July 2008 enews - Introduction...
This month we update you
on the final timescale for the long awaited increase in the
personal allowance for the current tax year.
We also include our
usual round up of news. Please browse through this month’s
articles using the links below and contact us if any issues or
questions arise.
Extra Personal Allowances
Report on HMRC’s lost discs
Professional subscriptions
HMRC penalties for errors
£10,000 VAT errors
HMRC Powers
Newcomers must earn the right to stay in the UK
HMRC have now issued
further guidance on the increase in the personal tax allowance
which is due to take effect from 7 September 2008.
The guidance is aimed at
both employers and employees. Although the increase takes effect
for pay dates from 7 September onwards the change will
effectively be backdated for the majority of individuals until
the beginning of the tax year.
As has been widely
reported the increase in personal allowances from £5,435 to
£6,035 will mean that the majority of basic rate taxpayers will
be £120 better off for the current tax year. The increase is
designed to compensate those tax payers who were worse off
following the removal of the 10% starting rate of tax from
non-savings income. Higher rate taxpayers will not be better off
following the increase in personal allowances due to a
corresponding reduction in the point at which taxpayers start
paying the higher rate of tax of 40%.
Please get in touch if
you require any clarification of the new rules.
Report on HMRC’s lost discs
Alistair Darling has
made a statement to Parliament following the Poynter Review,
which was commissioned following the loss of the child benefit
data discs. The Independent Police Complaints Commission (IPCC)
has also issued a report into the circumstances surrounding the
loss.
HMRC’s Acting Chairman,
Dave Hartnett, has written to the Financial Secretary to the
Treasury, Jane Kennedy, regarding the findings of the reviews.
He said:
‘HMRC is absolutely
committed to delivering all of their recommendations and to
ensuring data security remains an explicit priority in the
future’.
According to the report
HMRC have significantly strengthened their data security since
the incident.
The report by the IPCC
found no evidence of misconduct or criminality by HMRC staff,
however it did acknowledge that the data loss was avoidable and
a result of ‘serious failings’ within HMRC.
Mr Poynter noted that
HMRC have made good progress towards implementing the 45
recommendations which are designed to ensure HMRC achieves the
highest standards of data security.
Both reports and related
documents can be accessed using the link below.
Do you pay any
professional subscriptions? If so then tax relief may be due on
the subscription as long as the professional body appears on the
latest HMRC list. The list includes all bodies approved by HMRC
up to 30 May 2008.
HMRC update the list
periodically.
Please get in touch if
you are not already claiming tax relief and would like to do so.
HMRC have issued revised
guidance on the system of penalties which they will be able to
apply to taxpayers.
The revised penalties
were introduced as part of legislation enacted in the Finance
Act 2007. The penalties generally affect returns which cover the
period from April 2008 and are due to be submitted from 1 April
2009.
Businesses have long
been allowed to correct net errors not exceeding £2,000 in their
VAT returns. From the first new VAT period commencing on or
after 1 July 2008, HMRC have raised the previous limit of £2,000
to a minimum figure of £10,000.
Errors of more than
£10,000 can also be put right on the return for businesses whose
turnover for VAT purposes exceeds £1 million.
HMRC are in the process
of updating their website to reflect this change.
Please do get in touch
if you have any concerns in this area.
HMRC has been busy
aligning its own rights and powers following the merger, several
years ago, between the two old organisations of the Inland
Revenue and HM Customs. This process will take a number of
years as the different organisations previously had different
powers, from rights to view paperwork and in some cases to
rights of access to business premises.
Some of the powers are
contained within legislation making its way through Parliament
as part of the Finance Bill. We will keep you informed of how
these increased powers will affect you.
The government has
announced that foreign nationals who wish to become British
citizens will have to earn the right to stay here.
The government’s new
tough approach, outlined in a draft Immigration and Citizenship
Bill, will require all migrants to speak ‘English’ and ‘obey the
law’ if they want to gain citizenship and stay permanently in
Britain. Other changes will result in speeding up the process of
gaining citizenship for those who ‘contribute to the community’.
From a MORI poll it
appears that the public support the proposals.
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