You may have suffered a penalty from HMRC due to late filing of a tax form, and no doubt you will have felt aggrieved but at the same time realised that ordinarily there is little or no scope to get the penalty reduced or withdrawn.
A brave taxpayer took on HMRC recently and won! It involved an employer who received a penalty notice of £400 for failure to file the employer annual returns by the due date, with the penalty being £100 per month for 4 months. Later on a further penalty notice for £100 was issued after the returns were properly filed, so overall the taxman wanted £500.
This is often seen as overly complex, with many pensioners subject to PAYE before retirement but self-assessment afterwards when they may have several small sources of income that may or may not need tax deducted. A perennial problem indeed! It is not the amount of income that makes somebody’s tax affairs complex – rather it is the number of different sources.
The Office of Tax Simplification (OTS) is to conduct a review of the system of pensioner taxation and make recommendations on how to simplify the tax system and ease tax administration.
This is the somewhat quaint name of the latest HMRC initiative to tackle tax defaulters. It is aimed at those delivering tuition and coaching or who use those skills in another way to supplement income, but it also provides a means of telling HMRC of ANY undeclared income or gains with the promise of lower penalties than would normally apply.
If you are worried about your tax not being up to date please contact us and we will make sure you get the best tax deal possible.
HMRC publish benchmark scale rates for accommodation and subsistence payments made to you by your employer where you travel overseas, so that up to those rates there is no income tax charge on you nor any exposure to national insurance contributions.
The rates are reviewed once a year and new rates have just been announced. They represent a useful increase which hopefully your employer will implement. They vary considerably between countries and indeed between different areas of a country. Furthermore, the benchmark scale rates are split between items such as room rate; meals (separate rates apply to each meal); drinks; specified travel.
There is a sharp increase in the taxable car benefit on many company cars with effect from 6 April 2012. This is by reference to a new emissions scale which creates an income tax charge (and Class 1A national insurance liability) for the private use of a company car on 10% of the car’s list price from 76 g/km to 99 g/km, rising by 1% per 5 g/km to the usual maximum of 35% (there is also a reduced charge on 5% where the emissions do not exceed 75 g/km).
That may not sound much of an increase, but it is in fact a 50% increase in tax if you have a company car with CO2 emissions of 120 g/km, or 40% if they are between 115 and 119 g/km. We can advise of the exact tax charge in your particular circumstances, and include advanced warning of a further but more modest increase in the taxable benefit from 2013/14 of 1% of the list price where the CO2 emissions are between 95 and 219 g/km.
The tax authorities are entitled to look at and ask questions on any tax return within an enquiry window which normally ends 12 months after the tax return was filed with them. But they can also do this outside that window, by making what is termed a discovery, if they can show that all relevant information was not supplied to them with the tax return so they had no way of knowing that all might not be well.
As your tax adviser we always take care to disclose additional information with the tax return where we feel that protects you from a later discovery, but until now HMRC have things very much their way on this. A recent tax case, however, looks like it has changed that. The case is Dr Michael Charlton and Others v HMRC and we will try to use it to your advantage if you ever face the threat of HMRC making a discovery in respect of an old tax return.
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