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Business Alert 22 April 2008 |
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Welcome to Moore Stephens’ Business Alert Service, designed to help you keep up-to-date with business and tax legislation. The service provides details of key changes, issues and opportunities, and includes suggested action and links to more information.
To receive these Business Alerts automatically, email businessalerts@moorestephens.com.
NEW TAX PENALTY REGIME COMMENCES
The tax authority is in the process of modernising the administration of the tax system, including enforcement and collection of tax. Part of this involves restructuring tax penalties, beginning with those in relation to underpaid tax as a result of an error or omission on a return. The new penalties will affect all taxes eventually, but the new regime which commenced on 1 April 2008 applies to income tax, corporation tax, VAT and payroll. The penalties are stepped according to the behaviour of the taxpayer, and in particular whether in the view of the tax authority the taxpayer took “reasonable care” with his tax affairs. Guidance has now been issued describing what is viewed as reasonable care, and more will be issued soon to help taxpayers understand what is required of them.
WORKING FROM HOME?
When an employee works from home under what are termed “homeworking arrangements”, which may be in place for the convenience of either the employer or the employee, then a contribution to the costs may be made by the employer. There is a recommended rate, which has increased from £2 per week to £3 per week from April 2008. Alternatively, the employer may reimburse a greater sum, provided this meets only the additional costs incurred by the employee as a result of working from home. Employers would in practice need to agree a dispensation for sums greater than the recommended amount in order to pay without deducting tax and NIC from the payment.
ONLINE FILING – PAYROLL
Employers are being encouraged to file all payroll forms online, not just year end forms. From April 2009 there will be a requirement for forms P45 and P46 to be filed online by all employers with 50 or more employees. However, the major upgrade of services that took place in April 2008 has left a problem with form PENNOT, which will be replaced by a modified P46(Pension) later this year. Employers cannot file PENNOT online until this problem has been fixed, which is expected to be by the end of April. There is also news of a new employer online service which will go live in October 2008. This will entail deleting certain information held which is unsubmitted or was submitted using HMRC software prior to 2005. Employers may need to review their records on the HMRC system in case they wish to archive certain data before October 2008.
We believe the information in this Business Alert to be correct at the time it was sent, but cannot accept any responsibility for any loss occasioned to any person as a result of action or refraining from action as a result of any item herein.
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