ESC A19 Success!

Eaves & Co are pleased to announce that HM Revenue and Customs have agreed to allow a claim drafted by us for ESC A19 in relation to 2007/08, 2008/09 and 2009/10 saving our client £5,653.68.

We successfully argued that HM Revenue and Customs should have taken into account information provided in the employer end of year return when determining our clients PAYE code for the relevant year.

If you have receieved a notice of underpaid tax through the PAYE scheme and believe ESC A19 may apply to your circumstance please contact Eaves & Co on 0113 244 3502.

High Expectations? – HMRC Advice Lines

A very recent First Tier Tribunal decision was held in favour of a taxpayer, Mr Noor.

Mr Noor called HMRC’s National VAT helpline to take advice about construction costs.

He followed the advice given, but on his claim for a repayment of input tax HMRC denied a chunk of money under the rules about time limits for claims.

Mr Noor claimed that after taking the advice over the phone his expectation was that he would be able to claim all the VAT back if he followed the guidance suggested, which he did.

 In a very interesting decision HMRC believed Mr Noor in relation to the phone conversation, even though no written confirmation of the advice line’s comments was obtained.  They also held that he would have taken a different course of action if he hadn’t received the comments on the phone.

It was found that HMRC were due to pay the full amount of VAT back to Mr Noor.

Perhaps the life of the Advice Line is limited!

Details of VAT Disclosure Released

The current VAT disclosure facility is aimed at traders who exceed the VAT threshold of £73,000 but are not VAT registered.

HMRC are currently sending out more than 40,000 letters outlining details of the disclosure to taxpayers they believe should be VAT registered.

The disclosure is however available to anyone and you do not need to receive a letter to take part.

The benefit of disclosing is that in the majority of cases a full disclosure will result in a penalty rate of no more than 10% of the tax due.  It is also possible to disclose tax arrears other than VAT under the scheme, but penalties charged on these are only guaranteed to be under the maximum 100% of tax due.

To take part in the disclosure a trader must notify HMRC of his intentions to disclose by 30 September 2011 and must inform HMRC of the VAT due and make arrangements to pay by 31 December 2011.

If you are interested in the disclosure or if Eaves and Co can be of any assistance, please get in touch.

HMRC Crackdown on Unregistered Traders

Recent commentary suggests that HMRC may be planning a detailed crackdown on businesses that should be registered for VAT and are not.

 The recently announced amnesty to be introduced for traders to come forward voluntarily suggests that this is an area that HMRC are interested in, and a recent case highlights the direction they are taking.

 The case (Annett Glen-Jones t/a Sophisticuts v HMRC) centred around a self-employed hair stylist who owned a hairdressers’ of which the basement floor was used by independent stylists.

 The appellant claimed that the usage was an exempt supply of a license to occupy land, whereas HMRC argued that she was making a taxable supply of services to hairdressers of which the use of the basement was one part.

 The tribunal agreed with HMRC and therefore VAT was chargeable on the supply.  The increased taxable supplies resulted in the business trading above the VAT threshold having not been registered for VAT and so a number of years of VAT was due in respect of the whole business, plus interest and presumably penalties.

Property Trade or Investment Business?

In the recent case of Parveen Azam (TC 00928) the Tribunal found that the taxpayer was carrying on an investment business and not a property trade.

In this case, the taxpayer purchased 11 properties in a 4 year period with the intention to sell the properties immediately at a profit.  Due to the downturn in the property market, the properties did not sell and the taxpayer began to let the properties.

The taxpayer argued that the business consisted of a trade because the original intention was to sell the properties.  However, the Tribunal found that after purchasing several properties the taxpayer must have realised that they were not selling.  It follows that the taxpayers intention on the acquisition of further properties was to run a rental business.

Therefore the Tribunal concluded the taxpayer was not carrying on the trade of a property developer or dealer but carrying on an investment business.