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| Latest News | | Time to Pay Data Secrecy (posted: 11-8-10) | | | HMRC is reviewing the release of statistical information on Time to Pay arrangements. Whilst reviewing this position, it has postponed the release of any TTP data.
TTP, also known as Business Payment Support Service arrangements, allows businesses to defer tax payments to HMRC.
Colin Howe, president of the UK200Group, said he would be very concerned if this was the case.
Howe explained that Vince Cable, speaking at a recent Institute of Directors event, said his departments instructions to HMRC was to still make it easy for applicants to receive TTP arrangements.
This contrasts with the experience of most practitioners; if stats arent published well never know, said Howe.
Richard Mannion, national head of tax at Smith & Williamson, said the message from HMRC is that TTP works and this latest announcement doesnt quite tie-up.
Mannion offers the explanation that spending cuts could be the reason behind the review.
An HMRC spokesman said it was currently considering the release of statistics for TTP.
He added: Until such a review is completed, HMRC is unable to provide statistical information for the BPSS.
The HMRC spokesman was unable to give an indication as to how long the review would last.
HMRC revealed in March this year it allowed businesses to defer £5.13 billion worth of taxes by setting up 300,000 TTPs in its first 15 months.
Alistair Darling gave the go-ahead in his final budget, earlier this year, to extend the availability of TTP arrangements to 2015.
| | | | Insolvency Figures Fall (posted: 11-8-10) | | | For the first time since 2007, personal insolvency figures fell according to the Insolvency Service.
There were 34,743 individual insolvencies for Q2 2010, which is a decline from Q1s total of 35,682.
The figures were comprised of 14,982 bankruptcies, 13,466 individual voluntary arrangements and 6,295 debt relief orders.
Bankruptcies fell to 14,982 in Q2 2010 compared with 18,256 for Q1 2010 and 18,870 for Q2 2009.
Both debt relief orders and individual voluntary arrangements increased in Q1 2010 compared with the previous quarter and the same period a year ago.
Deloitte personal bankruptcy specialist, Louise Brittain, said that despite the lower figures, a high level of individual insolvencies would continue for the foreseeable future.
Brittain predicts the country will see a rise in the number of personal insolvencies in the second half of this year, with an estimated end of year figure of 140,000.
“The cost of filing for bankruptcy currently stands at £600 – this is not an insignificant amount, and as a result we may see an increase in IVAs as the IVA market adjusts its pricing to make it more cost effective than bankruptcy,” she said.
| | | | Tax Scammer Jailed (posted: 6-8-10) | | | A fraudster who fleeced the UK of £500,000 has been jailed for three and a half years, following an HMRC probe.
Dmytro Shepel, 25, registered 350 fictitious people on the Self Assessment tax system.
False tax repayment claims were then made for 218 of these. In total, he tried to steal almost £650,000 of taxpayers’ money, HMRC said.
Shepel had been living in the UK under a false Lithuanian identity and he used his fake passport to open 74 bank accounts over two years, which then received a number of fraudulent repayments.
On raiding Shepels address, HMRC officers raided found diaries and documents containing lists of fake identities used to fraudulently reclaim tax rebates as well as blank Self Assessment registration forms.
Officers also found fake identities and bank account details in Shepel’s mobile phone memory. On checking these, the bank accounts had been used to receive thousands of pounds of fake repayment cash.
Simon Grunwell, assistant director of HMRC Criminal Investigations, said:
This was a criminal plot which deprived the nation’s public services of hundreds of thousands of pounds.
We are determined to stop those involved in this type of criminal activity and bring them before the courts.
| | | | Fears Sparked by HMRCs PAYE Overhaul (posted: 6-8-10) | | | Income Tax and National Insurance deductions have been calculated the same way since the end of the Second World War but HMRC now believes it’s time for an overhaul.
Advisers have warned that the most ambitious option being touted by HMRC would effectively turn HMRC into a payroll agency, calculating PAYE upfront rather than checking records submitted by companies.
The Centralised Deduction Plan would see HMRC use more timely information from companies about income and deductions as a platform for centralising the calculation and deduction of tax, NIC and student loan repayments.
This would mean the responsibility for undertaking the calculation would be taken away from employers and placed fully with HMRC.
Howver, there are concerns this could take work away from accountants operating payroll services for clients and the idea of HMRC being able to handle this work has been described as “impossible”.
David Ingall, partner at JWPCreers and member of the UK200 Group, said: “As a firm operating a payroll bureau for clients, the thought of HMRC offering the level of service required is an impossibility.”
Employers need one-to-one guidance on a variety of issues, often requiring help with key services such as wages being reprocessed because of errors, Ingall said.
“That sort of service is not associated with a government department. Additionally, the numbers of staff required to undertake this service will be enormous.”
The overhaul is being floated in an attempt to achieve two key objectives:-
- cutting out losses generated through calculation
errors; and
- helping to foil benefit fraud.
At a time when the UK’s coffers are still creaking, the value in raking the maximum amount of money from PAYE is clear.
In the 2009/2010 tax year, HMRC collected £249 billion PAYE from Income Tax and National Insurance contributions.
Problems currently arise because employers are only required to provide full information on individuals’ deductions annually, at the end of the tax year. This has two effects on the operation of PAYE. Firstly, checks that correct deductions have been made can only be carried out after the tax year has ended. Secondly, adjustments to tax codes have to be based on estimated income. Effectively, HMRC has to ‘guess-timate’ because factors such as a change of job and rates of pay mean actual income can turn out very differently from those predicted when the estimate was made.
The PAYE system also handles pensions, recipients of a state pension and those on benefits, an area which is vulnerable to fraud.
Alastair Kendrick, tax partner at Mazars, questioned how HMRC would be able to handle the extra responsibilities, raising concerns about having the entire operation controlled by HMRC. “What if the whole system collapsed?” Kendrick added.
Advisers countered that more value could be generated if HMRC gave accountants access to the systems which calculated the coding notices setting out how much tax a worker should pay.
“All too often, coding notices issued show a lack of thought and contain too many errors,” said Nick Forsyth of Lambert Chapman.
HMRC is calling for comment from the profession during a consultation period ending on 23 September.
| | | | Students Suffer Emergency Tax (posted: 6-8-10) | | | Thousands of students with summer jobs may be hit with emergency tax because they have not completed the correct forms.
Full-time students do not have to pay Income Tax provided they only work during their holidays and earn less than £6,475 per year.
However, they must fill in form P38(s), a document available from their employer or the HMRC website, to secure the tax break, thisismoney.co.uk reported.
Those who do not complete the form usually end up being put on emergency tax code (647L for 2010-11), leading to additional amounts of their income going to HMRC.
Kelly Sizer, of the Low Income Tax Reform Group, says: Students who work in either holidays or term-time will probably pay too much tax. If this applies to you, make sure you claim a repayment.
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