List of negligible value assets

hmrc_official_logoHMRC have today produced a revised list of assets that are officially accepted as qualifying for negligible value claims for Capital Gains Tax purposes. The revised list include any new agreements during the month of February 2012.  The list is very long so I suggest please use HMRC’s website to browse it.  The link is here:

Negligible Value agreements to 29 February 2012

As always, if you have any questions or need further assistance on this matter, please don not hesitate to contact us using this form: Contact us.


Internal Revenue Bulletin

The latest edition of Internal Revenue Bulletin has been released today and you can download it by clicking the link given below:


Us Treasury

Bulletin No. 2012-13 – March 26, 2012

If you have any questions or need any assistance in filing your UK Tax Return then please do not hesitate to contact me. All the viable methods of contacting me are given at this link:

Contact Us

I hope this information proves useful.

VAT: Registration and deregistration thresholds effective 01-April-2012

Effective 1st April 2012, the VAT registration and deregistration thresholds will be as follows:

  • the taxable turnover threshold, which determines whether a person must be registered for VAT, will be increased from £73,000 to £77,000
  • the taxable turnover threshold which determines whether a person may apply for deregistration will be increased from £71,000 to £75,000
  • the registration and deregistration threshold for relevant acquisitions from other EU Member States will also be increased from £73,000 to £77,000

If you have any comments to make, please use the link given at the top of this post.

SDLT Changes effective budget day 2012

The new 7 per cent rate of Stamp Duty Land Tax (SDLT) for residential property transactions applies where the chargeable consideration exceeds £2 million. This applies to transactions where the effective date is on or after 22 March 2012, subject to transitional provisions for pre-existing contracts.

The new 15 per cent rate of SDLT applies for residential property transactions by certain persons (broadly companies, collective investment schemes and partnerships with a member who is a company or a collective investment scheme) where the chargeable consideration exceeds £2 million. The effective date is on or after 21 March 2012, subject to transitional provisions for pre-existing contracts.

There are also two exclusions from the higher charge, firstly for companies acting in its capacity as trustee of a settlement and for bona fide property developers who meet the qualifying conditions.

If you need further assistance then please contact me using the form attached at this link: Contact Us

Budget 2012: – Summary of announcement

Main announcement on direct & indirect taxes

  • Income tax: 50p tax rate for anyone earning more than £150,000 a year will be reduced to 45p, effective 6th April 2013. Mr Osborne said the 50% rate is driving budding entrepreneurs away from Britain. Are they going to some other planet? Only he can tell us ;
  • Personal allowance: Tax-free threshold will rise to £9,205 from 6th April 2013;
  • Corporation tax: The corporation tax will be cut by 1% immediately, taking the tax to 24%. This will decrease to 22% by April 2014. the chancellor wants me to advertise this fact ” for business in Britain”. WELCOME TO BRITAIN FOR OUR WELFARE, FREE HOUSING AND REDUCED TAXATION;
  • Stamp duty: The Stamp Duty Land Tax charge on residential properties over £2m will rise to 7% from midnight tonight (21 March 2012) and homes bought inside a corporate envelope will see tax of 15%. Now this is going to hurt people who buy residential properties on a daily basis;
  • Tobacco: The tax on cigarettes will rise to 5% above inflation – adding 37p to the price of each packet sold from 6pm tonight (21 March 2012); Now this is the best time for smokers to quit;
  • Gambling: Slot and fruit machines will see new taxes – with a standard rate of 20% and a lower rate for low-prize machines of 5% of net takings; Kids and truants would be hit hardest by this announcement;
  • Alcohol and Fuel: No new changes to taxation announced. But Previously announced plans mean the price of a pint will rise between 5p and 10p from next week; Alcoholics beware!
  • Additional: A consultation document to be published in April on Integration of income tax and national insurance;
  • Where your money goes: the government confirmed that everyone would receive a personal tax statement explaining what they have paid and where this money has been spent – i.e. how much of your money has gone to things like education, health, benefits and the like. Now this move is considered money well spent by our government;
  • Tax breaks for industry: The 2012 Budget contained tax breaks and support for several UK based industries, including TV production companies, animators, video games producers and more industrial sectors like aviation and pharmaceuticals. this move is likely to benefit foreign investments more than British investors; Britain is for sale from midnight tonight;

Detailed tables and rates are at this link; Rates and Allowances

It’s budget day in United Kingdom

It’s budget day today, 21st March 2012, and the rich and powerful should benefit in give-away tax cuts at the expense of the poor, single parent, children and, of course, the low paid workers. This is how UK operates under the Conservative Government because they strongly believe that the state must provide incentives to the rich and powerful for them to remain on this planet

We shall be posting links to all the official documents issued by HMRC so please come and visit us again later today.

See you soon.

Property losses – Anti-avoidance

The Government has announced that it will introduce new legislation, effective from 13 March 2012, to counter tax avoidance that relies on property business loss relief or post-cessation property relief.


Online traders are next target by HMRC

HMRC has launched a campaign to target people who sell goods and services online for profit.

The campaign is aimed at people using online marketplaces (HMRC calls this e-marketplaces) to buy, sell or swap goods for a profit. You are at a risk to be investigated if it is suspected that you may not be paying tax on this income.

How to work out if you are trading

A website with questions and answers have been set up to help people decide if their activity is classed as an online trading. You can get preferential terms if you come forward before 14 June 2012. The website is here:

Murdoch’s UK papers told to tighten security

LulzSec hack again, planting a fake story on a website owned by Rupert Murdoch, while claiming to have stolen News Corp emails in the process

Staff at Rupert Murdoch’s British newspapers have been told to tighten security and change their passwords, Reuters reports, after the website of The Sun was hacked late on Monday night.

Hacking group LulzSec announced their breach of the Sun’s website on Twitter, after placing a redirect code on the main page which pushed visitors to a fake story about Rupert Murdoch’s death.

An old News International (NI) site called was used for the attack. It had been set up while the Times paywall was built. LulzSec gained access to that site and, through it, to NI’s Content Management System (CMS).

The CMS access was then used to change the content of the Sun homepage, inserting a redirect pointing readers to the fake story initially, and then to LulzSec’s Twitter account. The website has since been returned to normal.

One member of the hacking group, Sabu, announced that emails had been taken during the hack, saying that they would be released on Tuesday. A few details which appeared to relate to NI employees were posted on Twitter by LulzSec. News International declined to comment on security issues, merely acknowledging the hack.

“We are aware of the hacking attempt on the last night and our sites are now back up. We do not have any further comment to add at this time,” a spokesperson said.

Sophos security analyst Graham Cluley said that the hack demonstrated the ease with which trusted websites can be compromised.

“What we saw overnight with the Sun, we all have to be grateful that the hackers that did that didn’t plant anything malicious, because that would have been very simple for them to do,” Cluely said. “They just embedded a little bit of code which then did the redirect.”

Cluley told Information Age that advertising networks are increasingly being used to distribute malware, not just direct manipulation of websites. “You may not have to hack into a specific website. Media outlets carry advertising from legitimate advertising streams, and what hackers have done is plant malicious code in those streams. The website becomes the vector by which the malware gets to the [web user]. It poisons the advertising stream,” Cluley said.

HMRC introduces new penalties for late tax returns

In April 2011 a new penalty regime was introduced for the late filing of individual, partnership and Trust tax returns. The new rules, which apply to tax returns for 2010/11 onwards, greatly increase the penalties payable. A tax return that is 6 months late now attracts an automatic penalty of £1,300, compared to a comparable fine of £200 or less under the previous system. Penalties for missing tax payment deadlines have also been increased, and a further tightening of the penalty regime is likely in the future.

Why has HMRC introduced the new penalties?

The new penalty regime is part of long-term reforms by HMRC to tackle those who fail to keep up-to-date with their tax filings and payments. Other changes have already been introduced for providing inaccurate information or failing to notify HMRC of important changes, such as becoming self-employed. Further changes will be made in the future to bring other areas (such as company tax returns and Corporation Tax) into the new, unified regime.

What are the new penalties for late personal tax returns?

Under the new regime a taxpayer will be fined an initial £100 for missing the filing deadline, with the penalty increasing quickly once the tax return becomes more than 3 months late. The new penalty is calculated as follows:

  • initial penalty: failure to submit a tax return by the initial deadline (i.e. 31 January if filing electronically) will lead to an automatic penalty of £100. This is payable even if no tax is due;
  • more than 3 months late: if the tax return is still outstanding after 3 months the fine increases by £10 for each day it remains overdue, up to a maximum of £900;
  • more than 6 months late: the fine increases by a further £300, or by 5% of the tax due if higher;
  • more than 12 months late: the fine increases by another £300, or by 5% of tax due if higher. However if the taxpayer deliberately withholds information the penalty can be up to 70% of tax due, and this rises to 100% of tax due if the taxpayer takes deliberate action to conceal the incorrect information (for example, by faking paperwork).

Example: Sue moves abroad and believes she no longer has to complete a UK tax return. However when she comes back to the UK for a visit she finds a letter from HMRC saying a 2010/11 tax return was due 9 months ago. She completes the tax return (showing that no tax is due) and files it electronically on 11 October 2012.

Penalty: Sue is fined a total penalty to £1,300. This is £100 for missing the filing deadline, plus a further £10 for every day it was more than 3 months late (to the maximum of £900). There is a further penalty of £300 for being more than 6 months late. This £1,300 penalty is charged even though no tax is due.

What are the new penalties for the late payment of personal tax?

As well as raising the fines for being late with tax returns, penalties are also being increased for the late payment of tax. Under the previous regime a surcharge of 5% of tax due was charged if a tax payment was more than 30 days late, plus a further 5% if more than 6 months late. These two surcharges are being kept, but a third surcharge of 5% is being introduced if the tax payment is more than 12 months late. Interest also applies to all late tax payments.

Example 2: Steve is a busy executive and doesn’t have time to complete his tax returns. After being repeatedly reminded by HMRC and his accountant, he finally completes his 2010/11 Tax Return, showing a tax liability of £10,000, 13 months late.

Steve is fined a total penalty of £3,500 plus interest. This is made up as follows:
Penalty for late tax return: Steve is fined £100 for being late with his tax return plus the maximum of £900 for being more than 3 months late. He also receives a penalty of £500 (i.e. 5% of the tax due) for being more than 6 months late, plus a second charge of £500 for being more than 12 months late. This brings the total penalty for being late with his tax return to £2,000.
Penalty for late payment of tax: In addition to the fines above, Steve is also fined £1,500 for being late with his tax payment. This is made up of 3 surcharges of £500 each (i.e. 5% of tax due) for missing the 30 day, 6 month and 12 month payment deadlines. Steve will also be charged interest on all late payments at the rate set by HMRC at the time (currently 3%), as well as interest on the various penalties from the time they were payable.

What if the taxpayer has been given extra time to pay by HMRC?

Penalties for late payment of tax will not be charged while a taxpayer has been given extra time to pay by HMRC. However the penalties will be re-imposed if the taxpayer does not stick to the agreement and misses the agreed payment schedule.

How are partnerships tax returns affected?

If a partnership tax return is late each partner will receive a penalty. So if a partnership tax return is one day late each partner will receive an automatic penalty of £100, and these penalties will increase by £10 per day (up to a maximum of £900) if the return is more than 3 months late. Thereafter each partner will be fined an additional £300 if the return is 6 months late, and a further £300 if 12 months late.

Do these penalties also apply to Companies?

Not yet. However the legislation is in place to extend the penalty regime to companies, and this is likely to be activated in the future.

Can these penalties be appealed or reduced?

Although the penalties are levied automatically they can be waived in some circumstances. They can be overturned if the taxpayer is found to have a “reasonable excuse” for being late. HMRC can also, at its discretion, reduce penalties in special circumstances where the outcome is considered inappropriate or disproportionate.

What counts as a “reasonable excuse”?

There is no legal definition of the phrase “reasonable excuse”, so it will be down to the taxpayer to convince HMRC that their excuse falls within this category. However the law specifically excludes certain excuses, namely:

  • having insufficient funds available;
  • relying on someone else to file a tax return (unless the taxpayer took reasonable steps to ensure it was filed on time);
  • missing a tax payment because another taxpayer (such as his or her Limited Company or spouse) had an offsetting overpayment.

What are some examples of a “reasonable excuse”?

HMRC has issued some guidance on what constitutes a reasonable excuse. In addition, a number of disputed cases have been taken to independent tribunals and the decisions released. Some of these decisions show circumstances where the excuses prohibited by law, namely insufficiency of funds or relying on an agent, can in fact be accepted.

Generally HMRC will need to be convinced of three things: that the taxpayer made a serious effort to submit a return and/or pay tax on time, that the problem was out of the taxpayers control and could not be foreseen, and that the taxpayer made an effort to correct the problem as soon as possible. A few examples of reasonable excuses are shown below:

  • serious illness where supporting evidence is provided;
  • forms lost in the post where proof is provided;
  • a severe, unpredictable drop in income provided the taxpayer has done his or her best to make tax payments;
  • problems with HMRC’s online filing system;
  • problems with an accountant where the taxpayer had a genuine belief his or her return had been filed on time;
  • HMRC failing to provide information on whether a return is due (providing the taxpayer makes an effort to get the required information).

The following excuses have not been considered reasonable by the tribunals:

  • missing deadlines because a taxpayer doesn’t know the rules;
  • financial difficulties where the taxpayer hasn’t done his or her best to make tax payments;
  • not filing due to personal problems;
  • waiting for HMRC to provide information where the taxpayer hasn’t followed up properly.

How will these new penalties affect the average taxpayer?

Most taxpayers file their tax returns and make their tax payments on time, and are unlikely to be affected by these new penalties. However there are some taxpayers who, while being honest, may get caught out by the new rules. People who have moved abroad (such as Sue in the example above) are at risk, as many of them may not realise they need to file UK tax returns and do not receive post from HMRC. However ignorance of the rules, or not receiving post (which stems from a failure to inform HMRC of their new address), will not count as reasonable excuses. And people who put a low priority on completing their tax returns, such as Steve in the second example, are key targets of the new regime and will receive no mercy from HMRC.