Monthly Archives: April 2011

HMRC targets tradespeople in new tax amnesty

The Plumbers’ Tax Safe Plan, which was announced in March, gives those in the plumbing, heating and associated trades the opportunity to declare any unpaid tax and pay a reduced penalty.

The letter warns that, once the opportunity expires, the tax authorities will begin a fresh clampdown. Investigations after the amnesty could result in 100% penalties and prosecution for wrongdoers.

Those affected have until 31 May to tell HMRC if they would like to take part in the temporary amnesty. It is thought that most participants will face a lower penalty rate of 10% for making a full disclosure, although HMRC may levy fines of up to 20%.

After notifying the tax authority, individuals will have until 31 August to make their disclosure and arrange for payment.

“Our aim is to make it easy for plumbers to contact us, make a full disclosure of income and face a reduced penalty,” said Mike Wells, HMRC’s Director of Risk and Intelligence.

“We are using a variety of intelligence sources to target plumbers who have not declared their full income and I urge tradespeople in this group who think they owe tax on their income to get in touch with HMRC and get their tax affairs in order simply and on the best available terms”.

More information on the campaign can be found on the HMRC website.

 

Treasury rules out early access to pensions

The proposals, which would have allowed individuals to dip into their company pension during their thirties, were the subject of a four month consultation.

Currently only those aged over 55 can access their savings in a company pension scheme.

However, the Treasury has said the plans should not be considered because there is ‘limited evidence’ that early access would have a positive effect on overall pension contribution levels or significantly help individuals who are facing financial hardship.

Instead, the Treasury supported calls to allow more flexibility over access to pension savings upon retirement and welcomed the planned pension reforms, including automatic enrolment in a new national employment-based scheme from 2012.

“While early access has some merits, there is insufficient evidence to suggest it would act as an incentive to save more into pensions,” said the Financial Secretary to the Treasury, Mark Hoban.

“We will work with industry to develop workplace saving to supplement pension savings. In addition, we will explore other ways of making pension tax rules simpler and more flexible, for example by making it easier to deal with small pension pots.”

The decision was welcomed by the National Association of Pension Funds (NAPF), which represents 1,200 schemes.

“Letting people dip into their pensions early would not have increased their retirement income,” said Darren Philp, NAPF director of policy. “Instead it would have risked greater dependency on the state pension, and left pension providers in a bureaucratic tangle.”

ISAs ‘failing to encourage savers’, says think-tank

In a new report, the Institute for Public Policy Research (IPPR) argues that ISAs have failed to encourage saving amongst low and middle income families.

Latest figures from the IPPR suggest that less than a third of families with a weekly income of under £600 hold an ISA and 44% of families who earn less than £200 a week have no form of savings at all.

It added that the tax relief available through an ISA goes to people who would have saved anyway.

With the Office for Budget Responsibility forecasting a decline in saving, the IPPR proposes shelving ISAs and introducing a ‘Lifetime Bonus Savings Account’, which it claims will boost saving by low-to-middle income earners.

It recommends that the government pay an annual ‘bonus’ into accounts on a sliding scale, dependent on the average balance held in the account over the preceding three years, up to a maximum of £183.33.

Nick Pearce, IPPR director, said: “Our research shows that people on low to middle incomes want simple savings accounts with few terms and conditions, little in the way of small print and paying an easily understandable reward.

“The current tax relief given to higher-income earners could be withdrawn without reducing their propensity to save. Instead, these funds could be used to increase saving by low to middle-income families and boost aggregate saving to improve the UK’s saving ratio at no extra cost to the government.”

 

Student art competition is huge success

The walls of our Blackburn office are now home to some fabulous pieces of modern art thanks to the great success of the student art competition and gallery event we hosted with our local college in April.

Masterminded by PM+M practice manager, Jackie Gouldsbrough with tutors from the University Centre at Blackburn College, the competition invited students of all ages to create unique pieces to liven up our new premises on Greenbank Technology Park.

There was an excellent response, with more than one hundred creations entered. And for one evening only we saw our building transformed into an art gallery as friends of the college and PM+M joined together to view these amazing pieces, whilst a special judging panel selected the ones that now take pride of place on our walls.

Heading up the judging panel was Blackburn College’s Chairman of Governors, Sir Bill Taylor, who presented the winning students with cash prizes funded by PM+M.

“For over 120 years the college has been working with great local employers like PM+M to give students every possible opportunity,” said Sir Bill Taylor. “I hope other businesses see the success of this event and approach the college to embark on further joint ventures.”

The PM+M project mirrors the type of work students may be commissioned to create after they graduate. And as well as it being great to see such a variety of work on offer at the event, it was a fantastic experience for the winning students to see their work being not only recognised and rewarded but also exhibited in public spaces.

The winning pieces have breathed new life into our modern building and continue to be appreciated and complemented by our many staff and visitors.

HMRC issues final reminder for offshore tax evaders

From 6 April 2011 new penalties will apply to income tax and capital gains tax. They will be linked to the tax transparency of the territory in which the income or gain arises.

Where it is harder for HMRC to get information from another country, the penalties for failing to declare income or gains arising in that country will be higher.

“Time is running out for anyone going offshore to evade tax. Get your tax affairs in order or face the risk of a penalty worth up to 200% of the tax evaded,” warned David Gauke, Exchequer Secretary to the Treasury.

Under the new system there will be three new levels of penalty:

  • where the income or gain arises in a territory in ‘category 1′, the penalty rate will be the same as under existing legislation
  • where the income or gain arises in a territory in ‘category 2′, the penalty rate will be 1.5 times that in existing legislation – up to 150% of tax
  • where the income or gain arises in a territory in ‘category 3′, the penalty rate will be double that in existing legislation – up to 200% of tax

If a person can demonstrate that they have taken reasonable care to get their tax right, they may escape a penalty. Similarly, HMRC may not apply a penalty where an individual has a reasonable excuse for a failure to notify taxable income.

Where penalties are due, HMRC can reduce them depending on how helpful the individual is in assisting it to establish the correct amount of tax due.

More information on increased penalties for offshore non-compliance can be found at http://www.hmrc.gov.uk/news/offshore-penalties.htm.