Under a new scheme called Managing Serious Defaulters, HMRC will closely monitor the tax affairs of more individuals and businesses who have deliberately evaded tax for up to five years.
From 1 April, the department is extending the close monitoring of the tax affairs of those who deliberately choose not to pay what they owe. MSD will ensure that they comply with their tax obligations, with the aim of permanently changing their behaviour.
MSD replaces and expands the Managing Deliberate Defaulters (MDD) scheme, which was launched in 2011 and aims to keep tax cheats on the straight and narrow through close monitoring.
Early indications suggest that those monitored are changing their behaviour. This has led them to disclose concealed income and amend previous tax returns.
MSD will include evaders who have received a civil evasion penalty for dishonestly evading VAT, or are required to give a security deposit for VAT, Environmental Taxes, PAYE or NICs or who become deliberately insolvent as a way of dodging their business taxation obligations.
The scheme has the backing of the Treasury and the Exchequer Secretary, David Gauke, is convinced that the measure, along with those announced in the Budget, demonstrates that the Government is determined to crack down on people who do not pay what they owe.
The extra scrutiny on businesses and individuals could include unannounced visits from the taxman, requests for records, in-depth compliance checks into people’s tax affairs and observation and recording of business activities, whilst cross-checking details in their accounts.
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( 3.1 / 17 )HM Revenue & Customs (HMRC) have announced that they are relaxing real-time information (RTI) reporting arrangements for small and medium-sized employers (SMEs).
Instead of starting next month (April) – as originally planned, employers with fewer than 50 employees will now have until 5 October to comply with the new legislation and, until then, will be able to send information to HMRC by the date of their regular payroll run, but no later than the end of the tax month on the 5th.
The department said that it had taken the decision because although reporting in real time works well, as they say has been proved by their pilot scheme, some employers, who pay staff weekly or on a casual basis, may need longer to adjust to the new way of reporting.
Under the new RTI rules, employers must report PAYE information in real time, which means that employers must tell the taxman every time they pay an employee at the time that they pay them and must use payroll software to send the RTI payment details electronically.
This replaces the old payroll process of reporting to HMRC, when PAYE information would be submitted just once a year at Payroll Year End.
HMRC has claimed that the new method will simplify the PAYE process to make it less of a burden on both it and employers.
However, despite extensive advertising, social media campaigns and press releases, HMRC has realised that small businesses just are not ready, either through genuine ignorance of the change or because they have not had time to implement the necessary changes to their payroll arrangements, which could lead to problems both for them and HMRC.
Consequently, HMRC have said they will continue to speak to employer representatives and have even said that it will look at ways of improving the system for small business without compromising the success of the scheme
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( 2.9 / 60 )New research has shown that lending under the Government’s Enterprise Finance Guarantee Scheme (EFG), which is aimed at helping small businesses access funds, has fallen to a record low.
Lending under the EFG fell to £70.7m in the last quarter of 2012, a 26 per cent drop from the quarter before and a 9.1 per cent fall from the same period in 2011. In fact, the number of new loans provided through the scheme has fallen by two thirds since its peak in 2009.
The EFG is effectively a reworking of the old Small Firms Loan Guarantee Scheme and was launched in January 2009 to boost the credibility of small business loan applications.
However, as the data shows, the scheme has gone into decline and no-one seems to know why. Under the scheme, the Government underwrite 75 per cent of a loan, which theoretically should give small businesses the chance of getting funds even if it does not have the collateral to back it up.
Loans range from £1,000 to £1m and can be over any time period between three months to 10 years. In addition, business owners can opt to receive the loan in a lump sum or get it in different amounts over a time period to suit.
In addition to the decline of the EFG, uptake of the Government’s other key lending vehicle, the Funding for Lending Scheme (FLS), has dropped away.
Under the FLS, which was launched in August last year, banks and other lenders are able to access cash at very advantageous rates, as long as they pass those savings onto businesses and individuals. While mortgage lending has increased under the scheme, lending to small businesses fell in every quarter since its launch and in the last quarter alone, net lending to businesses fell by £4.5bn.
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( 2.8 / 50 )A survey out today (March 25th) shows that house prices in England and Wales posted their biggest month-on-month gain in three years this month, mainly driven by increases in London.
According to the survey from a leading property analyst, house prices rose by 0.3 per cent from February, which is the biggest increase since 2010 and the departure marks the first time that prices have not fallen since September 2010.
The housing market has been boosted by the Government's Funding for Lending Scheme (FLS), which was launched in August last year with the aim of providing cheap funds to lenders as long as they passed on the savings to individuals and small businesses.
While lending to small business has not been as successful, the mortgage sector has used the funds extensively, with both lenders and estate agents reporting activity uplifts on the back of the slashing of loan rates.
London has seen the biggest uplift in prices, with prices rising by 0.7 per cent month-on-month, while the rest of England and Wales showed rises in a fifth of postcodes. Only the North East showed a decline, but only by 0.1 per cent.
The housing market has also been buoyed by a lack of homes on the market and by an influx into London of wealthy people leaving less favourably taxed countries.
Apparently, the number of potential buyers on the market rose by 19 per cent in the past couple of months, while the number of homes for sale only rose 13 per cent in the same period.
In addition, Chancellor George Osborne announced further measures for the housing market in his Budget last week, including Government guarantees for up to £130bn of mortgages.
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( 3.1 / 13 )As part of his Budget speech delivered on Wednesday, the Chancellor George Osborne announced a series of initiatives aimed at clawing back tax to the tune of £4.6bn, in what he called "one of the largest ever packages of tax avoidance and evasion measures".
The measures include "naming and shaming" promoters of tax avoidance schemes and new financial disclosure agreements with the crown dependencies of Jersey, Guernsey and the Isle of Man. Banks will face the same fate from 2015 if they do not comply with the Code of Practice on Taxation for Banks.
The Government will also consult on how to collect tax debts through the Pay As You Earn system by "coding out" and changing individuals' tax codes. HM Revenue & Customs (HMRC) can already collect small underpayments in this way but the new system would allow greater range to increase the amount of tax debt collected.
Also among the measures was a tightening of the rules for companies that arrange loans, which do not attract tax, for their directors or shareholders in place of taxable salaries or dividends. HMRC has already identified three such loopholes.
The Chancellor is also scrutinising the misuse of partnerships in order to disguise what is really an employment relationship, and has opened up a consultation on the practice. Mr Osborne added that he would use next year's Finance Bill to remove loopholes allowing offshore intermediary companies to facilitate the avoidance of UK income tax and National Insurance Contributions, which the Treasury expects to raise around £340m over the next five years.
On the subject of tax avoidance, Mr Osborne has already been pushing through legislation that will introduce a so-called General Anti-Avoidance Rule (GAAR), which is designed as a catch-all measure to cover avoidance on schemes to exploit loopholes in taxes on income, corporate profits, capital gains, inheritance tax and stamp duty. It is thought that this will become law by the summer.
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