Steven Mugglestone

The more I learn, the less I know

Posts Tagged ‘HMRC

Call Paddy Power it’s McGregors 2012 Budget Predictions:

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Call Paddy Power it’s McGregors 2012 Budget Predictions

We have already given our top tax tips for 2012, without moving to Switzerland as well as reminding everyone of the tax increases for 2012 already on the books, but now we are on a run up to the budget for March 2012.  So if you are betting people, please feel free to see what odds you can get on our predictions below.

According to the press, this Budget will focus on growth and supporting and directing the British business world into pulling the UK away from a double dip recession.  The budget will also be in the international spotlight from the likes of Moody’s, Fitch and Standard and Poor’s, those organisations that most people have never heard of until the news discusses state credit ratings and a focus on the UK retaining our AAA credit rating.

In the main, all the tax rates for 2012/13 have been set. The reduction in corporation tax for large companies continues to 25% from April 2012 whilst income tax rates show no sign of doing the same. As the news now reports, the Government considers that the 50% tax rate to be temporary, but there are no intentions to reduce this any time soon.

There may be targeted but small tax breaks for the most vulnerable sections of society including families on low incomes and the elderly but there will be a continued focus on anti-avoidance measures including a clampdown on stamp duty land tax avoidance.

For those who have undertaken any tax avoidance strategies
Our advice is always to engage the support of an established firm of chartered accountants for all tax advice, but if you have undertaken any scheme etc., talk to us or other firms that will support you in any of these areas.  We have seen a proliferation of tax boutiques and brokers “selling” tax avoidance structures, over a number of years, who then walk away from any future support once they have earned their commissions from the sale.  If you have been sold any of these structures by brokers and tax boutiques, our advice is to talk to us and we will help and support you in your future discussions with HMRC.

From what we know so far, our key observations, predictions and advice, therefore, to SME and owner managed businesses, based on what has largely already been leaked and/or discussed about the budget is as follows:

Look at your capital requirements NOW and consider accelerating expenditure to March 2012
Capital Allowances are also set to reduce – the Annual Investment Allowance (AIA) will decrease from £100K to £25K from April and annual writing down allowances will reduce by 2% across the board. There have been calls to retain the AIA at the current level as we would not be surprised if there was a stay of execution – perhaps a deferral for a further 12 months.

Do not miss out on R&D tax relief
We have said this on numerous occasions, and pointed out that 75% of Accountants do not claim enough legitimate tax relief or their clients, contact us and/or review what you do in respect of research and development.  The definition is wider than you think and there is significant tax savings to be obtained.  R&D relief will increase again from April 2012 to 225%. The Government is keen to encourage the generation and retention of intellectual property in the UK and we expect this theme to continue. The Patent Box (10% tax rate for IP profits) is due to be introduced from April 2013 and this will complement the R&D regime, but we don’t expect any further changes to be announced in this area at the moment.

Competitive UK Plc
The Government will want to continue making the UK an attractive place to do business and in order to do that it has already set out a corporate tax road map around controlled foreign companies and the patent box regime. The Chancellor will reiterate these changes but may announce minor tweaks in response to consultation.

EIS will be a good, and perhaps an easier alternative to bank finance
There will be a relaxation in the criteria around Enterprise Investment Schemes (EIS) and the introduction of SEIS (a similar scheme aimed specifically at start-ups and seed capital) – all of which is designed to help businesses raise finance. We may see announcements around simplifying the processes around EIS.

Pension Tax Relief
There is speculation that the Government will limit pension tax relief to the basic rate of 20% in the March Budget, so it is advisable to take advantage of the rule that allows individuals to receive any tax relief which hadn’t been claimed in the previous four years.

This rumour, however, has appeared before many of the last budgets. This time, however, it appears to have more support from the Liberal Democrats.  If this change occurs it will affect the pension contributions of higher earners to help pay towards lifting everyone earning under £10,000 out of tax. The controversial plans could lead to a potential saving for the Exchequer of billions of pounds. For higher earners, this move will feel like a tax rise as when paying the top rate of tax you can claim relief of up to 50 per cent on your pension contributions.

Higher Rate Tax Payers – 50% tax
There is currently no report on the money raised by the 50% tax rate but the Government know that they cannot remove it while public sector workers are undergoing a pay squeeze. It is likely to stay the course of the parliament.

Personal Allowances
There will be reaffirmation for the coalition to raise the personal allowance to £10,000 by April 2015. Although there are suggestions of a more rapid rise, this is unlikely to feature as the cost of implementing it is so high.

Mansion Tax
It is envisaged the Government will rule out the creation of two new top-level council tax bands or a ‘mansion tax’. The Liberal Democrats believe installing this measure would enable the Treasury to raise the income tax threshold to £10,000 but Conservative ministers oppose the measure as it breaches the Tory manifesto commitment not to revalue homes for council tax.

Stamp Duty Land Tax
There has also been a great deal of publicity about stamp duty avoidance and it is commonly reported throughout the press. There was an expectation for the Government to act in the Autumn statement so it would be a surprise if did not provide clarity and close the perceived existing loopholes in March.

Statutory Residency Test
As already announced, the statutory test of residence will be deferred until 2013 but there may be a commitment to press ahead with establishing the test. It is understood that the Government is already refining visa and passport rules to encourage wealthy non-domiciled individuals to invest in UK businesses.

Support for Green Initiatives
There will be a balance for drivers and green lobbyists.  The fuel duty escalator will be frozen for the time being as a help for motorists. There has already been a green investment fund established for recycling projects and there is likely to be an update on the Green Investment Bank, either hearing of the first projects it will support or a projected timeline for the projects commencing

Tax Avoidance Clampdown
Following the Barclays bank story, and applying legislative changes retrospectively, the Chancellor will mention tax avoidance and the need to close down loopholes, especially focusing on higher rate tax payers and large corporates. It is anticipated that the Government will look to adopt general anti-avoidance rules (GAAR) along the lines outlined in the recent independent report by Graham Aaronson QC.

Luxury VAT Rate
The Government may impose a rate of VAT at 25% for luxury items.  This will not go down well with wealthy individuals and those that wish to purchase luxury items, especially those who are also caught by the top rate of tax.

Longer term predictions
After the March budget and longer term, there is an expectation that the Budget will contain announcements on changes which will come into effect from April 2013. We know that entrepreneurs have had a hard time over the last couple of years and we do not expect many changes to be announced this time round. The announcements are likely to will focus around encouraging investment and innovation. We work with new developments and young start-up technology businesses and we welcome this.  Our predictions for entrepreneurs are:

  • More investment in combating tax leakage from the system – both in the form of more targeted campaigns but also with the introduction of a GAAR (General Anti-Avoidance Rule)
  • Continued support and development of R&D tax credits
  • Further announcements in connection with Enterprise Zones – including the announcement of new zones.
  • Relaxation of the rules around NIC holidays, opening up the scheme to more entrepreneurs as a way of encouraging them to take on additional staff.

These are our predictions.  If you do go an put a bet on them with Paddy Power or any of the turf accountants, you do so at your own risk as we do not really have psychic powers and could well be wrong on many of the counts above.

If you do wish to consider any of these areas in more detail, do not hesitate to contact us and we can help.

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.


Written by Steven Mugglestone

March 8, 2012 at 5:58 pm

HMRC are showing their teeth and will bite:

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HMRC are showing their teeth and will bite

Electricians, plumbers, tutors, medical professionals, landlords, food retailers, construction businesses are already being targeted and now HMRC target set new task forces to target the rage trade, the motor trade and indoor markets.

This latest announcement shows that HMRC are really ‘showing their teeth’ in dealing with tax dodgers where HMRC is concerned.  Anyone with tax irregularities needs to sort them out extremely urgently and it is always better to come forward rather than wait to be found out.

This announcement and the recently launched ‘Contractual Disclosure Facility’ for investigating suspected tax fraud shows HMRC’s increasing desire to clamp down on deliberate tax evaders.  The tax authorities also have a dedicated disclosure scheme involving undisclosed assets held offshore (the Liechtenstein Disclosure Facility) running at the moment that could, in certain circumstances, be the best way to proceed.

Anyone with a tax disclosure to make should seek specialist professional advice.  Information on making a disclosure is available on the HMRC website and by contacting McGregors Corporate for help.

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659                T: 0121 236 3317

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.

Written by Steven Mugglestone

March 8, 2012 at 5:16 pm

Posted in HMRC

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Tax increases for 2012 already on the books, a brief reminder:

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Tax increases for 2012 already on the books, a brief reminder

I am sure that we will have a go at making some predictions for the 2012 budget, as most accountants do, as most of the changes will get leaked well before the budget.  We will not, however, try and make comments on the economy, as most tax accountants try to do, despite them neither having qualifications in economics, nor having actually managed or run a business.  We will stick to reporting the facts and this, accordingly, is a reminder of the tax increases or increased powers of HMRC to raise penalties and fines etc., that have already been put in place and will be implemented post April 2012, despite what may or may not be announced in the March 2012 budget speech.

This is perhaps the opposite and balances out our article, “Top Tax Tips for 2012, without moving to Switzerland.”

HMRC increase and strengthen penalty regime

See, “HMRC seeking 100% penalties for late Tax Returns, resistance is useless & the world recession is not an excuse for having no money”

HMRC powers to prevent deliberate non-payment of PAYE
From 6 April 2012, HMRC will hold additional powers enabling it to ask employers to pay a security where there is serious risk that they will not pay their Pay As You Earn (PAYE) tax deductions or Class 1 National Insurance contributions (NICs).  This will not affect employers who pay their tax on time and in full, and it will not be used for employers who are having genuine problems settling their liabilities.

HMRC has confirmed that it will only use this power to tackle employers who deliberately try to defraud the Government, and will calculate the amount of the security on a case by case basis depending on the amount of tax at risk, the previous behaviour of the employer and other risk factors.  The required security will usually be either a cash deposit from the business or director or a bond from an approved financial institution which is payable on demand.

Daily penalties increased to up to £1,000
Finance Act 2011 introduced legislation, effective from 1 April 2012, to increase daily penalties for failures to comply with a written request for information from HM Revenue & Customs (HMRC) or deliberate obstruction of an officer of HMRC in the course of an inspection.

Currently, a flat-rate penalty of up to £300 may be applied for failure to comply with an information notice, or deliberate obstruction. Additional daily penalties, of up to £60, may also be imposed if the failure persists.  With effect from 1 April 2012, however, where the failure continues for more than 30 days from the date on which the information notice was issued and if it is believed that the current £60 daily penalties will be insufficient to encourage compliance, HMRC will be able to apply to the tribunal for increased daily penalties of up to £1,000 to be imposed.

Where the increased penalties apply, HMRC must issue notice of the amounts imposed, and the date from which they apply.

Capital allowance amounts falling
Rates of writing down allowances will be reduced, with effect from 6 April 2012 for unincorporated businesses and from 1 April 2012 for companies, as follows:

  • Main rate pool will be reduced from 20% to 18% per annum
  • Special rate pool will be reduced from 10% to eight per cent per annum

Where a chargeable period straddles 6 April 2012 for unincorporated businesses and 1 April 2012 for companies a pro-rated hybrid rate should be used.  Reducing the rates of writing down allowances will mean that businesses continue to receive full tax relief to reflect the depreciation of plant and machinery assets, but over an extended timeframe.

The annual investment allowance (AIA) will also decrease from £100,000 to £25,000 from 1 April 2012 for companies and 6 April 2012 for unincorporated businesses, with the rules for periods straddling 1/6 April 2012 involving apportioning the AIA on a pro-rata basis including limiting expenditure after 1/6 April 2012 to £25,000, appropriately time-apportioned. Consideration should be given to the timing of any capital expenditure during the period which straddles the change, and it may be advantageous in some cases to amend an accounting period in order to secure the maximum AIA available.  These measures were included in Finance Act 2011.

Short life asset lives doubled (perhaps positive with a sting in the tail)
The 2011 Budget included the announcement that the period to which a short life asset election applies is to be doubled, increasing from four to eight years.

This change will allow businesses to allocate assets which they expect to sell or scrap within eight years (rather than four) to a single asset pool, and ensure that the capital allowances available to them over this period will be equal to the net cost of the asset.

Although this appears to be a positive step and may provide a cash flow benefit to businesses, the additional record keeping required by allocating each relevant asset to a single asset pool is likely to create a significant administrative burden and cost.  Many businesses, therefore, may choose not to make the voluntary election.  This measure was included in Finance Act 2011 and applies to expenditure incurred on or after 1 April 2011 for the purpose of corporation tax, and 6 April 2011 for the purpose of income tax.

Landfill tax rates increasing
Legislation was introduced in Finance Act 2011 to increase the standard rate of landfill tax by £8 per tonne to £64 per tonne for disposals made, or treated as made, to landfill on or after 1 April 2012.

The Government had previously confirmed that the standard rate would rise by £8 per tonne on 1 April each year up to and including 2014. Also, that it will not fall below £80 per tonne from 2014/15 to 2019/20.  A lower rate of landfill tax applies to less polluting wastes listed in a Treasury Order. The rate is currently £2.50 a tonne and this rate will remain frozen in 2012/13.

Keep watching this space

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659                T: 0121 236 3317

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.

Written by Steven Mugglestone

February 20, 2012 at 7:41 pm

Posted in Budget, HMRC, Tax

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HMRC allows late filing after the self-assessment deadline but check your insurance:

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HMRC allows late filing after the self-assessment deadline but check your insurance

As you will now be aware, the Self-Assessment deadline remains as midnight on 31st January although, due to industrial action, HMRC will treat all Returns that are filed by midnight on 2nd February as though they were submitted on the 31st January.

There is no extension to the enquiry window and this will remain as 31st January 2013 but, HMRC are proposing not to impose any penalties on Self-Assessment Returns filed on 1st or 2nd February.

To fall in line with the HMRC approach, many tax insurance providers will cover clients whose Returns are submitted either on 1st or 2nd February and individual clients will not be prejudiced in the event of an enquiry as the providers, in particular Abbey Tax Protection, who provide cover for our clients, will not be treating these as ‘late’ Returns.

However, all individuals who have not yet filed their 2011 SATR and have fee protection cover in place should check the claims position with their current provider.

We recommend that you ensure that you or your accountant/agent should obtain and retain an electronic receipt confirming the successful submission of the Return to ensure that, should a late enquiry be attempted, they can demonstrate that the Return was filed during this ‘relaxed’ period and before midnight on 2nd February.

If you do not have or do not know what fee protection insurance is, it is a policy for individuals and businesses that will reimburse the costs of professional representation in the event of a Revenue Authority enquiry or dispute.

If you do not have or do not know what fee protection insurance is, we would advise that you should really deal with an accountants, like ourselves, that offer these policies for very competitive and negligible costs when compared to the costs that could be needed if you are subject to an enquiry.

Steven Mugglestone BA FCA
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659                T: 0121 236 3317

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.

Written by Steven Mugglestone

January 27, 2012 at 4:23 pm

Posted in HMRC

Tagged with ,

HMRC warns of fake tax rebate and close 185 fake websites

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HMRC warns of fake tax rebate and close 185 fake websites

We have already warned you in “Pop Pickers, Top 20 Scams and Frauds of 2011 and Warning for 2012”; Click:

HM Revenue & Customs (HMRC) has now officially issued a warning over the latest round of ‘phishing’ emails.

As the self-assessment deadline approaches, the emails in question pose as HMRC notifying the recipient that they are due a tax rebate.

The email then links to a clone of HMRC’s website, and asks for bank or credit card details, which are then used to empty accounts.  In the last three months HMRC has helped to shut down 185 websites that were responsible for sending such emails.

HMRC is urging taxpayers not to get caught out. Commenting, Joan Wood, director of HMRC Online and Digital said: “We only ever contact customers who are due a tax refund in writing by post. We currently don’t use telephone calls, emails or external companies in these circumstances. If anyone receives an email claiming to be from HMRC, please send it to before deleting it permanently.”

“HMRC will do everything possible to ensure those people receiving this email know what steps to take to protect their information, and we are working closely with other law enforcement agencies to target the criminals behind this serious crime and see them brought to justice.”

HMRC has published security advice, including example emails on the HMRC website at the link below;

HMRC will never send notifications of a tax rebate by email, or ask you to disclose personal or payment information by email.

If you think you have been the victim of an email scam the advice is to report the matter to your bank or card issuer as soon as possible.

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659                T: 0121 236 3317

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.

Written by Steven Mugglestone

January 17, 2012 at 2:05 pm

Posted in Fraud, HMRC

Tagged with ,

Pop Pickers, Top 20 Scams and Frauds of 2011 and Warning for 2012

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Pop Pickers, Top 20 Scams and Frauds of 2011 and Warning for 2012

We all know that we are in recession and prospects of business growth remain challenging.  We also know that in economic times like this, we all have to be more imaginative and more creative in business ventures and ideas.

One area that does not diminish in a recession is fraud and scams.  In fact the willingness to lie, cheat and steal from the state, big and small businesses and people in general seems to grow unabated.  The imagination and brass neck cheek is sometimes astonishing, but we continue to live and learn.  According to BDO, reported fraud in the UK over the past 5 years has now topped £7bn, which is equivalent to what the UK spent online over Christmas 2011.

To act both as a warning and to give some insight into what fraud and scams look like in 2011, we have highlighted some of the more “popular” and “common” reported cases:

Clairvoyant benefit fraudster didn’t see it coming

A Welsh clairvoyant admitted to unlawfully claiming over £33,000 in income support, jobseekers allowance, housing benefit and council tax benefit whilst working as a telephone psychic reader and a sex chat-line operator. Dawn Pearson charged customers £1.53 a minute for psychic consultations, while claiming a wide range of state benefits for being too ill to work.

Inventing children is a little too obvious

Kerry Melia was jailed for eight months after ‘inventing’ 15 foster children to illegally claim more than £60,000 in benefits. Despite already being under investigation by HMRC for submitting false claims for 10 non-existent youngsters, Melia asked for help supporting a further five foster children before finally being taken to court.

Learning from James T Kirk does not help

A Chinese gymnastics official was charged with fraud after falsifying a score to help a compatriot win a gold medal at a major tournament. The International Gymnastics Federation found that Shao Bin had ‘altered an execution score prior to posting’ without telling event officials, resulting in a gold medal for gymnast Zhang Chenglong in the men’s floor exercise final at the Asian Games.

Learning from Jeremy Kyle does not help either

Amie Burn and Claire Hardy pleaded guilty to conspiracy to pervert the course of justice after attempting to falsify a paternity test. Burn had paid Hardy £100 to take her place at the court-ordered test in order to prove that her former boyfriend was not the father of her two-year-old son, thereby denying him access to the child.

Double booking at a minimum

Derren and Tracy Grant from Wincanton were jailed for 27 months and nine months respectively after being found guilty of advertising an occupied villa for rent in Spain. Some 300 holiday makers lost more than £100,000 in the fraud. In one incident, it was alleged that as many as 12 parties had been booked into the same property at the same time.

Vodka from meths and bleach

Kevin Eddishaw was jailed for seven years for manufacturing thousands of bottles of fake vodka using methylated spirits and bleach. Investigators estimated that 165,000 bottles of the falsely-branded Glen’s Vodka had been made before Eddishaw and his team were apprehended.

Shaggy dog insurance claims

Julie Pullman was failed for nine months after fraudulently claiming £37,000 to cover the cost of treating her non-existent pet dogs. Pullman had created fake vets’ bills in order to receive payment from her insurance company. Worryingly, there has been a growing number of reports of owners selling, abandoning or even killing pets in order to claim for early death.

A warning for HS2

The Chinese National Audit Office (NAO) revealed that 187 million yuan (around £20 million) was misappropriated by individuals or companies involved in building the 1,318-km Beijing-Shanghai high-speed railway. The announcement followed the dismissal of railways minister Liu Zhijun.

PT Barnum and a sucker born every day lives on

Peter Gillespie, a chartered accountant from Windsor, was jailed for eight years for importing fake drugs from China and selling them as genuine medicines for cancer, heart conditions and mental illness. The medicines were used by pharmacies, hospitals and care homes, and it is believed that at least 100,000 doses ended up being given to patients. Gillespie was caught after a wholesaler spotted a mistake on the packaging.

Green fraud and carbon emissions

Six men were jailed in Germany for a 300 million euro (around £249 million) fraud involving carbon emission permits. Three Britons, two Germans and a Frenchman bought the permits overseas without paying any tax, then resold the permits to each other in order to fraudulently claim the tax back. The judge told the perpetrators that they had brought “the carbon market trading scheme into disrepute.”

Land banking (if it’s too good to be true, it’s too good to be true)

Rogue property developers selling land that they claim has great investment value, when there is little or no chance of it ever being developed, are on the rise. Investors who have purchased a stake in plots of land that turned out to be worthless have lost an estimated £200 million.  This involves plots of land offered for sale, often online, with the promise of sizable returns when planning permission is approved for housing or other development. Yet often the land is located in areas protected from development by planning law.

The companies involved soon disappear with investors’ money and as the firms are not protected by the Financial Services Authority, their funds are not covered by the Financial Services Compensation Scheme.

Money laundering by money mules

Cases of money mule fraud have soared during 2011, according to figures from CIFAS – the government’s fraud prevention agency – which show an increase in the number of both knowing accomplices and innocently duped individuals.

The misuse of facility fraud, which involves an account or policy that has been legitimately opened but is later used fraudulently, rose 12% in the first ten months of 2011. CIFAS reports that a large proportion of the frauds display the hallmarks of ‘money mule’ activity; where a fraudster recruits another (often innocent) party and uses their account to launder money on their behalf.

Fraudsters recruit unknowing accomplices through email under the guise of offering employment, seeking a personal favour, or through internet shopping sites. The recruits are persuaded into receiving what are essentially fraudulent payments and then passing funds on. The ‘mules’ are frequently offered a small financial incentive to encourage involvement and face difficulties in proving their innocence when the fraud is discovered.

More Green and Carbon credit fraud

Between July and September 2010 the Financial Services Authority reported a ten-fold increase in carbon credit fraud, which lures investors in with the promise of steady returns and a tug on their eco-friendly conscious.  These claim to offer people the chance to profit from carbon credits. Under regulations that permit businesses to emit a tonne of CO2 – the companies claim to offer investment in green projects like a forestry scheme or a solar panel project, which generates carbon credits that are then sold on to heavy industry.

A flashy brochure or website tells of a reliable ‘government-backed’ scheme which provides reliable returns for investors. Such a scheme doesn’t exist however – the truth investors only discovered when they have parted with their cash and the company is untraceable. As with land banking, fraudulent companies are not covered by the FSA so victims have no course for recompense.

HMRC offering a tax repayment (obvious really – phishing scam)

Receiving an email from the taxman saying you are owed a payment may seem like a nice surprise, it is highly unlikely and is actually from fraudsters trying to relieve you of your cash instead.  HMRC sas confirmed that reports of fraudulent ‘phishing’ emails have risen by 300% over the last year. Almost 24,000 such emails were reported to HMRC in August alone and the office is currently helping to shut down around 100 scam websites a month.

The emails provide a “click-through link” to a cloned replica of the HMRC website. The recipient is then asked to provide their credit or debit card details – all the information the criminals need to clear your account, and sell on your personal details.

HMRC warns anyone receiving an email claiming to be from them telling the taxpayer they are due a tax repayment not to follow the email’s instructions. HMRC says it will never email or telephone taxpayers about refunds and only write to inform by post.

The great disappearing loan scam

This scam targets vulnerable people who are in financial difficulty and unable to access credit through regular channels like overdrafts and credit cards. The fraudsters advertise loans and those that sign up are asked to pay an upfront ‘arrangement’ fee of around £60-£70 fee before the loan is approved. Borrowers pay the fee only for the ‘loan providers’ to disappear without a trace.

In truth, due to poor credit history or lack of income, the applicants are unlikely to be approved for a loan in the first place, but the fraudsters have no intent in pursuing the application anyway.

Crash for cash scams

While honest motorists battle rising insurance premiums, those to blame for the price hikes continue to undertake fraudulent claims. Insurer Direct Line reported a hike in the number of ‘crash for cash’ scams this year – where fraudsters fake accidents by making unnecessary emergency stops at busy roundabouts or slip roads, forcing motorists to crash into them. They then make bogus claims to the innocent motorist’s insurer, often including fictitious injuries and passengers.

Driving school scam or why I am such a bad driver

Learner drivers have been taken for ride by being unknowingly taught by trainee instructors. An investigation by the AA found up to 27,000 extra driving tests have been failed in the last year because one in 10 learner drivers are unwittingly taught by an instructor they do not know is learning on the job.

With research showing much lower pass rates among trainee instructors, they have cost learners over £1.7 million in additional test fees over the past 12 months, with millions more believed to have been spent on extra lessons needed to reach test standard.

The AA is lobbying ministers to introduce new rules requiring driving schools to tell learners, at the time they book lessons, if their instructor will be a trainee.

The thieving magpie/postman or the postman always steals twice

A Leicester postman stole £46,686 worth of mail over two-and-a-half years. Yogeshbhai Patel, 38, was jailed for two years for stealing mail including 2,000 DVDs and 2,250 games along with CDs and other electrical equipment. He intercepting the valuable packages and spent the money on living a luxury lifestyle including helicopter rides and a trip to Las Vegas.

It is reported that while his bosses thought he was a model employee as he arrived an hour early for work at the delivery office every day, he was actually looking for packages to steal.

Leicester Crown Court heard he then ensured the valuables, destined for other postal rounds, went into his own sack of mail. Patel was caught when investigators received an anonymous tip-off that a postman was selling a large number of games and electrical items to a store in the city centre, where they found a special previously marked X-box game, out of its wrapping, on sale for £1.50.

Smart energy meter scam (Caveat emptor)

The nationwide roll- out of smart meters is intended to help households save money by becoming more informed about their energy usage – but fraudsters have been quick to relieve people of their cash instead.

The Trading Standards Institute reported over 200 cases where elderly homeowners have been targeted by telephone cold callers, purporting to be from their energy supplier and offering energy saving devices which could cut their bills by 40%.

The TSI tested the devices in homes where owners had fallen for the scam, only to find they both failed to satisfy electrical safety standards or deliver any tangible energy savings.

Thermal camera and ATM fraud (Sherlock Holmes would be proud)

As consumers become more savvy at cashpoints by covering the keypad when entering their PIN and avoiding any machines that look suspect – so do the the fraudsters in stepping up their game to grab our cash.  Thermal cameras that track ATM pin numbers are the latest weapon in their arsenal and US scientists have warned it is the next threat for this form of crime. Researchers at the University of California at San Diego found that up to 45 seconds after a person types their pin code into an ATM machine or door entry-pad the numbers and even the sequence are still readable by thermal cameras.

And a final addition, at number 21 and hot off the press, the fictitious franchise and Leicester, again a hotbed of fraud and scams:

You have been warned!

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659                T: 0121 236 3317

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.

Written by Steven Mugglestone

January 10, 2012 at 8:00 pm

Posted in Fraud, HMRC

Tagged with , ,

HMRC seeking 100% penalties for late Tax Returns, resistance is useless & the world recession is not an excuse for having no money

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HMRC seeking 100% penalties for late Tax Returns, resistance is useless & the world recession is not an excuse for having no money

Some clients complain that we badger and moan (politely) at them for their tax return information, but we do this for good reason.

H M Revenue & Customs (HMRC) is now looking to introduce new increased, and some say far more draconian, penalties for late submission of tax returns and for the late payment of tax.  In some cases the penalties may be up to 100% of the tax shown on the Return.  There is, therefore, an incentive to ensure that you pay tax on time and submit your tax returns on time, which is why we carry out the gentle badgering.  Late Tax Return penalties for partnerships may also prove to be an expense for each partner as they will be charged a penalty each rather than there being one penalty for the partnership itself.

The changes are part of the numerous changes that have been made in recent years to the UK’s tax administration legislation including:

  • Increased HMRC powers for obtaining information and inspecting business records,
  • Increased penalties for errors and the introduction of rules to enable HMRC to publish the names and details of those who are charged a penalty for deliberately evading tax
  • Increased task forces and “own up and pay up” amnesties for a variety of sectors including plumbers, electricians, tutors, doctors and landlords
  • The new penalties, however, for late submission of tax returns and late payment of tax have the potential to affect the greatest number of taxpayers.

The late return penalties apply to personal, partnership and trust returns for 2010/11 onwards.  If the return is submitted after the filing deadline (31 October 2011 for paper returns and 31 January 2012 for electronic returns) then a £100 penalty will automatically be charged.

If the Return is more than three months late then HMRC may also impose a £10 daily penalty.  If the Return is still outstanding 6 months after the submission deadline then HMRC will charge an additional penalty of £300 or 5% of the tax liability shown on the return, whichever is greater.   To top it all, a further penalty can be imposed if the Return is submitted over 12 months late and this can be up to 100% of the tax shown on the return, so much for those of you that think that there is a cash flow benefit of not submitting your returns and paying your tax bills.

The penalties for failing to submit a tax return on time apply regardless of whether the tax has been paid, so paying first and then not filing the return is not really a sensible option.

For those partners in traditional partnerships or LLPs amongst you, if a partnership return is submitted late then each partner is charged a penalty.  If a partnership of 10 partners files its return two months late then the total penalty will be £1,000.   If I were HMRC, I know where I would be looking to find some money.

The late payment penalties apply to income and capital gains tax liabilities whether included in tax returns for 2010/11 and subsequent years or separately assessed, which includes amendments to returns made in 2010/11 and after.  On top of all that interest is also charged on the late paid tax.

The late payment penalties are:

  • 5% of the tax that is not paid within 30 days of the due date,
  • A further 5% of the tax that remains unpaid 6 months after the payment date, and
  • An additional 5% of the tax that is still unpaid 12 months after the payment was due.

Late payment penalties can be avoided by contacting HMRC before the payment is due to let them know that the taxpayer is experiencing cash flow difficulties and reaching an agreement as a “time to pay agreement”.  These agreements, however, are not as easy to obtain as they once were.  If the revised payment deadlines, however are not met then late payment penalties will be charged.

You can, however, appeal against the amount of any penalty and it is also possible to ask for a penalty to be reduced to nil if you have a “reasonable excuse”, whatever that is.   The legislation, however, states that having insufficient funds cannot be a reasonable excuse unless it is caused by events out of the taxpayer’s control… world recession, the Euro crisis and the continuing credit crunch seem all to be within the taxpayer’s control.

Also the reliance on another person may not be a reasonable excuse and that once the excuse ends then the penalty will be charged unless the failure to pay tax or submit a return is corrected without unreasonable delay.

If a taxpayer submits their Return late and pays their tax after the due date then both late payment and late return penalties will be charged unless they have a reasonable excuse.  Failing to comply with tax obligations will rapidly become expensive…. Resistance is useless!!

It is, however, easier to organise your tax affairs so that you get your information to your tax adviser, and reduces our moaning and badgering, to be in good time to enable your tax return to be submitted before the deadline.

Even if you are preparing it yourself, leaving it to the last minute will mean that things are done in a rush and, even with the best will in the world, mistakes can and will be made which give HMRC even more opportunities to charge tax geared penalties for errors.  You also risk suffering late payment interest and penalties if HMRC do not receive your payment in time, especially as HMRC cannot receive payments via the Faster Payments Service so bank transfers usually take at least three working days to reach them.  The “cheque’s in the post” is also not a get out and will not work.

If you are unable to submit your Return and pay your tax on time, do talk to a tax adviser and we will be happy to help in a relatively painless way and we will not moan at you too much, …… honest.

Steven Mugglestone BA FCA,
Finance Director Services

McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

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Written by Steven Mugglestone

December 9, 2011 at 8:00 am