Enews – August 2015

In this month’s eNews we report on HMRC’s time to pay arrangements, the launch of Tax-Free Childcare, the latest NMW campaign and changes to the rules for farmers averaging of profits. We also report on the introduction of the Alcohol Wholesaler Registration Scheme and TPR guidance on pension schemes for auto enrolment.

Please do contact us for further advice.

Tax-Free Childcare to launch in 2017 following court ruling

The government has welcomed a judgment from the Supreme Court that found the proposals for delivering Tax-Free Childcare to be lawful. The new Tax-Free Childcare Scheme was being challenged by some of the providers of the childcare vouchers typically used in the current Employer Supported Childcare arrangements.

The scheme is now expected to launch from early 2017. The existing Employer Supported Childcare scheme will remain open to new entrants until Tax-Free Childcare is launched.

Exchequer Secretary to the Treasury, Damian Hinds said:

‘We are pleased that the government’s proposals for delivering Tax-Free Childcare have been found to be clearly lawful. This government is absolutely clear on the importance of supporting families with their childcare costs.’

‘It is disappointing that some organisations involved in the existing scheme felt the need to take and persist in this costly and wasteful course of action, which has led to a delay in the launch of Tax-Free Childcare.’

If you would like advice on Employer Supported Childcare please contact us.

Internet link: GOV.UK news

 Time to Pay Arrangements – Mandatory Direct Debit

Where a taxpayer has difficulty paying their tax liabilities HMRC may agree ‘time to pay arrangements’ whereby the taxpayer agrees to pay off the amount owing by instalments after the due date. These arrangements are only entered into where the taxpayer is genuinely unable to pay by the due date and is able to commit to agreed payments to bring their tax up to date.

HMRC have announced that where time to pay arrangements are agreed the payments will need to be made by Direct Debit.  This has always been HMRC’s preferred method of collection but this became mandatory from 3 August 2015.

However, HMRC do state that:

‘We recognise that there will be exceptional circumstances where a customer is unable to set up a direct debit, perhaps because their bank account will not allow it. In such cases payment by other methods may be agreed.’

Internet link: GOV.UK blog

NMW campaign targets hair and beauty sector

HMRC are targeting employers in the hairdressing and beauty sectors who pay their staff below the national minimum wage (NMW).

HMRC and the Department for Business, Innovation and Skills (BIS), supported by the National Hairdressers’ Federation and the Hair and Beauty Industry Authority, will work with hair and beauty businesses to help them understand their pay obligations to their employees.

In a new approach HMRC will provide employers with tools and guidance to check if they are paying the correct amount.

Employers who take this opportunity to ‘self-correct’ will not have to pay penalties, nor will they be ‘named and shamed’. If employers choose not to comply with their NMW obligations, HMRC will take action to ensure that employees are paid what they are owed.

As detailed in the press release ‘BIS analysis shows that 42% of businesses in the sector do not pay level 2 and level 3 apprentices the correct minimum wage – the highest underpayment rate of any sector. Those paying under the minimum wage now have a chance to put things right. If they fail to do so it could result in their business being publicly ‘named and shamed’ and facing a fine of up to £20,000 per employee.’

Jennie Granger, HMRC Director General of Enforcement and Compliance, said:

‘This innovative campaign is about helping employees who have been underpaid get the money they are legally due back into their pockets. It will help them understand where they can report underpaying employers confidentially.

It is also about helping employers check if they are making mistakes, and self-correct if they are. Some employers will need a bit of a reminder to check they are getting it right, and some will need stronger action from us, so we are bringing in more enforcement officers to support this campaign.

I urge all employers and employees in the sector to check that salary is being paid correctly, as we will use these extra resources to find and investigate where it is not. Check you’re paying NMW correctly – it’s worth it.’

Employers in the hair and beauty sector are being asked to come forward as part of the National Minimum Wage Campaign by:

• advising HMRC they want to take part in the campaign
• disclosing details of arrears now paid to their workers and confirming that wages worth at least the NMW are now paid to all workers.

If you would like help with NMW issues please contact us.

Internet link: GOV.UK nmw campaign

Latest job market statistics

The Office for National Statistics (ONS) has released figures showing that the UK employment rate has dropped by 67,000 when compared to the three months to February 2015. As detailed in the press release the figures show:

• There were 30.98 million people in work. This was 67,000 fewer than for the 3 months to February 2015, the first quarterly fall since February to April 2013. Comparing March to May 2015 with a year earlier, there were 265,000 more people in work (272,000 more people working full-time and 7,000 fewer people working part-time).
• The proportion of people aged from 16 to 64 in work (the employment rate) was 73.3%, little changed compared with the 3 months to February 2015 but higher than for a year earlier (72.9%).
• There were 1.85 million unemployed people. This was 15,000 more than for the 3 months to February 2015, the first quarterly increase since January to March 2013. Comparing March to May 2015 with a year earlier, there were 273,000 fewer unemployed people.
• The proportion of the economically active population who were unemployed (the unemployment rate) was 5.6%, little changed compared with the 3 months to February 2015 but lower than for a year earlier (6.5%). Economically active people are those in work plus those seeking and available to work.
• There were 9.02 million people aged from 16 to 64 who were out of work and not seeking or available to work (known as economically inactive), 30,000 more than for the 3 months to February 2015 and 104,000 more than for a year earlier.
• The proportion of people aged from 16 to 64 who were economically inactive (the inactivity rate) was 22.2%, little changed compared with the 3 months to February 2015 but higher than for a year earlier (22.0%).
• Comparing March to May 2015 with a year earlier, pay for employees in Great Britain increased by 3.2% including bonuses and by 2.8% excluding bonuses.

Internet link: ONS

Alcohol Wholesaler Registration Scheme

The Alcohol Wholesaler Registration Scheme (AWRS) is being introduced on 1 October 2015 by HMRC to tackle alcohol fraud. HMRC are advising that if you are an alcohol wholesaler or trade buyer, you need to prepare for the new registration scheme now.

Who the scheme applies to

HMRC are advising that the AWRS will apply to existing, and new, wholesalers of alcohol, trading at or after the point at which excise duty has become payable. In addition all businesses that trade in or retail alcohol will in future need to make sure that any UK wholesalers that they buy from are registered with HMRC. The types of business who will be affected include:

• alcohol wholesalers
• brokers
• auctioneers
• alcohol retailers.

The scheme will not apply to private individuals purchasing alcohol from retailers.

HMRC are advising that:

• from 1 October 2015, all alcohol wholesalers must apply online to HMRC to register for AWRS
• from 1 January 2016 HMRC will start to review all AWRS applications to decide whether businesses are ‘fit and proper’ to be accepted onto the register. Where a business fails the ‘fit and proper’ test, HMRC will remove its right to trade in wholesale alcohol
• from 1 April 2017, all businesses that trade in, or retail, alcohol will need to make sure that any UK wholesalers that they buy from are registered with HMRC. HMRC will provide an online look up service so that trade buyers can ensure wholesalers they buy from are registered with HMRC.

Internet link: GOV.UK AWRS

Farmers Averaging of Profits

It was announced in the March 2015 Budget that the government plans to extend the period over which self-employed farmers can average their profits for income tax purposes from two years to five years. The government has launched a consultation which considers ways in which the extension could be designed and implemented.

The change to the averaging rules is expected to come into effect from 6 April 2016.

Internet link: GOV.UK farmers averaging

Pension Schemes for Auto Enrolment  

The Pensions Regulator (TPR) has published some guidance aimed at the 1.3 million small and micro employers who are preparing for pensions auto enrolment. The guidance aims to help employers find a good quality pension scheme. TPR research suggests one in five (290,000) employers will not seek advice when choosing a pension scheme, while one in ten (130,000) do not know how to select a scheme, or think it will be difficult.

The information includes details of a list of ‘master trust’ pension schemes open to employers of all sizes, and which have been independently reviewed to help to demonstrate that they are administered to a high standard.

TPR have also made available a quick guide for small and micro employers on what to look out for when choosing a scheme suited to their needs. They have also updated  their webpage guidance to advisors.

Lesley Titcomb, chief executive of The Pensions Regulator, said:

‘I strongly believe that the vast majority of the 1.3 million small and micro employers approaching automatic enrolment want to do the right thing. However, many will choose not to seek advice and will need additional support to meet their duties.

We are committed to providing them with the information they need to make confident choices when it comes to choosing a quality scheme for their employees.’

If you would like help complying with your auto enrolment duties please do get in touch.

Internet link: Press release

 

 

 

eNews – August 2014

In this month’s enews we report on a number of issues including HMRC’s latest disclosure opportunity, warnings of incorrect PAYE overpayment notifications and the introduction of late submission penalties and guidance on pension scams.  We also advise on HMRC guidance on exceptions to the VAT return electronic filing rules and the Pensions Regulator issues first report on auto enrolment penalties.

Please do get in touch if you would like more detail on any of the articles.

Guidance on changes to VAT filing rules

The majority of businesses have to file their VAT returns online. HMRC have issued guidance on changes to VAT rules which introduce additional exemptions to the requirement to file VAT returns online. The changes, which came into effect at the beginning of July 2014, allow business owners that satisfy HMRC that it is ‘not reasonably practicable’ for them to use the online system to submit ‘paper’ VAT returns.

HMRC will also be able to approve telephone filing as an alternative method of electronic filing in certain circumstances.

If you would like any advice on VAT issues please do get in touch.

Internet link: HMRC VAT Brief

Pensions Regulator uses formal powers over Auto Enrolment

The Pensions Regulator (TPR) has issued the first quarterly bulletin which details how many times it has needed to use its formal powers to ensure employers comply with their automatic enrolment duties.

The first of the new quarterly bulletins shows the regulator had used its powers on 23 occasions up until the end of June this year. The powers listed include the ability to carry out inspections and to issue statutory notices including fixed penalty and escalating fines.

Executive director of automatic enrolment Charles Counsell said:

‘Employers and the pensions industry are understandably interested to know how and when we use our powers. To date the vast majority of employers are complying with their new workplace pension duties without the regulator needing to use our enforcement powers.’

‘I believe this is a testament to the success of our proportionate, risk-based approach to compliance and enforcement. We target our resources where they will maximise compliance and work with employers to help them comply with their duties.’

‘We have provided the tools and assistance that large and medium employers need to ensure millions of workers didn’t miss out on the pension contributions they are entitled to. On a small number of occasions, when our intervention has not resulted in the required outcome, we have used our powers to help to ensure employers comply with their duties.’

For general guidance on employers auto enrolment duties see TPR website. If you would like specific guidance, help or advice on how to deal with your auto enrolment obligations please do get in touch.

Internet link: Bulletin

Pension scams

HMRC and the Pensions Regulator (TPR) are publicising the availability of revised leaflets which warn people of the consequences of pension liberation scams.

HMRC are advising that individuals with pension savings continue to be targeted by unscrupulous companies encouraging them to access their pension savings early. Options are given for personal loans, cash incentives and one-off pension investments to encourage people to invest in these pension scams. Pension savers involved in these pension liberation scams face significant tax consequences.

HMRC has worked closely with TPR on publishing a revised set of leaflets highlighting the serious downsides of pension scams. The leaflets provide guidance on what trustees and scheme members can do to reduce the risk of becoming involved in these scams, and the tax impact of releasing pension funds early using these types of arrangements.

Internet links: HMRC news TPR website

HMRC latest disclosure opportunity

HMRC have announced the details of their latest disclosure opportunity which is expected to give approximately 16,000 tax avoidance scheme users the opportunity to pay the tax they owe.

The contractor loan scheme used non-UK employers to pay untaxed income or a loan instead of paying part of an employees salary.

HMRC are inviting those who have used the scheme to bring their affairs up to date using the contractor loans settlement opportunity which will allow taxpayers to settle their liability in the best possible terms. This opportunity is for the tax years up to 5 April 2011 and is open until 9 January 2015.

If they do, they will pay the tax and interest due on the sums they received as loans under the scheme. HMRC are warning that if  participants continue to challenge HMRC in the courts, they risk having to pay additional tax charges and penalties – as well as the costs of litigation if they lose.

Jennie Granger, HMRC Director General for Enforcement and Compliance, said:

‘Many people regret ever getting involved with complex aggressive tax avoidance schemes and HMRC is providing an opportunity for contractors to come forward and straighten out their tax affairs.’

‘This is an important opportunity and we are working hard to encourage users to withdraw from such schemes. We also want to ensure they’ve understood our position. They can choose to continue to litigate for a better outcome but they risk a worse result. HMRC has a strong track record of winning tax avoidance cases in court, with around 80% of decisions in our favour. The costs for users are high, potentially resulting in penalties, charges and significant legal costs for scheme users.’

Please get in touch if you have any concerns in this area.

Internet link: Contractor loan disclosure opportunity

HMRC warn of incorrect RTI letters

HMRC have warned that incorrect RTI letters have been issued. The full statement reads:

‘We are aware that a batch of RTI 201 letters has been sent to employers and agents in error, containing incorrect information about overpayments. Any employer or agent receiving one of these letters in August should please ignore it. Those wishing to check their tax position can do so on the Business Tax Dashboard. We are very sorry for any inconvenience caused.’

If you would like any help with payroll issues please do get in touch.

Internet link: HMRC What’s new

HMRC to issue penalties for late submission of PAYE returns

In the latest Employer Bulletin HMRC are warning that employers’ who fail to submit their PAYE submissions, Full Payment Submission (FPS) or where appropriate Employer Payment Summary (EPS) on time will face penalties. The penalties are being introduced from October 2014.

Penalty notifications will be issued on a quarterly basis.

Please do get in touch for advice on PAYE matters.

Internet link: Employer Bulletin