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.