Annual Tax on Enveloped Dwellings (ATED)
ATED – tax returns due by 1 October 2013
The deadline is fast approaching for submission of your tax return if you own a property worth more than £2m.
The Annual Tax on Enveloped Dwellings or ATED (previously called the Annual Residential Property Tax) is a tax payable by any company that owns a high value residential property (a 'dwelling'). It was introduced earlier this year and came into effect from 1 April 2013 and will be payable each year. The tax deadline for submission of your ATED return is 1 October 2013.
To follow is a brief summary of what ATED is and what to do if you are affected by it.
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TaxAgility launch New Accounting App
A great new App free from TaxAgility accountants in London
TaxAgility is one of the first accountancy firms in London to launch a free mobile Accounting App. As a business we are always looking for ways to improve the service we offer our clients and we are delighted to announce the launch of our new TaxAgility Accounting App.
It’s completely free of charge to download and it is available for iPhone, iPads and Android phones.
It has some really useful Tax Tables, Calculators and a reminder of important deadline dates. You can access all of this for free, anywhere you have internet connection on your device.
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Tax Return Catch Up – deadline draws near
If you have failed to submit your Self Assessment tax return on time or you have outstanding tax bills, don’t miss out on the opportunity to take advantage of the HMRC’s Tax Return Catch Up.
The HMRC recently launched their Tax Return Catch Up campaign, targeted to any individuals who have failed to complete and submit tax returns for any year up to 2011/12. If you have previously been sent a Self Assessment tax return by HMRC and you have not yet completed this or you have outstanding tax due, you have until 15 October 2013 to bring your tax affairs up to date and avoid what could amount to substantial penalties thereafter.
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Isle of Man Disclosure Facility
There has been much discussion recently about the Isle Of Man Disclosure Facility (IOMDF) and I thought it may be useful to provide a summary of the details. The IOMDF relates to a tax sharing agreement between HMRC and the Isle of Man (IOM) government. It allows individuals a limited period of time within which they can disclose any tax irregularities relating to holdings in offshore bank accounts held in IOM, with minimal penalties being applied.
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The Liechtenstein Disclosure Facility
The Liechtenstein Disclosure Facility (LDF) is a disclosure process which is currently unique in the United Kingdom tax system.
LDF gives taxpayers the opportunity to disclose their tax irregularities relating to holdings in offshore bank accounts, investments and various other structures, on the HMRC’s most generous terms yet:
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Changes to Child Benefit
The Government has decided to withdraw child benefit from high-income households. But rather than cancelling the payment to high earners, HMRC will impose a new Child Benefit Tax to recoup some or all of the benefit.
The new tax charge will be introduced from the 7th January, 2013.
Who is affected by the changes to Child Benefit?
You will have to pay the High Income Child Benefit Charge if:
- You (or your partner) have an individual income of over £50,000 a year
And
- You receive Child Benefit or get financial help from someone who claims Child Benefit for a child that lives with you.
This sounds straightforward enough, but there are a few things to bear in mind. By ‘partner’, HMRC means any person you are married to, any person you are in a civil partnership with, or any person you are living with as if you are married to or in a civil partnership with.
Also, it does not matter whether the child that is living with you is not your child – you will still have to pay the tax.
If it’s still unclear, the HMRC has an online tool to help you figure out whether you will be affected.
How much will you be taxed?
The amount of tax you are due to pay will depend on two factors: the amount of Child Benefit you receive and the level of your income.
If your income is £60,000 or more, then you will have to pay back all of the Child Benefit you receive.
If your income is £50,000 or more, then you will have to pay back 1% of the benefit for every £100 you earn above the £50,000 base level.
So for example, if you earn £57,000 then you will have to pay 70% of the Child Benefit you receive back to HMRC.
What do you need to do?
If the changes will affect you, then you need to decide whether you want to stop receiving the benefit.
If you decide to keep receiving the benefit, you will now have to register for Self Assessment and file a tax return every year.
To stop receiving Child Benefit (and thus avoid paying the tax charge) you will need to notify the Child Benefit Office.
Here's HMRC's FAQ pdf document which may be helpful.
Please do not hesitate to contact us if you would like more information and advice on the Changes to Child Benefit on 020 8780 2349.
This blog is a general summary. It should not replace professional advice tailored to your specific circumstances.
Statutory Residence Test
Statutory Residence Test
The Government has announced that it will introduce a new residency test in the Finance Bill of 2013. The Statutory Residence Test is designed to formalise and codify the way in which the HMRC determines an individual’s tax residency status. In the past, this has been decided by case law, HMRC guidance and standard practice. So, in short, the test is intended to clarify a complex and vague process. It will be enforced from 6 April 2013.
The test requires people to consider their previous residence status, the number of days they’ve spent living and working in the UK in the relevant tax year, and their number of ‘ties’ to the UK.
Here’s a basic summary of how the Statutory Residence Test will work.
The test is broken down into three test stages:
- an automatic residence test
- an automatic overseas test
- a sufficient ties test
1. The Residence Test
There are four automatic residence tests and they consider whether a person:
- spends 183 days (or more) in the UK in a tax year
- has their only home (or homes) in the UK
- works full time in the UK
- in certain circumstances, dies during the year.
If an individual meets at least one of these criteria, and none of the automatic overseas tests (see below), they will be automatically resident for the year.
2. The Overseas Test
A person will be automatically non-resident if one of these tests is met:
- only a minimal number of days were spent in the UK in the tax year (fewer than 16 or 46 depending on when they were last UK resident)
- the individual works full time overseas
- in certain circumstances he or she dies during the year.
Most people will be able to determine their residency status through completing these first two steps. But if it’s still unclear, a third --- more complex --- test stage has to be completed.
3. The sufficient ties test
The next step is to look at the sufficient ties test. Residence status depends on the number of ties with the UK in conjunction with the number of days spent here. The ties to consider are:
- family tie
- accommodation tie
- work tie
- 90 day tie
- country tie (only applicable if the individual was resident for one or more of the preceding three tax years.)
The application of these factors varies according to the individual’s status in the previous three tax years.
Although it is supposed to clarify the issue of residency, the draft legislation consists of over 50 pages of draft clauses.
To make things easier, there is a prototype online-tool available on HMRC’s website.
Please do not hesitate to contact us if you would like more information and advice on the Statutory Residence Test on 020 8780 2349.
This blog is a general summary. It should not replace professional advice tailored to your specific circumstances.
Closing In On Tax Evasion HMRC Report
In December 2012, HM Revenue & Customs published an online booklet entitled Closing In on Tax Evasion.
The Government’s programme of austerity has propelled debates about the equality of the tax system into the national papers. In recent months, the tax affairs of public figures and high-profile corporations have been exposed and discussed on an unprecedented scale: Amazon, Starbucks and Google have all been accused of paying far too little. The moral and legal distinction between tax evasion and avoidance are being eroded in the public mind.
Reacting to this surge of debate and concern, the fourteen-page document Closing In on Tax Evasion sets out HMRC’s objectives, recent achievements, short term tactics, and longer term strategy for stamping out tax evasion in the UK.
In the foreword, David Gauke (Exchequer Secretary to the Treasury) declares that the publication should reassure honest tax payers that HMRC is committed to enforcing taxes fairly and strictly. He adds: ‘It’s also a message to those who evade that we are determined to detect and deal with them – the net is closing in’.
The range of actions that have already been taken
HMRC has:
- signed an innovative agreement with Switzerland to recover billions of pounds in previously uncollected tax
- developed and expanded its technical capability to join data together and uncover the hidden links in data using the advanced capabilities of Connect, HMRC’s new computer system.
- handled around 130,000 reports in the last year from the Tax Evasion and Customs Hotlines, which allow the public to notify HMRC confidentially if people are not paying the tax they owe
- created the Offshore Coordination Unit, dedicating an additional 100 investigators to tackling offshore evasion
- established a dedicated team dealing with the tax affairs of about 5,000 of the wealthiest individuals that has already brought in an additional £500 million in tax since 2009
- brought in expertise from the private sector to help HMRC to deploy the latest thinking and techniques
- invested in a team of experts who, in collaboration with the Dutch Tax Administration, have developed tools and techniques to mine the internet for data
HMRC’s Success Stories and Achievements
Using third party data HMRC identified an individual who was found to have 11 undisclosed properties in several Mediterranean countries. The total cost of the properties exceeded €1.3 million despite the individual declaring UK income of just £6,000.
As part of a campaign aimed at medical professionals, Connect helped HMRC make the links between tax records and data from hospitals, pharmaceutical companies and insurers. This has resulted in £33 million in unpaid tax being recovered so far including one case of £1.2 million. One doctor was also prosecuted for trying to evade £92,000 of tax.
The HMRC has seen more than 400 criminal convictions in 2011-12 achieving £1 billion of revenue benefit, either in losses prevented, or in payment of tax
HMRC has begun to apply a penalty since 6 April 2011 of up to 200 per cent of the tax due if an individual does not tell them about income or gains from an offshore bank account.
Short Term Plans
In the short term, HMRC will:
December
- Launch a radio campaign
- Establish a new unit dedicated to tackling offshore evasion
January
- Begin implementing the Swiss/UK Tax Cooperation Agreement
- Launch a campaign on missing VAT returns
- Use the latest extract of Land Registry data to chase companies who try to evade property tax
- Begin analysis of Self Assessment returns to identify potential evasion
February
- Pilot a new scheme of credit reference checks
- Set up five new task-forces targeting high risk groups
March
- Start a new campaign to target those who profit from multiple properties in the UK or abroad who have not paid their tax liability
- Publish a comprehensive strategy to tackle offshore tax evasion
April
- Complete the increase in the number of investigators dedicated to pursuing affluent tax evaders and avoiders
- Add almost half a million tax evasion hotline reports made by the public into the Connect system
May
- Begin testing new data from the Police used to identify fake identities being used in fraud
- Begin new work to identify offshore trusts that are being used to hide income
Long Term Goals
HMRC plans to:
- Continue to improve its analytics and risking capabilities by training additional risk analysts and expanding its use of Connect
- Build on its enhanced automatic exchange agreement with the USA – the first of its kind – and look to conclude similar agreements with other jurisdictions
- Increase the number of criminal investigations into offshore tax evaders, publishing the names and details where appropriate and applying penalties for those who hide assets in jurisdictions that don’t provide HMRC with full exchange of information
- Ramp up action against affluent tax evaders; using data to focus on serial offenders, offshore properties, and high risk professions or groups
- Increase the annual number of prosecutions for evasion five-fold by 2014-15
- Launch 20 new task-forces every year between now and 2015, using data to help target high risk groups or sectors
Please feel free to contact TaxAgility on 02087802349 should you require any further information.
This blog is a general summary. It should not replace professional advice tailored to your specific circumstances.
Autumn Statement 2012: The Key Points
George Osbourne's Autumn Statement declared that the Government’s economic strategy is designed ‘to reduce the deficit, restore stability, equip the UK to succeed in the global race and rebalance the economy.’
The Autumn Statement admitted that over the past three years the recovery has been slower than forecast, maintaining that this was down to the impact of the financial crisis on GDP being greater than expected, the sovereign debt crisis in Europe, and the way in which commodity price driven inflation has reduced real incomes and raised budget costs.
Despite this, he attempted to claim a number of successes for his Government’s fiscal policy – assertions that were met with a chorus of jeers and groans from across the House.
He argued that the government’s policies have reduced the deficit by a quarter, created 1.2 million private sector jobs since the first quarter of 2010; and caused market interest rates to fall to near record lows.
But critics fiercely refute the Government’s belief that the economy is healing; they maintain that the statement represents an attack on the welfare system and demonises the most vulnerable sectors of British society.
More specifically, the Chancellor announced that there would be no net tax rises. Along with this, the Office for Budget Responsibility updated the forecasts for growth (1.2% for 2013, rising to 2.8% by 2017) and borrowing (to fall from £108bn in 2012/13 to £31bn in 2017/18).
Here are some of the highlights:
- Cancellation of the previously proposed fuel duty increases.
- Increase in the Annual Investment Allowance to £250,000 for 2 years from January 2013.
- The main Corporation Tax rate is to be cut to 21% from April 2014.
- Further increase of £235 in the personal tax payers allowance for 2013/14.
- A reduction in the annual allowance for pension contributions from £50,000 to £40,000 from 2014/15.
- The creation of a new £1 billion Business Bank.
- An increase in the Bank levy is forecast to raise £515m for 2013/14.
View the Autumn Statement in full
If you have any questions about the Autumn Statement 2012 and how it may affect you please contact us at 020 8780 2349