Employment Tax Expert

The nature and definition of a “reasonable excuse” with respect to tax issues has been highlighted by Geraint Jones QC (who oversaw 4 hearings into late payment penalties imposed by HMRC).

Accountancy Age reports that he found in favour of 3 cases:

- Anthony Leachman,
- Ballysillan Community Forum and
- NA Dudley Electrical Contractors.

He relied on a European Court of Human Rights ruling that stated the penalties imposed by HMRC were “in the nature of a criminal penalty”.

As such, he said HMRC must “satisfy me to the criminal standard” – beyond reasonable doubt – that it was an unreasonable mistake on the taxpayer’s behalf that filing did not take place.

Jones is quoted:

“HMRC argues that a ‘reasonable excuse’ must be some exceptional circumstance which prevented timeous filing.

That, as a matter of law, is wrong.

If Parliament had intended to say that the penalty would not be due only in exceptional circumstances, it would have said so in those terms.”

However, he didn’t stop there in admonishing HMRC. He also noted that HMRC, by imposing a second penalty while deliberately failing to send reminder about the first penalty, was trying to take advantage of its own default.

“In my judgment, it is not open to HMRC to take advantage of its own default in sending a timeous default notice to a taxpayer.

That would offend the common law principle of fairness and most right-thinking members of the public would find it repugnant, especially on the part of a public body.”

HM Revenue & Customs has confirmed it is taking on an extra 100 officers to target tax abuses in the construction industry.

HMRC said it is doubling the number of specialist officers cracking down on labour providers who fail to pay tax.They are expected to bring in an additional half a billion pounds of tax across all business sectors over the next four years. Labour providers found guilty of tax evasion could face jail.

David Gauke, exchequer secretary to the Treasury, said: “This government has invested £900m in HMRC to crack down on people who break the rules. Expanding these teams will help make sure that we bring in the additional money that the UK needs. Labour providers who think they can exploit their staff and the tax system need to think again.”

Mike Eland, HMRC’s director general of enforcement and compliance, said: “Building on HMRC’s successful approach to tackling fraud in the labour provider industry, these teams will make it even harder for fraudsters.

“Labour providers are traditionally found in agriculture and construction where they supply workers to other businesses. But HMRC will also continue to focus its efforts on all sectors where there is a demand for a flexible workforce to meet seasonal and market demand such as leisure, food, transport, security and cleaning.

“We will tackle fraud by those employers who don’t play by the rules and the organised crime gangs who exploit their workers. We will also work collaboratively with labour users and businesses in these sectors to help them use legitimate providers. This will help to create a level playing field for compliant businesses to compete in the market place.”

This employment tax expert warns companies that there are many labour providers in the Construction Industry who are not legitimate and will cause you more problems than if you engaged the subcontractors on truly self employed terms

How many seemingly straight forward changes in forms from HMRC carry the potential for information collation leading to a tax investigation?

Well, later this year you will find that your solicitor, or property conveyance person, will be required to file new forms with the Stamp Duty Land Tax Office when you buy a property. After 4 July 2011 new forms need to be filed and you need to be aware that the devil is in the detail!

The new forms require that each lead purchaser provide the following unique identifier when completing the forms:
• Individuals – their National Insurance number, or
• Companies and Partnerships – their Unique Tax Reference (UTR) or VAT registration number.

So be warned HMRC will be setting up tracking processes that could find you walking straight into an HMRC tax investigation

HMRC have announced that they will allow plumbers and people in associated trades to declare their unpaid taxes for the past five years but this will be different from previous amnesties such as the Tax Health Plan (THP) and Liechtenstein Disclosure Facility (LDF) – the Plumbers Tax Safe Plan (PTSP) is not based on information uncovered about plumbers’ accounts and covers five years rather than a 10-year period.

HMRC state that they do not have specific information about plumbers’ accounts but is using data obtained from the Gas Safe register (previously known as Corgi) to target plumbers. Well call me a cynic but these sort of campaigns are not one of those finger in the wind moments, it is backed up by intelligence and is basically trying to encourage people out of the wood work rather than HMRC focusing on individual investigations, this merely represents an easier way for HMRC to meet targets as opposed to doing the real work of tax investigations.

Anyone thinking of entering the PTSP scheme will have until 31 May to notify HMRC of their intentions with arrangements to pay them off by the end of August.

The penalties will be:

* 10% for careless errors
* 20% for deliberate defaulters

Important dates to note are:

* 1 March 2011 – the start of the Plumbers Tax Safe Plan
* 31 May 2011 – the last day you can notify
* 31 August 2011 – your disclosure must reach HMRC by this date

but before anyone launches forth re participating in this disclosure, take expert professional advice

HMRC have issued an apology noting that the turnaround times for newly self-employed people to register will increase to eight weeks, between now and October 31 2010.

It seems that processing times for paper form 64-8 and registrations for self-assessment will also increase over the next two months.

HMRC staff are being moved to “higher priority work”, hence the delays in processing these forms.

Be very careful during this time to ensure that you are genuinely self employed, whether it be in the construction industry or elsewhere – if in doubt contact us today