HMRC’s failings won’t go unanswered

Thomas Coombs is reminding people that HM Revenue & Customs (HMRC) could be forced to waive or reduce penalties for taxpayers who filed returns late or incorrectly because the tax authority did not answer their telephone calls.

Ministers have condemned HMRC for its customer service after an official report claimed that half of all calls received in the first six months of the year – totalling 12 million – were not answered.

HMRC commented: “We work very much on a case-by-case basis but if you phoned us and couldn’t get through we would take that into account. We know our customer service hasn’t been as good as it should be so we have moved a further 3,000 people into them and things are getting better.” Christopher Darwin, Partner at Leeds based Thomas Coombs said: “This really is a turnaround and shows that HMRC have accepted their poor service is not acceptable. The deadline for submitting online self-assessment tax returns is 31 January 2016 but this date should not be looked upon with complacency. Fines may still be issued for anyone that submits a late refund.

Thomas Coombs can take away the anxiety of self-assessment and allow you to focus on doing what you do best; running your business.”

For guidance and support with self-assessment tax returns, please Christopher Darwin.

Stuart Adam, Thomas Coombs

Thomas Coombs encourages businesses and home owners to consider capital gains tax when selling up

Leeds based accountancy firm Thomas Coombs is encouraging business and home owners to give greater consideration to capital gains tax (CGT) when selling.

The message comes after new figures show that the amount of CGT being collected by the government is growing at a rate of 43 per cent per year; one of the fastest areas of revenue growth for the Treasury.

According to the latest government figures, in 2013-14 the total amount of CGT collected rose to £5.5 billion; up from £3.4 billion in 2012-13.

The increase is believed to be due to further rises in the value of shares and property, as well as an increase in turnover for investments subject to CGT. In recent years HM Revenue & Customs (HMRC) has also become more vigilant in identifying those who have a liability through various targeted campaigns.

Basic-rate taxpayers pay CGT at a rate of 18 per cent, while higher and additional-rate taxpayers pay a rate of 28 per cent, which is offset by an annual CGT allowance. This is currently £11,100 for individuals and £5,500 for trusts.

Stuart Adam, Partner at Thomas Coombs, said: “The increase in CGT is not surprising considering the increase in the value of property and shares, stricter monitoring by HMRC and a number of other changes that have contributed to a larger tax take.

“However, there are still options available to individuals and businesses who wish to reduce their CGT tax bill, including schemes such as entrepreneur’s tax relief which is available to some companies.”

Stuart Adam added that it was important that individuals and businesses sought professional advice to reduce their tax liabilities, as there could be savings to be made.

For more information please contact Stuart Adam.

Get ready for payroll changes

Thomas Coombs is reminding clients that PAYE legislation is changing from 5 April 2016, so employers who intend to or are already payrolling benefits and expenses must register with HMRC using the new online Payrolling Benefits in Kind (PBIK) service. In addition, from next April, employers who use the service and already payroll benefits and expenses won’t have to report them on a P11D.

Employers must align their payroll software and register to payroll using the new service by 5 April 2016. They will not be able to register after this date for the 2016/2017 tax year as HMRC is unable to process changes in-year.

HMRC adds that all payroll benefits and expenses need to be included when employers report their payroll information in a Full Payment Submission (FPS). In addition, P11D (b) forms must still be completed, including the total benefits and expenses provided, whether or not they have been put through the payroll. However, if employers payroll car and fuel benefits, they must not complete P46 (Car) forms as they are deducting the tax at source that is due on these benefits.

Christopher Darwin, Partner at Thomas Coombs said: “All of these changes coming in from next April can be very confusing for an SME owner and so I would suggest that if you’re unsure about payroll changes, you seek professional advice. At Thomas Coombs, we can handle your payroll duties so that it is one less thing for you to worry about. Let PBIK be our headache, not yours!”

For more information please contact Christopher Darwin.

Stuart Adam, Thomas Coombs

Don’t be scared, you still have time to submit your paper tax return

As Halloween quickly approaches, most people may be worried about ghosts and ghouls, but Thomas Coombs is warning individuals to be more concerned about their paper self-assessment tax return.

The deadline for submission of this year’s annual paper tax return is midnight on 31 October and businesses and individuals who use this method must submit their return and all supporting evidence to HM Revenue & Customs (HMRC).

Any paper returns submitted after this date could leave a taxpayer liable to fines or investigation from HMRC.

Those that miss the paper deadline will have a second chance to return their documents in the form of an online tax return in the new year, using their unique taxpayer reference (UTR) provided by HMRC.

Stuart Adam, Partner at Thomas Coombs, said: “It is important that those who wish to return their self-assessment tax return in paper form do so before this month’s deadline.

“Submitting the return after this date could lead to a fine, even if you then complete an electronic return ahead of the online deadline of 31 January 2016.

“The government is currently in the process of developing a new online system that will do away with the traditional self-assessment return by 2020, but until then it is vital that businesses and individuals meet their annual tax return deadlines.”

For more information please contact Stuart Adam.

Do not bury your head in the sand

Leeds – based accountants Thomas Coombs is urging business not to be complacent if they receive accelerated payment notices (APNs), after new figures reveal that the government has collected more than £1 billion through their use.

HM Revenue & Customs (HMRC) recently announced that it has collected more than a billion pound using APNs, since it was granted the new powers in 2014/15.

Under the accelerated payment rules, HMRC is able to make taxpayers pay disputed tax in advance, rather than waiting for the outcome of a tax tribunal ruling.

Once an APN is received taxpayers have 90 days to pay the outstanding tax, whether they feel it is due or not or face additional penalties. If the taxpayer wins the case the money is reimbursed to them with interest.

During the first year HMRC issued more than 10,000 notices to businesses or individuals who had used a disclosable scheme under the Disclosure of Tax Avoidance Schemes (DOTAS) rules.

Andrew Cowe, Senior Tax Manager at Thomas Coombs, said: ““Receiving an APN should not be taken lightly, as it can have a serious effect on the liquidity and reputation of you and your business.

“The fact that HMRC have collected more than £1 billion, shows that they are serious when it comes to potential tax avoidance.”

Earlier this year, it was revealed in HMRC’s annual report on tax avoidance, that of the £596m received from APNs during 2014/15, some £28m was refunded after legal challenges.

“While many of those targeted by these new powers may have legitimately avoided paying tax, there will be some individuals and business who have been unfairly targeted and this is evident in the number of refunds already issued by HMRC,” added Andrew Cowe. “Seeking professional advice sooner rather than later is critical.”

For more information please contact Andrew Cowe, Senior Tax Manager

UK’s smallest employers need to embrace auto-enrolment

Thomas Coombs has responded to a Chartered Institute of Payroll Professional survey which states that more than a third of workers reaching the end of their working lives are not planning financially for their retirement.

At a time when auto-enrolment is very much at the forefront of SME owners’ minds, 36 per cent of individuals aged 51-60 admitted to having no pension provision. Meanwhile, two-thirds of 20-24 year-olds surveyed also confessed to having no pension plans, with 30 per cent of all survey respondents fearing that their final pension pot is unlikely to be enough to live on when they do come to retire.

Andrew Cowe, Senior Tax Manager at Thomas Coombs said: “I would hope that most people are thinking about their future, but these results show that a great many towards the end of their working lives are not planning for their retirement.

“This should act as a wake-up call for SMEs to look at their automatic enrolment staging date and evaluate the role that payroll plays within their organisations. Auto-enrolment is here to stay and will not go away by ignoring it.

“Small employers should therefore be embracing auto-enrolment and promoting the virtues of it to their staff. After all, the survey revealed that 55 per cent of employees feel saving for the future through payroll is a good idea.”

If you would like more information please contact Andrew Cowe.

SMEs are looking to grow

Leeds based Thomas Coombs has welcomed news that growing a business is top of the agenda for 34 per cent of SMEs. That’s according to research from Close Brothers Asset Finance.

The quarterly survey of UK SME owners and senior management from a range of sectors also revealed that more than half of firms have already experienced growth in the last 12 months, while a further 37 per cent expect their business to expand during the next year.

Christopher Darwin, Partner at Thomas Coombs said: “It’s great to see that so many SMEs appear to be experiencing the benefits of an improving financial climate.”

The results also highlighted that a significant number of firms are planning to recruit, with 43 per cent hoping to take on new staff within the next year.

Christopher Darwin added: “Naturally, firms need to expand their team as they grow organically but the challenge often lies in how they manage this growth. It’s important that firms seek professional advice to help with obtaining funding.

“I would urge any business owners looking at expanding to ensure that they assess their plans and evaluate all of the financial options available to help them find an appropriate solution to fit their needs. At Thomas Coombs my team and I can assist with a range of issues affecting SMEs and we can also handle the payroll. This allows SME owners to get back to doing what they do best; running their business and growing their enterprise.”

If you would like more information please contact Christopher Darwin.

Stuart Adam, Thomas Coombs

Invoice financing for SMEs

There has been a lot of publicity recently on the availability of finance for small to medium sized enterprises (SMEs), particularly focusing on traditional bank loans or equity investments.

However, as Thomas Coombs notes, there are other forms of business funding which should also be considered as an alternative source of money for firms.

Invoice finance is a solution that is being increasingly used by companies to deal with late payments whilst also improving cashflow. This is where a finance provider pays an agreed proportion (usually 80-85 per cent) of approved invoices to the company on receipt of a copy of the invoice. The balance (minus a small charge) is paid upon client payment.

Stuart Adam at Leeds based Thomas Coombs said: “With the economy growing, there has been a surge in demand for working capital in the SME sector that has created lots of opportunities for more invoice financing. Despite this, its current use is relatively low compared to ‘traditional’ sources of lending. In fact, only around 43,000 SMEs out of a total of nearly five million in the UK are currently using invoice finance.

“Whilst invoice financing is available from the banks and independent providers, one of the major problems is that there is a general lack of awareness by SMEs of the advantages of utilising this source of funding.”

For more information please contact Stuart Adam.

Owners of personal service companies could face stricter tax rules

Thomas Coombs is warning individuals who run a personal service company (PSC) that they could face higher tax bills in the future as HM Revenues & Customs (HMRC) looks to re-evaluate its tax rules.

The Leeds-based Chartered Accountancy practice has said that HMRC have put forward a proposal to amend Intermediaries Legislation, which could have a serious effect on freelancers.

The legislation – often referred to as IR35 – was introduced in 2000 and aims to tackle ‘disguised employment’.

It requires individuals working through an intermediary to pay broadly the same tax and National Insurance Contributions as any other employee, where they would have been providing the same services directly.

This mainly refers to personal service companies, which are enterprises where people provide their services usually through their own company.

In HMRC’s latest discussion document they say there is a “growing body of evidence which suggests there is significant non-compliance with the current rules.”

They point to the fact that the number of those paying tax under IR35 has remained fairly static, while the number of PSCs has increased dramatically from 200,000 PSCs in 2011-12 to 265,000 in 2012/13 – a number that is expected to continue to grow.

HMRC officials estimate that during 2015, the cost of non-compliance regarding IR35 will total a staggering £430m.

Christopher Darwin, Partner at Thomas Coombs, said: “While HMRC are only currently consulting on this issue, it shows that this is an area of particular interest for them and one that is likely to be targeted within the next few years.”

“IR35 legislation can be quite complex and can add an additional burden to the running of you businesses, while you are trying to focus on building a reputation and deal with your clients requirements. For some individuals it may be best to seek professional help.”

Those who take on employees from a PSC also need to be aware of the proposals, says Christopher Darwin, as one of the measures put forward by HMRC would make it a requirement of employers to declare a person’s employment where they felt IR35 rules may apply.

“Why this still remains a proposal on paper, there are a number of indications which suggest that this could be the way that HMRC intends to monitor PSCs in future,” added Christopher Darwin. “This could create an additional regulatory burden for businesses and it is an issue that they will need to monitor.”

If you would like help with IR35 legislation or you are interested in setting up a personal service company, please contact Christopher Darwin, Partner at Thomas Coombs.

Auto enrolment and ‘director only’ companies

Many ‘director only’ companies may be completely exempt from auto enrolment duties. The Pension Regulator has now revised its procedures for claiming exemption. There is an online submission process and, apparently, email and letter notifications will no longer be processed.

‘If your company receives a letter which includes a staging date and you believe that automatic enrolment duties don’t apply to it, because they are a director only company, the employer needs to let The Pension Regulator know at https://automation.thepensionsregulator.gov.uk/notanemployer‘.

If you need assistance in this area please contact Andrew Cowe, Senior Tax Manager.