Penalties for late Construction Industry Scheme (CIS) contractor monthly returns are due to change from October 2011 onwards.
The new penalty regime could produce lower penalties than those under the current rules. A key change will be for new CIS contractors who will now have an upper limit to some of the penalties that are charged.
The upper limit will apply when new contractors first send a monthly return, where that return and any other late monthly returns that are submitted at the same time.
The new penalties do not start until October 2011, however, any contractor who is liable to penalties for filing a late monthly return prior to October 2011 is entitled to request that HMRC calculate the level of penalties under the new rules. If this is less than the amount already charged, HMRC should agree to reduce the penalties to the lesser amount.
Eaves and Co Specialist Tax Advisors in Leeds are experienced in the construction industry scheme penalties and enquiries can assist in corresponding with HMRC to ensure the best position for our clients.
The Liechtenstein Government and HM Revenue and Customs have recently issued a second joint declaration in relation to the Liechtenstein Disclosure Facility (LDF).
In order to qualify for the terms of the LDF, it is not necessary for assets to have been held in Liechtenstein historically. Instead a taxpayer could invest in relevant Liechtenstein property now so as to be able to utilise the favourable terms of the LDF for undisclosed UK tax liabilities in past years.
The original memorandum of understanding merely noted that relevant property must be part of a meaningful relationship, however the second joint declaration expands on this to say that any new relevant property must not only be meaningful but also of sufficient value and permanence to reflect the spirit of the LDF.
It is unclear at this point as to what level of investment is likely to be considered as ‘sufficient value’, however further clarification is to be provided by HM Revenue and Customs in due course.
An Employer Financed Retirement Benefit Schemes (EFRBS) is a pension scheme that is unqualified.
Contributions into EFRBS are tax neutral, between employer and employee.
In recent times they have become increasingly popular with footballers and bank staff. They are routinely offered as part of contract negotiations. The trusts’ funds can be used to buy assets such as property and can for example, be very attractive to foreign players who intend to leave the UK when they finish their football careers.
An EFRBS can be used as part of a tax strategy for owner managed businesses also. However, the Treasury and HMRC has announced that they intend to shut the opportunity, and limit contributions to EFRBS to the same level of contributions that will be permitted to qualifying pension schemes.
For alternative tax planning methods or to talk about EFRBS why not give our Leeds office a call?
In dealing with a recent project in Leeds, we came across one of the many quirks of the tax system regarding Capital Allowances.
Certain capital expenditure is deemed to be an ‘Integral Feature’ which receives writing-down allowances at a low rate. Such items include electrical systems, lighting systems and cold water systems.
Key here is that when an ‘integral feature’ is repaired, in certain situations, the cost may be treated as capital rather than as revenue thus causing a problem as relief is deferred.
In general, this rule will apply where the expenditure is more than 50% of the cost of replacing the whole asset, however tax advice should be taken on a specific case by case basis, to understand if the problem can be avoided.
Eaves & Co are proud to announce that HM Revenue & Customs have agreed our offer for settlement under the LDF for our first client project under the facility.
The offer was made using the marginal rate of tax route and was agreed by HMRC with only some minor amendments required. We are pleased to report that HMRC did not raise any in-depth questions into our client’s tax affairs as a result of the disclosure.
The smooth passage of the LDF process in this case is largely down to the hard and detailed work put in by our professional team in preparing the calculations in a robust and timely manner. This is an exceptional result, especially given the complexity of the client’s offshore banking and investment affairs.
We are now working hard on our 2nd and 3rd client projects, with the objective being a similar successful outcome for their Liechtenstein Disclosure Facility disclosures.
Eaves & Co, Specialist Tax Advisors are excited to have joined the Sharemark Advisers Network.
Sharemark is an alternative trading platform that offers innovative and flexible trading mechanisms to companies, their investors and employees.
Eaves & Co, Specialist Tax Advisors are experienced in providing both tax and share valuation advice to SME’s and their owners. We believe that our tax and share valuation background will allow us to advise both new and existing Sharemark clients on a range of tax matters including; company reorganisations, employee share schemes, management buyouts, entrepreneur’s relief and other taxation aspects of share sales.
The Construction Industry Scheme remains a difficult beast with which to comply.
Here at Eaves & Co in Leeds we are dealing with a case where tax was not deducted by a contractor on a certain category of payment to its subcontractors.
The case has been ongoing for a good of time and we have been introduced to mitigate the CIS tax exposure to the contractor. Our well considered case that the contractor took “reasonable care” in implementing the CIS has been put to HMRC. We await to hear whilst still claiming evidence that the subcontractors have actually paid all relevant taxes, which is the second line of defence.
Reasonable excuse is a well tested path in CIS terminology with a number of recent cases taken to Tribunal in attempt to avoid the consequences of non-CIS compliance. We expect our case of reasonable care to be thoroughly tested by HMRC.
Liechtenstein Disclosure Facility (LDF): A Progress report on a worldwide facility
According to recent information provided by the Tax Faculty of the Institute of Chartered Accountants in England & Wales (ICAEW) the new disclosure opportunity has yielded about £82 million from approximately 5,500 disclosures. This works out at an average of £14,500.
Given the number of UK residents HM Revenue & Customs believe to have offshore assets, the numbers taking up the generous terms offered by the Liechtenstein Disclosure Facility seem small.
An explanation for this may lie in the fact that the LDF remains misunderstood.
Many people do not realise that from December 1, 2009, anyone with any investments or assets in any other offshore location is also able to participate in the LDF if they move some or all of those investments into Liechtenstein.
HMRC has said that it will not offer such favourable disclosure terms as the LDF again so there really is no better time than now to disclose any offshore assets.
The view here at Eaves & Co Leeds is that this is a worldwide facility worthy of consideration.
If you require any tax advice regarding a Liechtenstein Disclosure call our Leeds office on 0113 244 3502.
The recent changes in rules on Capital Gains Tax and Entrepreneurs’ Relief mean that it is more important than ever. With the main rate of CGT now 28% and the rate on assets qualifying for ER remaining at 10%, the benefit of attaining ER is increased to 18% from the previous 8%. Coupled with the lifetime limit increase to £10m, the overall lifetime value of ER is a maximum of £1,800,000; a significant increase on its initial value of £80,000.
It is therefore more important than ever to fully consider the availability of ER on transactions and ensure that all the conditions are met.
HM Revenue & Customs have produced a toolkit for identifying associated companies and proving whether small company rates or marginal small company relief (MSCR) is due.
Much commentary has suggested that the toolkit should be used every time the small company rate/MSCR is claimed with the checklist incorporated into the procedures of all accountancy firms so that the issues brought up are discussed annually with the directors of companies.
HMRC have stated that penalties could be applied where such rates are applied incorrectly and it is therefore important to ensure that the correct procedures are followed. Having the completed checklist on file would be an advantage, but it must also be clear that someone has appropriately considered the circumstances.
There are proposals to change the rules on associated companies which are currently in consultation. The proposed new rules look at commercial interdependence rather than the current basis looking strictly at control.