Tag: HMRC

Disclosures

Posted on by Alicia Sprott

A disclosure to HMRC will provide peace of mind and a clean slate going forward – HMRC will provide written acceptance of a disclosure following review, providing the disclosure is complete and correct. The insufficiency of tax must also be rectified, together with late payment interest and penalties in some cases.

A disclosure can be made to HMRC voluntarily or following receipt of a letter or enquiry. Making a voluntary disclosure to HMRC is strongly advised as you will benefit from the lowest possible penalty ranges. Making a timely disclosure will minimise the interest payable, compared to HMRC discovering the error. Making a voluntary disclosure also protects your position from a potentially costly HMRC enquiry. In more serious cases, a disclosure to HMRC can offer protection from criminal prosecution.

HMRC is in receipt of more information than ever before and has been using this information to send ‘nudge’ letters to those they believe have not paid enough tax. If such a letter is received and not responded to, HMRC is likely to open an investigation in the future based on the information it holds, so engaging professional advice and making a disclosure is highly recommended. A disclosure is usually recommended in the HMRC letter.

The disclosure process differs depending on the type of tax being disclosed and the entity to which the disclosure relates. In most cases, the disclosure process is clearly established, with time limits to which us and HMRC must adhere to. We have assisted clients in making various types of disclosures to HMRC, covering all heads of tax, including offshore income and gains, rental income and undisclosed capital gains. We are well placed to guide you through every step of the process in order to reach a successful outcome.

Contact Danielle Ford, Partner and Head of Tax Disputes & Resolutions, or Riocard Hoye, Senior Manager.

“We should be removing hurdles to innovation” – the latest on R&D tax reliefs

Posted on by Gemma Rodger

According to a recent article in The Mail on Sunday, the Government’s R&D tax relief scheme – which provides a vital financial lifeline for many start-ups and small firms which need financial support to grow – has rejected valid submissions and delayed payments.

The article continues that HMRC estimates that £7.6billion in R&D tax relief was claimed by more than 90,000 firms in 2021-22 – with more than £1billion of that paid out to fraudsters, or in error.

Commenting on the issue, Natasha Frangos, Managing Partner, said: “There is a real risk that the handling of some R&D tax relief claims is undermining the Government’s own policy to support investment here in the UK. We should be removing hurdles to innovation, but this is hindering rather than helping.”

See the full article here.

Salaried Members’ Rules Changes – Key Considerations for LLPs

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  •  June 26, 2024
     10:00 am - 11:00 am

LLPs must ensure they have a robust process in place and assess each member against the salaried members rules to determine the individual’s status to be taxed as an employee or as self-employed. Join our Partnerships and Employment Tax teams for an insightful webinar who will discuss the changes to HMRC’s guidance, the risks to (more…)

HMRC targeting online sellers – Accountancy Daily

Posted on by Alicia Sprott

HMRC is intensifying efforts to ensure tax compliance among online sellers and content creators who use digital platforms such as eBay, Etsy, Airbnb, and Vinted for sales. This move comes as part of a broader initiative to crack down on unreported income from the rapidly growing online marketplace sector.

As of 1 January 2024, digital platforms must collate income details of sellers, with reporting due from January 2025. This requirement stems from the Model Reporting Rules for Digital Platforms, a global initiative spearheaded by the Organisation for Economic Co-operation and Development (OECD), which is aimed at increasing transparency and preventing tax evasion within the digital gig economy.

Despite HMRC’s move towards improving tax compliance for online sellers, the legislation being applied isn’t reflective of modern changes in employment, technology and expense requirements, and some legal precedents being applied date back to the 1980s.

Danielle says: “If you are required to complete tax filings, seeking professional advice is advised. It is particularly crucial as an expert will be able to advise on expenses, potential tax reliefs, and to guide you through the process.”

You can read the article in full on Accountancy Daily here.

Tax compliance for online sellers

We have previously commented on the tax obligations online sellers need to be aware of. In short, it’s best to be prepared and to keep detailed records of your sales and expenses.

For further guidance and advice on the content detailed above, please contact Danielle directly.

HMRC update – an insight into HMRC’s current priorities and strategies

Posted on by Katie Trower

Nudge letters

  • Fast becoming one of HMRC’s most common method of communication, this is where a standard communication is sent to many taxpayers who HMRC believes may have a tax issue to disclose, based on specific information they hold.
  • Nudge letters are much more cost effective for HMRC than opening full enquiries, as has traditionally been done. However, we expect HMRC to open enquiries into those who do not respond or make a full disclosure.
  • We are seeing these letters being issued for increasingly specific matters, most recently into Research and Development (R&D) claims and Electronic Sales Suppression (ESS) being used in businesses.
  • Should you receive a nudge letter, please send a copy to your haysmacintyre contact, as we do not always receive copies of all HMRC communications.

Code of Practice 9 (COP9) fraud enquiries

  • COP9 is HMRC’s most serious civil investigation type, where HMRC alleges fraud against a taxpayer. We are seeing an increase in such enquiries being opened, as HMRC focuses its compliance resource on those who have made the biggest mistakes.
  • COP9 provides immunity from prosecution but only for matters which are fully disclosed, so it is crucial to act quickly, make a full disclosure and adhere to the process.

Time to Pay (TTP) arrangements

Due to the ongoing cost of living crisis, many are finding themselves unable to pay tax bills outright and requiring a TTP arrangement. HMRC may agree to this but, in our experience, they are being much tougher in agreeing payment arrangements lasting more than six months, requiring sight of financial information to determine what may be possible.  Approaching HMRC and agreeing a TTP arrangement before a liability becomes due, reduces penalty charges and is favourable in the eyes of HMRC.

Notices of requirement to give security

Applicable to owner-managed businesses, such formal notices can require a business, or its directors, to provide funds as a deposit against current and future tax liabilities. It is usually issued where HMRC has concerns the business may not pay the tax liability and demand significant sums of money from directors personally. We have seen increased use of security notices and have succeeded in assisting clients overturn the demands of these notices by agreeing alternative terms with HMRC.

Settlements and enquiries into investments HMRC now consider to be avoidance schemes

These matters can often run over many years whilst HMRC seeks to defeat schemes in the courts, but with the increases in interest rates recently (HMRC’s late payment rate is currently 6.75%), interest charges can add up over the course of an enquiry. Seeking settlement with HMRC is possible, or even making an advance payment of the tax, where possible, to mitigate overall interest charges.

We are seeing HMRC amendments to earlier years’ tax returns following the conclusion of long-running enquiries.

It is vitally important to seek experienced professional advice and thoroughly check HMRC’s settlement calculations. We are regularly identifying errors in such calculations, usually in HMRC’s favour.

Please also note that payment of an Accelerated Payment Notice (APN) or Partner Payment Notice (PPN) are only advance payments of the tax and do not represent settlement in HMRC’s eyes. Such payments do not conclude open enquiries and interest will be payable from the original tax payment due date, until payment was made to HMRC.

Penalties issued by HMRC, including late filing and late payment

We strongly recommend seeking professional advice in relation to any HMRC penalties issued. There is a defined appeal process in relation to HMRC’s penalty regimes and it may be that penalties could be appealed, mitigated or, in some cases, suspended.

Our Tax Disputes & Resolutions team have a wealth of experience dealing with all HMRC matters. If you would like to discuss any of the above in more detail, or have an HMRC enquiry, dispute or appeal that we may be able to assist with, please get in touch your usual haysmacintyre contact, Danielle Ford, Partner and Head of Tax Disputes & Resolutions or Riocard Hoye, Senior Manager.

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