Tax News
May 2010
HMRC fines taxpayer for overpayment
An unnamed self-employed man overpaid his tax by £3,000 and when HMRC recalculated it they fined him £1,400 for the error, according to a report in the Telegraph.
Four out of five HMRC staff hate their employer
A leaked HMRC document sent to dissident ICAEW union member Ken Frost reveals that its workers aren’t a happy bunch. Only 18% say they are proud to work for the department and just 14% would recommend working for it. Just 13% of those surveyed agreed that “as a whole HMRC is managed well”, with 12% agreeing they “have confidence in the decisions made by HMRC’s senior managers”.
French tax authorities investigate HSBC accounts
French tax authorities are to launch an investigation into the accounts of thousands of HSBC private clients after buying details from a former employee at a Swiss branch of the bank. More than 8,000 accounts are involved.
International carbon tax demanded by France and Italy
French president Nicolas Sarkozy and Italian prime minister Silvio Berlusconi have demanded that countries which do not have to comply with EU regulation on environmental standards should pay a carbon tax on products imported into the EU. In a joint letter sent by the leaders to the head of the European Commission, they stress: “It would be unacceptable if the ambitious efforts already agreed by the EU to reduce greenhouse gas emissions… were compromised by carbon leaking due to… insufficient action by certain third countries.”
£12.6bn tax extracted from big business
The Financial Times has reported on research by UHY Hacker Young revealing that tax investigations into big businesses has resulted in increased revenue of £12.6bn. The research indicates that HMRC crackdowns raised an additional £40bn over the period up to March 2009. Hacker Young claims that the intensity of the tax investigations could be a factor in persuading companies to go offshore.
HMRC besieged by calls
Owing to the errors made by HMRC with regard to PAYE notices of coding, its switchboards have been swamped with calls, leading to long periods before the phone is answered and/or long periods on hold.
IR35 on post-election agenda
It is believed that the new government will be revising the IR35 legislation. IR35 was introduced to catch employees falsely being treated as freelancers to reduce their tax bill. The rule has proved unpopular in how it defines workers, with many arguing that they are unfairly designated as employees.
Two major cash payouts by HMRC
In a statement to the Stock Exchange, Ladbrokes, the gambling business, said it expects a cash receipt of around £80m in respect of corporation tax as part of a settlement of “outstanding items” in relation to tax years through to 31st December 2007. HMRC may also have to return £77m in corporation tax after a tribunal decision in a loss relief case brought by Ford, the motor car manufacturers, after falling foul of a 35-year-old rule allowing US companies to be treated the same as UK companies in claiming loss relief.
IMF plans for bank tax under fire
Accountancy experts have warned that the International Monetary Fund’s (IMF) plan to create a levy and tax on bank profits and bank staff remuneration would be almost impossible to enforce. At the same time, they anticipate that it would result in an unnecessary increase in tax avoidance. Michel Taly, an adviser at French firm Arsene Tax and a former manager in the tax legislation department of the French finance ministry, said the levy would be a sales tax, not an income tax, and this would cause huge implementation problems in banking and insurance operations. “All [the IMF] is doing is outlining, but it needs to clarify how this will work. There are any number of off-balance-sheet activities that can easily be located in foreign jurisdictions,” said Mike Devereux, director of Oxford University’s Said Centre for Business Taxation. “It is almost inevitable that there will be an increase in banks looking to arrange their tax affairs in the most efficient way possible.” The world’s 80 largest insurance groups have written to the G20 group of nations to protest at their industry’s inclusion in proposals for a global financial services tax. The G20 has also called for the IMF to go back to the drawing board and flesh out its proposals, while banking representatives also voiced concerns on the collection issues and the degree of multilateral cooperation needed for the proposals to work.
6p income tax increase vital
The National Institute of Economic and Social Research says that the basic rate of income tax should be raised by 6p in the pound in order to “lower government borrowing to below 3% of GDP by 2020”. The body also called for the zero rate of VAT to be scrapped on everything except food and children’s clothes. It will take at least another £15bn of spending cuts to fix the public finances, it claimed.
50% income tax will hit 300,000 people
The new 50% tax rate will affect the 300,000 highest earners in the UK, out of the 29 million people who pay income tax. It will be levied on taxable incomes greater than £150,000 a year and aims to raise an extra £2.4bn by next year. The 600,000 people who earn more than £100,000 a year will have their personal tax allowance eroded too, raising £1.5bn for the government. Added to the increased tax on pension contributions, which starts next year, the UK’s top 600,000 earners are expected to be paying an extra £7.5bn a year in tax.
