HMRC has now decided that all remaining VAT registered businesses will be required to file VAT returns online and pay any VAT due electronically from 1 April 2012.

Existing VAT businesses with a turnover of £100,000 or more and all new customers that have registered for VAT since 1 April 2010 are already required to file and pay online.

The new measures will have effect from 1 April 2012 in relation to accounting periods starting on or after that date, for those businesses with a VAT exclusive turnover below £100,000. Only two exemptions are proposed:

• where the business is insolvent or

• where run by people who are practising members of a religious group whose beliefs are incompatible with the use of computers.

All businesses affected should be advised by letter, in February 2012, of their new responsibilities and how to meet them. Businesses which believe they fall into either of the two exempt categories ...   Read more...

The capital gains tax (CGT) exemption for gains made on the sale of your home (known as Principal Private Residence (PPR)) is one of the most valuable reliefs from which many people benefit during their lifetime. Only a property occupied as a residence can qualify for the exemption. An investment property in which you have never lived does not qualify.

Quality matters

'Occupying' as a residence requires a degree of permanence so that living in a property for say, just two weeks with a view to benefiting from the exemption is unlikely to work.

It would appear that HMRC are taking an interest in this particular area as there have been a number of appeals heard at the First Tier Tribunal (FTT).

Burden of proof

In one case HMRC held information that suggested that a taxpayer had disposed of a property in addition to receiving rental income from it. No mention was made of this in the taxpayer’s tax returns.

HMRC started an enquiry ...   Read more...

The reductions in key capital allowances announced last year come into force from April 2012 - that is 1 April 2012 for companies and 6 April 2012 for the self-employed. 

One of the key changes concerns the Annual Investment Allowance (AIA). This allowance provides 100% tax relief on most types of plant and machinery (not cars) for all forms of qualifying business.

Since April 2010 the maximum annual limit available has been £100,000 but this is to reduce to £25,000 annually for expenditure incurred from April 2012.

What this effectively means is that if a business delays the replacement of qualifying expenditure until April 2012 then it could significantly delay when it obtains the related tax relief.

At the same time the annual writing down allowances, otherwise available on unrelieved qualifying expenditure, reduce as follows:

• from 20% to 18% for the main qualifying pool

• from 10% to 8% for ...   Read more...

HMRC are adopting a new, targeted approach to the collection of overdue taxes. This started under the previous government and continues to yield rewards. HMRC’s purpose is to make sure that money is available to fund the UK’s public services and, to do this, they need people to pay taxes in full and on time.

However, HMRC are also keen to emphasise that if businesses find themselves in financial difficulty, they should contact HMRC as soon as possible. It may be that HMRC can arrange time to pay, for example, by an instalment arrangement.

If businesses do not contact HMRC before payment is due, HMRC’s strategy is to segment customers according to their previous behaviour, payment history and risk.

HMRC then try to tailor their debt letters and direct interventions according to the characteristics of each of those segments e.g. their letters will be stronger in tone if customers have a history of non payment and are ignoring their attempts ...   Read more...

To be or not to be… resident

The Government has published a consultation document on its plans for a statutory residence test (SRT). The aim is to enable taxpayers to assess their residence status in a straightforward way. Furthermore, it will enable those who come to the UK on business, as employees or investors, to have a clear view of their tax treatment.

Tax residence has an important bearing on an individual’s UK tax liability, especially if they have overseas income or capital gains. At present there is currently no full legal definition of tax residence, which means that the rules are unclear, complicated and seen as subjective. Instead, the definition largely rests on legal cases decided in the courts over a long period of time and is based on a world completely different from today’s fast paced global environment. The current uncertainty for individuals about their residence status is seen as a deterrent to businesses and ...   Read more...