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UK Tax and Non-Domiciled Individuals - The New Rules
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Capital Allowances - The New Rules
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Companies Act 2008
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Summer 2008 Newsletter
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Detailed Budget 2008 Report
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Incorporation or Not - Are There Any Tax Savings Still Left?
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Tax Aspects of Buy To Let
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Autumn 2007 Newsletter
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August 2006 Bulletin
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Summer 2006 Newsletter
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Summer 2006 Bulletins
Armstrong Merger.
On 1st January 2007 Armstrongs accountancy merged with George Addis & Co to incorporate Peter Georgiades as a director of Armstrongs Accountancy.
Contractors urged to face up to new rules.
The Government proposes changing the law governing the taxation of subcontractors in the construction industry - a standing bone of contention between the industry and the Inland Revenue.
The new Construction Industry Scheme (CIS) was included in this year's Finance Bill after a 3 month consultation period. It is proposed that it will become law on 6th April 2006.
The fundamental difference4 between the new scheme and the old is that a contractor will have to make a monthly declaration that he has confirmed the employment status of his workers.
"It will remain the responsibility of the contractor to ensure that the contract falls within CIS definitions" says IRPC tax consultant Andrew Scrivens. "The work must be within the construction industry and the subcontractor must be self employed.
"But one wonders how they are meant to do this when there is no set definition of self-employment. The information provided by the Revenue is of little help and its not unknown for a dispute over a worker's status to drag on for over 2 years!"
The penalty for getting it wrong will be severe - up to £3,000 per incorrect declaration. That's £36,000 for each year where employment status ha been incorrectly determined. The Revenue is also ending the concession of setting off the tax deducted at source (currently 18%) against the liability arising from the classification of a worker.
The classification of a worker has been a thorn in the side of the construction industry ever since the first CIS was introduced in the early 1970's. Then, the subcontractor had to apply for an exemption certificate, which was dependent on him proving that he was working in the construction industry, running his own business and up - to - date with his tax affairs. Those failing to qualify for a certificate had tax deducted at source.
Contractors generally were happy to accept the subcontractor's word - backed by the exemption certificate - that he was self employed.
In the 90s, The Revenue reminded contractors that they must review the employment status of workers and issued booklet IR148 as guidance.
"many contractors, feeling under pressure form the Revenue, put their subcontractors onto PAYE when it was really unnecessary for them to do so." says Andrew.
A new version of the CIS came into force in 1999, and made matters even more complicated. It introduced a turnover test, which saw many contractors losing their exemption certificates and consequently losing income, and it did nothing to clarify the employment position of contractors holding exemption certificates (CIS5 or 6) or registration cards (CIS 4).
Clearly the Inland revenue felt that it wasn't working properly, because, in November 2002, it issued the consultation document for the latest CIS scheme.
"They had a mere 202 responses, most of them from subcontractors in support of the new scheme" says Andrew, "and little wonder, since the new CIS will operate without any certificates or vouchers at all".
The Revenue has now sent out letters to 13,000 contractors and 44,000 subcontractors to make them aware of their obligations. The contractors' letter suggests that they should review the employment status of their subcontractors because the Revenue has 'some doubts' about it.
"It suggests contacting the local tax office for advice"says Andrew. "But this doesn't point out that local offices have been told they should seek arrears going back 6 years if employment status is found to be incorrect!"
"They also mention leaflets IR56 and IR148 - two leaflets that have long been seen as unhelpful by tax professionals. There is an interesting article on the subject in the 26 August edition of "Taxation".
The subcontractors' letter also suggests that their self-employed status might have been wrongly determined. It lists six questions to help them decide.
"To suggest that someone might be an employee on the basis of 6 very simplistic questions is bordering on the reckless", says Andrew. "The Revenue's motives in extolling the virtues of being an employee in the letter to subcontractors are seeking third party advice about taking the contractor to an Employment Tribunal".
The fact that these letters have been issued so far in advance of April 2006 suggests that the Revenue is taking the matter extremely seriously and it won't be accepting any excuses. It is equally likely that they will be issuing penalties regularly for incorrect completion of the monthly declaration.
It is crucial that all contractors, not just those who have received the Revenue's letter, should review the employment status of its workforce as a matter of urgency.
Taken from December 2004 issue of Tax sure.
Increased Enquiries and Disputes with the Tax Authorities
The Problem :
You are probably aware that the Tax Authorities is channelling addtitional resources into collecting more tax. As a result, all tax payers are now, much more likely than ever before to face an enquiry, whether by random or targeted. Defending clients in these circumstances is an area in which we have considerable expertise, but the costs can aslo be considerable. Enquiries and Disputes can be complex and can drag on for many months. Even if no additional Tax is found to be due, you could face signifiacant costs - often into £ thousands.
The Solution:
We now offer our clients fee protection through IRPC, the markt leader in this type of cover. In the event that you are unlucky enough to experience an enquiry or dispute with the Inland Revenue, then our costs for defending you will be paid in full by the Scheme. For a small annual premium you will have total peace of mind.
We believe that in today's climate joining our fee protection scheme is not only prudent but represents real value for money. WE STRONGLY RECOMMEND THAT YOU PROTECT YOURSELF TODAY.
Please contact us if this is something that is of interest to you. It is an investment that you will be glad of if you are targeted.
Give us a call or e mail us and we will be happy to provide more information
Did you know.... - You can earn up to £825 from the Inland Revenue!
From April 2004, the Inland Revenue has agreed to reduce the PAYE/NI Liabilities for clients by up to £250 per annum, if end or year returns are filed electronically.
Although there will be no legal requirement for comapnieswith less than 50 employees until 2010, here at Armstrongs we have recognised that many businesses will wish to take advantage of a "gift from Gordon Brown".
Our payroll costs start from as little as £30 per period.
The rebate could exceed our charges in the first year, saving you time, money and hassle.
At Armstrongs, we are able to offer the service of calculating wages, preparing P45s, and completeing P11Ds plus any other aspect relating to the PAYE system.
To find out more, simply contact us.
Welcome to our new website
Please keep coming back to our website as this information will be continually updated and added to. We want to provide you with a reliable source of up-to-date business information so that you don't have to waste time searching the Internet for what you want.
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