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Making Tax Digital

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Is your business eligible for Research and Development (R&D)?

There are tens of thousands of pounds being lost in tax relief by eligible companies every year. This reflects the common misconception that Research and Development (R&D) is confined to manufacturing, tech giants or research laboratories. In reality, businesses are often undertaking #R&D in their day-to-day activity, driving innovation and moving the industry forward without realising. Get in touch to find out more.

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HMRC release statistics on Corporation Tax for 2018

HMRC have released detailed statistics on the Corporation Tax system for 2018. The statistics show Corporation Tax receipts of £56 billion – an increase of 11% on 2016/17. There were almost 1.5 million companies recording Corporation Tax liabilities . Around 8,000 companies had Corporation Tax liabilities of in excess of £500,000 – and contributed around 58% of the Corporation Tax collected.

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Appeal allowed in part in recent tax tribunal case regarding Capital Allowances

A complex recent tax case to the First Tier Tribunal has found partially in the tax payers favour. The case involved construction of a hydro-electric power facility near Loch Ness. The total cost of the scheme was around £300 million – the taxpayer claimed £260 million qualified for Capital Allowances. HMRC accepted that £34 million qualified but the balance of £227 million remained in dispute. The tribunal found partially in the tax payers favour – but given the amounts involved an appeal to a higher tribunal is likely.

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Tax case: Penalties issued by HMRC found to be invalid even though taxpayer had agreed to paperless contact

The taxpayer had registered for Self Assessment on the HMRC website and agreed to paperless contact from HMRC. Subsequently the taxpayer omitted to submit her 2015/16 tax return and HMRC began to issue penalties for late filing. The penalties were issued by way of messages to a secure mailbox on the HMRC portal. It was not until the penalties reached £1,200 that the tax payer received written notification of the penalties. The First Tier Tax Tribunal reviewed the case in July 2018 and found that the penalties were invalid as they were notified electronically.

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Government produces guidance on VAT system if ‘No Deal’ Brexit

As part of the publications regarding the planning for a ‘No Deal’ Brexit the government has published details of the plans for the VAT system. The intention is to maintain the VAT system as closely as possible to the current system. The biggest potential change would be that the government would introduce ‘postponed accounting’ on all goods (both from the EU and outside the EU) brought to the UK. This measure is intended to avoid gridlock at the ports – and particularly for those bringing in goods from outside the EU is a relaxation of the current rules.

The position for those exporting from the UK is more difficult and a ‘No Deal’ Brexit will mean goods sent to the UK will potentially be subject to EU VAT and Duty in the destination country.

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Tribunal finds that age and “not owning a computer” are not reasonable grounds for an exemption from filing VAT returns online

The Tax Tribunal judgement in the case of Glen Lyn Generations Limited & Exmoor Coast Boat Cruises Limited has confirmed HMRC’s assessment that age and having limited access to IT equipment were not reasonable grounds to give an exemption to file VAT returns online.

All businesses must file VAT returns online although in very limited circumstances HMRC can allow an exemption to permit the use of paper VAT filings. The director of the two companies here argued that his age was such that he had never learnt to use a computer at school – and that this, along with his remote location, meant that he should be granted an exemption from filing electronic VAT returns. HMRC refused to allow the exemption and this decision was supported by the First Tier Tax Tribunal.

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Beware Bogus HMRC Phone Calls

There has been an increase in bogus HMRC phone calls recently. HMRC have issued the following description including guidance on how to deal with a suspicious phone call:

HMRC is aware of an automated phone call scam which will tell you HMRC is filing a lawsuit against you, and to press one to speak to a caseworker to make a payment. We can confirm this is a scam and you should end the call immediately.

This scam has been widely reported and often targets elderly and vulnerable people.

Other scam calls may offer a tax refund and request you to provide your bank or credit card information. If you cannot verify the identity of the caller, we recommend that you do not speak to them.

If you’ve been a victim of the scam and suffered financial loss, report it to Action Fraud.

The calls use a variety of phone numbers. To help our investigations you should report full details of the scam by email to: phishing@hmrc.gsi.gov.uk, including the:

  • date of the call
  • phone number used
  • content of the call

CLICK HERE TO FIND OUT ABOUT OTHER HMRC SCAMS TO BEWARE OF

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HMRC begins to issue letters to taxpayers suspected of receiving undeclared foreign income

HMRC have in the last week begun to issue warning letters to taxpayers where they believe that there may be undeclared offshore income or assets. These letters arise from information that HMRC has obtained under the Common Reporting Standard (CRS).

The regime for disclosure of undeclared overseas income changes significantly after 1 October – with penalties increasing to 100% – 200% of the undeclared tax due. Taxpayers are advised to consider the position carefully in advance of the 30 September if they believe that they may have undeclared overseas income.

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Tribunal finds that “total confusion” is not a Reasonable Excuse for late filing of tax returns.

A recent Tribunal case (Spacia Grocers vs HMRC) has found that the “total confusion” of the taxpayer is not a Reasonable Excuse for the late filing of tax returns. HMRC charges penalties for the late filing of tax returns – unless the late filing arises where there is a Reasonable Excuse.

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