TAX INVESTIGATIONS/DISCLOSURES WITH OFFSHORE CONNECTIONS - 8th September 2010
The new Liechtenstein / UK Tax Information Exchange Agreement Act came into force on 1 September 2010. It introduces procedures for notifying accounts and certifying that individuals are registered for UK tax purposes. It also notably outlines the penalty provisions in the event that the Financial Intermediaries do not comply.
The existing investigations/disclosures and those for a number of years to come may be able to achieve capped exposure and only a 10% penalty by taking advantage of the Liechtenstein Disclosure Facility. This includes cases with no historic Liechtenstein connection whatsoever.
This is a complex area and the involvement of highly specialised experts is essential.
PAYE TAX CALCULATIONS - 6 September 2010
HM Revenue & Customs (HMRC) has started to send calculations (form P800) telling you if you have paid too much or too little tax for the tax years 2008-09 and 2009-10. The calculation shows your total income and the allowances that are due to you for each of these years.
Not everyone will get a calculation, only those who have paid too much or too little tax. So do not worry if you do not receive one.
What you need to do with your tax calculation
If you receive a calculation, it is important you check it to make sure you agree with the information included. If you agree with the calculation you do not need to do anything, but keep it safe.
Please make sure you read the notes that came with the calculation as these will help you understand what it means. You can read the notes online by going to www.hmrc.gov.uk/P800 .
HMRC will not be issuing copies of forms P800 to agents so, if you are represented by an agent, please show the calculation to them.
If you have paid too much tax
HMRC will automatically send you a repayment, usually within a week.
If you have paid too little tax
If the underpayment is under £2000, HMRC will automatically include the amount you have underpaid in your tax code for 2011-12. This spreads the collection of the underpayment throughout the year.
If the underpayment is under £2000, but the coding deduction causes hardship, you can ask for the underpayment to be included in your tax code over a longer period.
If the underpayment is £2000 or more, HMRC will write to you and ask for direct payment. You should contact HMRC on 0845 3000 627 if you wish to discuss a repayment schedule.
There are specific, limited, circumstances in which HMRC can agree to forgo collection of an underpayment where information they held was not used at the right time. There are details on the HMRC at
http://www.hmrc.gov.uk/esc/esc.htm (this page will be live from 6 September). If you think this applies to you, or you need further information, contact HMRC on 0845 3000 627.
What to do if you think that your tax calculation is wrong
If you do not agree with something included in the calculation, you can contact HMRC on 0845 3000 627. Or you can write to HMRC at the address shown on the calculation.
HMRC HELPS EMPLOYERS RUNNING CYCLE TO WORK SCHEMES - 18 August 2010
HMRC has updated the Employment Income Manual to include details of an optional simplified approach to assist employers with valuing cycles sold to employees after the end of a hire/salary sacrifice period. To avoid the employee's incurring a tax liability, the cycle's sale price has to be set at a fair market value - the price that it would fetch in an arm's-length sale on the open market. In practice, this has proved to be difficult to establish and can have significant bureaucratic costs for the employer. It is an employer's responsibility to determine the fair market value figure.
HMRC recently agreed that the individual valuation of a wide range of models of cycle, in various conditions, presents difficulties and it has developed a simple Valuation Table. In HMRC's view this represents an acceptable pricing methodology for a cycle being offered for sale to an employee. For further details, including the terms on which the simplified approach can be used, see EIM21667 and EIM21667a
HMRC's approach to the issue now is that in the absence of a specific valuation, employers have the option of using the Valuation Table to establish the market value of a cycle - this applies to existing schemes as well as any future cycles purchased through a scheme. The production of the Valuation Table does not imply that it has to be used and we will be pleased to advise on alternative methods of reaching a reasonable sale price.
There is no requirement for an employer to seek prior approval from HMRC for his cycle to work scheme or his arrangements for disposing of the cycles. So long as the sale price can be justified, either by reference to the specific transaction or by demonstrating that a reasonable pricing strategy exists, the obligation to challenge any sale will rest with HMRC.
Where a cycle is not sold to the employee and continues to be hired or used by the employee beyond the original period set out in the salary sacrifice arrangement, the tax exemption will continue to apply as long as the conditions continue to be satisfied.
For further information or assistance in considering the impact on your scheme please contact Duncan Groves Tel: 020 7920 3216 Email: duncan.groves@rsmtenon.com