French Tax Refund Scam!

BEWARE Scam emails (example below) have been sent out to French taxpayers purporting to come from the French Tax Administration.   If in any doubt contact your local SIP and do not respond.   

Cher(e) client(e) :

Vous avez choisi de télérégler vos impôts par Internet et nous vous en remercions.

Après les derniers calculs d'administration fiscale d'impôt sur le revenu,nous avons déterminé que vous êtes admissible à recevoir un remboursement de notre part d'un montant de 158,40 €

Quelles sont les démarches à suivre pour effectuer mon remboursement d'impôts ?

Veuillez accéder à votre dossier personnel est mettre à jour vos coordonnées postales et bancaires pour que votre remboursement soit effectué dans les plus brefs délais et vous nous permettez dans les 3 jours ouvrables pour traiter votre situation.

·       Accéder à votre dossier personnel maintenant

ATTENTION! :

ce lien est valable pour une durée de 48 heures.

Vous pouvez consulter les Conditions Générales d'utilisation de votre espace particulier.

En vous remerciant de votre confiance.

La Direction générale des finances publiques

Suivez-nous sur Twitter@dgfip_officiel et sur Facebook : Direction Générale des Finance

Spring Budget 2017

Philip Hammond's first and last Spring Budget is not quite as bland as, perhaps, it initially seemed, and some of the key points are discussed below:

The Chancellor has drastically cut the dividend allowance that was introduced by his predecessor, down from £5,000 to just £2,000 per annum, which will not go down well with OMBs (owner managed businesses).  This measure will impact from April 2018 so there is still one more year (2017/18) at the current level of dividend allowance of £5,000 tax-free.

The self-employed, with profits in excess of £16,250, are on the receiving end of a hike in their Class 4 National Insurance Contributions, although this increase is an effort to ensure more equity in the National Insurance Contributions between the employed and self-employed, now that the self-employed are receiving better state pension provision under the new state pension rules, which commenced in April 2016.

From 1 April 2017, the VAT registration and deregistration thresholds will increase in line with inflation by £2,000 to £85,000 and £83,000 respectively.

As discussed elsewhere on our News Blog, the date for the implementation of Making Tax Digital has been postponed for one year, until April 2019, for those businesses and landlords whose income is below the VAT threshold.

The main changes to the non-dom regime legislation have been well documented and draft legislation is already out for consultation but, in the Budget yesterday, there were a few minor additions - namely the extension of the transitional rule permitting non-doms to segregate their existing "mixed fund" accounts so that now this applies to pre-2007/08 accounts, too.   In addition, in order to encourage UK investment by non-doms, the Chancellor announced some changes to Business Investment Relief to make it more attractive and more widely available.

There is no change to the proposed reduction in corporation tax rates, so the new 19% rate will apply from next month, as originally intended.

If you have any questions on any of the above, or on other provisions announced yesterday, then please contact us on:  info@petersonsims.com

 

MTD: Part Four - A Reprieve!

Philip Hammond delivered some very welcome news yesterday when he announced that, for all businesses & landlords with income below the VAT limit (now £85,000), the implementation of Making Tax Digital will be delayed for one year until April 2019.

This reprieve of one year offers the opportunity, at last, for proper foundations to be laid for MTD and it gives HMRC more time to run simulations and iron out the problems which will inevitably crop up within their systems.  It also provides more time to implement digital support for the small businesses and landlords impacted by MTD.

HMRC's original time frame of April 2018 was always over ambitious.   Software firms, in particular, were facing impossible deadlines to provide the software packages that would underpin MTD and the accountancy profession was anxious that HMRC's proposed support systems would be inadequate.  Education of those impacted by MTD can now be delivered in a staged and measured way, with businesses having the time to get proper help to prepare for "D-day" in April 2019. 

In addition, this one-year postponement will also allow more time for the professional accountancy bodies and other interested parties to continue to lobby the Government over those parts of the original MTD proposals that we feel have not been properly analysed, including the very important issue of the real cost to businesses of MTD.

MTD: Part Three - The Government's Response

After an unprecedented 3,000 + responses to HMRC's six Consultation Documents on Making Tax Digital, we finally got the official response from the Government.....and it basically says not much is going to change from the original proposals.

There are still concerns that HMRC has responded to public concerns with only some "window dressing".   There is to be a period of further consultation regarding the two main aspects of the MTD proposal  that have given most concern - namely the decision on the hoped-for increase in the exemption limit up to the VAT threshhold and the timescale for implementation.  However, this period of consultation is only three and one-half weeks instead of the usual 12 weeks!   

Most professional commentators still consider the pace of change is too ambitious and could damage the economy at a delicate time, post-Brexit when the country's smaller businesses will be facing other, more pressing, challenges.  A fundamental change in reporting and taxation for these businesses could just tip some over the edge as the perceived view is that HMRC's projection, of a reduction in costs for these businesses, is totally wide of the mark.   If the public's concerns are taken onboard, we could perhaps expect to see a postponement, possibly only for one year until April 2019, but even that would be widely welcomed.

At least HMRC has now agreed that Excel spreadsheets, beloved of most businesses and accountants, can be used for digital record -keeping, which is seen as a major softening of HMRC's original proposal.  Furthermore, the penalties regime will be sympathetic to late submissions in the early days.  

So, we are still waiting for the Government's answers on the two fundamental issues of the exemption limit and the implementation timetable, but with such a short second consultation period, we will hopefully get some answers soon!  

MTD: Part Two - a little glimmer of hope!

The Treasury Select Committee (TSC) has released their Report on Making Tax Digital and it is scathing of HMRC's programme for MTD. 

The Chairman of the TSC said "Without sufficient care, MTD could be a disaster. Implemented carefully, with long transitional arrangements where necessary, and, having drawn on information from fully inclusive pilots, Making Tax Digital could be designed for the benefit both of the economy and of the tax yield, but with a rushed introduction, it will benefit neither".

The TSC have criticised the digitising of business records and quarterly reporting, especially for small businesses and have commented adversely on the speed at which HMRC proposed the implementation of MTD.  "Just over a year is too short a lead time for such a fundamental change …and there should be a comprehensive set of pilots of the end-to-end system before it is made mandatory for all businesses."

The TSC also expressed concerns that the envisaged cost benefits of MTD to the Exchequer would not materialise and that the collateral damage to millions of small businesses up and down the country would be very significant.

Four crucial areas of concern were specifically commented upon in the Report:

·       the threshold of £10,000 should be raised to the VAT threshold of £83,000

·       the proposed timetable - an April 2018 start date - should be postponed until at least 2019/20 or even later

·       comprehensive pilots of the proposed system are essential, covering the full cycle of four quarterly updates and an end of year reconciliation and these must be evaluated before MTD goes "live" for the first tranche of small businesses

·       software availability is key and this must be fully trialled and free for small and less complex businesses  

So we must now await the Government's response to the Consultation but at least the TSC's Report offers some glimmer of hope that we are not to be prematurely bullied into MTD.

We will report further when the Government's response is made public.

MTD: Making Tax Digital

The former Chancellor, George Osborne, in his 2015 Budget, announced his plans for a  "brave new world" of transparency and accessibility in the UK tax system which would be the envy of the world!  His vision of Making Tax Digital would be fully implemented by HMRC by 2020 giving us all, including HMRC, a very challenging target!

In August, HMRC released not one but six Consultation Documents on the subject and all of us in the accountancy profession have been busy picking over the bones of the proposals and formulating our responses and feeding in comments to our various professional bodies who will respond to HMRC on the content of the ConDocs on behalf of millions of members.   The deadline for responses is 7 November 2016.

So, on the eve of the deadline, just what do we know? Firstly, the Government started by rolling out Digital Tax Accounts for individuals and similar accounts for businesses.  This should eventually ensure that taxpayers no longer have to report income that HMRC has already been told about by, for example, banks, employers, stock brokers etc.  Taxpayers should have the complete picture of their tax situation in one place.  So far, so good. 

HMRC then announced Quarterly Reporting would be introduced, effectively making self-employed individuals, businesses and landlords report and update their tax affairs every three months.   MTD will start with the smallest businesses first but there is an exemption for those small businesses and landlords where the gross income from their activities is under £10,000 p.a.  This is not a particularly generous move by HMRC, considering income of this level would be covered by the annual personal allowance and so unlikely to be subject to tax!  

These quarterly updates would not be necessary for employed individuals and pensioners with secondary sources of income below the £10,000 limit. 

So, whilst George Osborne trumpeted the end of the annual tax return, this will effectively be replaced by "Reports" uploaded every quarter with a year-end summary to reconcile the Quarterly Reports and to make any necessary adjustments.  So, for millions of taxpayers, the annual tax return will be replaced by five digital inter-actions with HMRC every year!    

HMRC envisage this digital revolution is just a tap of an app away!  It is intended that the Quarterly Reporting can be done from a smart phone or through HMRC's (own) provided software or third party software.  HMRC say there will be help and even some limited financial support to assist individuals and businesses cope but this unlikely to stretch to enough money to buy a smart phone if you do not already have one!

The proposed time line is very challenging in every respect with small businesses and landlords starting  reporting under MTD from April 2018, VAT registered businesses from April 2019 and companies from April 2020.  There is much debate around potential delays for the implementation of MTD.  The consultation timetable suffered when the original ConDocs were not ready for the  scheduled release in March 2016 and then there were further delays due to the EU Referendum.  So HMRC are slipping from their original objectives; questions are being asked whether software houses can produce, test and offer to the market the necessary software, and add to the mix the fact that HMRC are in the midst of major IT transitions of their existing systems and it is no wonder the original timetable is looking shaky.  

Of course, the responses to HMRC's ConDocs by the ICAEW, the ATT and AIETP, of which we are members, will be focusing on many of the practical issues associated with MTD - a generation who are not comfortable with smartphone technology, intermittent internet coverage, untried and unproven HMRC software, the unseemly haste of implementation, the low exemption level etc.

We will be updating you on developments for MTD on our blog, so watch this space.  If you have any questions, then please contact either Gerry or Paulette or email: info@petersonsims.com

 

Giving to charity can now mean a tax liability!

The recent changes to the taxation of investment income, with the introduction of the £5,000 dividend nil rate band and £1,000 personal savings allowance, could mean that many individuals donating to charity under the Gift Aid scheme, will have insufficient taxed income to cover their Gift Aid donations.  In this event, HMRC will come knocking on the door of the individual concerned in order to recover the shortfall of tax that has been passed to the charity and which has served to augment the donation to the charity.

Some charities have been criticised as being slow to react to these fundamental changes and to alert their millions of generous donors as to the potential tax implications.

Certain groups of individuals are now at risk that they will have paid insufficient tax on their own income and so should review their Gift Aid declarations and consider carefully whether this mechanism is appropriate to them now.  

Low income pensioners are an obvious group who may fall foul of the rules, because if they have little or no tax liability, following the introduction of the £5,000 and £1,000 investment income tax breaks, some tax on their Gift Aid donations will be due to be paid by them - this may come as an unwelcome surprise to many!

Similarly, some expatriates with limited on-going UK tax liabilities, for example, on rental income, UK dividend income or on Government Service pensions, may have opted to give donations under the Gift Aid scheme but they, too, may not have paid sufficient UK tax to cover their Gift Aid tax.