COLLECTING TAX DEBTS THROUGH PAYE
Over recent years, HMRC has concentrated its debt collection resources, out of necessity, on high-value debts. Unsurprisingly, say HMRC, this has led to a considerable increase in the number of small debts, particularly those less than £1,000 in value. In most cases, the low value of these debts meant that taking action to enforce their payment would have been inappropriate.
However, the result of all this is that more tax debts will be reflected in your Code Number used by your employer. Specifically the intention is to increase the maximum amount that can be coded out from £2,000 to £3,000. This will clearly ensure that more people with small debts can benefit from this collection method, and HMRC can direct its resources to those who deliberately choose not to pay tax.
Equitable Liability was a little known practice in which HMRC accepted the evidence of time-barred returns, accounts, claims etc where there was a tax debt but no longer any legal right to adjust the liability. The amount of the legal liability was not actually amended, but HMRC agreed not to pursue the difference between the original liability and the revised amount.
Following consultation, equitable liability has been replaced from 1 April 2011 by a new and statutory special relief. This is welcome news and we will always look to claim the relief when the circumstances are right and proper.
TAX CREDIT CLAIMS
We constantly make sure we stay up to date with changes in law and practice when we act on your behalf to claim tax credits. To help us, and indeed help you in cases where you need to deal with tax credit issues yourself, we will be using a valuable new tool in the shape of a new website: www.benefits.org.uk
This is a joint venture between the Low Income Tax Reform Group (LITRG) and rightsnet, who provide information on social welfare law. This is a source of invaluable information, with LITRG once again coming to the rescue for so many people.
CALLING ALL RESTAURANT OWNERS
HMRC has announced the use of specialist teams to focus on particular trades and areas in the near future.
The first such task-force will target those in the restaurant trade, beginning with those in London before covering Scotland and North West England. This new approach is clearly an attempt to use HMRC’s resources more effectively in their continuous quest to collect more tax (not forgetting of course that their real role is to make sure a taxpayer pays the right amount of tax – no more and no less).
The danger is a possible gung ho approach which makes unwarranted assumptions. If you are in this trade we really should be having a good look at your business records to make sure all is well and that HMRC, in their haste, do not come to the wrong conclusions from a cursory examination of your records.
THE TAXMAN HAS SEEN THE LIGHT AT LAST!
Two useful developments have occurred on the tax admin front. Firstly, HMRC intend to scan incoming post. This will be introduced in phases during 2011/12.
The main benefits claimed by HMRC are pretty obvious, and if all turns out well it will make life easier.
• Scanning will ensure documents get to the relevant HMRC caseworker as quickly as possible.
• By assigning paperwork to cases electronically, HMRC avoid the need for manual distribution of letters and documents received by caseworkers.
• HMRC will be able to handle our calls to the caseworker about the case, without the delay of locating original paper copies.
The second development involves piloting real-time information from next April. This will enable volunteer employers to use the new system which, if all goes well, will become compulsory for all employers from October 2013. Real-time Information is intended to support improvements to the PAYE system, making it more accurate for taxpayers and easier for employers and HMRC to administer. HMRC say we all need a PAYE system that can meet the demands of the 21st century workplace and ensure that the tax system works better. We would all echo that, and let’s hope this is the answer.