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.
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.
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.
If you would like further advice on any of the topics discussed, please contact us by: