Solicitors could face hefty VAT bill for electronic property search fees

Solicitors are being warned they could face hefty VAT bills for electronic property searches after a landmark ruling deemed they should not be treated as a disbursement.

The caution comes following the case of Brabners LLP Vs HM Revenues & Customs (HMRC) which cast doubts over solicitors’ treatment of disbursements.

Brabners conducted searches and used the results as part of its advice to clients. The law firm treated the cost as a disbursement and invoiced the client for this cost, excluding VAT. HMRC assessed the law firm as liable for VAT, a decision that the law firm appealed.

It is standard practice in the sector to treat such costs as disbursements where no VAT has been incurred, this has now changed for electronic search fees.

Guidance from the relevant regulatory bodies, which sets out how legal disbursements should be treated for VAT purposes, is now under review following the tribunal decision.

HMRC which applies strict criteria to such situations, argued that Brabners’ costs were not VAT disbursements as the recharge of the cost formed part of the onward supply to the client and was therefore subject to VAT.

The First Tier Tribunal was in agreement with the HMRC, meaning Brabners was ordered to pay a £68,000 VAT bill as the results were used as part of their advice to clients, and they were not acting as a middle man to collect the search fee from the client.

At Pierce, we would advise law firms to review their disbursement treatment in light of the outcome of this tribunal, for both previous and future policies.

If your firm is using the same process as Brabners, then contact the Law Society to seek clarification before amending your practices as Brabners may consider taking this appeal further.

For more information regarding VAT for solicitors, please contact Gary Speak on 01254 688 100 or email g.speak@pierce.co.uk

1st April VAT rules change – not a joke

By: Margaret Scott

1st April VAT rules change – not a joke. The changes to the VAT rules relating to Prompt Payment Discounts may cause some problems, please do not hesitate to contact us for clarification and assistance.

The following information relates to a Sage Bulletin.

Sage

PDP – Prompt Payment Discount – what to do when you raise or receive a VAT invoice offering a PPD from the 1 April 2015 when the change takes effect.

Summary of Changes

Currently where businesses offer PPD terms to customers they calculate the VAT due on the discounted price. If the discount is not taken up HMRC does not require businesses to alter the amount of VAT invoiced and accounted for.

For example:

“.A discount of X% of the full price applies if payment is made within Y days of the invoice date. No credit note will be issued. Following payment you must ensure you have only recovered the VAT actually paid.”How can Sage ERP X3 customers meet these requirements?

 

  1. Correctly calculate VAT on Invoices.

Currently VAT may be calculated on the full value or the discounted value of an invoice, this is controlled the parameter BRIDISC.

From the 1st April 2015 to be in line with the new legislation, VAT must be calculated on the full value of an invoice:

  • In Sage ERP X3 V6 the parameter BRIDISC should be set to NO
  • In Sage ERP X3 V7 the parameter DEPMGTMOD (Discount management mode) should be set to 2 (Breakdown by VAT).
  • The payment attribute used for Early Settlement Discount should be set to Tax Recovery

From the 1st April 2015, businesses must account for VAT on the full consideration received for supplies of goods and services. Therefore invoices must calculate VAT with no reduction for PPD.

Where a discount is subsequently taken, it is therefore necessary to ensure VAT records are amended to reflect the lower VAT amount. Businesses may comply with this change in two ways;

  • Credit Notes must be issued for the difference.
  • Each party must make appropriate internal accounting adjustments.

When choosing the latter option businesses must add suitable wording to the terms of any discount.

  1. Provide details of Customer VAT responsibilities on Sales Invoices

We would recommend that our customers add suitable wording to their settlement discount terms rather than issue credit notes for each discount taken.

(Note: In the HMRC guidance there is an optional requirement for the invoice to show Total Gross, Total VAT and Total Net amounts with and without the discount appliedSage ERPX3 only shows totals without the discount applied).

  1. Make appropriate internal accounting adjustments

Sage ERP X3 has functionality to “claw back” VAT. VAT is calculated on the full invoice value, and when any PPD is taken in Cash Entry, the VAT element of the discount is calculated and posted to specified GL account(s), thereby recording the VAT clawed back.

If a part payment has taken place, at the time of the payment, the Settlement Discount line will have the full amount of the discount. This will also post the full amount of the VAT claw back which is not correct under the new legislation. It is recommended that customers change the ESD line on the payment to correctly account for the ESD on the part payment. This will result in the posting of the part of the VAT claw back that is relevant on the payment.

In the instance of a credit note being raised after the invoice has been paid, manual adjustments will need to be done.

What does this mean

a) If the customer pays the full price they record it in their records and no VAT adjustment is necessary.

b) If the customer pays the discounted price in accordance with the PPD terms on receipt of the invoice they may record the discounted price and VAT on this in their accounts and no subsequent VAT adjustment is necessary.

c) If the customer does not pay when the invoice is first issued, they must record the full price and VAT in their records as shown on the invoice. If they subsequently decide to take-up the PPD then:

  • If the supplier’s invoice states that a credit note will be issued, the customer must adjust the VAT they claim as input tax when the credit note is received. They must retain the credit note as proof of the reduction in consideration.
  • If they have received an invoice setting out the PPD terms which states no credit note will be issued, they must adjust the VAT in their records when payment is made. They should retain a document that shows the date and amount of payment (e.g. a bank statement) in addition to the invoice to evidence the reduction in consideration.

The invoice must contain the following information (in addition to the normal invoicing requirements):

  • The terms of the PPD (PPD terms must include, but need not be limited to, the time by which the discounted price must be made).

A statement that the customer can only recover as input tax the VAT paid to the supplier.

Worked Example

Example for a Sales Invoice, with Settlement discount 10%, VAT rate 20%, using Claw back:

Before 1st April

Invoice net value is £100.00, Settlement Discount is £10.00 (10% of 100), VAT is £18.00 (20% of £90.00). Cash paid is £108.00

GL Postings:

From GL Account Credit Debit
Invoice Control £118.00
Invoice Goods £100.00
Invoice VAT £18.00
Cash Control £118.00
Cash Bank £108.00
Cash Discount £10.00

 

After 1st April

Invoice net value is £100.00, VAT is £20.00 (20% of £100.00),  Settlement Discount is £12.00 (10% of £120). Cash paid is £108.00

GL Postings :

From GL Account Credit Debit
Invoice Control £120.00
Invoice Goods £100.00
Invoice VAT £20.00
Cash Control £120.00
Cash Bank £108.00
Cash Discount £10.00
Cash Claw back VAT £2.00

 

Example for a Sales Invoice, with Settlement discount 10%, VAT rate 20%, NOT using Claw back:.

GL Postings:

From GL Account Credit Debit
Invoice Control £120.00
Invoice Goods £100.00
Invoice VAT £20.00
Cash Control £120.00
Cash Bank £108.00
Cash Discount £12.00

 

GOV.Uk image 2727733_orig

Source: Gov.UK

A PPD is an offer by a supplier to their customer of a reduction in the price of goods and/or services supplied if the customer pays promptly; that is, after an invoice has been issued and before full payment is due. For example a business may offer a discount of 5% of the full price if payment is made within 14 days of the date of the invoice.

  • at present, suppliers making PPD offers are permitted to put on their invoice, and account for, the VAT due on the discounted price, even if the full price (i.e. the undiscounted amount) is subsequently paid. Customers receiving PPD offers may only recover as input tax the VAT stated on the invoice.
  • after the change, suppliers must account for VAT on the amount they actually receive and customers may recover the amount of VAT that is actually paid to the Suppliers.

Guidance

a) on issuing a VAT invoice, suppliers will enter the invoice into their accounts, and record the VAT on the full price. If offering a PPD suppliers must show the rate of the discount offered on their invoice (Regulation 14 of the VAT Regulations 1995 (SI 1995/2518)).

b) the supplier will not know if the discount has been taken-up until they are paid in accordance with the terms of the PPD offer, or the time limit for the PPD expires.

c) the supplier will need to decide, before they issue an invoice, which of the processes below they will adopt to adjust their accounts in order to record a reduction in consideration if a discount is taken-up.

d) when adjustments take place in a VAT accounting period subsequent to the period in which the supply took place the method of adjustment needs to comply with Regulation 38 of the VAT Regulations 1995 (SI 1995/2518).

e) suppliers may issue a credit note to evidence the reduction in consideration. In which case, a copy of the credit note must be retained as proof of that reduction.

f) alternatively, if they do not wish to issue a credit note, the invoice must contain the following information (in addition to the normal invoicing requirements):

  • the terms of the PPD (PPD terms must include, but need not be limited to, the time by which the discounted price must be made).
  • a statement that the customer can only recover as input tax the VAT paid to the supplier.

Additionally, it might be helpful for invoices to show:

  • the discounted price
  • the VAT on the discounted price
  • the total amount due if the PPD is taken up.

g) if a business has adopted the option at (f), the VAT invoice, containing appropriate wording as described above, together with proof of receipt of the discounted price in accordance with the terms of the PPD offer (e.g. a bank statement) will be required to evidence the reduction in consideration, and the reduction to the supplier’s output tax (in accordance with Regulation 38 of the VAT Regulations 1995).

h) we recommend businesses use the following wording on the invoice:

“A discount of X% of the full price applies if payment is made within Y days of the invoice date. No credit note will be issued. Following payment you must ensure you have only recovered the VAT actually paid.”

i) if the discounted price is paid in accordance with the PPD terms, then the supplier must adjust their records to record the output tax on the amount actually received.

If the full amount is received no adjustment will be necessary.

Customers:

On receiving an invoice offering a PPD a VAT registered customer may recover the VAT charged, in accordance with VAT Regulation 29 of the VAT Regulations 1995.

As adjustments may take place in a VAT accounting period subsequent to the period in which the supply took place the method of adjustment needs to comply with Regulation 38 of the VAT Regulations 1995 (SI 1995/2518).

In practice this will mean:

a) if the customer pays the full price they record it in their records and no VAT adjustment is necessary.

b) if the customer pays the discounted price in accordance with the PPD terms on receipt of the invoice they may record the discounted price and VAT on this in their accounts and no subsequent VAT adjustment is necessary.

c) if the customer does not pay when the invoice is first issued, they must record the full price and VAT in their records as shown on the invoice. If they subsequently decide to take-up the PPD then:

  • if they have received an invoice setting out the PPD terms which states no credit note will be issued they must adjust the VAT in their records when payment is made. They should retain a document that shows the date and amount of payment (e.g. a bank statement) in addition to the invoice to evidence the reduction in consideration.
  • if the supplier’s invoice does not state that a credit note will not be issued, the customer must adjust the VAT they claim as input tax when the credit note is received. They must retain the credit note as proof of the reduction in consideration.

 

The Budget 2015 in full

The Budget 2015 in Full

Chancellors red box

Read the Budget document in full.

Download our detailed budget report as a pdf.

UPDATE: Download the presentation slides from our budget breakfast review.

The Chancellor has presented his Budget to Parliament – here’s a summary of what was announced.

1. The UK had the fastest growth in the G7 in 2014

The UK economy had the fastest annual growth among G7 economies in 2014, and the strongest annual growth since 2007. At the end of 2014, employment had reached its highest ever level, unemployment has been falling in every region across the UK, and inflation is at a record low.

But risks still remain and there is still more to do to support businesses and boost p

Read the Budget document in full.

2. Debt will be falling as a share of GDP in 2015-16

Debt will be falling as a share of GDP from 2015-16. This is a year earlier than forecast at Autumn Statement.

By 2014-15, the deficit is forecast to have fallen by half, from 10.2% at its peak in 2009-10, to 5% in 2014-15.

In 2018-19, the government will have a surplus (will raise more in taxes than is being spent) of £5.2 billion.

Access the Treasury’s set of Budget infographics, explaining some of the key announcements.

3. The tax-free personal allowance is being increased in April 2017, to £11,000

To make work pay and ensure families keep more of the money they earn, the tax-free personal allowance – the amount people earn before they have to start paying tax – will rise to £10,800 in 2016-17, and £11,000 the year after.

The increases to the personal allowance from £6475 in 2010, to £11,000 in 2017-18 will save a typical taxpayer £905.

To make sure the full benefits of the personal allowance increase are passed on to higher rate taxpayers, the government will also increase above inflation the point above at which higher earners start paying 40% tax. It will increase by £315 in 2016-17, and by £600 in 2017-18 – taking it to £43,300 in 2017-18.

4. A new Personal Savings Allowance will take 95% of taxpayers out of savings tax altogether

From April 2016, a tax-free allowance of £1,000 (or £500 for higher rate taxpayers) will be introduced for the interest that people earn on savings.

If they are a basic rate taxpayer and have a total income up to £42,700 a year, they will be eligible for the £1,000 tax-free savings allowance.

If they are a higher rate taxpayer and earn from £42,701 to £150,000, they’ll be eligible for a £500 tax-free savings allowance.

Access the Treasury Personal Savings Allowance one page explainer factsheet.

5. Introducing the Help to Buy ISA – every £200 people save towards their first home, the government will put in an extra £50, up to a maximum bonus of £3000

The government has already helped people to buy a home with Help to Buy, which allows people to purchase a home with just a 5% deposit.

The government is now going further. To help first time buyers save for a deposit, it is introducing a Help to Buy ISA.

People will be able to open an ISA, save up to £200 a month towards their first home, and the government will boost it by 25%. That’s a £50 bonus for every £200 people save, up to £3000.

Access the Treasury’s Help to Buy: ISA one page explainer factsheet.

6. People will have complete freedom to take money out of an ISA and put it back in later in the year

ISAs are being reformed so that instead of being able to put up to £15,240 in the 2015-16 tax year into an ISA in total, people can take out their money and put it back in within the same year, without losing their ISA tax benefits – as long as the repayment is made in the same financial year as the withdrawal.

7. £1.25 billion for children’s’ mental health services

An extra £1.25 billion will be spent on mental health services for children and new mums – helping more than 110,000 people.

8. Cancelling the fuel duty increase scheduled for September

Fuel duty will be frozen again; since 2011, the government has cut and frozen fuel duty, saving a typical motorist a total of £675 by the end of 2015-16.

By the end of 2015-16 fuel duty will have been frozen for five years, resulting in the longest duty freeze in over 20 years.

9. Cutting beer duty for the third year in a row

There will be another penny off a pint, a 2% cut for spirits and most ciders, and a freeze on duty on wine.

10. Up to five million pensioners will be given the freedom to sell their annuity for a cash lump sum

From April 2016, people who already have an annuity will be able to now effectively sell it on, so that they too can benefit from the pension freedoms announced at last year’s Budget.

Currently, people who have bought an annuity are unable to sell it without having to pay at least 55% tax on it. From April 2016, the tax rules will change so that people who already have income from an annuity can sell that when they choose and will pay their usual rate of tax they pay on income, instead of 55%.

11. Charities will be able to claim more gift aid on small donations

The amount of small donations charities can get an extra 25% top up payment on in gift aid without needing any paperwork is increasing from £5,000 to £8,000 a year.

The government expects 6,500 charities to claim in full the higher new cash boost of £2,000 a year – nearly double the current amount.

12. Farmers will have more time to average their profits for income tax

This extends the period from two to five years, and will give farmers additional security as they typically have volatile profits due to uncontrollable factors such as the weather.

13. We will abolish the annual tax return

Millions of individuals will have the information HMRC needs automatically uploaded into new digital tax accounts. Businesses will feel like they are paying a simple, single business tax – and again, for most, the information needed will be automatically received.

14. Support for all regions across the UK

Working with Transport for the North, the government will look at rolling out better roads, quicker journeys and improved rail connections between the major cities of the north, as part of the government’s plan to build a Northern powerhouse.

The government is also giving even more powers to local areas, with a new devolution deal for things like transport, business support and skills for West Yorkshire, and more planning powers for London.

Ten Enterprise Zones across the country are also being supported to go further to create growth and jobs.

The government is also working on a Cardiff city deal and opening negotiations on the Swansea Bay Tidal Lagoon.

15. Making sure banks pay their fair share

The government is increasing the rate of the bank levy (one of the taxes that banks pay) from 1 April 2015.

This will raise an additional £900 million a year.

16. Increased support for the oil and gas sector

The oil and gas sector provides highly-skilled jobs, energy security and makes a significant contribution to the UK economy.

To encourage further investment in the North Sea, the government will introduce a new Investment Allowance and reduce the supplementary tax charge on oil and gas companies further, from 30% to 20%, from 1 January 2015.

The rate of Petroleum Revenue Tax paid on older oil and gas fields will also be reduced from 50% to 35%.

These changes are expected to increase oil production by around 15% by 2019, and drive £4 billion of new investment over the next five years.

17. Faster broadband and better mobile networks

The government is investing up to £600 million to deliver better mobile networks, and is announcing a new ambition that ultrafast broadband of at least 100 megabits per second should become available to nearly all UK premises in the country.

18. Introducing postgraduate research loans

Loans up to £25,000 will be available for postgraduate PHD and masters research students.

The government will also conduct a review into how the government can strengthen its funding for postgraduate research.

19. Further investment in science and innovation

Future economic success depends on future science success. The government is investing £140 million in world class research on the infrastructure and cities of the future, and £40 million in research into what is known as the Internet of Things. This is the next stage of the information revolution, connecting up everything from urban transport to medical devices to household appliances.

The government is also launching a new UK research initiative into the future potential of digital currency technology, supported by a £10 million increase in funding in this area.

20. The government will consult on a tax relief for local newspapers

Local newspapers are a vital part of community life, but they’ve had a tough time – so the government is announcing a consultation on how to can provide them with tax support.

 

The Credit Card Sales Campaign

credit card

The Credit Card Sales Campaign – From: Andrew Stephenson

Do you accept Debit and Credit Cards, are you sure that you have fully declared all your transactions in your return – here’s how to bring this matter to order with HMRC.

Credit Card Trap

The Credit Card Sales campaign provides an opportunity for individuals and companies in business that accept debit and credit cards and have not reflected all transactions in a return, to bring their affairs up to date in a simple, straightforward way and take advantage of the best possible terms. – contact the Pierce Tax Department for further details.
20130926 HMRC logo PF-hmrc-logo_1379417f

Credit Card Sales campaign: your guide to making a disclosure

 

Contents

  1. About the Credit Card Sales campaign
  2. How to make a notification and disclosure to HMRC
  3. Preparing your disclosure
  4. Paying HMRC
  5. After HMRC receives your disclosure
  6. Getting things right for the future
  7. General information

1. About the Credit Card Sales campaign

1.1 Introduction

HM Revenue and Customs (HMRC) believes that its customers want to pay the right amount of tax and so wants to help those that are not paying the correct amount to put that right.

The Credit Card Sales campaign provides an opportunity for individuals and companies in business that accept debit and credit cards and have not reflected all transactions in a return, to bring their affairs up to date in a simple, straightforward way and take advantage of the best possible terms.

If you owe tax on your income you must tell HMRC about any unpaid tax now. You will then have 4 months to calculate and pay what you owe. This guide explains how you can do that.

1.2 The scope of the Credit Card Sales campaign

The Credit Card Sales Campaign is an opportunity open to individuals and companies in business.

Examples could include:

  • a business accepting payments by card that might not have declared all of their income
  • a business that is trading and has not registered with HMRC and accept cards as one of their payment methods.

1.3 Disclosures outside of the Credit Card Sales campaign

You can still make a disclosure and put your tax affairs in order even if you are not within the scope of the Credit Card Sales campaign. You may be eligible under another campaign. To find out whether you fall within any other Campaign you need to check HMRC campaigns or contact the helpline on Telephone: 0300 123 9272.

If your disclosure cannot be made under a current open campaign the terms offered will not be available. However, if you make a full and voluntary disclosure of all unpaid liabilities in these circumstances you can usually expect a lower penalty than HMRC would otherwise seek if they raised an enquiry or compliance check without the disclosure.

For all other disclosures you should telephone the Voluntary Disclosure Helpline on Telephone: 0300 123 1077. This is a helpline specifically designed to help you if you do not fall within the scope of an ongoing campaign but wish to make a voluntary disclosure.

1.4 How to take part in the Credit Card Sales campaign

To take part in the Credit Card Sales campaign you should:

  • tell HMRC that you want to take part in the Credit Card Sales campaign (Notify)
  • tell HMRC about all income, gains, tax and duties you’ve not previously told them about (Disclose)
  • make a formal offer
  • pay what you owe
  • help HMRC as much as you can if they ask you for more information

To benefit from the reduced penalties offered HMRC will take account of the level to which you have helped them and the accuracy of the information you provided.

1.5 What’s in it for me?

Regardless of whether the errors were due to misunderstanding the rules or deliberately avoiding paying the right amount it is better to come to HMRC and admit any failures and or inaccuracies rather than wait until HMRC uncovers those errors.

The Credit Card Sales campaign offers the best possible terms available to get your tax affairs in order. You can take advantage of these by notifying your intention to participate and make a full disclosure and payment.

When you make your disclosure you must tell HMRC how much penalty you believe you should pay. What you pay will depend on why you have failed to disclose your income. If you have deliberately kept information from HMRC you will pay a higher penalty than if you have simply made a mistake.

You may not have to pay any penalty at all but if you do it is likely to be lower than it would be if HMRC finds out you have not paid enough tax.

If you have completed your Income Tax Self Assessment or Corporation Tax Self Assessment tax returns within the appropriate time limits, but have made a mistake when declaring your income, the number of years you will need to pay for will depend on the reasons you are behind with your tax affairs. This can be up to either 4, 6 or 20 years.

If however you do not come forward and HMRC finds later that you are behind with your tax, it may be harder to convince them that it was not a deliberate act. The law allows HMRC to go back up to 20 years and in serious cases HMRC may carry out a criminal investigation.

This is an opportunity to stop worrying about what might happen; have certainty about what you owe and get things right for the future.

1.6 If you have undisclosed liabilities and choose not to disclose

HMRC is targeting tax evasion through Debit and Credit Card Sales and will use information it holds on its digital intelligence systems to identify taxpayers who might not have declared all their income. This will involve HMRC carrying out checks or enquiries to resolve. The customers involved will not then be able to make use of the opportunity offered as part of this campaign Where additional taxes are due HMRC will usually charge higher penalties than those available under the Credit Card Sales campaign. The penalties could be up to 100% of the unpaid liabilities, or up to 200% for offshore related income.

In serious cases HMRC may consider starting a criminal investigation, in line with their [criminal investigation policy[(http://www.hmrc.gov.uk/prosecutions/crim-inv-policy.htm).

2. How to make a notification and disclosure to HMRC

2.1 Notification

You must tell HMRC of your intention to make a disclosure. You need to do this as soon as you become aware that you owe tax on your undeclared income.

At this stage, you only need to tell HMRC that you will be making a disclosure.

You don’t need to provide any details of the undisclosed income or the tax you believe you owe.

You can tell HMRC about a disclosure you will be making:

  • about your own tax affairs or your company’s tax affairs (if you are a director, or company secretary)
  • on behalf of someone else (for example if you are a tax adviser or personal representative)

You can’t include details for more than one person and or company on a disclosure. For example if a husband and wife both have undisclosed income they must complete separate disclosures, each showing the share of the income they need to disclose. A separate notification is required for each person. Similarly if a disclosure is required for a company and for a director, this should be on two separate disclosures.

You can notify:

HMRC will note your details if you telephone or they will send an email if you notify online and agree to an electronic acknowledgement. Please be aware that your form will be sent over an internet channel which does not have security protection. Information you send to HMRC is at your own risk. Later, HMRC will write to you to confirm your unique Disclosure Reference Number to use whenever you contact them about the Credit Card Sales campaign.

You will also be given a Payment Reference Number to use when paying what you owe.

If after you have notified you realise you no longer need to make a disclosure you must tell HMRC by calling the Credit Card Sales Helpline on Telephone 0300 123 9272. If you don’t HMRC will take follow up action to secure a disclosure from you.

2.2 Disclosure

You can do this as soon as you have your Disclosure Reference Number but you must disclose within 4 months of the date you receive your notification acknowledgement.

You can make a disclosure:

  • about your own tax affairs or your company’s tax affairs (if you are a director, or company secretary)
  • on behalf of someone else (for example if you are a tax adviser or personal representative)

You can make your disclosure by:

If you are not submitting your form online you should post the completed disclosure form to:

HMRC Local Compliance Centres Credit Card Sales campaign S0790 Po Box 3900 Glasgow G70 6AA

When you send your disclosure you must pay what you owe.

Please make sure that HMRC receives your disclosure and payment by the date stated on your notification acknowledgement. If you cannot pay what you owe by the deadline given you must have made payment arrangements with HMRC (contact the Helpline Telephone: 0300 123 9272) by that date.

If you do not do this you will not be able to make a disclosure under the Credit Card Sales Campaign and will not receive the certainty of terms and conditions within it.

3. Preparing your disclosure

3.1 How to calculate what you owe

Depending on your circumstances this could be simple or complicated and you may want to seek independent professional advice. Although you have 4 months from the date you receive your notification acknowledgement to make your disclosure, you should start gathering together your information and records as early as possible. HMRC cannot provide advice on calculating how much you should pay.

You’ll need to work out the total income for each year you have previously failed to tell HMRC about. You don’t need to include any income in your disclosure that you’ve already declared. This is because tax should already have been paid on this income.

You will then need to deduct the allowable expenses from your total income in order to work out your taxable profit (“income”). Not all of the expenses you incur will be allowable as a deduction. You should not include any expenses in your disclosure that you’ve previously included in a tax return or earlier correction.

Once you have calculated the income you need to disclose, you will need to work out how much tax you owe on that income. The rates of income tax you will pay depend on how much income you earn above your Personal Allowance, which is an annual amount of tax free income.

If you have already received PAYE income and/or told HMRC about some other income and are now disclosing additional income for any year you need to make sure that you take this into account in your calculations.

If you or your partner are receiving or have recently made a claim for tax credits you should still make a disclosure but tick the appropriate box on your disclosure form. The information will be passed to the tax credit office to consider. You will be notified separately of any changes that may be required to the amount of tax credits you receive for the relevant years. If you have made a joint claim for tax credits you may need to tell your partner that the award may be adjusted as a result of your disclosure.

Companies (and other organisations including clubs, societies, associations and other unincorporated bodies.) will need to determine the amount of Corporation Tax to disclose on the understated profit arising from this undeclared income. The rate of Corporation Tax payable will depend on circumstances. You will have to consider notifying Companies House if you have submitted accounts that require amendment.

3.2 If you don’t have all the business records you need to make your disclosure

If your records are incomplete you should make your best estimate of the undisclosed income and gains and use this to make your disclosure. HMRC may ask you to explain how you have worked out any estimates you have used, so you need to keep your calculations.

If you have your bank statements for the period of your disclosure they will probably help. If you don’t have them HMRC recommends you contact your bank as soon as possible to get copies.

If you can’t get copy statements at all, you should work out your income by using more recent statements as a guide to your income and expenditure. HMRC may ask you to explain why you couldn’t get copy statements.

If you have not kept proper business records you should begin to do so immediately. This opportunity is your chance to put things right from now on. If HMRC finds in the future that you have failed to keep appropriate records, they can penalise you up to £3,000.

3.3 Income that should be included in your disclosure

A condition of taking part in the Credit Card Sales campaign is that you include all of the income you have previously not told HMRC about in your disclosure.

You need to tell HMRC about any income that has not been previously declared. The income you need to include in your disclosure will depend on the tax year it relates to and the reason why you have not told HMRC about this income before.

Income earned in either the current tax year or the year prior to the current tax year

Any income received in the current tax year should not be included in your disclosure. If you are not registered for Self-Assessment you will need to register now either for Income Tax or in the case of Companies you must give notice of coming within charge of Corporation Tax.

A tax return or notice to file a tax return will be issued to you shortly after the end of the current tax year. You should report this income on that tax return by the deadline. There are different deadlines for individuals and companies.

The income you received in the year prior to the current tax year will also need to be included on a tax return rather than in your disclosure. If you have submitted the previous year’s tax return you can make an amendment within 12 months of the statutory filing date’

Income tax returns

Income Tax returns usually need to be submitted by either the 31 October or 31 January following the end of the tax year, depending on whether the return is submitted online or not. It is therefore likely that for current and prior year, you will still have time to submit an accurate tax return including this income.

For income tax a tax year starts on 6th April each year and runs to the following 5th April. The current tax year is the year in which the current date falls.

For example if you are registered for Income tax self assessment and if today’s date is 12 November 2014 the current tax year starts 6 April 2014 and ends 5 April 2015. This income should be included on the tax return for tax year ending 5 April 2015 which must be filed online by 31 January 2016 or by 31 October 2015 if submitted in paper form. The income for the tax year ending 5 April 2014 should be submitted on a tax return online no later than 31 January 2015. The income for both years should not be included in the disclosure.

Income tax for tax year ended 5 April 2011 and later years

If you were registered for Self Assessment prior to tax year ending 5 April 2011 and have not submitted tax returns for this or any later year you should complete these and submit them rather than include the years in your disclosure. You will be liable for any penalties that are due for the late submission of these returns.

If you have not been issued with tax returns for tax year ending 5 April 2011 and later or have already submitted them and now wish to report previously undeclared income you can include income for these years in your disclosure. Remember that the income for both the current year and the year prior to that should not be included in your disclosure.

Income tax for tax year ended 5 April 2010 and earlier years

Income for tax years ended 5 April 2010 and earlier can be included in your disclosure.

Company tax returns

A Company’s tax returns should be submitted within 12 months from the accounting period end date. More information can be found on the internet the deadlines and requirements for Corporation Tax.

If your Company Tax returns are outstanding, you should file all outstanding tax returns that are within 4 years from the end of the accounting period. Income for earlier years can be included in your disclosure.

If your Company has come to within the charge to Corporation Tax and if today’s date is 12 November 2014 and your corporation tax accounting period ends on the 31 March 2015, you must pay the Corporation Tax for that period by 1 January 2016 and file your Company Tax Return for that period by 31 March 2016. The profits chargeable to corporation tax for the accounting period ended 31 March 2014 should be submitted on a tax return online no later than 31 March 2015. The profits chargeable to corporation tax for both years should not be included in the disclosure.

HMRC’s internet page Introduction to Corporation Tax will provide you with more information.

3.4 How many years will I need to include in my disclosure?

This depends on why things went wrong.

If you are taking part in the Credit Card Sales campaign you will know why you haven’t previously told HMRC about your income or paid the right amount of tax.

You will need to understand when you should have told HMRC that you were receiving this income as this will have a bearing on the number of years that you will now need to disclose.

HMRC also asks you to decide whether you made an error despite taking reasonable care, whether you were careless, or whether it was something you did deliberately. How much you pay will depend on the answers to those questions.

If you failed to notify HMRC that you had started in business

When you started to receive income, and you are an individual (including individuals within a partnership), the latest you should tell HMRC is 5 October after the end of the tax year for which you start to receive that income. If, for example, you have tax to pay on income in the tax year ended 5 April 2014, you need to let HMRC know by 5 October 2014.

HMRC sends a newly formed limited company form CT41G (Corporation Tax – Information for New Companies) within a few days of the company being registered at Companies House. This form is usually sent by post to your company’s registered office. However, even if you don’t receive this form you must still tell HMRC within three months of your company becoming active, for example by starting business activity or starting to trade. The best way to do this is to use HMRC’s online service.

If you failed to register for a Self Assessment tax return by the appropriate deadline you will have to pay HMRC what you owe up to a maximum of 20 years.

If you have taken reasonable care

If you registered for a Self Assessment tax return by the appropriate deadline, have taken care to make sure your tax affairs were correct but you have still paid too little, you will only have to pay HMRC what you owe for a maximum of 4 years. This means you:

  • will need to make sure that your tax affairs for the current and later tax years are accurately reported on tax returns by the appropriate deadlines
  • will need to make sure that your tax affairs for the year prior to the current tax year are reported on the tax return that was issued to you for that year by the appropriate deadline
  • have to complete the disclosure form and pay HMRC what you owe for the 3 years prior to this

If you were careless

If you registered for a Self Assessment tax return by the appropriate deadline but you have paid too little because you were careless, you will have to pay HMRC what you owe for a maximum of 6 years. This means you:

  • will need to make sure that your tax affairs for the current and later tax years are accurately reported on tax returns by the appropriate deadlines
  • will need to make sure that your tax affairs for the year prior to the current tax year are reported on the tax return that was issued to you for that year by the appropriate deadline
  • have to complete the disclosure form and pay HMRC what you owe for the 5 years prior to this

If you deliberately misled HMRC about this income

If you have deliberately paid too little tax you will have to pay HMRC what you owe for a maximum of 20 years.

3.5 Other liabilities you should include in your disclosure

Other Income liabilities including non- business income

You must include all income and gains in your disclosure where you have paid too little tax. This may include:

  • investment income not taxed before you receive it, for example, interest
  • taxed income where additional tax is payable.
  • Income from property or land rental etc (less the expenses relating to that income) however, if your only undeclared income is from residential letting you should use the Let Property campaign to disclose this.

Loans to directors – Corporation Tax Act 2010, Section 455

If you’re a company director and take money out of your company that’s not a salary or a dividend – over and above any money you’ve put in – you’re classed as having received the benefit of a director’s loan. If this applies, the company may have tax to pay.

When you pay off a director’s loan on which your company has paid Corporation Tax, your company may be able to reclaim that amount of Corporation Tax paid, you should contact the campaign helpline.

However, if you are disclosing on behalf of a company that is entitled to claim relief under Section 458 CTA 2010 Telephone: 0300 123 9272 immediately for an appropriate offer letter.

Capital Gains income

You must disclose all capital gains which you have not previously declared. For example, capital gains made on the disposal of investments, such as land, property, shares, stocks, bonds, goodwill.

A company will include its Chargeable Gains on its Company tax return.

Employer income

If you employed anyone, you may have to pay some tax and national insurance contributions (Pay As You Earn) in respect of what you paid to your employees. You need to include this on your disclosure form.

3.6 Other potential liabilities you can tell us about in your disclosure

You cannot provide details of the liabilities below on your disclosure form however please tick the relevant box in the other potential liability section of the form and follow the guidance contained within the disclosure form and below. The campaigns team will liaise with the relevant department to confirm you successfully resolved any issues regarding these liabilities.

VAT issues

If you want to make a disclosure of a VAT matter because:

  • you have exceeded the VAT threshold and need to register, then you can either use HMRC’s online services or make a postal application Most applications for VAT registration can be completed online but there are some circumstances where a postal application is required. For all standard registration applications, please send your completed form to the VAT Registration Service, Crown House, Birch Street, Wolverhampton, WV1 4JX
  • you have made an error on a VAT return you have submitted then you can correct certain errors, subject to conditions, by adjusting your VAT Return. Please refer to Notice 700/45 (July 2013) “How to correct VAT errors and make adjustments or claims”)
  • if you do not meet the conditions for making adjustments on the return then the adjustment must be made in writing. You can notify any error in writing including those eligible for adjustment on a VAT return. The simplest way is to use form VAT 652 ‘Notification of Errors in VAT Returns’

You can include the details in a letter instead and post to the:

VAT Error Correction Team HMRC Regian House James Street Liverpool L75 1AD

Class 2 National Insurance Contributions (NIC)

If you are self-employed but have not yet registered to pay Class 2 NIC you need to do so immediately so you do not lose out on future benefits.

Trusts, Inheritance tax and tax during Administration Periods

If you wish to make a disclosure of Inheritance Tax, trust or administration period liabilities please write to HMRC at

Trusts and Estates Risk Team Ferrers House PO Box 38 Castle Meadow Road Nottingham NG2 1BB

Tax Credits

What if you or your partner are receiving or have recently made a claim for Tax credits?

You should still make a disclosure but also tick the appropriate box on the disclosure form. The information will be passed to the Tax Credit office to consider. You will be notified separately of any changes that may be required to the amount of Tax credits you receive or have received for the relevant year(s).

If you believe you may have liabilities for any other taxes and or duties not mentioned above please ring the helpline for assistance.

3.7 Interest

HMRC charges interest from the date tax is due until the date it is actually paid. Interest is calculated on a daily basis. Any additional tax that is included in your disclosure will be late and so will attract an interest charge. If you fail to include the correct interest your disclosure will be rejected as it will be incomplete.

To assist individuals there is a 6 year tax, interest and penalty calculator and a 19 year interest and penalty calculator available to help you establish the correct amount of interest due. It should only be used if your tax affairs are straightforward and you are entitled to only basic personal allowances

Companies can refer to HMRC interest rates to establish the amount of interest payable.

3.8 Penalties

HMRC charges penalties on any additional tax due as a result of you having:

  • sent HMRC an incorrect tax return
  • not told HMRC that you have started to be liable to tax

HMRC does not charge interest on these penalties unless they are paid late.

The penalty is a percentage of the additional amount due. Penalties can be up to 100% of the tax liability. However, for the Credit Card Sales campaign, if you submit an accurate voluntary disclosure, the rates are usually 0%, 10% or 20% depending on the circumstances. Higher penalties of up to 200% can be charged for an offshore liability.

Penalties that apply to offshore income and gains depend on the category that the offshore territory falls into. This includes your disclosure. Penalties that apply to offshore can be higher. Please contact the helpline if your disclosure includes an offshore matter.

The tables below show the penalty HMRC will charge if you:

  • do take part in the Credit Card Sales campaign
  • don’t take part and HMRC later find that you have not told them about all your income and paid enough tax

Although the rate of the penalties will vary depending upon your circumstances, they will usually be lower if you take part in the Credit Card Sales campaign than they would be if you do not.

If you haven’t declared the correct tax payable to HMRC despite taking reasonable care with your tax affairs, you will not pay any penalties at all. HMRC does not expect many people’s circumstances to fall within this category.

If you haven’t paid enough tax despite taking reasonable care with your affairs or there is anything else you think HMRC need to consider concerning the penalties you have to pay, please phone the helpline before making your disclosure.

Penalty if you come forward in this Credit Card Sales Campaign

Penalties for making an inaccurate return

Circumstance Tax Years up to year ended 5 April 2008 or Accounting period ending on or before 31 March 2008 Tax years ending 5 April 2009 and later years or Accounting period beginning on or after 1 April 2008
You sent HMRC a return showing less tax payable than the correct amount because you had been careless No penalty No penalty
You sent HMRC a return knowing it showed less tax payable than the correct amount (You may have to pay penalties of up to 100% of the tax due if you tried to conceal the inaccuracy) 20% of the tax due 20% of the tax due

Penalties for failing to tell us about your liability to tax

Circumstance Tax Years up to 5 April 2009 or Accounting periods ending on or before 31 March 2010 Tax years ending 5 April 2010 and later years or Accounting periods ending on or after 1 April 2010
You started trading, made a gain, started letting property, or received other untaxed income and did not tell HMRC that you needed to make a return, but you weren’t deliberately trying to keep the information from HMRC 10% of the tax due 10% of the tax due or 0% if you advise HMRC within 12 months from when the tax first became unpaid
You deliberately failed to tell HMRC you had started trading, made a gain, started letting property, or received other untaxed income and needed to make a return. (You may have to pay penalties of up to 100% of the tax due if you tried to conceal the failure). 20% of the tax due 20% of the tax due

Penalty if HMRC finds out you have not paid enough tax

Please note higher penalties of up to 200% can be charged in relation to inaccuracies involving offshore matters.

Penalties for making an inaccurate return

Circumstance Tax Years up to year ended 5 April 2008 or Accounting period ending on or before 31 March 2008 Tax years ending 5 April 2009 and later years or Accounting period beginning on or after 1 April 2008
You sent HMRC a return showing less tax payable than the correct amount because you had been careless No Penalty Between 15-30% of the tax due
You sent HMRC a return knowing it showed less tax payable than the correct amount. (You may have to pay penalties of up to 100% of the tax due if you tried to conceal the inaccuracy). Up to 100% of the tax due Between 35-70% of the tax due

Penalties for failing to tell us about your liability to tax

Circumstance Tax Years up to 5 April 2009 or Accounting periods ending on or before 31 March 2010 Tax years ending 5 April 2010 and later years or Accounting periods ending on or after 1 April 2010
You started trading, made a gain, started letting property, or received other untaxed income and did not tell HMRC that you needed to make a return, but you weren’t deliberately trying to keep the information from HMRC Up to 100% of the tax due Between 20-30% of the tax due or 10% if you advise HMRC within 12 months from when the tax first became unpaid
You deliberately failed to tell HMRC you had started trading, made a gain, started letting property, or received other untaxed income and needed to make a return (You may have to pay penalties of up to 100% of the tax due if you tried to conceal the failure). Up to 100% of the tax due Between 35-70% of the tax due

You may have to pay penalties of up to 100% (200% for offshore related income) of the tax due if you tried to conceal the extent of the undeclared tax. If this applies to you please call the helpline on Telephone: 0300 123 9272.

If HMRC thinks that you have not included the right penalty in your disclosure, they may reject it.

Individuals can use HMRC calculators to help you calculate the interest and penalties due on the income you are including in your disclosure.

If you are making a multiple year disclosure, you should include all years in a single calculation and not calculate each year on a separate, individual basis.

Use the tax and interest calculator (PDF 69K) to calculate what you owe going back 6 years. This will also help you in calculating the tax you owe. It should only be used if your tax affairs are straightforward and you are entitled to only basic personal allowances.

Use the 19 year calculator (PDF 143K) if you need to include more than 6 years in your disclosure. This will help you to calculate the interest and penalties you owe for the last 19 years. This calculator is for interest and penalty calculations only and will not help you calculate the income tax due.

Companies can refer to Corporation Tax rates and HMRC interest rates to establish the amount of tax and interest payable. Penalties can be calculated by reference to the tax understated and applying the appropriate penalty percentage as shown in the above table. Suggested steps to calculate the amount to be included in the disclosure are:

  • step 1 – Calculate additional Corporation Tax liability
  • step 2 – refer to Interest table
  • step 3 – apply correct interest to liability calculated in step 1
  • step 4 – Apply appropriate penalty to liability calculated in step 1

When HMRC checks your disclosure they will consider whether the penalty you have applied is reasonable. There is a space on the disclosure form where you can provide an explanation to assist them in reaching their decision. HMRC may need to contact you to ascertain the reasonableness of the penalty if no explanation is provided. If HMRC think the penalty applied is too low they may need to carry out a further check of your tax affairs. For example, HMRC may find it difficult to accept, without further enquiry, that someone in business for many years, earning significant amounts without telling HMRC, has not done this deliberately.

3.9 The Declaration

This is a very important part of your disclosure. You should only complete the declaration once you are certain that the disclosure is correct and complete and that you understand why you have been asked to include penalties in your disclosure.

3.10 The Offer

It is a condition of using the Credit Card Sales campaign that you make an offer for the full amount of everything you owe. The offer, together with HMRC’s acceptance letter to you will create a legally binding contract between you and HMRC. There is a letter of offer included in the disclosure forms which you should complete.

However, if you are disclosing on behalf of a company that is entitled to claim relief under Section 458 CTA 2010 Telephone: 0300 123 9272 immediately for an appropriate offer letter.

4. Paying HMRC

4.1 When you will have to pay

Unless you have contacted HMRC to agree additional time to pay, you should send your payment at the same time as you send your disclosure, but no later than the 4 month deadline given on your notification acknowledgement letter.

4.2 Payment Methods

Whichever way you pay, please make sure that you quote your Payment Reference Number. HMRC accepts payment by a range of methods but recommends that you make your payment electronically. Electronic payments are more efficient, secure and safer than payment by post.

4.3 If you cannot pay the full amount

HMRC expects you to pay what you owe when you make your disclosure.

If for some reason you cannot pay the full amount, you will need to let HMRC know as soon as possible and before you send in your disclosure. To do this, you should contact the helpline on Telephone: 0300 123 9272 Lines are open Monday to Friday 9:00am to 5:00pm.

When you phone, HMRC will want to talk to you about your current financial position so they can tell you what they think you should pay and when. To help HMRC decide, you will need to tell them:

  • your Disclosure Reference Number
  • how and when you intend to pay HMRC what you owe
  • what your current weekly/monthly income and outgoings are
  • what you own, including your home, other property/land, vehicles, investments, money in the bank etc
  • what you owe, including mortgages, loans, credit cards

If you cannot pay the full amount do not submit your disclosure or payment until you have spoken to HMRC.

5. After HMRC receives your disclosure

5.1 Accepting your disclosure

HMRC anticipates that the vast majority of disclosures will be accepted. If after checks HMRC is satisfied that you have made a full disclosure, they will accept it as quickly as possible.

5.2 Acknowledging your disclosure

When they receive your disclosure, HMRC will send you an acknowledgment as soon as possible. HMRC will then consider the disclosure under the terms of the Credit Card Sales campaign. If you haven’t received an acknowledgement within 2 weeks of sending your disclosure, please telephone the Credit Card Sales campaign Helpline on Telephone: 0300 123 9272.

HMRC expects most disclosures to be self explanatory but they may need to contact you or your tax adviser to clarify any points. You may also be asked to provide evidence of your circumstances to satisfy HMRC that your disclosure is complete. Your full co-operation is one of the conditions of using this opportunity and failure to co-operate may jeopardise acceptance of your offer.

5.3 Considering your disclosure

HMRC will review all disclosures. If after those checks are completed HMRC decide to accept your disclosure they will send you a letter accepting your offer. If HMRC cannot accept the disclosure they will contact you. If following their enquiries HMRC finds that a disclosure is materially incorrect they will seek significantly higher penalties. It is also possible that in exceptional circumstances an incomplete disclosure may be considered under HMRC Criminal Investigation Policy. In such cases the material in the disclosure could be used as evidence.

5.4 Disclosures that are unlikely to be accepted through the Credit Card Sales campaign

Certain disclosures are unlikely to be accepted under the Credit Card Sales campaign.

Disclosures that are found to be materially incorrect or incomplete when checked by HMRC are unlikely to be accepted under the Credit Card Sales campaign.

Also unlikely to be accepted are disclosures from customers where HMRC has opened an enquiry or compliance check before the customer has notified their intention to submit a disclosure under the campaign. Those who want to disclose liabilities under these circumstances should tell the person conducting the enquiry. A full and early disclosure will influence the amount of penalty HMRC seeks in the ongoing enquiry or investigation.

Instances involving disclosures where HMRC believes the money that is the subject of the disclosure is the proceeds of serious organised crime are not likely to be accepted. Examples of this include VAT fraud, VAT bogus registration fraud, organised tax credit fraud and instances where there is wider criminality (such as an ongoing police investigation).

Disclosures will not be accepted where a person’s inaccuracy or failure was a result of a deliberate action which they then tried to conceal.

An important factor for HMRC in deciding if they will carry out civil or criminal investigations into cases of fiscal fraud is whether the taxpayer(s) has made a complete and unprompted disclosure of any amounts evaded or improperly reclaimed. Whilst HMRC would consider each case on its merits a complete and unprompted disclosure would generally suggest that a civil (rather than criminal) investigation was appropriate.

Also, if you were eligible for any past HMRC disclosure opportunity and you did not disclose at that time, HMRC may find it hard to accept that anything you disclose through the Credit Card Sales campaign was not a result of something you did deliberately. HMRC would expect you to calculate your penalty and the number of years you should pay to reflect deliberate action. If you do not, HMRC may not accept your disclosure. You will be in this category if you have not yet come forward and would have been covered by a previous campaign.

5.5 If you disclose very serious tax problems

HMRC can’t offer immunity from prosecution but an important factor when they are deciding whether to carry out criminal investigations into cases of tax fraud is whether you have made a complete and unprompted disclosure of any amounts evaded or improperly reclaimed.

5.6 If you leave something important out of your disclosure

If after submitting your disclosure you realise you have missed something out, you should immediately contact HMRC to make an amendment. You can do this by contacting the helpline on Telephone: 0300 123 9272 or by forwarding your amendment in writing to the following address:

HMRC Local Compliance Centres Credit Card Sales campaign S0790 Po Box 3900 Glasgow G70 6AA

If HMRC receives information indicating that your disclosure was incorrect, they have the right to look at your tax affairs again. HMRC may write to you about the information they have received and if necessary, will send you assessments to collect any extra tax due. These penalties are likely to be higher than those offered by the Credit Card Sales campaign.

5.7 Information received after disclosure accepted

HMRC will continue to seek new information. They will use it to identify customers where a disclosure should have been made or where the disclosure made is not what was expected based on the information HMRC holds.

5.8 If I disclose this liability could HMRC publish details about me?

In certain circumstances HMRC is able to publish the details of those penalised for deliberately failing in particular tax obligations. If you come forward as part of this campaign you will earn the maximum reduction of any relevant penalties for the quality of disclosure, and HMRC won’t publish your details if you do all of the following:

  • notify HMRC that you are going to make a disclosure
  • make a full disclosure including full payment of tax owed which proves to be both accurate and complete before the deadline you are given for doing so
  • cooperate fully with HMRC if they ask you for any further information

HMRC may include you in a list of deliberate defaulters if you don’t follow these steps.

5.9 As an officer of the company could I be liable to pay a penalty

A company officer or officers may be liable to pay part, or all, of a company’s penalty for a deliberate inaccuracy, failure to notify or wrongdoing but only where the inaccuracy, failure or wrongdoing was attributable to the officer or officers.

And either the officer gained or attempted to gain personally from the offence, or the company is, or is likely, to become insolvent.

6. Getting things right for the future

Once you have submitted your disclosure HMRC expects you to keep your tax affairs in order in the future. This means that you should continue to accurately declare your income and gains for those years that fall after the latest year you include in your disclosure. You should ensure any tax returns that are issued to you are returned with accurate information by the appropriate deadlines.

7. General information

7.1 Help and advice

If you have any questions not covered by this guide please phone the Credit Card Sales campaign Helpline on Telephone: 0300 123 9272. Lines are open Monday to Friday, 9am to 5pm.

Further guidance on Self Assessment for income tax and Self Assessment for corporation tax is also available.

7.2 Customers with particular needs

If you need extra help to deal with the Credit Card Sales campaign Team please get in touch. HMRC can help if:

  • english is not your first language
  • you want a copy of this guidance in Welsh
  • you would like HMRC to use a certain format to communicate with you – for example braille or Text Relay
  • you would like a copy of this guidance in audio or large print

Contact the helpline on Telephone: 0300 123 9272 or +44 300 123 9272 if dialling from outside the UK (Monday to Friday, 9am to 5pm).

If you use Text Relay by Textphone, please dial 18001 + number. If you use Text Relay by Telephone please dial 18002 + number.

HMRC recognises that the above options might not meet the needs of some of their customers. If you believe that you require additional support and advice, you can contact the needs enhanced support services.

7.3 Your rights and obligations

HMRC’s customer charter (called Your Charter) explains what you can expect from HMRC and what HMRC expects from you.

7.4 What if you are unhappy with HMRC’s service?

If you are unhappy with HMRC’s service please phone the Credit Card Sales campaign Helpline on Telephone: 0300 123 9272 or write to HMRC at the address below:

HMRC Local Compliance Centres Credit Card Sales campaign S0790 Po Box 3900 Glasgow G70 6AA

7.5 Privacy and confidentiality policy

The full protection of the Human Rights Act will continue to apply to you and HMRC has a strict policy regarding the privacy and confidentiality of customers’ personal information.

HMRC’s privacy policy in the Personal Information Charter.

7.6 Data Protection Act

HMRC is a Data Controller under the Data Protection Act 1998. HMRC holds information for the purposes specified in their notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.

HMRC may get information about you from others, or they may give information to them. If HMRC does, it will only be as the law permits to:

  • check the accuracy of information
  • prevent or detect crime
  • protect public funds

HMRC may check information they receive about you with what is already in their records. This can include information provided by you, as well as by others such as other government departments or agencies and overseas tax and customs authorities. HMRC will not give information to anyone outside HMRC unless the law permits them to do so.

For more information see HMRC’s Data Protection – Information Charter.

Contents

Help us improve GOV.UK

Don’t include personal or financial information, eg your National Insurance number or credit card details.

What you were doing [          ]What went wrong [          ]

Send

Services and information

Departments and policy

Support links

Open Government Licence

All content is available under the Open Government Licence v3.0, except where otherwise stated

© Crown copyright

Autumn Statement 2014: 16 things you should know

Autumn Statement 2014: 16 things you should know

**UPDATE** Click here to download our detailed report in pdf format.

From:HM Treasury and The Rt Hon George Osborne MP

First published: 3 December 2014

The Chancellor has presented the Autumn Statement to Parliament – here’s a summary of what was announced.

1. The UK has the fastest growth in the G7 and the deficit is forecast to be halved – but there is still more to do

The UK has the fastest growth in the G7, there are more people in work than ever before, and the deficit is forecast to fall by a half by the end of 2014-15. But there are still difficult decisions ahead to continue to lower the deficit and to cut debt.

Access the Autumn Statement document in full, or all our infographics that explain some of the key measures.

2. Stamp duty will be cut for 98% of people who pay it – only the highest value residential properties will pay more

Under the old rules, you would have paid Stamp Duty Land Tax at a single rate on the entire property price. Now, you will only pay the rate of tax on the part of the property price within each tax band – like income tax. Under the old rules, if you bought a house for £185,000, you would have had to pay 1% tax on the full amount – a total of £1,850. Under the new rules you don’t start paying tax until the property price goes over £125,000, and then you only pay tax on the price of the property within the tax bands over that price. Under the new rules, you’ll pay nothing on £125,000 and 2% on the remaining £60,000. This works out as £1,200, a saving of £650. This will make the system fairer, and means stamp duty will be cut for 98% of people who pay it.

Our stamp duty factsheet explains this policy in more detail. You can also access our infographic which gives some examples of how the new system will work.

3. The tax-free personal allowance is being increased by a further £100 in April 2015, to £10,600

The personal allowance – the amount you earn before you have to start paying income tax – will be increased again from £10,000 to £10,600 in 2015 to 2016. Typically, someone earning between £10,600 and £42,385 will be £825 better off by 2015-16 as a result of increases in the tax-free personal allowance since 2010. Even while making difficult decisions to fix the economy, since 2010, the government has cut income tax for 26.7 million taxpayers.

4. Children will be exempt from tax on economy flights

This will apply for under 12s on flights from 1 May 2015, and for under 16s from 1 March 2016 – saving an average family of four £26 on a flight to Europe and £142 on one to the US. The government expects these changes should be clear to consumers, and will consult on making sure that the tax is displayed on ticket prices.

5. Spouses will inherit their partner’s individual saving account (ISA) benefits after death

Currently, if someone passes away they can’t pass on their ISA to their spouse, even if they have saved the money together. 150,000 people a year lose out on the tax advantages of their partner’s ISA when their partner passes away. From 3 December 2014, if an ISA holder dies, they will be able to pass on their ISA benefits to their spouse or civil partner via an additional ISA allowance which they will be able to use from 6 April 2015. The surviving spouse or civil partner will be allowed to invest as much into their own ISA as their spouse used to have, in addition to their normal annual ISA limit.

6. £2 billion for the NHS to do more

The government is providing £2 billion of additional funding for frontline NHS services in England in 2015-16. This is part of a multi-year £3.1 billion UK-wide investment in the NHS. £1 billion will fund advanced care in GP practices over four years in England; this has come from fines collected by the Financial Conduct Authority from five banks for failures in foreign exchange trading. In England, at least £15 million will go to research in dementia, £150 million over five years will be invested to support young people with eating disorders. £200 million will go to develop new ways of caring for patients. £1.5 billion will go to local NHS services next year. A 0-2 year old early intervention pilot has also been announced to prevent avoidable problems later in life. The government will work with four pilot local authorities to draw on the success of the Troubled Families programme.

7. Business rates will be cut and capped, with extra Help for the High Street

To support small businesses in local communities, the ‘high street discount’ for around 300,000 shops, pubs, cafes and restaurants will go up from £1,000 to £1,500, from April 2015 to March 2016. This is in addition to doubling Small Business Rate Relief for a further year which means 380,000 of the smallest businesses will pay no rates at all. The government will also continue to cap the annual increase in business rates at 2% from April 2015 to March 2016 – this will benefit all businesses paying business rates. Finally, the government will extend the transitional arrangements for smaller properties that would otherwise face significant bill increases due to the ending of ‘transitional rate relief’.

Access our infographic on full employment, and the government’s long term economic plan.

8. No more employer National Insurance contributions (NICs) on apprentices under 25

To make it cheaper to employ young people, from April 2016 employers will not have to pay National Insurance contributions (NICs) for all but the highest earning apprentices aged under 25. This is in addition to the announcement made at Autumn Statement last year that employers won’t have to pay NICs on under 21s from April 2015. These are part of the government’s wider ambition to have the highest employment rate in the G7.

9. Loans for postgraduate masters

From 2016-17, income-contingent loans will be available for postgraduate taught masters courses in any subject for those under the age of 30. The loans, of up to £10,000, will beat commercial rates. This will mean that more people will be able to take advantage of postgraduate courses, including those from low income backgrounds.

10. £5.9 billion sustained investment in science

This will make sure the UK remains the best place in the world for science and research, and includes £95 million to take the lead in the next European mission to Mars. £235 million will also go on a new science research centre called the Sir Henry Royce Institute in Manchester and £20 million will go towards a research centre on ageing, in Newcastle.

11. Long term plans for infrastructure

This includes £15 billion on roads, nearly £6 billion funding for local road improvements, and over £2.3 billion towards over 1,400 flooding and coastal erosion protection schemes.

12. The government is clamping down on tax avoidance by multinational companies

Currently some large multinational companies divert profits abroad through complicated business structures, such as the so-called ‘double Irish’, in order to avoid paying taxes. The government is introducing a new tax to counter this. The ‘diverted profits tax’ will apply to a company’s profits that have been diverted from the UK through complex arrangements such as these, and will apply to both UK and foreign multinational companies. So if a company conducts a lot of activity in the UK – sales, for example – but can avoid paying corporation tax by moving profits generated in the UK to other countries through the manipulation of the international tax rules, the UK will now be able to tax those profits at a rate of 25%. This will be introduced from April 2015.

13. Banks will increase corporation tax payments

Some banks made large losses during the financial crisis, and subsequent misconduct and the costs associated with mis-selling scandals. These losses are now being used by banks to eliminate corporation tax payments on current profits. It is unsustainable that some banks will not be making corporation tax payments for another 15 to 20 years. So from 1 April 2015, the government will therefore restrict the amount of banks’ profits that can be offset by carried forward losses to 50%, increasing their contribution to public finances through their tax payments.

14. Creative sector tax reliefs will be extended to children’s TV

Following on from the success of the film, high end TV, animation, video games and theatre tax reliefs, a new children’s TV tax relief will be introduced from April 2015. This will counteract a decline in investment in children’s TV in the last decade. Eligible companies will be able to claim 25% of qualifying production spending back through the relief. The government will also consult on introducing a new orchestra tax relief in April 2016.

15. A further £7 billion announced to build a Northern Powerhouse

This money will be spent on connecting up the North to create a powerhouse by investing £6 billion on roads to reduce jams, introducing new modern trains and 20% more capacity to end overcrowding, developing HS3 to make east-west travel faster, and doubling the number of northern cities to benefit from the government’s superfast broadband programme. Funding will also go on building the North’s strengths in science, with major new science investments across the North.

Access our infographic which explains how the government is building a Northern Powerhouse.

16. Search and rescue and air ambulance charities will be eligible for VAT refunds from 1 April 2015

From 1 April 2015, search and rescue and air ambulance charities will be eligible for VAT refunds, in recognition of the vital role they play in providing support to the emergency services. The government will also meet the costs the hospice sector faces from VAT.

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)

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.

Company cars – advisory fuel rates from 1 March 2014

Company cars – advisory fuel  rates from 1 March 2014

From: Ben Davies

20130830 blue fuel

These rates apply to all journeys on or after 1 March 2014 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.

Engine size Petrol LPG
1400cc or less 14p 9p
1401cc to 2000cc 16p 11p
Over 2000cc 24p 17p
Engine size Diesel
1600cc or less 12p
1601cc to 2000cc 14p
Over 2000cc 17p

Hybrid cars are treated as either petrol or diesel cars for this purpose.

20131210 Porsche zoom

These rates are calculated from the fuel prices in the tables below:

Petrol
Engine size (cc) Mean MPG Applied MPG Fuel price (per litre) Fuel price (per gallon) Pence per mile AFR
up to 1400 51.06 43.4 129.2 587.2 13.5 14
1401 – 2000 42.24 35.9 129.2 587.2 16.4 16
over 2000 28.63 24.3 129.2 587.2 24.1 24
Diesel
Engine size (cc) Mean MPG Applied MPG Fuel price (per litre) Fuel price (per gallon) Pence per mile AFR
Up to 1600 62.36 53.0 136.8 621.9 11.7 12
1601 to 2000 53.25 45.3 136.8 621.9 13.7 14
Over 2000 43.30 36.8 136.8 621.9 16.9 17
LPG
Engine size (cc) Mean MPG Applied MPG Fuel price (per litre) Fuel price (per gallon) Pence per mile AFR
up to 1400 40.8 34.7 71.5 325.0 9.4 9
1401 – 2000 33.8 28.7 71.5 325.0 11.3 11
over 2000 22.9 19.5 71.5 325.0 16.7 17

Notes:

  1. Mean mpg – miles per gallon – from manufacturers’ information, weighted by annual sales to businesses (Fleet Audits average, 2010-2012).
  2. Applied mpg – adjusted downwards by 15 per cent to take account of real driving conditions and lower fuel economy for older cars.
  3. For LPG, mpg is assumed to be 20 per cent lower than for petrol due to lower volumetric energy density.
  4. Department for Energy and Climate Change latest petrol and diesel prices (17 February 2014), LPG (UK Average) from AA website (January 2014).

Will the rate per mile figures change if fuel prices go up or down?

Since March 2011 the rates have been reviewed four times a year. Any changes take effect at the beginning of each calendar quarter     – on 1 March, 1 June, 1 September and 1 December and will be published  the HM Revenue & Customs (HMRC) website shortly before the date of change.

In view of the increased frequency of review, HMRC will no longer consider changing the rates if fuel prices fluctuate by 5 per cent from the published rates.

Employers should make themselves aware of any changes by referring to this page in late February, May, August and November each year. It is the primary source of information.

VAT

HMRC will also accept the figures in the table for VAT purposes though employers will need to retain receipts in line with current legislation.

Further information is available for: