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The BBC is still in the spotlight over the way it pays some of the presenters. It would appear that many are paid through personal services companies, which can lead to a reduction in national insurance contributions. The BBC are reviewing the tax arrangements in an effort to reassure licence fee payers that they are paying the correct and appropriate amounts of tax and national insurance.
The IR35 anti-avoidance legislation should ensure that the same amount of tax is paid by these personal service companies, but HMRC is consulting on proposals to tighten IR35 compliance by requiring organisations engaging people through these companies to deduct income tax and national insurance from the fees it pays.
For more information please contact Haxton Chartered Accountants.

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A new scheme to prompt banks and other lenders to make more money available to homeowners and businesses has come into operation.
Under the Funding for Lending initiative, the Bank of England will lend money at below-market rates to the financial institutions.
The Bank will then monitor their progress in lending the cash out.
Some mortgage lenders have already cut the cost of their long-term, fixed-rate deals.
But the lower borrowing costs being introduced by mortgage lenders are so far only being offered to people with large deposits.

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Higher rate taxpayers who have failed to submit tax returns are being offered the opportunity to come forward and pay up under a time limited HMRC campaign. The Tax Return Initiative is aimed specifically at people liable to pay higher rate tax that have been told to submit a self assessment tax return for 2009/10 or earlier, but have failed to do so. The Tax Return Initiative is also open to any individual who has tax returns to submit to HMRC for these years.
Individuals have until 2 October 2012 to:
• let HMRC know that they want to take part,
• submit completed returns, and
• pay the tax and National Insurance Contributions (NICs) that they owe.
By coming forward voluntarily through the initiative, taxpayers will receive better terms and any penalty they pay will be lower than if HMRC comes to them first.
Where taxpayers fail to take advantage of the initiative, HMRC will use its powers to pursue outstanding returns and any unpaid tax and NIC together with significant penalties of up to 100% of tax due.
For help and advice with completing your self assessment return call us at Haxton Chartered Accountants

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Chancellor George Osborne’s autumn statement heralded a big shake up of tax incentives for investors bank rolling small businesses.
Enterprise Investment Schemes and Venture Capital Trusts are all due for a revamp in the next tax year – and April 6, 2012, will also see their little cousin, the Seed Enterprise Investment Scheme (SEIS) being launched.
For investors keen to see what a SEIS has to offer, here are some of the important points to consider:
• SEIS investors can input £100,000 in a single tax year which can be spread over a number of companies. Any one company can raise no more than £150,000 in total via SEIS investment.
• Investors cannot control the company receiving their capital and have more than a 30% stake in the company in which they invest
• Investors can receive up to 50% tax relief in the tax year the investment is made, regardless of their marginal rate
• The business company must be a UK company and have a permanent establishment in the UK
• In the 2012-13 tax year, tax payers can roll a chargeable gain on the disposal of assets in the tax year in to shares qualifying for SEIS income tax relief, with a full capital gains tax exemption.
• The company must have fewer than 25 employees. If the company is the parent company of a group, that figure applies to the whole group.
• The company’s trade must be no more than two years old.
• The company must have assets of less than £200,000
• The company has to trade in an approved sector – generally not in finance or investment, for example, a property company raise capital as a SEIS.
The aim behind a SEIS, say the Chancellor, is to stimulate entrepreneurship and kick start the economy.

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The government drive aims to:
• Help people find a business mentor
• Increase the number of mentors available, and
• Improve information about mentoring to help UK businesses to grow.
Work began in July last year when the Department for Business and the British Bankers’ Association (BBA) launched mentorsme.co.uk, the national mentoring portal. Since then, the number of mentoring organisations on the portal has risen from 42 to over 100. Through them, there is now access to around 11,000 mentors. The site is proving popular: the BBA’s statistics show there were over 100,000 visits to the site in the last year.
Over 12,000 people have now volunteered as business mentors, signing up to the Small Firms Enterprise Development Initiative’s (SFEDI) Get Mentoring scheme. Over 7,000 people have been trained. They are now being encouraged to become part of mentoring organisations on the mentorsme portal and start mentoring through their own networks

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Communities Secretary Eric Pickles has highlighted government proposals to scrap restrictions that put off start-up businesses from temporarily using empty high street shops that can help attract shoppers back to more family friendly town centres
Temporary or ‘pop-up’ shops often utilise vacant high street premises until a permanent tenant can be found. One of the barriers to start-up firms can be planning rules that control what type of business a shop can and can’t be used for.
The proposals would scale back the red tape that causes shop owners costly delays securing planning permission, over £1200 on average, before a disused shop can be used for a different purpose. Landlords would instead be free to temporarily change the use of an empty shop for two years, something currently not automatically permitted.

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It makes sense to protect a business by providing life cover in the event of the death of the business owner. A relevant life policy is a life plan, taken out on the life of an employee by an employer to provide death in service benefits. This type of policy is ideal for protecting directors who work day to day in a business as they qualify as employees. A relevant life policy will usually be a cheaper and possibly the only way of providing life cover for these small businesses. It is also cheaper than the individual entering into a contract personally.

The plans are restricted to providing life cover only and cannot contain a waiver, critical illness or income protection benefits. They must cease before the employees 75th birthday.

Policy premiums are paid by the company, which are usually an allowable deduction, without being treated as a benefit in kind.
Payments are treated as a business expense, thereby reducing the corporation tax liability.
There is no national insurance liability for employer or employee
No liability to income tax for the employee.
Benefits paid are tax free if paid to the nominated beneficiary
Payments for not form part of an individual’s annual or lifetime allowance.

For more details please contact us at Haxton Chartered Accountants.

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HM Revenue & Customs are concentrating on and targeting people who are evading tax, they have many tools in their box to help them do this.

They are using the information we send them more actively. If you submit self employment accounts that show a turnover over the VAT threshold then you are likely to get a call asking why you are not registered for VAT.

If you have an advert for a property rental and do not include this income in your self assessment return they may write and ask you why it is not included.

They are also using a task force approach to target specific industries and they have found this to be particularly beneficial, with as much as £50m of outstanding tax being collected from the 12 taskforces launched in 2011/12. Plumbers and electricians are amongst those already targeted and those that have been found to be under declaring their income have been prosecuted.

Restaurants, property rentals, taxi firms and London’s market traders are the most recent targets for investigation. Tax advisers are encouraging those who have evaded tax to consider a voluntary disclosure to reduce the cost of penalties to 10% or 20% from a possible 100% of the tax due.

If you need accountancy help to comply with the accounting or disclosure requirements or you have been contacted by H M Revenue & Customs please contact Haxton Chartered Accountants.

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HM Revenue & Customs have confirmed that the total number of top-rate taxpayers has increased to 4.1m, up from 3.8m last year. More than 300,000 people are now paying the 50% additional rate. Furthermore, it is anticipated that by 2014 five million workers will pay higher rate tax
The total number of people liable to pay tax is expected to drop from 30.1m to 29.7m as the lowest-paid are removed from the tax system as a result of an increase to their personal allowance.
There have been calls for a 25% or 30% tax band to restore incentives and fairness for the ‘squeezed middle’ if the tax system is to be fair across the whole income spectrum.
For further help and advice please contact Haxton Chartered Accountants.

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RED TAPE By: Gordon

The government launched a Red Tape Challenge in 2011, with a particular spot light on employment law. The aim of this was to simplify and improve the system by reforming employment law to assist businesses and boost economic recovery.

The changes have been far reaching looking at workplace disputes, the employment tribunal and extending flexible working. Some changes are being considered and some future proposals are being consulted on.

Employment Tribunal

The majority of businesses will face the employment tribunal at some stage and the government has implemented some changes to overhaul the employment tribunal system and further proposals are in the pipeline. Some of the current changes are as follows:-

Unfair Dismissal

Currently employees with one year’s continuous employment may bring a claim for unfair dismissal in the employment tribunal. However, for those whose employment starts on or after 6th April 2012 they will have to wait two years before being able to bring a claim for unfair dismissal.

Deposit Orders

Deposit orders can be the secret weapon of any employer in defending a claim in the employment tribunal and the maximum deposit order has been increased if a claimant has little prospect of success, from £500 to £1,000. This is for cases presented on or after 6th April 2012.

Cost Awards

As all businesses will be aware, one of the potential headaches of pursuing the matter all the way to the employment tribunal is that, in the majority of cases, each party bears its own legal fees. However, this is set to change for all cases presented on or after 6th April. The maximum amount of costs an employment tribunal can award has now been increased from £10,000 to £20,000.

We will report and further updates in this important area of law as and when they happen.

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