Employment Tax Expert

HMRC has capped penalties for late returns of payment information to contractors under the Construction Industry Scheme. The scheme has proved controversial with contractors. Since 1 October penalties have been capped at £3,000. Before then, however, penalties for failing to register with the scheme were £100 per month and some penalties could amount to tens of thousands of pounds. In some instances where firms had neglected to register in the first place, they were being hit with notices for £20,000 and more. One firm was landed with a penalty of £80,000, which had built up over a year because the firm had failed to register as a contractor.

The new penalty regime came in on 1 October and only applies to penalties levied since that date however if you are faced with penalties under the old regime, contact us today on o800 917 9176 and we will assist you in mitigating these liabilities

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

A new Tax Disclosure opportunity aka The Tax Catch Up Plan began on 10 October 2011 and according to HMRC represents an opportunity for those delivering tuition and coaching in the fields of academia, sport, leisure, or music, but they have caveated it to say, ,this is not an exhaustive list who have undisclosed tax liabilities, to come forward and settle with HM Revenue & Customs.

Now, if you potentially fall into this category, this employment tax expert strongly suggests you take specialist advice BEFORE contacting HMRC, especially by phone or the internet. I will give you a clue why, because HMRC have been very, very sneaky – asking you how much penalty you should pay, now that’s a new one. Think laterally it’s like a salesman asking what your budget is, you will never get the best deal by providing this information and it has far reaching consequences with this “opportunity”.

The Tax catch up plan is also full of veiled threats that could intimidate the unwary, including some incorrect information – so if you think you may need to contemplate using this disclosure facility, call us today on 0800 917 9176

HMRC Tax Investigation into plumbers has begun in ernest

Five plumbers have been arrested and around 600 are under civil investigation by HM Revenue & Customs (HMRC) for failing to pay the right amount of tax.

The arrests and investigations have taken place during a campaign targeting plumbers which invited them to put their tax affairs in order. Some of those involved owe up to £150,000.

This is the start of co-ordinated action and more raids are expected to take place over the coming weeks across the UK, including Yorkshire, Kent, Cambridgeshire, Tyne & Wear, Midlands and South Wales.

John Pointing, Assistant Director, HMRC Criminal Investigation, said:

“These raids and arrests of ‘ghosts’ – people who have not declared income from the work they do – are the culmination of months of work by HMRC.

“We provided a chance for those we have arrested, and the 600 we are investigating, to come forward voluntarily and put things right. These arrests send a clear message that HMRC will take action against those who choose not to come forward and pay the tax they owe.”

Mike Wells, Director HMRC Risk & Intelligence Service, said:

“These arrests are just the start. HMRC is considering hundreds of further cases for criminal investigation in the plumbing and medical professions. Some people may have thought we were bluffing when we said we have information that we will use to prosecute tax evasion.”

Under the Plumbers Tax Safe Plan (PTSP), plumbers, gas fitters, heating engineers and members of associated trades who owe tax that they had not declared faced a penalty rate of only 10 per cent, with a maximum of 20 per cent if they disclose in full. They have until 31 August to arrange for payment.

If you are worried about these developments call us today on 0800 917 9176

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.”