Employment Tax Expert

HM Revenue & Customs (HMRC) is extending the Alternative Dispute Resolution (ADR) tax trial which provides Small and Medium Enterprise (SME) customers with an alternative way of resolving tax disputes in compliance checks.

ADR involves an independent person from HMRC (called a ‘facilitator’), who has not been involved in the dispute before, and who will work with both the customer and the HMRC case owner to try to broker an agreement between them. ADR has proven to be an effective way of resolving tax disputes in a quick and efficient way, not just for tax but in the commercial world as well.

In this stage of the trial, ADR will be available to SME customers, where a tax issue is in dispute, but before an appealable tax decision or assessment has been made by HMRC. Initially this stage of the trial will be limited to customers based in North Wales and North West England.

ADR covers both VAT and direct taxes disputes, and entering into the ADR process will not affect the customer’s existing review and appeal rights.

This employment tax expert says, be careful this is not for everyone. The example situations provided are where HMRC would probably get their backsides kicked if it went to Tribunal, so it will wrap up a case quicker BUT there is the other side of the equation as well and remember this is only open to 2 areas. If you find yourself in this situation, call us today on 0800 917 9176

HMRC has warned Employers about silly mistakes on their PAYE/NIC/Payroll end of year forms

In 2009/10, more than 500 PAYE forms incorrectly claimed to employ A N Other, 128 staff were entered as Mr, Ms or Mrs Dummy, and 40 employees had apparently reached the grand old age of 200.

Nearly 600 employees had surnames that included the letter X, while 75 had the surname ‘casual’. Other surnames included ‘worker’ and ‘student’. A large number of employees were simply referred to as ‘unknown’.

Jim Harra, director of customer operations of HMRC, said: “Most employers get their PAYE returns right. The few who do not cause problems for their employees, for example, incorrect deductions of tax.

“Around 80% of errors in employee data are due to an incorrect name, date of birth or national insurance number – straightforward information that can be collected and checked quite easily.

“So, whether employing ‘Mr or Mrs J Smith’ – or even ‘Mr or Mrs A N Other’, please use the full and official name on PAYE paperwork.

“First names are very important, especially for common surnames. We really want employers to check that they are sending us the right details for all their employees, to make life easier for them, HMRC and their employees.”

and just remember the stick that goes with is message is that of PENALTIES, you have been warned

This employment tax expert warns all readers of the increased use of the Proceeds of Crime Act 2002 (PoCA) by police and government agencies that has been highlighted by the recent case of Kishor Doshi, director of Sunderland accountancy and taxation firm Otax, who is now facing a custodial sentence after being found guilty of tipping off a client about a police investigation.

According to the Sunderland Echo Doshi admitted he rang and told a client that his office had received a police order commanding him to hand over the man’s accounts just hours after he discovered it.

The order relates to a money laundering investigation by Northumbria Police’s Economic Crime Unit – called Operation Galapagos – into the dealings of the client.

Doshi told the hearing at Newcastle’s Moot Hall that he did not know the Production Order related to a criminal investigation and was supposed to be kept secret by law. He claimed he thought it was part of an ongoing civil inquiry that his client had a right to know about. The accountant of 23 years told the court he only read the first two paragraphs of the Production Order before he made the first in a series of phone calls.

This is, for those of you who are unaware, an offence under the PoCA 2002

Sentencing has been adjourned until next month.

The Time to Pay arrangements that have helped many a business struggling with cashflow may be a target for cutbacks in the Budget next week. There have already been moves to place restrictions on those wishing to delay payments in respect of £1m by placing requirements on these companies to be reviewed by one of a panel of approved accountants, these then provide a report to support or otherwise the companies claims. However, this latest rumour could cause a lot more problems with the economy still fragile but in order to get this into context, this employment tax expert must also state that they disagree with time to pay arrangements for PAYE, VAT and CIS deductions – controversial you may think but pause for a moment – this money has never belonged to and never will belong to the company, the Company is simply an unpaid collector of taxes and the payments should definitely not be part of Company cashflow. This apart Corporation Tax and Self Assessement tax should still have a strictly controlled ability to apply for time to pay arrangements as this could mean the difference between companies staying afloat and getting through the recession and folding. These latter points cannot be underestimated, so long as the company in question represents something that is a viable proposition, so fingers crossed the sweeping rumour that Time to Pay arrangements will go unilaterally is just that … a rumour!

You may recall from earlier posts the concerns raised over HMRC and their report on “lost” revenue and people paying the “right” amount of tax – well tax investigations, employer compliance visits, tax enquiries have all now taken a sinister turn as it has been announced (via a Parliamentary answer) that HMRC are using anti-terror laws to spy on those suspected of not paying the “right” amount of tax. 5492 requests were granted to HMRC officers under the Regulation of Investigatory Powers Act (RIPA) 2000.

The RIPA powers enable officers to watch or follow suspects, and use informants to snoop on them. The statistics indicate that the number of cases in which HMRC has used the anti-terror powers has increased by approximately 75% in the past four years.

The concern here is that these powers are used as a weapon of first resort and not what they were intended for. We have all heard before about these powers being abused by councils across the land, spying on householders and their dustbins, dog fouling, school catchment area claims etc – so watch out, you don’t know who may be watching you or someone you know!