Charity U Turn

http://www.bbc.co.uk/news/uk-politics-18278253

And a damn good thing too!

We look after a number of charities and I really can't see the problem - if a wealthy individual gives away £1m to a charity and gets £300k tax relief, it has still cost them £700k. The charity gets £1m and can ...put it to good work. If it doesn't get it, then often the load will fall back on the public sector - and to raise £1m for the public sector to spend, we'll have to pay £1m more in taxes!!

As a policy it was always utterly bonkers and shows how certain parts of the Coalition are utterly out of touch.

Important changes to IR35

HMRC has issued a consultation paper setting out proposals to tighten IR35 compliance by requiring organisations engaging “controlling persons” through personal services companies to deduct income tax and national insurance from fees paid to their companies.
The consultation document fleshes out an oblique mention of the measure in the Budget 2012 document (para 2.207). The new rule will be based around a new definition for “controlling person” that will be set out in the Finance Bill 2013. A controlling person will be defined as someone from the contracting organisation who is able to shape the direction of the engaging organisation during the year. “This would be someone who has managerial control over a significant proportion of the organisation’s employees and/or control over a significant proportion of the budget of the organisation,” the consultation document explained.
“This measure is intended to be targeted only at those who are able to influence the direction of the entity/organisation as controlling persons. We do not intend for this measure to stop genuine commercial arrangements.”
As well as placing administrative responsibility for deducting the tax and NICs on the engaging organisation, the new measure will also make them liable for the relevant employer’s NICs.
Microbusinesses employing fewer than 10 people and whose turnover and or balance sheet does not exceed £1.7m will be exempted from the measure, because the burden on them would be disproportionate.
The new rules will be policed by HMRC through risk-based employer compliance visits during which they would check that everyone who meets the definition of a controlling person of that organisation was on the payroll. The controlling person rule is a direct response to the controversies in Whitehall that followed revelations that more than 2,000 senior civil servants were engaged through personal services companies. This group will be covered by a similar set of rules that will be brought into force in September 2012, ahead of the private sector changes planned for next year, Treasury minister Danny Alexander told the House of Commons last week as he announced the new measures.
“This proposed tightening of the rules will apply to any organisation, be it public or private. It is right that when an individual is in a position to control the major activities of an organisation, they should be on the payroll of that organisation,” he said.
The use of personal services companies in Whitehall “should be exceptional and unusual, and should apply only in particular cases, such as when there is a short-term shortage”, the minister commented, noting that 40% of the civil service contracts related to IT services.
“There is an employee test under the IR35 rules, which I am told is simple and straightforward, and that should be sufficient for determining on which side of the line someone sits.”
However, the impact of the Whitehall contractor scandal on IR35 reform is significant. When the government came into power, it acknowledged that the measure had become a burden on small, contracting businesses. The rhetoric in both the Commons and the consultation document took a very different tone, with the mininister calling IR35, “a vital tool in tackling tax avoidance” that helps to ensure people pay the right amount of tax.
The controlling persons legislation and the Whitehall clampdown were part of the government’s commitment to “strengthen the IR35 regime”, Alexander said. Enforcement will be backed with resources to investigate cases caught out by the review or cases under IR35, he added.
The consultation period closes on 16 August, and asks for feedback on questions including:

• Is the measure proportionate?
• Does it raise commercial issues, or can you suggest alternative approaches?
• What are the consequences of this provision taking precedence over IR35 (Part 2 Chapter 8 ITEPA 2003) Part 2 Chapter 7 ITEPA 2003?
• Is someone who has managerial control over a significant proportion of the workforce and/or control over a significant proportion of the organisation’s budget the correct definition for a ‘controlling person’?

Corporate insolvencies on the rise

Corporate insolvencies rose by 10% in quarter 1 compared to quarter 4 of 2011 according to figures issued by the Insolvency Service. However persoanl insolvencies for the same period saw a drop of 1.2%

Why banks are scared of Greek exit from the euro

Target 2 is a payment system that links banks across the 17 members of the eurozone.

Each time money is transferred betwene the member countries of the Euro, the trade is settled through Target 2. However no real money transfers take place.

Imagine that a German sells his Greek villa to a Greek for 1 million euro. What happens is his bank receives a 1 million euro credit with the Bundesbank. The Greek bank has the same sum deducted from its account with the Greek central bank.

The two central banks then have to square off the 1 million euro through Target 2. But those trades are reallty just IOUs.

Until recently the sums owed by each country's central bank were more or less in balance.

However, so much money has recently been pulled out of Greece that it now owes the rest of Europe 107 billion euros. If it leaves the euro, that sum would be wiped out. It would take out the entire capital of the European Central bank five times over.

Greek exit form the euro would have catastrophice effects of the banking system.

Over 2000 civil servants use companies to avoid tax

Public sector government department including, HMRC, HM Treasury and the Debt Management Office (DMO) has published details of key individuals engaged off payroll in their department in response to the review of the tax arrangements of public sector appointees.

The data published details the individuals’ job title, specialism, type of organisation that payments are being made to, engagement length, total cost of engaging the individual and whether the contract has been ended and/or the individual brought onto payroll since January 31st.

The data is available from HMRC and

HM Treasury.

Taxation of controlling persons

On the back of the review of the tax arrangements of public sector appointees, the Government has launched a consultation into the engagement practices of controlling persons. It proposes that a provision is introduced to ensure that controlling persons have income tax (PAYE) and National Insurance deducted at source by the engaging organisation. The closing date for comments is 16 August 2012.

The purpose of this consultation is to explore whether this is a necessary and appropriate way of achieving this aim and to test whether the provision is sufficiently targeted and without unexpected detrimental effects.

Further details are available from HMRC.

NHS

http://www.bbc.co.uk/news/health-17755552

This is why the NHS is in need of radical reform............

Do as I say............

Do as I say, not as I do............

I spoke to a very agrressive lady from HMRC yesterday about the tax arrears of a client of mine. She basically said that as he was "well paid" he should have the money and should pay the tax straight away and not by installments (completely ignoring the fact that his profit is a paper one and that in cash terms he made a loss because customers are very slow in paying!).

How ironic then, that yesterday to OFT told off Wonga.com for chasing their debtors vigorously and refering to their employment status (apparently if you Wonga.com and are employed in the public sector, they see that as a guaranteed income that means you should have the money to be able to repy them).

One rule for HMRC and another rule for everyone else it seems............

30% tax

http://www.bbc.co.uk/news/business-18137548

This is actually a half sensible idea

Business Secretary out of touch

http://www.bbc.co.uk/news/uk-politics-18142544

This shows how out of touch the Business Secretary is - with restrictive employment laws heavily biased in favour of the employee is it any wornder that businesses are slow to employ people at the first signs of the green shoots of recovery??

Stamp duty tax planning at an end?

http://www.accountingweb.co.uk/article/orsman-decision-limits-chattels-claim/527615

HMRC campaigns begining to bite

http://www.accountingweb.co.uk/article/hmrc-secures-plumber-conviction/527556

Changes to Discrimination Law

From Howes Percival

News The government have published proposals to make a number of significant changes to the existing law on discrimination as contained in the Equality Act 2010. It has also set out the changes it is going to make to the Equality and Human Rights Commission's remit and functions.

Implications Some of the government's proposals will have little practical impact on employers, for example the proposal to repeal the socio-economic duty contained in section 1 of the Equality Act 2010, which has never been bought into force. However, others are more significant, in particular the proposal to abolish the statutory questionnaire procedure in discrimination claims and to repeal employer's liability for harassment of employees by a third party (e.g. a customer). All the government's proposals are set out in our Details section below. The consultation closes on 7 August 2012. Therefore legislation to amend the Equality Act 2010 is likely to be published in the autumn. We will update readers as soon as more information becomes available.

Details The government is consulting on: 1) Repealing section 138 of the Equality Act 2010 (the statutory questionnaire procedure) The ability of potential claimants to submit a statutory questionnaire to their former, current or potential employer was not a new right created by the Equality Act. The ability to submit a questionnaire existed under all the former discrimination laws (e.g. The Sex Discrimination Act 1975, The Race Relations Act 1976 and The Disability Discrimination Act 1995). This right was simply replicated in the Equality Act 2010 which consolidated all discrimination laws into a single act of parliament. The government's view is that the statutory questionnaire procedure is sometimes used as a 'fishing exercise' by potential claimants and businesses find the forms very long and technical. However the consultation document notes that repeal of section 138 will not prevent employees asking for the type of information commonly asked for in the statutory questionnaires anyway by simply writing direct to the employer. 2) Repealing section 40 of the Equality Act 2010 (employer's liability for third party harassment) Under section 40 an employer can be held liable for the repeated harassment of their employees by third parties (such as customers or clients). The government's view is that employees are adequately protected from third party harassment under other laws such as the Protection from Harassment Act 1997 and health and safety legislation, as well as breach of contract/constructive dismissal claims following an employer's failure to comply with their common law duty of care. 3) Repealing section 124(3)(b) of the Equality Act 2010 (Tribunal's power to make wider recommendations) The tribunal's power to make recommendations to an employer who they have found has discriminated against an employee, was extended by the Equality Act 2010 to cover cases where the employee had left their employment. A tribunal's recommendations can be wide ranging, for example that an employer introduces an equal opportunity policy or the employer trains their managers on equal opportunities. The government wants to repeal this provision because it goes beyond the minimum required under EU law. Instead, the tribunal's powers to make recommendations will revert back to being limited to cases where the employee is still employed (and therefore the tribunal's recommendations are for the individual claimants benefit). 4) Repealing the socio-economic duty in section 1 of the Equality Act 2010 This is a legal obligation on public bodies to consider the impact of their decisions on social class. However section 1 has never been bought into force. In addition the government is also going to: 1) Review the operation of the Public Sector Equality Duty Under section 149 of the Equality Act 2010, public bodies are required to consider the impact of their decisions on groups who share a relevant protected characteristic (e.g. sex or race). The review will establish whether or not this obligation is operating as intended. 2) Reform the Equalities and Human Rights Commission (EHRC), including: Repealing some of the EHRC's powers and duties under the Equality Act 2006 such as its "good relations duty" at section 10. Repeal the EHRC's powers to arrange provision of conciliation in non work place disputes. A new chairman and a smaller board, with stronger business skills and experience, will be recruited over the summer. The EHRC's progress will be reviewed in Autumn 2013.

Employment or not

http://www.accountingweb.co.uk/article/stringfellows-stripper-goes-back-tribunal/527059

Parklands Tigers U14's

http://www.northamptonchron.co.uk/community/community-news/figures-add-up-for-new-sponsor-deal-1-3844247

Parklands Tigers Girls U14 Soccer Team

I am being interviewed by Inspiration FM next Tuesday folllowing our shirt sponsorship of the Parklands Tigers Girls U14 team and their successful defence of the League Cup at Stadium MK last Sunday

New HMRC tool kits

HMRC have issued three new tool kits designed to help you avoid common errors. These cover property letting, directors' loans and company losses.

New proposed IR35 tests

http://www.accountingweb.co.uk/article/business-entity-tests-what-you-need-know/527355

Great summary of the new proposed tests.

Scotland Act 2012

The Scotland Act 2012 came into force on 1 May 2012. It reduces the rate of income tax in Scotland to 10% and gives the Scottish Parliament the power to levy income tax in addition to that. It comes into force in April 2016.

HMRC will administer the tax for Scotland which means of course that the long suffering English taxpayer will be paying for the Scots to collect their taxes.

Energy costs

A crucial decision about our future power supply will be made by the end of the year - not in London but in Paris.
EDF (86%) owned by the French government will decide whether or not to build nuclear power stations to replace our ageing coal and gas ones. They are the only game in town - two other consortia have withdrawn.
As they have us over a barrel, the likely cost being bandied about would mean a doubling of the wholesale electricity price!!!

Cuts?

Cuts? What cuts?

Tunbridge Wells Council is advertising for an "engagement" officer (£24710 pa) to "develop the council's engagement programme"

IR35 update

Against a backdrop of increased public anger over the use of personal service companies (PSCs) by top public officials, HMRC has published an IR35 guide and launched a dedicated helpline.

It covers everything relevant to the intermediaries legislation – more commonly known as ‘IR35’.

The legislation is aimed at stopping those who use intermediaries “from being better off than they would have been had their end clients employed them directly”.

HMRC has also launched a confidential IR35 telephone helpline - 0845 303 3535. As well as answering one-off queries, the helpline provides a review service. Staffed by IR35 specialists – all independent of the department’s compliance teams – HMRC say that they “will not pass on what you tell them to other people in HMRC”.

The specialists can review a contract and if they believe the contract is outside IR35, HMRC will issue a certificate with a unique number, valid for three years.

More details are available from the HMRC website.

Bank loans

A new appeals process gives businesses a second opinion if their loan application is turned down by their bank. ICAEW head of enterprise Clive Lewis explains

As part of the recommendations of the British Bankers Association’s Supporting UK Business, major banks have introduced an appeals process. If you or one of your clients apply for a business loan and the request is turned down, an appeal can now be launched to review the application.

IR35

Margaret Hodge is shocked (and so is Danny Alexander) by the revelation that “2000 senior civil servants are using companies to avoid or mitigate tax”. But is it what it seems?
Part of this illustrates, as always, how little the media understand about tax. The BBC ran this on ‘Newsnight’ with Tory MP Richard Bacon, Jonathan Baume from the First Division Association, and Emma Boon from the self-styled Taxpayers’ Alliance

IR35

After several weeks of debate and backroom lobbying, HMRC is due to release a “business entities test” to help personal services companies assess their risk of being caught by IR35 rules.
Developed in tandem with the IR35 Forum following the chancellor’s announcement of a major overhaul for the operation of personal services company rules, the business test will be made available shortly after 7 May

Fuel taxation

Of the total revenues in 2011 generated by the major oil companies in the UK, 70.6% ended up in the Government's coffers.

Leaving the UK in droves

The number of Britons with modest wealth leaving the UK due to poor infrastructure, red tape and high taxes is set to rise by 2014 according to a Lloyds TSB survey.

Polls findings indicate that 19% of Britons with £250,000 in savings and investments are actively considering moving abroad in the next two years. This is a rise of 5% from a year ago.