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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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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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The changes to child benefit have been well publicised in the press. They will take effect from 7 January 2013. As the benefit is being withdrawn as an income tax charge in households where there is an income of over £50,000 a year this will have an impact on the tax returns that are due to be filed before the end of next January.
Where an income is between £50,000 and £60,000 the charge will apply gradually and where there is an income of over £60,000 they will no longer gain from child benefit. The partner with the higher income will be liable for the charge and this will have to be reported in the self assessment tax return. Alternatively the claimant can choose not to receive the benefit and then the tax charge will not apply.
These changes mean that households that breach the child benefit threshold will pay much higher marginal rates of tax depending on the number of children they have claimed for in the past. There may be scope for tax planning depending on your circumstances.
For further information please contact Haxton Chartered Accounts.

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With the announcement of the 2012 budget, what does this mean for the small business?
With the change in corporation tax being reduced from 26% to 24% in April 2012 it is definitely a step in the right direction and if the Treasury’s proposals go to plan it should eventually reach a low 20%. This is fantastic for encouraging new business to move to the UK and relieving the tax burden on an existing business, however for small businesses with profits not exceeding £300,000, you currently only pay 20% and will not see any benefit.

In addition to this with the increase in business rates, smaller companies are expected to feel the strain, with no change to employer’s national insurance contribution to help ease the burden of employing people it all adds up.

It’s not all bad news, from April 2013 companies with revenue of up to £77,000 are now expected to be able to change the way they calculate their tax payments from the cash they receive and not the amounts invoiced, this will greatly benefit cash flow. If successful the Treasury will consider raising this to £150,000 seeing many more businesses benefit.

For any questions please don’t hesitate to contact us at Haxton.

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If you are thinking of winding up your company and qualify for Entrepreneurs’ Relief then you have until 28 February 2012 to act to obtain the 10% CGT tax break under ESC 16
This is only viable if you have retained reserves over £25,000 as the new rules allow this sum to be classified as capital
Please contact Haxton, Chartered Accountants for a review as soon as possible

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The Institute for Fiscal Studies has been carrying out a review of our tax system and has concluded that it is “overly complex and frequently unfair”
The IFS has proposed an extension of VAT to nearly all spending, including food, saying that the zero rating of certain products was an inefficient means of redistribution and causes an overly complex system.
Other proposals are :-
• The removal of taxation on standard bank and building society accounts,
• The abolition of stamp duty,
• the taxation of petrol and diesel being replaced by congestion charging
• More consistent carbon emission taxation.
• They have also, again, called for a merger of national insurance and income tax.
They have made it clear that this is an aspiration for the tax system over the next 10 to 20 years, with a gradual move towards the new system.
For help and guidance on all areas of taxation call Haxton Chartered Accountants West London.

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Treasury figures show that the 50% top rate of tax will raise an additional £12.6bn over five years.

The government has always claimed that this is a temporary tax, but a final decision regarding its future is not now expected until after the self assessment deadline in January 2012.

A letter from 20 leading economists to the Financial Times called for the 50% top rate to be scrapped as it was harming economic growth.

For more details or to check your tax position, please call Haxton Chartered Accountants West London.

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Following on from the HM Revenue & Customs (HMRC) investigation into the plumbing trade, HMRC have announced an initiative to crack down on VAT rule breakers. The new campaign will focus on businesses who are trading above the VAT threshold but who have not yet registered for VAT. The VAT threshold is currently £73,000 turnover on a rolling annual basis.
Each HMRC campaign is aimed at reducing the tax gap by focusing on areas where a significant underpayment has been identified, and they have raised over £500m from voluntary disclosures and a further £100m so far from follow-up activity.
Other previous campaigns have targeted offshore investments and medical professionals. For each, HMRC has used new technology and legislation to gather and analyse data, from internal and external sources, to identify people who should come forward. This has provided thousands more investigations, now being worked through, including a number of criminal investigations.
For additional help with your VAT registration and returns contact Haxton Chartered Accountants West London.

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There have been substantial increases in the life time gains limit for entrepreneurs relief, up to £5 million from 23 June 2010 and then to £10 million from 6 April 2011. The qualifying rules remain unchanged :-
• Shares have to have been held for at least one year
• Holding of shares must represent greater than 5% of the voting share capital
• Must be a director or employee of the company, there is no requirement to be full time.
For further guidance please call Haxton Chartered Accountants West London.

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HMRC have made changes to the tax treatment of Employment Benefit Trusts (EBT) and Employer Financed Retirement Benefit Schemes (EFRB). These schemes were originally designed to provide pension benefits for employees. In recent years they have been used to extract profits from owner managed companies with little or no income tax charge. HMRC had made it clear that it disliked this method of extracting profits. The new legislation in the Finance Bill 2011 treats transfers of loans and other assets from EBT’s and EFRB’s as disguised remuneration and enables HMRC to raise income tax and national insurance contributions on these payments. The new legislation will apply from 6 April 2011, with loans made before 9 December 2010 not being caught. Loans made between 10 December 2010 and 6 April 2011 will be subject to a charge under the new rules if they are not repaid by 6 April 2012.
For further information please contact Haxton Chartered Accountants West London.

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