Author Archive

R & D boost for smaller businesses

Wednesday, November 4th, 2015

In a major boost for pioneering small businesses, the Financial Secretary to the Treasury, David Gauke, recently launched a new plan outlining how government will make it easier for small businesses investing in research and development to claim tax relief.

The two-year plan, which is a response to an HMRC consultation, aims to increase take-up of research and development (R&D) tax relief through raising awareness of the relief amongst small businesses and making it easier for them to apply.

The tax relief, which encourages companies to invest in costly new product development, helps companies reduce the amount of corporation tax they pay on profits by offsetting them against any investment in research and development. Latest statistics for 2013-14 show more than 15,000 SMEs claimed the relief in 2013, an increase of around 19 per cent from the previous year, but the government wants to go further.

Financial Secretary to the Treasury David Gauke said:

R&D is crucial for the long-term growth of the UK economy. Over 15,000 SMEs claimed the relief in 2013, an increase of around 19 per cent from the previous year, but we need to go further to support pioneering small businesses.

That’s why we’ve published a document setting out our plans to increase awareness and make it easier for people to apply.

The plan, ‘Making R&D Easier: HMRC’s plan for small business R&D tax relief’, was published 28 October 2015 and sets out that:

  • From November, small companies – with a turnover under £2 million and fewer than 50 employees – will be able to seek advance assurance on R&D tax relief. This will give them greater certainty and enable them to plan their finances effectively.
  • HMRC will explore ways to improve its communication around R&D tax relief, including looking at ways to use data and work with other government agencies to identify companies that have carried out R&D but have not claimed relief.
  • Interactive guidance will be developed with stakeholder involvement

HMRC evaluation shows that each £1 of tax foregone by R&D tax relief stimulates between £1.53 and £2.35 of additional R&D investment. SME R&D relief works by way of super deduction, allowing companies to reduce profits liable to corporation tax by 230 per cent of their qualifying R&D expenditure. In 2013-14, businesses received £1.75 billion in R&D tax relief, an increase of almost £750 million since 2009-10.

G20 agree tax crackdown

Monday, September 9th, 2013

Although the recent G20 conference in St Petersburg failed to reach a consensus on the best way to deal with the Syria crisis, they did agree on a long term strategy to make it harder to hide money in tax havens. The ultimate goal, to force companies to pay tax in the countries where they make the profits, will take a number of years to organise as the necessary legislative changes required will no doubt take time.

The breakthrough was facilitated by the Chinese who finally agreed to align with the other members of the G20 by signing an agreement to share tax records.

The G20 accord states:

“Cross-border tax evasion and avoidance undermines our public finances and our peoples’ trust in the fairness of the tax system,” it read. “We endorse plans to address these problems and committed to take steps to change our rules to tackle tax avoidance, harmful practices, and aggressive tax planning.”

The G20 members have committed to begin the exchange of information by the end of 2015.

Tax Diary September/October 2013

Thursday, September 5th, 2013

 1 September 2013 – Due date for Corporation Tax due for the year ended 30 November 2012.

 19 September 2013 – PAYE and NIC deductions due for month ended 5 September 2013. (If you pay your tax electronically the due date is 22 September 2013.)

 19 September 2013 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2013.

 19 September 2013 – CIS tax deducted for the month ended 5 September 2013 is payable by today.

 1 October 2013 – Due date for Corporation Tax due for the year ended 31 December 2012.

 19 October 2013 – PAYE and NIC deductions due for month ended 5 October 2013. (If you pay your tax electronically the due date is 22 October 2013.)

 19 October 2013 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2013.

 19 October 2013 – CIS tax deducted for the month ended 5 October 2013 is payable by today.

 31 October 2013 – Latest date you can file a paper copy of your 2013 Self Assessment tax return.

Machine Games Duty

Thursday, September 5th, 2013

 If you intend to make amusement machines available for play, you must register under the Machine Games Duty (MGD) regulations. MGD was introduced for existing operators from 1 February 2013. The published list of person’s who may be affected is anyone who:

  • holds, or is required to hold, a licence or permit which allows them to provide gaming machines for play on premises
  • owns, leases or occupies premises on which machine games may be played
  • controls the operation of machines games
  • controls admission to premises on which machine games may be played
  • is responsible for the management of premises on which machine games may be played or provides goods or services to people who are admittedl.

Penalties may be applied if you don’t register for MGD, don’t make your MGD returns on time, don’t pay the MGD that you owe, and if you make a mistake on your return.

If you had dutiable machines available for play at 1 February 2013, or since that date, and you have still not registered to make MGD returns, you should apply as soon as possible in order to minimise any penalties payable.

The rates of MGD depend on the type of machine. There are two for MGD purposes:

  • Type 1: all machines that do not qualify as Type 2 machines.
  • Type 2: to qualify as a Type 2 machine it must be demonstrated that:

(a) the cost to play each dutiable machine game on the machine once does not exceed 10p, and

(b) the maximum cash prize for each dutiable machine game on the machine does not exceed £8.


The standard rate of MGD (20%) applies to Type 1 machines, and the reduced rate of 5% to Type 2 machines.



High Income Child Benefit Charge (HICBC)

Thursday, September 5th, 2013

The HICBC was introduced on 7 January 2013 and applies to couples where:

  • One partner has received Child Benefit payments after 7 January 2013, and
  • Either partner has income in excess of £50,000 a year. The person with the highest income, if both are over £50,000, will be liable to pay the charge.

 It will not apply if the person entitled to receive Child Benefit stops their claim for a complete tax year (or for the period 7 January 2013 to 5 April 2013, for the tax year 2012-13).

 In effect, the charge recovers the actual Child Benefit received using a graduated scale. 1% of benefit received will be recovered for every £100 the highest earner’s income exceeds £50,000. Accordingly, if the highest earner’s income exceeds £60,000, all of the Child Benefit received will be clawed back.

 The partner with the highest income in excess of £50,000, and where either partner received any Child Benefit payments from 7 January 2013 to 5 April 2013, will need to declare the benefit received on their Self Assessment tax return for 2013.

 If you are not registered for Self Assessment you must do so by 5 October 2013.

 If you are concerned that you may be caught by the HICBC, and would like assistance with the registration or reporting process, please call.

National Minimum Wage (NMW)

Thursday, September 5th, 2013

There has been much press commentary recently regarding HMRC’s pursuit of football clubs who stand accused of paying certain “employees” below the NMW. This action is being taken due to complaints HMRC has received from ballboys and club mascots who receive no payment for their time.

 All employers are required to pay their employees at least the NMW rates. However, there are a number of persons not entitled to the minimum wage. They are:

  • self-employed people
  • company directors
  • volunteers or voluntary workers
  • workers on a government employment programme, e.g. the Work Programme
  • family members of the employer living in the employer’s home
  • non-family members living in the employer’s home who share in the work and leisure activities, are treated as one of the family and aren’t charged for meals or accommodation (e.g. au pairs)
  • workers younger than school leaving age (usually 16)
  • higher and further education students on a work placement up to 1 year
  • workers on government pre-apprenticeships schemes
  • people on the following European Union programmes: Leonardo da Vinci, Youth in Action, Erasmus, Comenius
  • people working in a Jobcentre Plus Work trial for 6 weeks
  • members of the armed forces
  • share fishermen
  • prisoners
  • people living and working in a religious community

HMRC took enforcement action against more than 700 employers last year who were each fined up to £5,000 for non-compliance with the NMW rules. HMRC also secured back pay for over 26,000 employees, to top up their wages to the appropriate NMW rate.

The NMW rates are changing from 1 October 2013:

  • the main adult rate (for workers 21 and over) will increase by 12p to £6.31 an hour
  • the rate for 18-20 year olds will increase by 5p to £5.03 an hour
  • the rate for 16-17 year olds will increase by 4p to £3.72 an hour
  • the rate for apprentices will increase by 3p to £2.68 an hour

Charities reminded to adopt online Gift Aid submissions

Thursday, September 5th, 2013

HMRC are advising certain charities to sign up to its new online Gift Aid system. The last “old style” forms will not be accepted after 30 September 2013.

According to HMRC, more than 19,000 charities have already signed up to Charities Online. Since the online process was launched 22 April 2013 almost 50% of Gift Aid payments are now being processed online.

Charities with no access to the internet can still claim using a paper based system, but must use a new form, ChR1, that can be ordered from the Charities Helpline on 0845 302 0203.

 Charities should allow 15 working days from the day they sign up, before making their first Gift Aid submission online.

Check HMRCs callers IDs

Thursday, September 5th, 2013

Readers will be aware that there a multitude of emails circulating on the internet purporting to be from HMRC. In almost all cases these will be some form of scam, attempting to gather personal information from you in exchange for the promise of a tax refund or similar inducement.

HMRC have confirmed, on numerous occasions, that they do not email taxpayers. They may telephone, send you a letter or knock on your door, but they will not send you an email.

However, if someone does turn up at your door, purporting to be from HMRC, how do you know the person is who they say they are? To deal with this HMRC have issued instructions: how to check a caller’s ID.

‘To provide a safeguard against bogus callers in these situations, HMRC has introduced a new Field Force Verification Helpline.
To access the helpline, customers [taxpayers] should follow these simple steps:

• Ask to see the Collector’s photo ID
• Make a note of the ID number on the photo ID
• Call 0300 200 3862
• Provide HMRC with the ID number you’ve noted

The operator will then be able to confirm to you whether or not your caller is genuinely an HMRC Collector.

Every customer visited, from now onwards, will be given a copy of a leaflet showing the rights and responsibilities by the Collector on arrival at the customer’s premises. This also includes the Field Force Verification Helpline number.’

Minimum wage crack down by HMRC

Tuesday, September 3rd, 2013

Businesses should be aware that HMRC polices the National Minimum Wage (NMW) legislation. Not only do they fine employers who breach the regulations, they also enforce the payment of underpaid wages to staff.

HMRC have recently released figured confirming that 26,000 workers were paid less than the minimum wage.

• 708 employers had been fined with charges of up to £5,000, after it reviewed 1,693 complaints in 2012-13, and
• affected workers were given an average of £300 each in back-pay.

Investigated cases included the illegal use of interns, unpaid extra hours and workers being forced to buy company clothes as uniform. The NMW is currently £6.19 an hour for workers aged 21 or over.

From 1 October 2013 the NMW rates are:

• 21 and over: £6.31 per hour
• 18 to 20: £5.03 per hour
• Under 18: £3.72 per hour
• Apprentices under 19 years or in the first year of their apprenticeship: £2.68 per hour.

If you are unsure if your working practices comply with the NMW legislation you should take professional advice.


Vodaphone settlement

Thursday, August 29th, 2013

In a previously unreported settlement with the UK Government, Vodaphone appears to have made a large payment to HMRC. The additional taxes related to the tax returns of an Irish subsidiary. Although the overall amount settled was not disclosed Vodaphone were required to reclaim approximately £57m from the Irish Government in tax that should have been paid in the UK.

For a four year period Vodaphone had used the Irish subsidiary to collect royalties from most countries and to remit more than one billion Euros of dividends to the low tax jurisdiction of Luxemburg. Vodaphone are reported as saying:

“In all respects and at every point, Vodaphone has conducted itself with the highest integrity and in full compliance with the law.

The settlement with HMRC related to a number of technical factors regarding inter-group transfer pricing arrangements.”

HMRC added:

“We do not comment on the affairs of individuals or companies, but we do ensure that multinationals pay the tax which is due under the law.”