Research and Development and Patent Box

The Budget announced some significant and beneficial changes to R&D Tax Credits:-

– The rate of credit available has been significantly increased

-More companies will be able to access credits as the lower spending threshold is removed

However, what is also important for innovative companies is the new “Patent Box”

This is a 10% rate of tax for companies after April 2013 on patents that are brought into use now

For more information call Eaves & Co Leeds, on 0113 2443502

ESC A19 – Update

 According to the Daily Telegraph, 23% of those who appealed against tax demands issued in 2010 using extra statutory concession A19 were successful.

Some 250,000 pensioners have also had potential tax liabilities waived under the concession.

So it is clear that A19 is being widely used and with some success.

If you have any problems with under payment or believe a tax refund might be due please contact Eaves and Co, Leeds.

Eaves & Co are pleased to announce their first success for ESC A19 saving our client over £5,000 in tax.

Taxpayer Wins Postage Tribunal Case

The Tax Tribunal recently heard the case of Heronslea v HMRC which arose from a Construction Industry Scheme return due on 19 June 2010.   

HMRC stated that it did not arrive until 22 June and therefore determined a late filing penalty of £100.

The company appealed the penalty informing HMRC the return was posted in good time to arrive on our before 19 June.  The taxpayer stated that they posted the return first class on 14 June 2010, however they did not obtain proof of posting. 

The Tribunal found that obtaining proof of posting was not a legislative requirement for the CIS return and that therefore “properly addressing, pre-paying and posting a letter containing the document….at the time at which the letter would be delivered in the ordinary course of post”, was acceptable unless HMRC could prove otherwise.

The tribunal heard that first class post normally arrives on the day after posting or the day after that, and therefore a letter posted first class on 14 June could be expected to arrive by 16 June – three days before the deadline.

Despite the outcome of the case, it would appear to be prudent to obtain proof of posting where possible given HMRC’s apparent aggressive stance.  Perhaps a posting book or recorded delivery, especially if a deadline is looming.

VAT – Flat Rate Scheme

The recent case of ICAN Finance shows the importance of identifying the entity that is registered for VAT purposes.

In the case of a sole trader, it is the individual and not the business that is VAT registered. 

In terms of the VAT flat rate scheme, the First Tier Tribunal heard that the flat rate should be applied not only to the taxable supplies relating to the trade but also exempt supplies such as rent from a lettings business.

This is a potentially unexpected pitfall which advisers of small businesses should be aware of.

Tax Amnesty (Plumbers)

HMRC have recently issued another amnesty opportunity for UK tax payers. This time plumbers.
The main feature of the amnesty is the limitation of the rate of penalties to 20%.

What is interesting is that HMRC’s guidance has to some extent hinted that the terms of the amnesty might be available to all UK tax payers.

Acceptance of other taxpayers to the scheme might depend on how their misdeclarations have come about

Ending Soon – End of Tax Year planning for 10/11

With the end of the tax year 2010/11 fast approaching there are several opportunities that will be gone come 2011/12.

Here are some of these opportunities:

  • Pension Contributions: As of 6 April 2011 the annual allowance for pension contributions will be reduced to £50,000 as opposed to the £255,000 in 2010/11. If you are considering making lum sump contributions to a scheme then it is important to take advice as soon as possible because other factors may affect your planning
  • Trusts & Estates: There is still a possibility for Capital Gains taxable on the settlor to be charged at the old rate of old rate of 18% even if the gains are realised after the 23 June 2010.
  • National Insurance Contributions: With an increase of 1% due in 2011/12, a bonus paid before the end of the tax year will make an effective saving, compared to the bonus being later.

If you require any help with your tax planning, please contact Eaves & Co at either our Leeds or Southport offices for an initial consultation.