UK Self-assessment tax returns - late filing

Three million people have not yet filed their self-assessment tax returns in the UK. Last year one million were late - that's £100 million into the Chancellor's coffers in penalties not to mention interest charges !! Money for old rope ? 

Individual taxpayers have 9 months to file a self-assessment tax return after the tax year end on 5 April each year, and yet one million fail to do so. Why ? 

Within each year I file tax returns for clients and approximately 40% of those are filed in the final two months  before the 31 January deadline. This, despite sending reminders each year. 

I have thought about this many times, why ? Apathy, fear, finances, cash-flow ?

Is there a misconception that once a tax return if file and tax due has to be paid there and then ? A self-assessment tax return can be filed and time after 5 April each year and HMRC will send a bill if tax is due and payable but that does not have to be paid until 31 January of the following year.

Are people afraid of what they might have to pay and stick their heads in the sand for as long as possible ? Isn't it better to know the situation and to plan for any outcome ? Getting the tax return done quickly gives breathing space (up to 9 month) to find a solution and to look at possibilities to legitimately reduce the final tax bill.

Is too much time given to file the tax return ? Does this create apathy ? In other countries the time to file is much shorter:

Norway - 5 months
USA - 4 months
France - 5 months
Spain - 6 months

Coming to the end of another 'mad month' I can say that it is really not worth waiting. The number is sighs of relief I hear on the telephone or emails with comments such as "what a lovely surprise !", " a refund ?" , "I wish I had done this sooner"..... these all tell me that 9 months of fretting is really not worthwhile.

.....it could turn out that HMRC have been holding onto your money without good reason.

Norway agrees exchange of information with Panama

It has long been a desire for the Norwegian tax authorities to expose income that individuals have secreted away in offshore tax havens. The Norwegian Finance Ministry have now declared a 'significant breakthrough' obtaining agreement from Panama to disclose financial information. 

They will now be able to obtain information on money transfers as they now do with 38 tax havens around the world. The Norwegian Finance Ministry continue to negotiate with countries such as Hong Kong, United Arab Emirates, Jamaica and Bostwana.

Individuals are encouraged to review their current tax arrangements and to seek advice where there is potential exposure.

Norway's Conservative Party seeks to lower taxes

Norway's Conservative party have proposed that if they win next year’s general election they will reduce the unpopular income and possessions surtax by over three-times. 

The proposal includes raising the basic allowance and lowering the tax level from 1.1% to 1%. In addition, they will introduce a share discount of 10%.

The Conservative Party and populist Progress Party have suggested scrapping the taxes entirely. However, they say that this could take five years or more if the current state of play remains the same, with almost three billion and one billion kroner, respectively. 

Both Parties originally planned to accomplish this within the next four-year parliamentary period but It could take 15 years at 1 billion kroner per year.

Currently, approximately 690,000 people are liable for wealth tax in Norway today.

This number will decrease if the basic allowance is raised from NOK 750,000 to NOK 870,000, contained in the government’s draft 2013 national budget proposal presented on Monday.

The tri-partite Leftist Coalition raised net wealth tax but also the lowest basic allowance in its draft national budget 2013 proposal.

Norwegian Tax

I have been providing tax services for expats living in Europe for the past few years and now have a reasonable sized client base in Norway including contract/freelance workers in the oil & gas industry as well as IT. Telecoms and Entertainers to name but a few industries. I have recently registered to trade in Norway specifically and so am looking to build business partnerships and to increase my client base in Oslo and Norway generally.

Please get in touch if you are interested in business partnerships or the services that I can provide. Contact link.

Warning to expats from HMRC over EBT schemes

HM Revenue & Customs is warning expats and other workers utilising Employee Benefit Schemes (EBT) for tax benefits should declare them and pay up taxes due or face significant fines and court action.

The current disclosure program initiated by HMRC can avoid penalties and legal action in some cases and provide a framework for settlement of taxes.

The program covers various EBT structures and taxes such as:

• Income tax (PAYE)
• National Insurance Contributions
• Corporation Tax
• Inheritance Tax
• Other taxes on EBT's and beneficiaries

Assuming a settlement is agree with HMRC the disclosure program :

• Allows payment to be made to HMRC of taxes due
• Avoids complex and lengthy tax enquiries and legal costs
• Provides certainty and finality to tax liabilities

EBT's were outlawed in January 2011 when HMRC successfully challenged the structure in the case against PA Holdings Ltd. It was determined by the Court and by a subsequent supported by the Court of Appeal that the arrangements avoid PAYE and NIC's through the EBT structures does not work.

Employer-Finance Retirement Benefit Schemes (EFRBS) are also considered not to work.

Are Christmas Parties Tax-Deductible ?

It's coming up to that time again when companies are considering a good night out with colleagues. So, are Christmas parties tax-deductible ? Here are a few guidelines:

For the cost to be tax-deductible it must be:

·          

•           Open to all employees
•           An annual event
•           Cost less than £150 per head

If your event meets the above criteria then there is no benefit in kind on the Christmas Party/meal and it is allowable for tax.

However beware...

• The £150.00 includes VAT
• If the cost is £151.00 then all of it is taxed as a benefit in kind
• This is not a licence to put a flat rate of £150.00 through your accounts
• You can have more than one event but the £150.00 is reduced proportionately
• Like all business costs you must have a receipt
• The event must be for all employees and not just directors - except where the director is the only employee

The £150.00 limit is for each employee so no family or friends allowed. However if you are a Director and therefore an employee of your own company then you can have a Christmas meal courtesy of the company.

Tax Return Initiative for 2009/10 and earlier

HMRC is about to send our reminders to thousands of higher rate taxpayers with overdue self-assessment tax returns for 2009/10 and earlier. Individuals will have until 2 October 2012 to inform HMRC that they wish to participate in the 'Tax Return Initiative', to submit the tax returns and to pay any outstanding tax.

HMRC say that by coming forward individuals will receive better payment terms and penalties will be lower than if HMRC catch up with them first. The spreading of payments may also be available under certain conditions and circumstances.