Today is the day that you stop working for the government and start working for yourself. This is one day earlier than last year according to the Adam Smith Institute but generally Tax Freedom Day has been getting later and is now a full week later than it was in 2002 and more than five and half weeks later than in 1963 when it was first calculated.

• Print
• Comments
• Trackbacks

Please find below a blog which you might find of interest from my colleague Cathy Corns, who writes for our sister blog SME Plus...

HMRC has published new guidance on the new penalty provisions that will apply from April 2008.

HMRC states that it has designed the new penalties so that:

• If people take reasonable care when completing their returns they will not be penalised.
• If they do not take reasonable care errors will be penalised, and the penalties will be higher if the error is deliberate.
• Disclosing errors before HMRC find them will substantially reduce any penalty due.

The new penalties initially apply to VAT, PAYE, National Insurance, Capital Gains Tax, Income Tax, Corporation Tax and the Construction Industry Scheme.

Further information can be found at:
http://www.hmrc.gov.uk/about/new-penalties/penalties-leaflet.pdf
http://www.hmrc.gov.uk/about/new-penalties/faqs.htm

• Print
• Comments
• Trackbacks

Last year HM Revenue & Customs launched the Offshore Disclosure Facility to enable those with undisclosed interest from offshore bank accounts to come clean and report the omissions and pay the tax, interest and a 10% penalty.

Before the facility closed on 26 November 2007 it was being reported that the facility had not been as successful as the Revenue had hoped.

Today the Revenue are implementing the second phase of the attack on offshore account holders by issuing letter to around 5,000 account holders who did not come forward last time. This time, as well as having to pay the tax and interest the Revenue has stated that any penalty is:

“..unlikely to be less than 30%”

If you are in the position of having undisclosed income you should seek professional advice as soon as possible. Next time it could be the maximum penalty of 100% of the tax or even a criminal investigation.

• Print
• Comments
• Trackbacks

The Budget announcement today includes some welcome clarifications and relaxations on the extension of the offshore trust capital gains tax rules to non-UK domiciled individuals from 6 April 2008. The main points to note are that :

• Non-UK domiciled settlors will not be taxed on gains arising to offshore trusts under the “settlor charge”.
• Non-UK domiciled beneficiaries will not be subject to effective retrospective taxation on gains, or capital payments, arising before 6 April 2008. Offs
• hore trustees will be able to make an election to rebase assets to 6 April 2008 values so that gains accruing before that date will fall outside the charge to tax for non-UK domiciled beneficiaries.
• Offshore trust gains arising and matched with capital payments on or after 6 April 2008 will potentially be taxable on non-UK domiciled beneficiaries.
• Gains arising in respect of UK as well as non-UK assets can be taxed on the remittance basis.
• The requirement to provide detailed disclosure of information on offshore trusts to HMRC has in large part been dropped.
  

The changes clearly reflect many of the concerns raised during the consultation process on the draft legislation published in January and are perhaps more generous than expected. This does remove much of the pressure to take significant actions in respect of offshore trusts before 6 April 2008. However, specific advice should be sought in all cases.

• Print
• Comments
• Trackbacks

It was previously announced that paying interest out of foreign income would be treated as a remittance with effect from 6 April 2008. Today’s Budget has relaxed this proposal in respect of existing mortgages.

Interest payments on existing mortgages, which are secured on a residential property in the UK, that are funded out of untaxed foreign income will not now be treated as a remittance. This will continue for the remaining period of the loan, or until 5 April 2028 whichever is shorter. If the terms of the loan or further advances are made after 12 March 2008 the grandfathering provisions will stop.

• Print
• Comments
• Trackbacks

Currently Non-doms do not get the benefit of capital losses on foreign assets as the remittance basis is compulsory for capital gains tax. From 6 April 2008 it will be possible to elect in and out of the remittance basis on a year by year basis.

Legislation will be amended so that Non-doms who have not claimed the remittance basis from 2008/09 will get relief for foreign losses. Those non-doms who do claim the remittance basis will be able to elect into a regime that gives them relief for foreign losses in the UK in the years they are taxed on an arising basis. The election will be irrevocable and will require disclosure of unremitted capital gains.

• Print
• Comments
• Trackbacks

Proposed changes to the tax rules for Non-Doms had meant that UK residents who took advantage of the remittance basis would lose personal allowances and annual capital gains tax exemptions where their unremitted foreign income and capital gains exceeded £1,000 a year.

Today’s Budget has relaxed this rule slightly and the limit has been increased to £2,000 a year.

• Print
• Comments
• Trackbacks

There have a number of changes announced in today’s Budget to the proposed levy of £30,000 for taking advantage of the remittance basis.

The first change to note is that it will only apply to adults. Children will not have to pay the charge until the year in which they turn18. Secondly the de-minimis limit of £1,000 has been raised to £2,000.

The most significant change is that it will now a tax charge rather than a stand alone charge and, as a result, will be treated as such for the purposes of Double Taxation Agreements. This follows serious lobbying by the, particularly American, ex-pat community as it looked like US citizens would not get credit for the £30,000 against their US tax liability.

The charge will be attributed to unremitted income or gains (at the choice of the individual) and when these are eventually remitted to the UK they will not be taxed again. However there will be ordering rules that will ensure that untaxed unremitted foreign income and gains will be treated as remitted before income or gains upon which the £30,000 has been paid.

The £30,000 charge will also be available to cover Gift Aid donations.

• Print
• Comments
• Trackbacks

The main VAT changes announced in the Budget today are;

1. With effect from 1 April 2008, the annual VAT Registration/deregistration limits have
   increased to £67,000/£65,000 respectively. 
2. Revised fuel scale charges will apply for VAT return periods beginning after 1 May 2008.
3. A transitional period has been announced for VAT refund claims to 31 March 2009. This follows recent litigation relating to the three year capping rules introduced in 1996/7.
4. Withdrawal of the staff hire concession with effect from 1 April 2009.
5. A package of simplification measures for the option to tax.
6. Extension of the VAT exemption for fund management services.
7. The limits for correcting errors on VAT returns have increased from £2,000 to the greater of £10,000 and 1% of turnover.
   
   Full details of these changes will be contained in our Budget Tax Bulletin to be issued shortly.
   
   

• Print
• Comments
• Trackbacks