news and tips in one app.

The app comes with tools such as mileage and expense trackers – which make it easy to keep a track of your claims whilst on the move.

To find the app, search ‘Tax Ready’ in your app store. It’s completely free to download and use.

We hope you find it a useful and informative resource.

Business groups respond to Brexit customs papers

Some of the UK’s leading business groups, including the Confederation of British Industry (CBI), the British Chambers of Commerce (BCC) and the Institute of Directors (IoD) have responded to the publication of Brexit customs position papers by the Department for Exiting the European Union.

The government states that it is seeking to secure a new customs arrangement which ‘facilitates the freest and most frictionless trade possible’ between the UK and the EU. Its newly published paper outlines two customs approaches: a ‘highly streamlined’ customs arrangement between the UK and the EU, and a new customs partnership with the EU.

The ‘streamlined’ approach would seek to continue some of the existing customs arrangements between the UK and the EU, as well as reducing or removing barriers to trade by establishing new arrangements. Meanwhile, the new customs partnership would ‘remove the need for a UK-EU customs border’.

Responding to the publication of the papers, Josh Hardie, CBI Deputy Director General, said: ‘Companies will welcome the progress government has made . . . in publishing these papers. Over the past year, businesses have been providing policymakers with the evidence, ideas and solutions to make a success of Brexit.’

Dr Adam Marshall, Director General of the BCC, called for clarity on future customs arrangements, stating: ‘Business needs to see the government’s resources focused on the conclusion of a successful customs deal with the EU. At this stage, it is critically important to keep a number of different options open in order to achieve this goal.’

Meanwhile, the IoD welcomed the government’s ‘first concerted push on trade after Brexit’. The Institute’s Allie Renison said: ‘This is a hugely positive step from government in putting pen to paper to spell out its objectives for customs arrangements with the EU after Brexit. The paper outlines options for a transitional period and for the longer term, proving that both are crucial to achieving a smooth and orderly exit.’

A second Brexit customs paper has outlined proposals to ensure that existing trade in goods and services can continue after the UK leaves the EU in 2019. It calls for goods already on the market to be allowed to remain on sale in both the UK and the EU, ‘without restrictions’.

Exciting Opportunity! Job Vacancy for an Accounts Assistant…

An opportunity not to be missed!

Due to continued growth, The Shepherd Partnership Ltd have an exciting opportunity for a PRACTICE ACCOUNTS ASSISTANT to join our friendly team.

We are looking for a committed, hard-working team member to support our senior staff and Directors… and make a real difference to our business!

Responsibilities

We envisage that key responsibilities will include, but not necessarily be limited to;

  • Preparation of annual accounts for limited companies, partnerships, sole traders and other entities
  • Maintenance client records/ book-keeping
  • Preparation of VAT returns and management accounts
  • Preparation of tax returns
  • Payroll

Qualifications & Experience

  • Candidates must have GCSE grade C or above in Maths and English.
  • A formal accountancy qualification is desirable but not essential.
  • The ideal applicant will have a minimum of 3 years’ experience gained within an accounting practice, ideally including knowledge of cloud based accounting packages and payroll processes (including auto-enrolment).

Work Pattern

This position is full-time (some flexibility in working hours may be possible for the right person). The successful candidate will primarily work from our Skipton premises.

To Apply

If you feel you are the ideal person to join our supportive and experienced team, please send a covering email and your CV to skipton@shepherdpartnership.com.

Salary

Competitive – negotiable depending on experience.