The announcement that Mr Gaines-Cooper has lost his case at the Supreme Court last week has resulted in a number of headlines about the issue. The case went on for a long while, arguing that mere day counting for determining an individuals tax residency status is not enough and the IR20 Residents and non-residents leaflet should be looked at as a whole. They key point that was determined was the an individual should have a 'distinct break' in the pattern of their life in the UK in order to become non-resident. It is at this point that the day count is considered when looking at an individuals UK residency status.
HMRC has launched a campaign to recover unpaid tax from health professionals. 2,500 doctors and dentists have received a letter asking them to come forward within 21 days and confirm their tax liabilities. If the warning is ignored they may incur significant charges, or be referred to the Criminal Investigations department.
If you received a penalty letter from HM Revenue & Customs then do not panic. HM Revenue & Customs have admitted that over 17,000 final reminder letters have been sent out in error. It would appear from reports that I have read that the incorrect notices relate to individuals who made their payments in December but had yet to be allocated correctly on HM Revenue & Customs system.
It was announced in the budget that the tax free personal allowance will be increasing to £9,205 from 6 April 2013. This is a £1,100 rise on the already announced 2012/2013 allowance of £8,105. It is proposed that this increase will bring some 840,000 people out of income tax altogether. Whilst this is good news for lower paid individuals, people earning over £42,000 will only see one quarter of this benefit as the amount of earnings being taxed at 20% is reducing which will remove the majority of this benefit.
One of the biggest changes announced was the way that Child Benefits are to be withdrawn. As part of the budget the government have reintroduced the availability of claiming Child Benefits for households where someone earns up to £60,000. The amount of Child Benefit will be gradually reduced by way of an income tax charge where the individual earns between £50,000 and £60,000 per annum.
HMRC have launched a tax calculator app that can be used to estimate the amount of Income Tax and National Insurance you can expect to pay on your income. It will also tell you how this money is expected to be spent by the government. The app is free to download and is part of an initiative that will see the government sending all tax payers individual statements about how much they have contributed to individual government departments from 2014-2015.
Our Tax Partner, Bryan Elkins, features in the January edition of All About Horsham magazine. He provides an interesting review of the Chancellor’s Autumn Statement and looks at what sort of impact new measures could have on individuals. Bryan covers issues including the tax free Personal Allowance and Child Benefit.
HMRC have announced a new campaign which allows tax payers who have not completed their tax returns up until 2011-12. By registering for the campaign the level of penalties payable should be substantially reduced. If you know you owe tax and cannot afford to pay it all now, there are dedicated helplines which may allow you to negotiate a payment term with HMRC. Individuals who haven’t submitted prior year returns need to register with HMRC from now until 15 October 2013 in order to take advantage of the scheme. All returns must be submitted and outstanding liabilities paid by the October deadline.
With the introduction of the child benefit charge, the number of individuals who are now within the self-assessment system is ever increasing. The deadline for filing a 2012/13 electronic return is 31st January 2014, with any outstanding tax liabilities also being due by this date. The deadline for filing a paper return was 31st October 2013.
In the recent case of Cotter v HMRC, the Supreme Court found that where the taxpayer had included information in his tax return that did not feed into the year’s calculation, HMRC were not obliged to give effect to it. As Mr Cotter had not calculated the tax due in his reurn, HMRC were not required to include a claim for loss relief in the earlier year’s assessment.
Following the Office of Tax Simplifications review of employee benefits and expenses a recommendation has been made to introduce a new single tax code for homeworkers, including freelancers. This will distinguish between individuals who work from home because they can, and those who have a genuine business need to do so.
The Low Income Tax Reform Group (LITRG) has warned taxpayers when filing online Self-Assessment returns to be wary of commercial Self-Assessment tax websites that charge to forward the return onto HMRC.
The government has now concluded its consultation on remittance basis flexibility. The consultation, which was announced in the 2014 Autumn Statement, looked at setting a minimum claim period for the remittance basis for non-domiciled individuals (“non-doms”). It has been decided to leave the existing rules unchanged, allowing non-doms to continue to choose from year to year whether to claim the remittance basis or not.