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Taxing times

03 April, 2009
This month we're turning our attention to taxes. Firstly there's VAT and the return of the dreaded VAT-man, plus a helpful list of VAT dos and don'ts. Then there's news on interest cuts on late tax payments plus a reminder about new P45 forms
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== The VAT-man is back on the road - this time with new powers ==

 

Up until a few years ago most cash businesses - and that included forecourts - used to expect a routine visit from their local VAT office every 12-18 months. For some time following the reorganisation of HM Revenue & Customs (HMRC), these visits became a bit of a rarity but that looks like it's changing.

Over the past six months or so we've been asked to attend a number of visits on behalf of our clients, and we gather that this is part of a new trend to get the VAT officers back out on the road.

Perhaps the biggest difference, compared to old-style VAT visits, is that HMRC is now more of an integrated agency. So rather than simply looking at VAT or PAYE, it is able to look at all tax and duty matters. The terms of the Finance Act 2008 mean that from the beginning of this month, HMRC has the right to visit businesses in order to inspect premises, assets and records, and to ask taxpayers for more information and documents. In effect the new legislation means that HMRC will also have the right to see statutory business records without a right of appeal, and gives it a single approach across all taxes for asking taxpayers and third parties for supplementary information. As part of the changes there will be a new four-year time limit for assessments and claims. That's a reduction from the previous six-year period in relation to income tax, capital gains and corporation tax, but an increase from the previous three-year limit for VAT.

The new regulations have at least imposed a statutory requirement for HMRC to give at least seven days' notice of all 'routine' visits (unless you agree to a shorter period when they contact you), as well as a statutory requirement for HMRC to act reasonably.

 

== VAT Dos and Don'ts ==

 

Given that you may now be more likely to receive a call from HMRC asking for a visit appointment, just a reminder of some very basic rules and requirements for staying on the right side of the law:

DO keep a monthly record of your turnover - late registration can result in severe penalties.

DO notify your local HMRC's office when major changes take place - changes must be notified within 30 days.

DO retain records for the past six years - these could be demanded by law.

DO obtain and keep VAT invoices - these are your authority to claim back VAT on supplies made to you.

DO charge VAT on supplies to your staff.

DO charge VAT on any equipment or vehicles (except motor cars) that you sell or part-exchange.

DO account for VAT on fuel used for private motoring using the appropriate scale charge.

DON'T claim the VAT paid on the purchase of a motor car - it is not recoverable except in some very special cases.

DON'T claim the VAT paid on goods or services used for private purposes. Where there is an element of private use (eg telephone) an appropriate percentage should be claimed.

DON'T claim the VAT paid on entertaining.

DON'T forget to account for VAT on inter-company charges.

Ideally your accountant should be able and willing to attend any visit with you, so that they can guide the VAT officer through your returns and accounts.

 

 

== Old P45 forms are about to be replaced ==

 

Employers should be aware that as from the end of the present tax year (April 6, 2009) the old A5 size P45 will become obsolete and superseded by the new A4 version that first came out last October.

The new form also includes details of the employee's gender and date of birth. If you're still doing your own payroll you should destroy any stock of the old forms by April 6 and replace them with the new format.

 

 

== Interest cut on late tax payments ==

 

It had to happen eventually - with the Bank of England's base rate down to an all-time low of 0.5% there's also been a cut in the interest rate charged on late payments of a whole range of taxes.

From 3.5% to 2.5% covering -

? Income tax

? NIC contributions

? Capital Gains Tax

? Stamp Duty

? Stamp Duty Land Tax

? VAT

From 2% to 1.5% covering -

? Underpaid installments of Corporation Tax

From 1% to 0% covering -

? Inheritance tax

? Capital Transfer tax

? Estate Duty

On the other hand, if you've overpaid some tax, the rates of interest that HMRC will pay to you on the overpaid balance have effectively stayed at 0% (although there's a 0.25% rate payable to you if you've overpaid Corporation Tax, which had previously been 0.75%).

 

 

== New code of practice for workplace discipline ==

 

The draft code of practice from Acas on the new rules governing discipline and grievance procedures at work has been now been approved by Parliament, and comes into effect on April 6.

The new code means that there will be less emphasis on the mechanics of how to manage disciplinary issues, grievances and dismissals. Instead, employers and employees will have more flexibility for solving problems at an early stage. The intention is that better and more direct workplace communication will reduce the chance of problems going to an employment tribunal, saving employers both time and money.

The revised Acas Code of Practice explains what's fair and reasonable behaviour when tackling problems at work, while a new non-statutory guide provides employers with more information on how to handle discipline and grievance solutions in the workplace.

Also as part of the reforms, there's an improved Acas Helpline, on 08457 47 47 47. It is open 8am-8pm Monday to Friday, and 9am-1pm on Saturdays.

A new, free early conciliation service will also be available through the Acas Helpline.