Young people targeted with phone tax scams

HMRC is warning young adults who may have less experience of the tax system to be especially vigilant about tax refund scams via smartphone, as fraudsters ramp up activity after the self assessment season

During April and May, fraudsters regularly blitz taxpayers with refund scams by email or text pretending to be HMRC. Criminals do this to coincide with legitimate rebates being processed by HMRC.

HMRC says these messages include spoofed calls, voicemails and text messages. They are designed to encourage people to provide bank details, in exchange for a payment worth hundreds of pounds, on a fake government website to harvest private information and steal money. It confirms that HMRC will never ask someone to provide bank details by text or email.

Last spring alone, HMRC received around 250,000 reports of tax scams - which is nearly 2,500 a day - and requested that over 6,000 phishing websites be deactivated.

In the 12 months to February 2019 HMRC received 73,382 reports of suspicious HMRC phone calls, and asked phone carriers to remove more than 400 unique numbers associated with scams.

Angela MacDonald, head of customer services at HMRC, said: ‘We are determined to protect honest people from these fraudsters who will stop at nothing to make their phishing scams appear legitimate.

‘HMRC is currently shutting down hundreds of phishing sites a month. If you receive one of these emails or texts, don’t respond and report it to HMRC so that more online criminals are stopped in their tracks.’

When taxpayers file returns to HMRC, they will then legitimately receive a tax calculation as well as an email promoting them to check their personal tax accounts, but no other HMRC communication. As many taxpayers file self assessment returns, most of HMRC’s contact happens in the months after January.

If an individual has paid too much tax, HMRC will issue the repayment automatically either direct into their bank account or if they have indicated on their tax return there is no bank account then HMRC will send a cheque. In the case of underpayments of tax, HMRC will tell taxpayers how much they owe and how to pay securely.

Source: Accountancy Daily by Pat Sweet.

Are you aware that you can keep up to date with the latest developments and news using our new mobile application. Download for Android and iPhone.

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…

HMRC update income tax forms for new tax year changes

Released 06 April 2019

HMRC have updated income tax forms to reflect the new tax year changes.

View the updated forms and guidance at Collection: Income Tax forms.

Source: Accountancy Daily.

Are you aware that you can keep up to date with the latest developments and news using our new mobile application. Download for Android and iPhone.

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…

2019/20 tax year: personal tax rate changes and allowances

A roundup of all the personal tax changes which come into force from the 2019/20 tax year including, an increase to the personal allowance and higher rate threshold, changes to residential inheritance tax and capital gains tax regime for non-UK residents

Personal allowance and higher rate threshold

The personal allowance increases on 6 April 2019 to £12,500 from £11,850. This will lead to a reduction in tax of £130 a year for most people. The threshold for paying the higher rate of income tax (which is 40%) will increase to £50,000 from £46,350.

Income tax rates

UK and Northern Ireland

Scotland – Scottish rate of income tax (SRIT)

Wales

Other Allowances


*Available to persons born before 6 April 1935. Relief limited to 10%. Reduced to minimum allowance by £1 for every £2 over income limit. Minimum allowance reduced by £1 for every £2 income over £100,000 after applying personal allowance reduction.

Inheritance Tax

Disguised remuneration loan charge

The deadline for settling loan charges with HMRC is 5 April 2019. In April 2019, all outstanding loans from disguised remuneration schemes will become subject to an income tax and national insurance contributions (NICs) charge under Income Tax (Earnings and Pensions) Act 2003 ITEPA 2003, Pt 7A. The loan charge is an anti-avoidance measure which targets the payment of remuneration in a form (in this case, as a loan) that avoids tax and NIC.

The new loan charge was introduced by Finance (No. 2) Act 2017 on all disguised remuneration loans, eg, loans made via company employee benefit trusts (EBTs) or EBT sub-trusts, or similar via employer-financed retirement benefits scheme (EFRBS) made on or after 6 April 1999 and still outstanding at 5 April 2019.

Pensions, loans and savings

Student loans

The Department for Education has confirmed that from 6 April 2019 the Plan 1 threshold increases to £18,935 from £18,330 and the Plan 2 threshold to £25,725 from £25,000 but the rate of deduction for both remains 9%.

Individual savings accounts (ISAs)

From 1 April there will be a small adjustment to the annual Child Trust Fund and Junior ISA savings limit with a £108 rise from £4,260 to £4,368 from 6 April 2019, equivalent to 2.5%. The interest and gains received on money saved in a CTF and Junior ISA is tax free as per standard ISA rules.

An estimated 907,000 Junior ISAs were paid into during 2017-18 tax year.

Personal pensions

The tax-free amount you can pay into a personal pension remains at £40,000 per tax year. The lifetime allowance for pension savings increases from 6 April 2019 to £1,055,000 (from £1,030,000)

Workplace pensions

The minimum amount you need to pay into your employee’s auto-enrolment workplace pension increases from 6 April 2019. This means the total amount of employer and employee contributions must be a minimum of 8% of your employee’s qualifying earnings.

Capital gains tax

The capital gains tax (CGT) annual exempt amount for individuals increases to £12,000 from £11,700.

Non-resident CGT

Non-UK residents will be pulled into the capital gains tax CGT regime for the first time on 6 April if they dispose of UK land and property.

Currently, non-UK residents are only taxed on disposals of residential property, but from 6 April 2019, all UK land (including commercial property) will come within the scope of UK taxation.

In addition, non-UK residents will also be subject to UK tax on the disposal of assets that derive at least 75% of its value from UK land, so called ‘property-rich’ companies.

With the new CGT regime, a new compliance system is being introduced, which non-UK residents will have to follow in reporting disposals of UK land and paying the associated tax.

Non-UK residents disposing of UK land (or assets that derive at least 75% of its value from UK land) must file a return within 30 days following the completion of the disposal, and a payment on account must be made at the same time.

The amount of tax to be paid is calculated under the normal rules, including using any allowable losses at the date of disposal.

Property tax

Interest relief for buy to let mortgages

Since April 2017, the government has phased in the removal of interest for buy to let landlords. Now in the fourth year of implementation, the restriction will be fully in place from 6 April 2020.

The finance costs that will be restricted include interest on mortgages, loans - including loans to buy furnishings and overdrafts.

Stamp duty land tax (SDLT) – UK and Northern Ireland

Residential

Non-residential

SDLT: first-time buyers

Residential only


SDLT rate effective from 22/11/17 for purchases by first time buyers only

Scotland – Land and Building Transaction Tax (LBTT)

LBTT rates and bands for residential and non-residential property transactions

Wales – Land Transaction Tax (LTT)


These rates came into force on 6 April 2018.

Cars

Company cars

From 6 April 2019, benefit in kind (BiK) tax rates are increasing for company cars. The percentage applied to the list price of the car will increase based on the CO2 emissions published by the Vehicle Certification Agency.

Tax free mileage allowances

The following rates will remain the same from 6 April 2019:

National Insurance Contributions (NICs)

Class 1 NICs

Employees

Employers

- Class 1A and Class 1B – 13.8%
- Class 2 (self-employed) – Flat rate £3 a week. Small profits threshold £6,365 a year.
- Class 3 (voluntary contributions) - £15 a week.
- Class 4 (self-employed) – 9% of profits between £8,632 and £50,000 a year. 2% of profits above £50,000 a year.

Source: Accountancy Daily - Report by Amy Austin.

Are you aware that you can keep up to date with the latest developments and news using our new mobile application. Download for Android and iPhone.

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…

HMRC call centre connection times deteriorate

One in five taxpayers are not satisfied with HMRC’s digital services despite the tax authority’s push to move all services online, while wait times to speak to an adviser worsened in February with nearly a third of callers waiting more than 10 minutes to speak to an adviser

At the same time, call centre response times have worsened this month, with the average speed of answering a call worsening from five minutes 14 seconds to six minutes, 27 seconds, well above HMRC’s target five-minute waiting time. This is nowhere near the performance in 2015-16 when average answer times were 12 minutes but HMRC did work to improve this with substantial investment in technology, automated call services and more call centre staff to improve response times.

However, although taxpayers are getting through to the service, they face longer waits to actually speak to an adviser as response times only illustrate time waiting to reach the automated service. Nearly a third of callers – 29% - have to wait more than 10 minutes to speak to an HMRC official, which is nearly double the number waiting this long in 2017-18. The call wait worsened significantly in February, up from 19.8% to 29% of taxpayers waiting more than 10 minutes, compared with HMRC’s target connection time of five minutes.

Pressures of Brexit queries and Making Tax Digital implementation dates have contributed to the deterioration in service as the tax authority has been reassigning staff to Brexit transition and no deal planning and preparation.

An HMRC spokesperson told Accountancy Daily: ‘Over the past 12 months, the average wait times for our helplines have been around our target of five minutes. We know that at busy times some customers have to wait longer, and we are doing all we can to keep all waiting times as low as possible.

Despite the push to online services, HMRC is still having to deal with large volumes of post and is falling well behind its target of dealing with 80% of post within 15 days of receipt. It received more than one million items of post in February for which customers require a response.

HMRC dealt with 64.8% of customer post within 15 days, leaving over 300,000 letters unanswered.

Despite the level of dissatisfaction with digital services, there has been good take-up of personal tax accounts, HMRC reported.

While company registration for Making Tax Digital for VAT has been slow with the majority of companies required to report VAT digitally still not registered, there has been strong interest in HMRC’s digital tax accounts with nearly half of taxpayers now signed up for the service.

The number of individuals signing up for personal tax accounts has hit 18.8m, up nearly 25% on the same time last year when total number stood at 14.7m, out of 30.3m UK wide taxpayers. Digital tax accounts were first launched in 2015 and are optional for taxpayers; each account amalgamates records for taxpayers including tax and NICs from different employment sources and income streams.

‘The numbers of customers using our digital services continues to increase, and we carry on improving these services in line with customer feedback,’ HMRC added.

Source: Accountancy Daily - Report by Sara White.

Are you aware that you can keep up to date with the latest developments and news using our new mobile application. Download for Android and iPhone.

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…

HMRC sends late filing penalties earlier than expected

The Association of Taxation Technicians (ATT) is alerting taxpayers that HMRC is starting to issue late filing penalties for self-assessment income tax returns this week

The penalty for missing the filing deadline of 31 January 2019 for a 2017/18 return is £100.

HMRC announced in February 2019 that, due to Brexit-related pressures, the issue of late filing penalty notices would be delayed.

At the time HMRC said that individuals who filed late will still be charged the penalty; but the notice would be delivered later than normal. It will still issue daily penalties to individuals who have still not filed three months after the deadline, in appropriate cases, at the normal time.

Previously, ATT raised concerns about the delay, pointing out that the £100 penalty notice is an important prompt to taxpayers that their return is outstanding as well as reminding them that they risk incurring an additional penalty of £10 per day if the return is still outstanding after three months from the 31 January due date.

ATT was concerned that if the penalty notices were not received until late April or into May, the £10 daily penalties will be unavoidable.

Jon Stride, co-chair of the ATT’s technical steering group, said: ‘The ATT is pleased that HMRC have now started to issue penalty notices and have not delayed the exercise to the end of April, which was originally a possibility. However, it will take HMRC until 12 April 2019 to issue all the penalty letters. This gives taxpayers a little over two weeks to submit their return before the daily penalty regime commences.

‘Anyone who has yet to file their 2017/18 tax return should do so as a matter of urgency. They will not be able to avoid the £100 penalty unless they have a reasonable excuse for being late, but getting the return filed online by no later than 30 April 2019 will mean that they will avoid the additional £10 per day.’

Source: Accountancy Daily - Report by Amy Austin.

Are you aware that you can keep up to date with the latest developments and news using our new mobile application. Download for Android and iPhone.

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…

700,000 taxpayers miss self assessment deadline

A record 93.68% of self assessment tax returns were completed by yesterday’s midnight deadline, with 700,000 taxpayers filing last night, according to HMRC

More than 11.5 million taxpayers were required to file their 2017/18 tax returns by 11.59pm on 31 January. The majority filed on time, but 700,000 taxpayers missed the deadline.

More than 700,000 taxpayers submitted their tax returns on deadline day, the peak hour for filing was 4pm to 5pm when 60,000 filed. The number of taxpayers who filed online soared to more than 10.1 million for the first time.

However, it is important to note that it is possible to dispute automatic penalties, at least a million of which are issued by HMRC.

The Low Incomes Tax Reform Group (LITRG) is reminding people of their right, in certain circumstances, to contest penalties given by HMRC for missing the self assessment tax return deadline of 31 January 2019.

HMRC issued one million late filing penalties issued for tax returns due for the 2015/16 tax year, the latest year’s numbers that are available.

It is possible to avoid a fine as long as the taxpayer has a so-called ‘reasonable excuse’ in the eyes of HMRC.

For example, if someone’s child was taken seriously ill just before they were due to submit a tax return, then that is likely to be a reasonable excuse for filing it late. But they would then have to submit the form as soon as possible after the situation was resolved.

Angela MacDonald, HMRC’s director general for customer services, said: ‘This year, we had a record numbers of filers completing their tax returns by the deadline. And for any customers who are yet to file their returns, please contact HMRC – we are here to help.’

HMRC is urging any taxpayer that missed the deadline to contact the tax authority. HMRC says it will treat those with genuine excuses leniently, as it focuses penalties on those who persistently fail to complete their tax returns and deliberate tax evaders.

The excuse must be genuine and HMRC may ask for evidence.

Challenging penalties

Head of LITRG team Victoria Todd said: ‘Most taxpayers will want to do everything they can to file their tax return to HMRC on time, however, sometimes that may not be possible and HMRC will automatically issue a late-filing penalty.
‘Where someone thinks they have a reasonable excuse for having missed the deadline, they must provide details and, where possible, evidence in support of those details to HMRC. It may be that a combination of reasons, rather than any one thing, may constitute a reasonable excuse to HMRC.

‘It is up to the taxpayer to appeal a penalty if they wish to claim they have a reasonable excuse. If HMRC agree with the appeal the penalty will be removed, however if they don’t, it is possible to challenge HMRC’s decision as HMRC do not have the final word on whether or not an excuse is reasonable; that question is ultimately for the courts to decide. If someone is unable to agree with HMRC, they can ask HMRC to review the decision and/or appeal to the First-tier Tribunal.

‘If someone claims a reasonable excuse, they must comply with the obligation in question without further delay, for example, submit a late tax return as soon as possible. This is because the law on reasonable excuse requires people to remedy a default within a reasonable time after the excuse has ended.’

Source: Accountancy Daily - Report by Amy Austin, Sara White.

Are you aware that you can keep up to date with the latest developments and news using our new mobile application. Download for Android and iPhone.

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…

Property income allowance gives £1,000 tax relief

Property owners who receive an income from rent could be missing out on a recently introduced tax-free allowance potentially worth hundreds of pounds provided they have low rental income.

Taxpayers can claim the property income allowance, which came into effect in April last year, giving the property owner £1,000 of tax relief on their rental income, provided they have few or no expenses. The allowance is worth up to £1,000 each tax year in tax-free allowances for property or trading income from 6 April 2017.

‘Depending on circumstances, this can be a fairly generous tax break for individuals who rent out their property, including land owners, for example farmers. A basic rate taxpayer can save up to £200, while higher rate taxpayers can save up to £400 by claiming the allowance,’ said Annalise Lovett FCCA, partner at chartered accountants Newby Castleman.

‘Because many landlords and property owners fill out their own tax returns, they may well have overlooked the property income allowance, especially as it only came into effect last year, and the 2017/18 tax return is the first time it can be claimed.’

The new allowance can be particularly beneficial to joint owners of property and land, for example married couples, as both parties are able to claim the allowance, ie, up to £1,000 each.

Where the allowance covers all of an individual’s relevant income (before expenses) then they will no longer have to declare or pay tax on this income.

Those with higher amounts of income will have the choice, when calculating their taxable profits, of deducting the allowance from their receipts, instead of deducting the actual allowable expenses. The trading allowance will also apply for Class 4 national insurance contribution purposes.

The allowance does not apply to partnership income from carrying on a trade, profession or property business in partnership. They cannot be used in conjunction with the relief available under the rent-a-room relief rules.

Lovett said: ‘It’s a relatively straightforward way of claiming back a potentially generous amount from the taxman, and if you’re completing your own tax return it might be easy to miss.’

The relief was introduced as part of Finance Act 2017, and introduced a new Part of Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005), to give relief for two new annual tax allowances for individuals of £1,000 each, a trading allowance and a property allowance.

Source: Accountancy Daily - Report by Sara White.

Are you aware that you can keep up to date with the latest developments and news using our new mobile application. Download for Android and iPhone.

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…

Two-tier Making Tax Digital penalty regime confirmed

The penalty system for Making Tax Digital will kick in within 15 days of an overdue payment and will be a two-tier system, the government has confirmed in the draft Finance Bill 2018-19, although there will be an initial grace period for late filers

The government has admitted that there were numerous complaints in the consultation responses stating that the system for Making Tax Digital penalties was overly complicated with effectively a two-tier system, but it will go ahead regardless.

HMRC has confirmed that the penalties for failure to keep digital records will come into force immediately from April 2019, while there will be a grace period for those who file late. Penalties for late filing will come into force in April 2020.

Making Tax Digital for VAT reporting for business is due to come into force from April 2019, although the wider project for corporation tax and property tax has been delayed until at least 2020-21.

Penalties will be calculated on debts remaining due after 15 days from the payment due date although on a mitigated basis where payment is made or a Time to Pay arrangements (TTP) has been set up until 30 days after the due date.

Where a successful TTP agreement is made, the government will take the date of contact with HMRC as the effective date for the purpose of late payment penalties.

The government intends to introduce the late payment penalties based upon the two charge model consulted on as it believes that a two charge system is fairer to the vast majority who comply with payment dates and prompts better compliance behaviours for the small minority who do not in a proportionate manner:

It says that the system will encourage taxpayers to get in touch earlier with HMRC when they have payment problems and will directly link the penalty to the amount of time a debt is outstanding.

Two-charge model

Two charge model will work as follows:

- If a payment or TTP is made or treated as made within 15 days of the due date no penalty will be charged;
- Between 16 and 30 days half a penalty will be charged;
- After 30 days a full penalty will be charged plus a further penalty which will then accrue daily until payment is made or a TTP treated as made.

VAT repayment interest

Some specific concerns were raised about VAT repayment interest not being paid where there are missing returns or for periods of reasonable enquiry.

In response, the government has decided that where a repayment return is received and there are other outstanding returns HMRC will pay interest from the date any outstanding returns are submitted, subject to reasonable enquiry.

The government rejected concerns about using differential rates for corporation tax Quarterly Instalment Payments (QIPS), stating that only those paying corporation tax have to estimate their current year’s tax liability before the year is finalised and make payments based on those estimations.

Once the payment date for the year, nine months and one day after the end of the accounting period has elapsed, the usual rates apply. As a result, there will be no change to the current interest rate differential for QIPS, the government confirmed.

Source: Accountancy Daily - Report by Sara White.

Are you aware that you can keep up to date with the latest developments and news using our new mobile application. Download for Android and iPhone.

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…