Our newsletter this month contains a timely reminder for firms that employ staff and are required to file forms online to HMRC; a new power that HMRC can use to request information regarding tax credit claims; a few pointers for businesses registered for VAT as we approach the change to a 20% standard rate of VAT on 4 January 2011; and finally an outline of the potential changes to the pension rules being considered, particularly those that relate to the requirement to take a pension income by age 75.
Although not specifically mentioned in the body of this month’s newsletter we would like to draw readers’ attention to the impending deadline to claim Small Business Rate Relief in England for 2009/10; new applicants need to apply before 30 September 2010.
Online filing PAYE forms, P45 and P46
PAYE form P45 is issued to employees when they leave your employment. Form P46 needs to be completed when you take on a new employee who does not have a P45 from a previous employment. In both cases these forms need to be filed with H M Revenue & Customs.
Firms with 50 or more employees
You have been required to file these two forms online since 6 April 2009. From April 2010 failure to file online may result in penalties being charged. Depending on the number of forms which an employer has failed to file, penalties could rise to a maximum of £3,000.
Firms with less than 50 employees
You are required to file forms online from 6 April 2011.
The advice from HMRC to employers is as follows:
Tax credits – requests for information
HMRC have powers to request information that underpin your claim for tax credits. If you fail to comply with their request you may find your tax credit payments are suspended.
To make matters worse there are no clear statutory rules about the type of records you should keep or how long they should be kept. It is likely therefore that in some cases you may not have the information HMRC requires.
You should also note that HMRC can charge a penalty of £300 and then daily penalties of £60 when they have issued a request and a complete reply has not been forthcoming. It is clear that these requests should not be ignored. Either send in the information you have or an explanation why you cannot comply.
The HMRC factsheet on this issue cites the following as a reasonable excuse for not sending in the information requested:
A final point, there are no present safeguards for taxpayers who have their tax credit payments suspended due to non-compliance with a request for information about their claim. This includes no right of appeal or provision for you to put forward a reasonable excuse and no time limit on how long the suspension can continue.
VAT issues to deal with before 4 January 2011
Apart from its effect on the cost of living, the hike in the standard rate of VAT to 20% on 4 January next year will have ramifications for registered traders. We have outlined a few of the likely topics that should be considered prior to this date, see below:
The legislation that you will need to observe over the rate change period next year is known as the “anti-forestalling legislation”. This was introduced to stop large transactions gaining an unfair advantage and accordingly its application in practice will be fairly limited.
In summary the anti-forestalling legislation applies taking into account the following factors:
If your customer cannot reclaim VAT and the supply does overlap the 4 January date, you will need to consider four further questions:
Pensions – abolition of age 75 deadline
The Government is presently consulting with interested parties to consider changes to the rules that require you to take a pension income from your pension fund by age 75 years. This article will be of interest to you if you are approaching 75 years or if you are deciding between an annuity and an income drawdown.
The main changes are likely to be:
Tax Diary September/October 2010
1 September 2010 – Due date for corporation tax due for the year ended 30 November 2009.
19 September 2010 – PAYE and NIC deductions due for month ended 5 September 2010. (If you pay your tax electronically the due date is 22 September 2010)
19 September 2010 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2010.
19 September 2010 – CIS tax deducted for the month ended 5 September 2010 is payable by today.
1 October 2010 – Due date for corporation tax due for the year ended 31 December 2009.
19 October 2010 – PAYE and NIC deductions due for month ended 5 October 2010. (If you pay your tax electronically the due date is 22 October 2010)
19 October 2010 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2010.
19 October 2010 – CIS tax deducted for the month ended 5 October 2010 is payable by today.