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Newsletter April 2018

Our newsletter this month includes: a short summary of the recent Spring Statement, details of a new offshore tax avoidance initiative by HMRC, incentives to promote the use of green black cabs, and details of the time that business records need to be kept.

Spring Statement

The Chancellor, Philip Hammond, was keen to promote the positive aspects of the UK’s economic performance when he stood to present his Spring Statement on 13 March.

  • Employment and manufacturing growth rising,
  • Inflation and debt falling.

The speech was also peppered with the usual political gambits to boost his party at the expense of the opposition.

The one practical change that was disclosed was a change to the next business rates revaluation that will now take place a year earlier than planned, in 2021, with further reviews every three years starting 2024.

The Chancellor also revealed new consultations that may eventually shape future legislation. These will include:

  • Reducing single-use plastic waste through the tax system. This will look at ways to reduce the impact of plastic waste in our environment such as disposable plastic cups, cutlery and foam trays. Some of the tax revenue raised will be used to fund research into new ways to encourage a more responsible use of plastic.
  • Making sure multinational digital businesses pay a fair share of tax. This is an ongoing attempt to ensure that the larger digital players pay tax in the UK on sales they make in the UK.
  • Seeking views on the role of cash in the new economy. Will cash become less relevant as digital payment processes become more widely used? This and the prevention of the use of cash to avoid tax and to launder the proceeds of criminal activity will be opened to a wider debate.
  • Supporting people to get the skills they need. Improving skills to benefit growth in the economy by investing in upskilling and retraining, especially by the self-employed.

It will be interesting to see if these initiatives subsequently drive government policy and new legislation.

Offshore tax evasion

From 1 October 2018, HMRC will be gaining access to information from tax havens that will enable it to identify UK citizens with undisclosed offshore assets, and by inference, undisclosed UK income and taxable gains. Why does this matter?

It matters because HMRC has introduced new legislation called the Requirement to Correct which will dramatically increase the penalties for people who have not declared tax or declared the wrong amount of tax on their offshore income and gains.

If you have declared your taxable income and gains, then you have nothing to worry about, but if you haven’t, and HMRC finds out, you could face an investigation and be required to pay the undeclared tax, plus a penalty of up to double the tax you owe - with a minimum penalty of 5% of the tax owed.

You can avoid being charged the higher penalties by making a full disclosure of all undeclared tax liabilities under existing disclosure facilities.

Offshore income sources that should be declared include:

  • interest from overseas bank or building society accounts,
  • dividends and interest from overseas companies,
  • rent from overseas properties, and
  • wages, benefits or royalties earned outside the UK.

If you are concerned, now is the time to come forward. You have until 30 September 2018 to correct matters before the tougher new penalties are introduced.

Tax payers who are uncertain if they are affected are advised to call and seek guidance.

Black cabs urged to go green

Britain’s black cabs now qualify for an incentive to go green as the new tax exemption for electric taxis comes into force this month. The exemption, worth 1,550, will apply to new cabs purchased from April 2018 onwards, and follows the Autumn Budget announcement that zero emission taxis worth over 40,000 will no longer have to pay a Vehicle Excise Duty charge.

Currently, all cars over 40,000 are required to pay this charge. By exempting zero emission taxis, it is hoped that cabbies will be incentivised to replace their old diesel taxi for a cleaner, greener electric version.

If just one switches to a zero-emission vehicle, it would rid the country of seven tonnes of carbon dioxide a year. With over 75,000 black cabs operating in England alone, the impact this would have on the environment would be significant.

According to government sources, black cab owners have had limited choice in the type of vehicle they can buy. This has meant that they have been forced to pay charges which their competitors - who can choose more affordable vehicles - can avoid.

Not only will today’s exemption save drivers from paying the VED charge, but by transferring to a zero-emission electric cab they will also benefit from average fuel savings of over 400 a month.

This initiative is part of a wider government plan to transform air quality and it builds on the 7,500 Plug in Taxi Grant, which helps cab drivers buy a zero-emission vehicle.

How long should you keep your records?

If you are self-employed, and obliged to submit a self-assessment tax return, you must keep your tax records for at least five years after the 31 January submission deadline of the relevant tax year. For example, if you sent your 2017-18 tax return online by 31 January 2019, you must keep your records until at least the end of January 2024. Records for this purpose includes those relating to personal income etc.

If you send your tax return more than four years after the deadline, you will need to keep your records for fifteen months after you submit your tax return.

If you keep your tax records on a computer, make sure you have sufficient backups of your data to meet these requirements. If you change software during the record retention period, you may need to print relevant reports if you are unable to maintain access to data backups.

If you run your business as a limited company you must keep records for six years from the end of the last company financial year they relate to, or longer if:

  • they show a transaction that covers more than one of the company’s accounting periods,
  • the company has bought something that it expects to last more than six years, like equipment or machinery,
  • you sent your Company Tax Return late, or
  • HMRC has started a compliance check into your Company Tax Return.

If you are not in business, the minimum period is 22 months after the 31 January filing deadline and at least 15 months after filing if later.

Tax Diary April/May 2018

1 April 2018 - Due date for corporation tax due for the year ended 30 June 2017.

19 April 2018 - PAYE and NIC deductions due for month ended 5 April 2018. (If you pay your tax electronically the due date is 22 April 2018)

19 April 2018 - Filing deadline for the CIS300 monthly return for the month ended 5 April 2018.

19 April 2018 - CIS tax deducted for the month ended 5 April 2018 is payable by today.

30 April 2018 - 2016-17 tax returns filed after this date will be subject to an additional 10 per day late filing penalty.

1 May 2018 - Due date for corporation tax due for the year ended 30 July 2017.

19 May 2018 - PAYE and NIC deductions due for month ended 5 May 2018. (If you pay your tax electronically the due date is 22 May 2018)

19 May 2018 - Filing deadline for the CIS300 monthly return for the month ended 5 May 2018.

19 May 2018 - CIS tax deducted for the month ended 5 May 2018 is payable by today.

31 May 2018 - Ensure all employees have been given their P60s for the 2017-18 tax year.




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