This month’s newsletter includes the following articles: a recent offer from HMRC to help you to file any outstanding tax returns, changes to the rules regarding loan deductions for IHT, details of a new HMRC taskforce targeting holiday businesses and an interesting summary of HMRC’s accounts for 2012-13.
HMRC’s “My Tax Return Catch Up” campaign
If you have been sent a tax return for any tax year up to 5 April 2012, and it has not been submitted, you may want to consider taking part in this campaign.
In a nut-shell HMRC are offering to look kindly on any penalties chargeable, as a result of late filing or late payment of any taxes due, as long as you submit all outstanding returns and pay any taxes shown to be payable.
To take part in this offer is fairly straight forward:
There is a deadline you need to consider; you must complete all of the three stages set out above by 15 October 2013.
HMRC have offered to consider extended payment plans if your individual circumstances warrant this requirement.
Of course it may be that you are due tax refunds for certain years, and this will be determined when your returns are completed, in which case HMRC will make appropriate refunds to you. However, any refunds of tax for 2008-09 and earlier are time barred and cannot be repaid unless you have received an estimated determination of taxes due within the last twelve months, and this is greater than the tax found to be due.
Deductions for loans against Inheritance Tax (IHT)
Generally speaking, debts of a person’s estate are deductible for IHT purposes – though there are some circumstances where specific debts cannot be deducted such as where the deceased had previously made a gift to the person who made the loan. Following this year’s Finance Act, which became law on 17 July, there are several changes affecting deaths on or after that date.
The changes will affect deductions for debt in the following ways:
HMRC sets up a further task force
Holiday businesses in Devon, Cornwall, North Wales, the Lake District and Blackpool area beware: the taxman has set up a further task force to seek out and bring to account business owners who are not declaring the correct information on their tax returns.
The taskforces are trained to focus on particular business sectors and may have some flexibility regarding the level of penalties they levy – this is likely to depend on how co-operative the defaulting tax payer is during their investigation.
It would be sensible for holiday businesses to get their house in order.
HMRC will be interested in a range of compliance activity and taxes. For example:
Committee of Public Accounts comments on HMRC 2012-13 numbers
We thought readers might be interested to see how well HMRC have done in the last year, collecting our taxes and tackling fraud.
The following statement is reproduced from Parliament’s website and was made by The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, on 2 July 2013.
“These accounts give us a mixed picture. One of the most startling figures is the tax gap for VAT, which HMRC estimates at £9.6 billion. That is a huge amount of money – 10% of the VAT that should be collected and a third of the overall tax gap. Yet despite some progress, HMRC still does not comprehensively check all VAT returns and its response to the emerging threat from online trading has been far too slow.
I welcome the progress HMRC is making in tackling fraud and error in the tax credit system, but with £2 billion in overpayments last year it still has a long way to go. And the personal tax credit debt balance is going up, not down. It now stands at £4.8bn, over £1bn greater than the target HMRC hopes to meet by the end of March 2015.
HMRC met its target to operate a normal PAYE service by March 2013, following previous problems. But it had to forego £953.3 million of tax in the process and there remain questions about its capacity to handle in year changes to taxpayer records. I also have concerns about HMRC’s Real Time Information system (RTI), which has been rolled out before being fully tested. HMRC has chosen not to add in contingency for significant extra costs or measures to deal with major technical failure. This is worrying as the current cost of RTI is already expected to be £115.5m more than originally planned. HMRC is leaving itself exposed, which could be a real concern for DWP as Universal Credit relies on RTI.
HMRC is responsible for collecting all the tax due. It must do more to crack down on tax avoidance. And it needs to put taxpayers – the customer – at the heart of its services.”
Tax Diary August/September 2013