Obligation to send HMRC leaflet, Disclosure opportunities, Changes to CT notices

Some taxpayers feel that all tax agents are on the side of HMRC. New regulations which require you to send a specific HMRC leaflet to some of your clients will reinforce this belief. We also outline new tax disclosure opportunities and proposed penalties which support HMRC’s campaign against tax avoidance. Finally, you need to be aware of changes to the distribution of some CT notices.

This is an
extract from our topical tax tips newsletter dated 15 September
2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

Disclosure opportunities 

HMRC is convinced there is a large population who fail to declare all of their taxable income. So it has set up a permanent digital disclosure service (DDS) to allow individuals, companies and trustees to come clean about their tax affairs. 
UK matters 
The DDS allows the taxpayer, or you as their tax agent, to make a declaration under any of the current open disclosure campaigns for: 
  • Let property 
  • Second incomes 
  • Credit card sales; and 
  • Worldwide interests (see below) 
However, to use the DDS the person has to set-up a Government Gateway account. As an agent you should already have Government Gateway login and password, so that should not be a problem. 
The DDS can’t be used to correct errors on tax returns already submitted for SA, VAT, IHT or payroll. It should not be used to report any incidence of tax fraud committed by the taxpayer or by another person. 
Worldwide 
The worldwide disclosure facility opened on 5 September 2016 to replace the various offshore disclosure facilities (including LDF) which closed last year. However, there are no special penalty reductions available with the worldwide disclosure facility, only a threat of more penalties if a full disclosure is not made by 30 September 2018. 
After that date new legislation will come into effect which will impose a requirement on taxpayers to declare any UK tax liabilities relating to offshore interests. If the taxpayer fails to correct their UK tax declaration in respect of offshore interests, sanctions will be imposed. HMRC is consulting on the design and implementation of those sanctions. 
HMRC is banking on the fact that from 2018 it will have access to vast amounts of taxinformation reported under the common reporting standard (CRS), from over 100 countries around the world. This CRS data will allow HMRC to identify UK taxpayers who have not fully declared their overseas interests. In addition, there is a separate initiative between; UK, Germany, France, Italy and Spain to share data from registers of beneficial ownership of companies and properties. 
Finally, you should be aware of a separate discussion document on strengthening taxavoidance sanctions and deterrents, which is explicitly aimed at tax advisers, accountants, financial advisers and anyone who helps to set up companies or other vehicles which are used in the implementation of tax avoidance. The penalties imposed upon the adviser in such cases could well exceed that paid by the taxpayer.

This is an
extract from our topical tax tips newsletter dated 15 September
2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

The
full newsletter contained the remainder of this item plus links to related source material and the
other two topical, timely and commercial tax tips. We’ve been
publishing this newsletter weekly since 2007; it’s clearly written
and focused on precisely what accountants in general practice need to
know about each week.
You can obtain future issues by registering here>>>


VAT flat rate scheme, Repayment claims, Members of the armed forces

Last week we had good news about revised HMRC guidance concerning the VAT flat rate scheme, and a prompt to think about clients submitting repayment claims. We also highlighted some special situations that apply to members and former members of the armed forces.

This is an
extract from our topical tax tips newsletter dated 19 May
2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

Members of the armed forces 
Individuals who serve in the armed forces are highly motivated, but some leave the forces carrying burdens of illness or disability. The UK tax and benefits system can present a barrier, as there are many rules which don’t fit easily with the usual situations faced by current and former members of the armed services. For instance: 

Residence 
Serving personnel may be posted to other countries, but their residence for tax purpose must be worked out using the statutory residence test (SRT). Individuals are not deemed to be UK resident for tax purposes when serving – although they may be treated as UK resident for tax credit purposes. Earned income from the armed forces will always be subject to UK income tax. The SRT will have to be applied to family members of serving personnel who also live abroad.    

Tax credits 
Serving personnel and their families can claim tax credits, even if they are serving in another country. The serving claimant is treated as if they were present in the UK, as long as they were ordinarily resident in the UK before their overseas posting began. 

Non-taxable income 
There are a number of travel and operational allowances that serving personnel receive which are not taxable and are disregarded for tax credits. Former members may receive war pensions and mobility supplements which are not treated as pension income. Also the armed forces independence payment is not treated as income.    

All of these issues, and much more, are covered in the LITRG guide for armed forces. There is also a very handy leaflet covering the same topics that can be printed out.  

This is an
extract from our topical tax tips newsletter dated 19 May
2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
 
The
full newsletter contained links to related source material for this
story and the
other two topical, timely and commercial tax tips. We’ve been
publishing this newsletter weekly since 2007; it’s clearly written
and focused on precisely what accountants in general practice need to
know about each week.
You can obtain future issues by registering here>>>