HM Revenue & Customs Investigations – are you in their sights?

We are increasingly concerned at HM Revenue & Customs new aggressive approach to investigations meaning that more innocent taxpayers are likely to be investigated.

HMRC do not need a reason to open an enquiry although the majority of these are now as a result of intelligence received.  HMRC have spent millions developing their Connect system which currently holds 12 billion pieces of data obtained from sources such as banks (both in the UK and abroad), credit agencies, Land Registry, DVLA, the internet, airlines and chip-and-pin merchants.  In fact 83% of HMRC enquiries are as a consequence of information received by Connect: the information is not always correct or interpreted correctly.

At Pierce we do our best to minimise the risk of a client being on the receiving end of an enquiry which, once opened, can easily take 18 months or more to resolve with substantial costs being incurred in the process, in addition to the stress and worry an enquiry can cause.  For this reason we strongly recommend clients join our tax investigation scheme which, for payment of a relatively modest fee, will cover the costs of our representing you in the event of a HMRC enquiry or investigation.  In addition the scheme also allows us to handle or guide you through a HMRC PAYE or VAT compliance review.

Please click here to view our dedicated micro-site.

If you want to know more about the scheme, or would like to join, please ring either your usual contact at Pierce or Andrew Stephenson on 01254 688100.

The Highway Code of company cars

Many businesses offer a company car as an employee benefit in kind. This is a great incentive for staff, but employers could face a HMRC challenge if they do not first review their procedures and employment terms and conditions, writes Andrew Stephenson from Pierce Chartered Accountants.

There are over 940,000 company cars in use on UK roads. Many businesses use them to entice new employees or retain existing staff. They can be an attractive perk of the job. However, businesses need to be aware of HMRC regulations of both company car and pool car schemes.

Employers need to be clear with their staff what the purpose of the car is as this has an impact on VAT recovery. Is it strictly just for business use in the form of a pool car, or is it a company car which can be used for work and personal travel? This detail should be clearly stated in the employee’s contract.

If the car is not intended for personal use, then the company needs to enforce measures to prevent this from happening. This must be done using either a physical or contractual restraint. Companies and employees also need to be aware that private use of a car includes travelling between home and work, unless it is a temporary place of work.

Physical constraints can include ensuring that keys are locked away and a log book or diary is maintained showing who booked the car out and when, as well as details of the journey and mileage. Best practice would also include having clear rules in place stating the circumstances in which a car can be booked out for business use.

Contractual constraints mean that in addition to terms and conditions of employment prohibiting private use, there should be some form of censure available for the business to bring against an officer or employee who is found to be using the car for a private journey. Typically, this would take the form of a disciplinary proceedings.

It is good practice for companies to develop an employee guide on company car use and require employees to sign the document to demonstrate that they have read and understood the terms.

As a general rule, under Article 7 of the VAT Input Tax order, if correct procedures are in place, then a company can reclaim VAT on the purchase of a pool car if it is strictly for business use only. VAT can also be reclaimed on cars bought for use as a taxi, driving instruction or as a self-drive hire car.

If you are planning to introduce a company car scheme to your organisation, or you already have them in place and would like to review your procedures, contact Andrew Stephenson on 01254 688100.

HMRC confirm it’s business as usual for intra-EU supplies

HM Revenue & Customs have issued Customs Information Paper 42 confirming that post-referendum there are no changes to the movement of goods in or out of the UK and that no changes are contemplated pending the agreement of terms for the UK exit from the EU

Background

The result of the EU Referendum has been confirmed as a vote to leave the European Union (EU).

Information for businesses

As the Prime Minister announced this morning, there will be no immediate change to the movement of goods and people in and out of the United Kingdom (UK) from the EU.
We are still a member of the EU. Until Article 50 is invoked, we will continue to engage with EU business as normal and be engaged in EU decision-making in the usual way. Once it is invoked, we will remain bound by EU law until the terms of our exit have been determined but we will not be involved in decision making.

The period between invocation of Article 50 and our eventual exit from the EU is expected to last at least two years.

Contacts

Further information can be found on the GOV.UK.

The Queen’s Awards for Enterprise

queensaward

50th anniversary: 1966 – 2015

The Queen’s Awards for Enterprise Magazine

 

BP_logo
When The Queen’s Awards for Enterprise were established in 1965, I could not have imagined how much they would grow in strength and reputation over the next 50 years. Read More
ELIZABETH R.

Why should I apply?

 

The closing date for entries is 30 September 2015 so start your application today by visiting GOV.UK

 

The Queen’s Awards for Enterprise are the most prestigious business awards, driving growth and innovation, and promoting exports. They recognise outstanding achievements by UK companies and could get your businesses noticed, above and beyond the competition.

The Awards have been operating in various forms since 1966, developing over the years into the current format comprising three categories of Award for companies and one for individuals.

The Queen’s Awards for Enterprise are awarded to businesses for outstanding achievement in International Trade, Innovation and Sustainable Development.

The Award for Enterprise Promotion (QAEP) is given to individuals who have made outstanding contributions to promoting and enhancing enterprise among UK entrepreneurs and companies.

 

A corporate Award is valid for five years.

Successful organisations may fly the Queen’s Award flag at their principal premises and are entitled to use the Emblem on their stationery, advertising and goods. Commemorative articles can be given to employees.

Queens Awards Logo

Winning businesses have already enjoyed immediate and long-term benefits from the respected Royal endorsement such as worldwide recognition, increased commercial value, greater press coverage and a boost to staff morale.

 

The closing date for entries is 30 September 2015 so start your application today by visiting GOV.UK

For tips and advice on completing your entry, take a look at this YouTube video.  It will only take a couple of minutes

 

What are you waiting for?

 

The benefits of entering the Queen‘s Award

The reasons for companies to enter for a Queen’s Award are as many as there are companies – each has their own specific purposes in doing so and the great majority of them benefit from their success.

Even those companies who do not achieve a win on their first attempt can find it a valuable experience, giving them targets to achieve and an additional focus for which to optimise their efforts in becoming one of the best UK companies in their field.

 

 

 

 

HMRC Investigations now yielding £18 x £1 invested

HMRC tax investigations into individuals and SMEs are now yielding £18 for every £1 invested

From:       Andrew Stephenson

Catch the blog below from PfP

pfp-logo-new

HMRC has boosted returns from its investment into tax investigations carried out by local compliance teams, which focus on individual taxpayers and small businesses. For every £1 spent by local compliance teams in 2013/14, £18 was collected in additional tax. This is up from £16 per £1 invested during the previous year.

In total, £8.9 billion in extra tax was collected via local compliance investigations in 2013/14, up from £7.8 billion in 2012/13.

This high return on investment means that HMRC is likely to continue to pour resources into tax investigations undertaken by these teams. A growing number of ‘everyday’ taxpayers, including more SMEs, are likely to find themselves under scrutiny as a result.

This increased efficiency serves as a reminder that HMRC is broadening its range of targets. As accountants frequently tell us, HMRC is no longer focusing solely on high net worth individuals with money held offshore or traditional cash businesses. The attempt to increase revenue has led to a greater focus on ordinary taxpayers.

Most accountants will be aware that HMRC has launched a range of campaigns in recent years targeting everyday taxpayers. The ‘Second Incomes Campaign’, for instance, means  that private tutors and even online traders are amongst those under more intense scrutiny. Voluntary disclosure schemes have also been launched to target specific job sectors, with solicitors being one of the most recent targets.

The 31st January filing deadline typically triggers a wave of new tax investigations. HMRC’s increased efficiency means that taxpayers should be ever more diligent when completing self-assessment tax returns.

The new aggressive approach adopted by HMRC means it is much more likely that clients may end up on the receiving end of a tax investigation.

How to Import Safely

How to Import Safely

A note from Andrew Stephenson

A date for your diary: 4th September 2014  9:30am – 4:30pm

At: East Lancashire Chamber of  Commerce, Clayton Business Park,  Accrington, BB5 5JR

‘This one day seminar helps delegates to recognise and overcome complications such as managing long-distance relationships, organising international transport and dealing with customs clearance issues’

This Chamber of Commerce seminar will cover:

  • HM Revenue and Customs – the import department and what is an import
  • HM Revenue and Customs – duty and VAT and the Tariff
  • HM Revenue and Customs – C88 SAD document, The Community/Common Transit  System, Customs/Import Procedures, origin, preference and restrictions
  • Insurance, transport documents, pre-shipment inspection
  • Payment methods including applying for letters of credit
  • Incoterms® 2010 overview
  • Real cost of goods

east lancs chamber logo

How to Import Safely

4th September 2014  9:30am – 4:30pm

Venue East Lancashire Chamber of  Commerce, Clayton Business Park,  Accrington, BB5 5JR

Practical, relevant and essential import training aimed at enhancing performance

This one day seminar helps delegates to recognise and overcome complications such as managing long-distance relationships, organising international transport and dealing with customs clearance issues. Being trained to understand the full import process helps businesses to react quickly and professionally to situations which often arise as a result of operating global supply chains.   Knowledge will be gained in the areas of risks and costs associated with Incoterms® 2010, various payment methods, licensing, HM Revenue and Customs and duties and tariffs, which enables the real cost of the imported goods to be calculated (ready for sale on the UK market).

These seminars are free of charge to Lancashire LEAP businesses under 3 years and is  supported by the European Regional Development fund. For all other companies wishing to attend please direct your enquiries on availability and pricing to Abigail

To book on please contact Abigail Peake on 01254 356473 or email: a.peake@chamberelancs.co.uk 

Our mailing address is:

East Lancashire Chamber of Commerce

Red Rose Court, Clayton Business Park

Clayton-Le-Moors

Accrington, LancashireBB5 5JR

United Kingdom

Add us to your address book

 

VAT Mini One Stop Shop (VAT MOSS)

MOSS stands for Mini One Stop Shop but isn’t anything to do with shops.

By: Andrew Stephenson

I have attached a link to HMRC website and their information on this subject.

http://www.hmrc.gov.uk/posmoss/index.htm

From 1 January next year any UK business supplying digital services to customers located in another EU state who are not in business or registered for VAT will either have to register for VAT in that state or alternatively, register for MOSS with UK HM Revenue & Customs.  If they do this then the requirement to register elsewhere in the EU is negated.

The downside however is that the business will have to continue to file their UK VAT return and at the same time submit a separate MOSS return on a calendar quarterly basis.   The VAT Mini One Stop Shop online service will be available from 1 January 2015, but businesses will be able to register to use it from October 2014.

 

Broadcasting, telecommunications and e-services; rule changes from 1 January 2015

On 1 January 2015, changes will be made to the European Union (EU) VAT place of supply of services rules involving business to consumer (B2C) supplies of broadcasting, telecommunications and e-services (digital services). A consumer means a private individual.

Find out more about B2C supplies

These changes will affect all businesses that supply digital services to consumers, whether or not they are registered for UK VAT. This is because there are no registration limits for digital service supplies made to consumers outside the UK. Any business supplying digital services to a consumer in another Member State therefore has to charge VAT on the supply in that Member State and register for VAT in that Member State.

Find out how to register for VAT

If you supply digital services to businesses only (including those who are self employed) then these changes do not affect you.

If you supply digital services to a mix of businesses and consumers, then these changes affect you as far as the supplies to consumers are concerned.

If your customer does not provide you with a VAT Registration Number (VRN), and you have no other information that suggests that your customer is in business and VAT registered, you can treat this as a B2C supply.

Changes to the place of supply of services rules

Currently, the place of taxation for digital services supplies is determined by your location as the supplier of the services. However, from 1 January 2015, the place of taxation will be determined by the location of the consumer.

This is a significant change and in order to work out the country in which VAT due must be paid, you will need to keep additional information that was not required before. You need to start planning for these changes now. To make this as straight forward as possible, the EU Member States discussed and agreed what a business needs to do and the records that it must keep.

Who is making the supply?

If you supply consumers through an online store or gateway, and the online store or gateway is acting in its own name, then they will normally be considered to be supplying the consumer. This means that the online store or gateway will be responsible for declaring and paying any VAT due. You will be treated as supplying the store and so will be making a business to business (B2B) supply, rather than a B2C supply. If this is the case, these rule changes do not directly affect you.

Where is the place of taxation?

When providing digital services in the circumstances below, you can presume that the location of the consumer, and therefore the place of taxation, is as follows:

  • if the service is provided through a telephone box, a telephone kiosk, a wi-fi hot spot, an internet café, a restaurant or a hotel lobby, the consumer location will be the place where the services are provided
  • if the service is supplied on board transport travelling between different countries in the EU (for example, by boat or train), the consumer location will be the place of departure for the journey
  • if the service is supplied through an individual consumer’s telephone landline, the consumer location will be the place where the landline is located
  • if the service is supplied through a mobile phone, the consumer location will be the country code of the SIM card
  • if a broadcasting service is supplied through a decoder, the consumer location will be the postal address where the decoder is sent or installed

To keep the administrative burden on businesses to a minimum, you can apply the above consumer location guidelines without needing to collect and keep any supporting evidence. If you think that the above bullets do not properly determine where the consumer is located, you can select the correct location. To support your decision, you will need to obtain and keep three pieces of non-contradictory commercial evidence (for example, evidence of the consumer’s billing address, their bank details, their internet protocol (IP) address) to support your view.

If you are providing digital services in circumstances not listed above, you will need to support your decision on the consumer’s location by obtaining and keeping two pieces of non-contradictory commercial evidence.

Read about the current place of supply rules

VAT Mini One Stop Shop (VAT MOSS)

To save you having to register for VAT in every EU Member State where you supply digital services, you may opt to use the VAT Mini One Stop Shop online service (VAT MOSS). This will be available from 1 January 2015, but you will be able to register to use it from October 2014.

If you are an EU business, you may register and use the ‘Union’ VAT MOSS online service in the Member State where you have your business establishment (usually the principal place of business or head office). Using the VAT MOSS online service means you can submit a single calendar quarterly VAT MOSS return and payment covering all your EU digital service supplies. For example, if you register for the VAT MOSS online service in the UK, you will be able to account for the VAT due on your B2C digital service sales in any other Member States where you do not have an establishment by submitting a single VAT MOSS return and any related payment to HM Revenue & Customs (HMRC). HMRC will send an electronic copy of the appropriate part of your VAT MOSS return, and the related VAT payment, to each relevant Member State’s tax authority on your behalf. The VAT rate used will be that of each Member State of Consumption at the time the service was supplied.

If you are a non-EU business making B2C digital service supplies to EU customers, and you have a fixed establishment in the EU, you will be able to register and to use the ‘Union’ VAT MOSS online service. You can choose a Member State in which you have a fixed establishment to register.

Find out more about business establishments

Find out more about fixed establishments

If you are a non-EU business making B2C digital service supplies to EU consumers and you do not have any fixed establishments, you will be able to register and to use the ‘Non-Union’ VAT MOSS online service. This will be a slightly modified version of the current EU VAT on E-Services (VoES) Scheme. If you do not have a business establishment in the EU, you can choose to use the Non-Union VAT MOSS online service in any Member State of your choice.

If you are already registered in the UK for the VoES Scheme and you would like to register in the UK for the Non-Union VAT MOSS, you will be provided with detailed information to help transfer your existing VoES Registration to the new scheme.

If you are a business making B2C digital service supplies to EU consumers and are not registered for VAT (because you are under the VAT threshold), you need to take action now as you will need to register for VAT. Under the new rules, you potentially have to register for VAT in every EU MS where you supply consumers with digital services. By opting to use VAT MOSS, you will not have to do this but will be able to make VAT declarations and payments, in respect of all of your EU supplies of digital services, to a single elected Member State on a calendar quarterly return.

The UK will be amending its legislation to reflect the new EU Regulations; draft Finance Bill legislation was published in December 2013 following the Autumn Statement.

Finance Bill 2014

On 2 June 2014, HMRC organised a VAT place of supply of services and VAT Mini One Stop Shop event in London. Businesses affected by these changes were invited to attend and the event was supported by the European Commission. The event included an overview of the changes to the VAT place of supply of services rules, information about the EU MOSS schemes and how they will work, with plenty of opportunity for questions and answers. A recording of the event is available to view and the presentations that were delivered are available to download.

Find out more about the event on 2 June (Opens new window)

Find out more about how businesses will be affected by these changes (PDF 129K)

Involved in Fraud ? – Yes or No

Have you been involved in Fraud – only two answers possible:

By: Andrew Stephenson

Code of Practice 9

HM Revenue & Customs enquiries HMRC regularly conduct routine enquiries into taxpayers’ affairs but occasionally they will instigate an enquiry using the Civil Investigation of Fraud procedures, also known as a ‘Code of Practice 9’  (“CoP9”) enquiry.

Fortunately we don’t often see clients on the receiving end of a HMRC CoP9 enquiry but HMRC see this as a major part of their armoury in combatting tax avoidance. Part of the opening procedure in such an enquiry is for HMRC to ask the taxpayer to declare whether they have been involved in a fraud.

Have you been involved in a Fraud?

In HMRC’s view there used to be only three possible answers to this.

  1. Firstly, an admission of fraud.
  2. Secondly a denial of acting fraudulently whilst agreeing to cooperate with HMRC in their enquiry by commissioning a report (at the taxpayer’s expense) into their taxation affairs.
  3. The final alternative would be a flat denial – in which case HMRC would undertake their own enquiry and could proceed to prosecute the taxpayer if a fraud was discovered.

In a rather worrying development HMRC have withdrawn the second option for taxpayers to deny acting fraudulently whilst agreeing to cooperate with them.

I say ‘worrying’ as until now although only the first option gave immunity from prosecution: the second denial option could also do so provided that a full disclosure was made to HMRC in the Report.

As a result of the change taxpayers can now only admit to a fraud or alternatively deny everything and risk prosecution.

A typical HMRC ‘black or white’ approach and a presumption of guilt. This is, in my view, a dangerous development: there now appears to be no facility open to a taxpayer to admit getting something wrong or doing something that falls short of constituting a fraud or of acting in a fraudulent manner, when challenged by HMRC using the CoP9 procedure.

 

VAT payment discounts

VAT prompt payment discounts

From: Andrew Stephenson

Business are reminded that they only have until 31 March 2015 to take advantage of the current rules on accounting for VAT where a discount for prompt payment is offered.

20130926 HMRC logo PF-hmrc-logo_1379417f

Under the current rules, when an invoice is issued showing details of a discount for prompt payment they only have to account to HM Revenue & Customs for the VAT due on the discounted price whether or not their client or customer takes advantage of it.

 VAT Discount Link

Discounts, vouchers, special offers and VAT

There are particular rules for accounting for VAT on promotions such as multi-buy offers eg, buy-one-get-one-free (BOGOF), coupons, vouchers and manufacturers’ support of retail promotions. If any of your goods or services are discounted, you must charge VAT on the discounted price rather than the full price. If you give away products, you must usually account for, and pay VAT on, the full value or cost of the gift, although there are some exceptions.

From 1 April next year however the rules are changing so that VAT will have to be accounted for on the amount actually received in payment.

If you wish to know more about this contact our senior VAT Manager, Andrew Stephenson.

GOV.UK Business Growth Vouchers up to £2k

GOV.Uk image 2727733_orig

Growth Vouchers programme

https://www.gov.uk/apply-growth-vouchers

From: Andrew Stephenson
This government programme helps small businesses get expert advice on:
  • finance and cash flow
  • recruiting and developing staff
  • improving leadership and management skills
  • marketing, attracting and keeping customers
  • making the most of digital technology
Some businesses will be randomly chosen to get a voucher for up to £2,000 to help finance specialist business support. You’ll have to match the amount with your own funds.
You’ll be asked to take part in surveys to find out how the programme has helped you.

Eligibility

Your business must:
  • have 49 employees or less (including any employees of companies that own a stake in your business)
  • be registered in England
  • have been trading for at least one year
  • not have paid for business advice in the last 3 years
  • be independent (ie no more than 25% is owned by other businesses or organisations)
You’ll need the following things to complete your application:
  • Companies House registration number or unique tax reference
  • registered business address
  • business turnover details
  • VAT registration number (if you’re registered)
  • PAYE number (if you have one)
  • contact phone number
  • email address
Read the terms and conditions for the Growth Vouchers programme.
  • Available in England only
  • Email address required

Growth Vouchers programme

https://www.gov.uk/government/collections/growth-vouchers-programme
Organisation:

Support for small businesses to grow.

The Growth Vouchers research programme will test what works best when giving advice to business – helping small businesses to find strategic advice from private sector suppliers who can help their business to grow.
This joint programme between the Department for Business, Innovation and Skills (BIS) and the Behavioural Insights Team in Cabinet Office was launched on 27 January 2014 and roll out over the next 15 months.
Growth Vouchers offer expert advice in areas such as:
  • raising finance and managing cash flow
  • recruiting and developing staff
  • improving leadership and management skills
  • marketing
  • attracting and keeping customers
  • making the most of digital technology

Documents

  1. Growth Vouchers programme: definition of business advice areas covered

  1. Growth Vouchers programme: terms and conditions

  1. Growth Vouchers programme: trial protocol

Growth Voucher programme: primary documents

The claim form, the de minimis declaration and the guidance for recruiting and managing consultants.

  1. Growth Vouchers programme: claim form

  2. Growth Vouchers programme: de minimis declaration form

  3. Growth Vouchers programme: a guide to choosing and managing a consultant