‘Tax Day’ helping to create a modern tax system

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The self-employed could be forced to pay taxes in the same way as most workers, tax loopholes for second homes will be closed, and green taxes for frequent flyers will rise, all under a raft of new proposals from HM Treasury.

The new ‘Tax Day’ proposals, some 30 in all, aim to close some of the £31 billion tax gap.

Self-employed workers could be forced to pay their taxes on a monthly basis. The government feels that it could tax the self-employed in real time, as they earn, in the same way as PAYE employees. This would reduce errors and make it harder for the tax cheats.

Another consultation will reform the air passenger duty, which would mean those flying the farthest will pay the most. So, in effect, the government is working on the “polluter pays principle”.

Second home owners will also be policed more strictly. If they are using them as a holiday let then these have to be genuine – owners will not be able to get out of paying taxes by saying the property is ‘available’ to let, but has never actually been let out.

The government is also considering whether tax advisers should be required to hold professional indemnity insurance to help raise standards. They are also looking for a definition of ‘tax advice’.

Families urged to use Tax-Free Childcare accounts

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Thousands of families across the UK are missing out on a government childcare top-up worth up to £500 every three months, according to HMRC.

Almost 248,000 families across the UK saved money using Tax-Free Childcare in December 2020, an increase of almost 43,000 families from December 2019.

Tax-Free Childcare allows parents or carers who have children aged up to 11, or 17 if their child is disabled, to pay their childcare provider through the scheme, and receive a 20% government top-up on any money deposited.

For every £8 per child a parent or carer deposits, they will receive £2 in top-up, up to the value of £500 every three months, or £1,000 if their child is disabled. That equals £2,000, or £4,000 for the care of a disabled child, for a whole year. The top-up is paid directly into the child’s account and is ready to use almost instantly.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “As children return to their schools, after-school clubs and nurseries, help is available towards the cost of childcare.

“Families using Tax-Free Childcare to pay their childcare provider are already benefiting from the 20% government top-up on deposits, and you could too. To find out more search ‘tax-free childcare’ on GOV.UK.”

Tax-Free Childcare is also available to families with pre-school aged children attending nurseries, childminders or other childcare providers. Parents and carers can check their eligibility and register for Tax-Free Childcare via GOV.UK.

Deadline looming for CJRS claims

HMRC is writing to agents to remind them that Coronavirus Job Retention Scheme (CJRS) claims for December must be submitted no later than Thursday 14 January.

Claims can be made before, during or after you process your payroll, but HMRC is advising that “it’s best to make a claim once you’re sure of the exact number of hours your employees worked so you don’t have to amend your claim at a later date”.

The Revenue said: “You can check if you’re eligible and work out how much you can claim using our CJRS calculator and examples, by searching ‘Job Retention Scheme’ on the gov.uk website.” It added: “Keep records that support the amount of CJRS grant you claim, in case HMRC needs to check them.”

Employers do not need to have benefited from the scheme before to make a claim. If you’re claiming for the first time, you’ll need:

  • a Government Gateway (GG) ID and password.
  • to be enrolled for PAYE online
  • the following information for each furloughed employee you’ll be claiming for:
    • name
    • National Insurance number
    • claim period and amount
    • PAYE/employee number.

There’s a list of monthly claims deadlines and a helpful step-by-step guide on the gov.uk website, summarising the latest information on CJRS and the steps you need to take to make a claim – you can find these by searching ‘Job Retention Scheme step by step guide’.

If you have furloughed employees because of the effect of coronavirus on your business, you can claim under the CJRS for periods of paid leave they take while on furlough, including for bank holidays such as Christmas Day or Boxing Day. You should not place employees on furlough just because they are going to be on leave.

For employees who are flexibly furloughed, you can count any time taken as holiday as furloughed hours rather than working hours. This means you can claim 80% of their usual wages for these hours.

If a furloughed employee takes holiday, you should top up their pay to their normal rate in line with the Working Time Regulations.

Christmas Day is tax return day!

More than 2,700 customers filed their self-assessment tax return on Christmas Day, according to the latest stats from HMRC.

The peak time for completing tax returns was 2pm to 2.59pm, with more than 200 customers pressing ‘send’ on their online form.

The self-assessment deadline is 31 January 2021, and HMRC has not heeded the call for it to extend the deadline for tax returns by the accountancy bodies.

HMRC explained that once self-assessment customers have completed their 2019/20 tax return, and know how much tax is owed, they can set up their own payment plan to help spread the cost of their tax liabilities, up to the value of £30,000. They can use the self-serve Time to Pay facility to set up monthly direct debits online. Interest is applied to any outstanding balances from 1 February 2021.

In total, 31,400 customers completed their 2019/10 tax returns between 24 and 26 December, which is down on the 34,200 returns last year.

The Christmas 2020 figures:

  1. Christmas Eve: 20,200 tax returns were filed. The peak time was 11am to 11.59am, when 2,892 returns were received.
  2. Christmas Day: 2,700 tax returns were filed. The peak time was 2pm to 2.59pm, when 214 tax returns were received.
  3. Boxing Day: 8,500 tax returns were filed. The peak time for filing was 3pm to 3.59pm, when 858 returns were received.

New HMRC Charter published

HMRC has published its following a full public consultation. The Charter sets out the standards and behaviours taxpayers can expect from the Revenue, and what it expects from taxpayers.

HMRC said: “The standards in the Charter explain how we will get things right, make it easy for our customers, be fair, responsive and aware of their personal situations.

“Information on how to provide feedback and how to make a complaint if the service you have received has not met the Charter standards is published alongside the Charter.”

HMRC will continue to report on performance against the standards in the HMRC Charter Annual report and in its regular meetings with the Customer Experience Committee and Charter Stakeholder Group.

HMRC issues tax scams warning to students

Students who started university this year are being warned by HMRC that they are being targeted by a fresh wave of online tax scams.

With universities taking a blended approach to online and face-to-face tuition this year, and an increase in remote working due to the pandemic, students could be left particularly exposed to the work of fraudsters, says HMRC.

First years are also be more vulnerable to these types of scams due to their limited experience of the tax system.

HMRC has written to universities, through Universities UK, asking them to help ensure their students know how to spot a scam.

In August, HMRC received reports from the public of more than 74,800 scam emails, text messages and phone calls. Nearly 41,300 of these specifically offered bogus tax rebates. Thousands of these scams were targeted at students and the criminals involved appear to have obtained their personal university email addresses by unlawful means. These scams often offer fake tax refunds or help with claiming Covid-related financial support.

Criminals also use phone scams to threaten taxpayers into handing over cash. Some 651,600 scams have been referred to HMRC since August last year. Of those, more than 215,660 were voice or phone scams, known as ‘vishing’.

Jesse Norman, Financial Secretary to the Treasury, said: “We are concerned that remote working because of Covid-19 could lead to more tax scams targeting a new and potentially vulnerable university intake.”

HMRC guidance on trading with the EU in 2021

HMRC is contacting businesses that move goods between Great Britain and the European Union to explain what they need to do to be able to trade with the EU from 1 January 2021.

Businesses that import and export between GB and the EU need to prepare now for that new procedures for moving goods to and from the EU from January, including:

making sure they have a UK Economic Operator Registration and Identification (EORI) number.
deciding how they will make customs declarations and contacting a customs intermediary to help move their goods.
checking if their imported goods are eligible for staged import controls.

An HMRC spokesman said: “These actions are vital for businesses to be able to keep trading with the EU – they will not change regardless of the outcome of the government’s negotiations with the EU.

“The letter we’ve sent to over 200,000 VAT registered businesses is published on GOV.UK. We have also launched a short video explaining how a customs intermediary can help businesses manage customs processes. Businesses that move goods in and out of the UK and are new to the customs processes may find this video helpful.”

All the revenue’s recent videos about importing and exporting can be viewed at https://tinyurl.com/ya5lfg6v