The recent report by the House of Commons' Public Accounts Committee (PAC) on "off-payroll" engagement in the public sector makes interesting reading. It transpires that we have all been over-egging the risks of IR35.
HMRC investigated just 23 cases in 2010/11. Does that not amount to state aid for IR35 insurers? They must think that they have won the lottery but it does not end there. Thanks to the intervention of the PAC HMRC is now carrying out a "risk based review" of the 27,000 personal service companies identified in the report. 2,400 of these relate to management posts. I would imagine that the small number (and I am guessing about numbers) of cases that will be found to be within IR35 will be settled outside of the Tribunal and so the deterrent effect of investigating these potential IR35 cases remains extremely low.
I note from my inbox that many accountants are extremely diligent in policing IR35, so perhaps the PAC should not worry too much about the number of investigations by HMRC and instead concentrate on the wider issue of why exactly it is that HMRC doesn't think it worthwhile investigating more cases.
Of other interesting news in recent weeks, please scroll on down to read more. We have updates and several briefings which I hope summarise the key issues for you.
Nichola Ross Martin FCA
Your online Virtual Tax Partner®: practical support for accountants, tax advisers and their clients
News round up:
The Chancellor's Autumn Statement 2012 will be on 5 December 2012. We should also be given an indication of what is being confirmed for the 2013 Finance Bill.
IR35 review for thousands of companies
Personal service companies used by civil servants to go under HMRC scrutiny.
A quick guide: large employers affected by the new rules from 1 October 2012. Those employing less than 30 employees have until 2015 to set up schemes.
PAYE: Real Time Information (RTI)
UPDATE: our quick guide to RTI.
HMRC's postal problems
New PO Box numbers will be appearing on correspondence from this month - use them instead of the old office addresses.
Bookkeeping by phone
Software developers have been creating bookkeeping apps to be used on mobile phones. HMRC's approved list of suppliers is here. Users should remember that HMRC may well assert that phones are computers for the purposes of interrogation.
HMRC Business Brief 27/12: VAT
Announces 7 new information sheets covering each of the following areas:
- Hot food and premises
- Sports nutrition drinks
- Listed buildings
- Hairdressers’ chairs
- Self storage
- Anti-forestalling (listed building and self storage changes)
Advisory fuel rates (company car drivers)
New rates from 1 September 2012.
National minimum wage rates
Increase from 1 October 2012.
Subscribers only (locked content)
Clothing and work wear - self employed
NEW: HMRC recently re-wrote some of their Business Income Manual we explore 'what's new'.
VAT: trading in the EU and abroad
UPDATE: a mini-guide to explain the basics.
NEW: a briefing explains the key issues for directors.
Seed Enterprise Investment Scheme (SEIS)
Update: HMRC have issued e-form SEIS1 to allow companies to provide it with their Compliance Statement under the SEIS rules.
Directors' loan accounts: toolkit
HMRC's instruction to its staff is that they examine directors' private expenditure during the course of an enquiry into a close company's books and records. In most cases the company will be expected to produce a transaction history of any director's loan or current account.
Dispensations, agencies and umbrella companies
HMRC has issued a statement confirming its views on so called "Pay Day Relief Models" and Dispensations. It is aimed at the employers of temporary staff who are using these models to net expenses off against gross pay.
Negligence by an adviser
Two cases with contrasting results. No tax penalties can be assessed on a taxpayer when his tax return error is made due to an adviser giving the wrong advice. However, the extent that delegation is possible depends on the nature of the error and the individual circumstances of the situation.
Extra Statutory Concession A19
A19 allows HMRC to not collect certain liabilities in respect of income tax and capital gains tax. It is consulting on revising the wording.
Latest disclosure opportunities
Direct Selling Campaign
HMRC's latest tax disclosure opportunity targets party planners, agents and distributors.
The Tax Return Initiative
This closed on 2 October 2012.
Home improvement sweep up
Another disclosure opportunity is being planned for later this Autumn, this one is aimed at the building and allied trades.
Recent guides and updates
Finance Act 2012: index & summary
What's new and where to find it.
PAYE late payment penalties buster
UPDATE: this guide is essential reading if you are having cashflow problems or do not understand these penalties.
Tax masterclass: running an LLP & Co structure
Sample our Masterclass guide to business combinations. This one is ideal for trading companies and professional practices.
High Income Child Benefit Tax Charge (HICBC)
Practice note with examples and handy tables to work out who pays the charge.
Land and Property - Adviser Update
This is one of our periodic CPD updates for subscribers, have a quick browse and follow the links into detailed guidance.
HMRC guide on how to report under SA.
NICs on dividends
Key issues for those in tax schemes.
How do you tax ABC or alphabet shares?
For share awards outside family companies, see:
For a run down on the basic rules on taxing awards of shares and securities see:
If you are dealing with family companies and shares are being issued to family members, see:
Furnished Holiday Letting
Including examples on Averaging and Period of Grace reliefs.
Retirement: purchase of own shares
Menu and summary.
Capital reduction: tax treatment
This guide examines the position where a capital reduction is used to return excess share capital or capital reserves to shareholders and trading is ongoing. Not to be confused with a purchase of shares out of distributable reserves.
Valuation (of goodwill) on incorporation
UPDATE: new examples for small & lifestyle businesses.
Come and join us .