HMRC time limits extended

From 2019, offshore matters could be raised by HMRC 12 years afterwards, even if the taxpayer has made an innocent error.

ie

Taxpayer behaviour    Earliest tax year caught    ordinary assessment time limit    Extended Offshore time limit

Reasonable Care taken      2015-2016                        Four years, ie to 5 April 2020                 12 years, ie to 5 April 2028

Carelessness                        2013-2014                        Six years. ie to 5 April 2020                     12 years ie to 5 April 2026

 

Currently, the time limit for HMRC to make an assessment to income tax and capital gains tax is four years if the taxpayer took reasonable care. This is from the end of the tax year.  (six years for careless behaviour and twenty years for deliberate behaviour).

It is important to note:

  • it applies to income and capital gains tax and to inheritance tax;
  • personal representatives are excluded from the changes, with the time limits in TMA 1970, s40 continuing to apply;
  • the extension will not be made for corporation tax;
  • the draft legislation prohibits an assessment being raised to the extent that lost tax arises due to transfer pricing adjustments; and
  • the extended time limit will not apply if, through receipt of information by way of automatic exchange arrangements, it was reasonable to expect HMRC to be aware of and have assessed the lost tax before the end of the normal time limit.

Taxpayers and their advisors must keep adequate records to defend their position should HMRC seek to raise an assessment.  However, the law is not being amended to require taxpayers to keep records for the extended limit.  It should be noted that failure to do so could leave the taxpayer struggling to defend a later assessment.

We would advise all out clients with offshore interests to keep records for the full 12 years.

If you would like to talk to someone about this more, or need addition advise, please contact us at info@bennewith.co.uk

MTD (Making Tax Digital)

Or otherwise known as ‘Making Tax Difficult’.

MTD comes into effect as of April 2019.  In HMRC’s recently published VAT Notice 700/22 Making Tax Digital for VAT it has become apparent that once registered for MTD companies are always registered for MTD even when they de-register from VAT.

In the Stakeholders communication pack clarity is found to the question: ‘What if my taxable VAT turnover is below the threshold?’ The answer states: ‘Businesses already have to check their turnover for the last 12 months at the end of each month so see if it exceeds the VAT threshold.  If it does then MTD applies from the first day of the following month.’

So as long as a business has sales of less than £85,000 for the 12 month period ending 31 March 2019 and every rolling 12 month period thereafter, they have no MTD worries.

The bad news is that is a VAT-registered business goes over the £85,000 threshold in any rolling 12 month period after April 2019, even if only temporarily, then it must join MTD and cannot withdraw if turnover subsequently falls below the threshold.  So once you are in, you have to stay.

Contact us at info@bennewith.co.uk is you need more assistance, or advice, with regards to MTD.

Are you expecting a tax repayment? Check HMRC repayment arrangements

In April 2015, HMRC systems were brought in line with banking industry standards so that, where possible, repayments are made back to the latest credit or debit card used to make a payment on the self assessment accounts.

Although it does mention this in the notes of the tax return, and during the process, many taxpayers are at risk of being caught out and suffering hardship as a result.

There are discussions taking place, but they suggest that there is no way of stopping HMRC’s system automatically attempting to repay a card.  In such circumstances it is very important that taxpayers are aware of this and that they understand that their tax repayment may not be made where they are expecting it to be.

At A J Bennewith & Co we will ask you to check for your repayment and let us know if there have been any issues.  It is important that you have informed us of any bank details when a repayment needs to be issued.  We will ask you to check the information on page TR6 of the return, before signing it and returning it to us.

If you use an online self assessment account please watch out for this.  If necessary you can contact us to complete your self-assessment on your behalf.  Please email, or telephone us for a quote if necessary.

Remember the deadline is 31 January 2018, for the return and any liabilities due.

New tax year – new rates and allowances

As businesses enter the new tax year on 6 April we are urging businesses to prepare for the new tax arrangements.  UK companies will pay a reduced rate of corporation tax on their profits (cut to 20%).  Employers hiring under 21s will also no longer face National Insurance Contribution tax bills.

For individuals, the standard personal allowance is increased to £10,600, but this could be larger if you receive the blind persons allowance or were born before 6 April 1938.  For those born before 6 April 1935 you may be able to claim the Married Couple’s Allowance, for others you may be able to claim the new Marriage Allowance.  If you receive over £50,000 per annum in income you may have to pay all, or part of any Child Benefit received.  Please contact someone in the office to find the most efficient way to do this.

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2015-16/tax-and-tax-credit-rates-and-thresholds-for-2015-16