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Late Self-Assessment ReturnsThe Inland Revenue have warned that they are going to make greater use of the daily penalty proceedings. Daily penalties can only be imposed after a direction from the commissioners, however, once granted the maximum penalty is £60 for each day on which the failure continues after notification of the commissioners direction. It should be noted that unlike the £100 late filing penalty, these penalties are not capped if the return shows the liability to tax to be less than the imposed penalties. If a number of returns are outstanding the Inland Revenue might seek to impose a penalty of £60 per day per return. Tax CreditsA draft order updating the tax credit rates for 2002-03 has been published by the treasury. The new rates will apply to award periods commencing from 9 April 2002. NIC Class 1 Limits for 2002-03The Class 1 NIC thresholds for 2002-03 are; Lower earnings limit £75 (72) Upper earning limit £585 (575) Primary and secondary threshold £89 (87) Monthly lower threshold £385 (378) Monthly upper threshold £4615 (£4535) Employees Business TravelA revised revenue leaflet is available encompassing the changes to take effect from 6 April 2002. ReminderIf an employee uses their own vehicle for work there is a maximum amount that can be received free of tax. This amount is known as the approved mileage allowance payment. If the employer pays more the employee is liable to tax on the excess. The rates for 2001-02 and 2002-03 are as follows; 2001-02 First 4000 miles Over 4000 miles
Up to 1500cc 40p 25p 1501cc- 2000cc 45p 25p Over 2000cc 63p 36p 2002-03 First 10,000 miles Over 10,000 miles 40p 25p Foreign Earnings Deduction – definition of a “ship”Following the decisions in Perks v Clark, Perks v Macleod and Newark & Granger v Guild, the inland Revenue have had to revise its interpretation of what constitutes a ship for the purposes of claiming the foreign earnings deduction for mariners. The court of appeal found that Jack-up Rigs, which have floating halls for the purposes of towing, did constitute a ship and therefore those that worked upon them were entitled to the foreign earnings deduction, provided they met the other qualifying criteria. After 17 March 1998 off shore installations were specifically excluded from seafarer provisions, so from that date workers on Jack-up Rigs or similar structures cannot claim the foreign earnings deductions. However where claims for the deduction prior to that date are still open, the deduction can now be claimed. Moreover even if the claim has not been made and the tax year is closed an error or mistake claim should be made, though the Inland Revenue have indicated that they will only accept claims for the years 1996-97 and 1997-98. Widows Bereavement AllowanceA taxpayer who took the Inland Revenue to court because they would not grant him, as a widower, the widows bereavement allowance has lost his case in the High Court. The judge found that although the Inland Revenue could have granted an extra statutory concession to correct the anomaly in the law they were not obliged to do so under law, and that they had followed the strict letter of the law in refusing to grant the allowance. The judge however went on to comment that he believed the UK law to be incompatible with the European Convention on Human Rights. The next course of action if the case is to proceed would be to bring it before the European Court of Human Rights in Strasbourg. IR 35 Extension of ConcessionThe concession whereby penalties would not be levied where IR 35 payments were made on the basis of a provisional return which was finalised by the 31 January following the tax year end, was originally only applicable for the tax year 2000/01. The Inland Revenue have now announced the concession is to continue until the government announces its withdrawal. Pension AnnuitiesThe Inland Revenue have issued a consultation document on modernising the UK pension rules. It would appear however that the basic structure of the rules is to remain intact in particular, there would seem to be no intention to do away with the need to purchase an annuity or alter the necessity to have done so by the age of 75. Aggregate LevyH M Customs & Excise have issued a “Guide to the Aggregates Levy”. The Levy, which comes into effect from 1 April 2002, is an environmental tax on commercial quarrying operations. The Levy applies to sand, gravel and rock and is charged at £1.60 per tonne. If businesses need to register for the aggregates levy, they should do so by completing form AL1. If you are unsure whether your business will be required to pay the levy then please contact us for further advice. VAT and the DisabledIt is not always obvious what the correct Vat treatment ought to be when good or services are provided for the disabled. H M Customs and Excise have published a new leaflet in this area in the form of 9 frequently asked questions and their answers. If you would like a copy of the leaflet or want any further information please contact us. Working family tax credit will be increased to £60 a week (£59). Disabled persons tax credit for single persons will increase to £62.10 a week (£61.05) and for married persons to £92.80 a week (£91.25). Stamp Duty – Disadvantaged AreasThe Stamp office has issued further details on the areas that will qualify for the new stamp duty exemption for property transfers with a value less than £150,000. The qualifying areas are identified in England and Wales by electoral wards and in Scotland by postcodes. UK/Ireland Double Tax TreatyUpdated versions of the forms required to claim the relief from UK tax under the double tax treaty have been released by the Inland Revenue. These are; IRL/IndividualThis applies to Irish Resident individuals claiming relief on UK pensions, annuities, interest or royalties. IRL/CompanyThis applies to Irish companies, charities or pension funds claiming relief on UK internet or royalties, in case of companies or rental income for charities or pension funds. EuroThe Inland Revenue have issued a leaflet “The Euro Tax Implications for UK Individuals and Businesses” from January 2002. The leaflet provides information on the tax implications of dealing in euros instead of the old national currencies. If you would like a copy of the leaflet, or would like an opportunity to discuss how the Euro might affect your business then give us a call. |