The Inland Revenue have revamped their leaflet on dispensations from reporting expenses and benefits in kind, to make it clear that a dispensation will be considered for controlling directors who record and monitor their own expenses provided that all such expenditure is fully supported by independent documentation.

This is a welcome clarification but one suspect that it will still be difficult to get the Inland Revenue to grant a dispensation for “one man companies”.

If you would like to apply for a dispensation please contact us.

IR 35 Employment Status Manual

The Inland Revenue have updated their employment status manual.

Two new sections have been added to clarify the Revenue’s view where there is only one client and in relation to the length of an engagement.

Further changes have also been made to the guidance on the provision of equipment, financial risk and the basis of payment.

If you would like to discuss these changes or have us review your status, please give us a call.

National Insurance Contributions

The Inland Revenue have published an updated 28-page guide to national insurance contributions for the self-employed. If you would like a copy please contact us.

Late Penalty Notice

There would appear to have been a larger number of late penalty notices raised in error by the Inland Revenue.

The main areas in difficulty would appear to be where the return was sent in late but there was less than Ł100 of tax to pay, and where the return was sent in on time but incorrectly logged by the Inland Revenue.

If you have received a late filing penalty and would like us to review whether it is correct please give us a call.

Construction Industry

A useful general guide has been released, aimed at those setting up in business in the construction industry. The guide covers a wide range of issues including dealing with the Inland Revenue and Customs & Excise, health and safety, ACAS and other construction industry-related topics. If you would like a copy please contact us.

Loan Relationships, Derivative Contracts and Foreign Exchange Gains and Losses

The Inland Revenue have published details of the amendments made to the draft legislation published in December 2001 for inclusive within clauses of the Finance Bill 2002.

The changes are a combination of removing errors in the original draft, a widening of scope of certain parts of the legislation and tightening of potential loopholes.

A full review of the new legislation will be given after the Finance Bill has been enacted.

Money Service Businesses - Laundering

Money service businesses such as money transmission agents, cheque cashers and bureaux de change must be registered with Customs & Excise by 1 June unless they are regulated by the Financial Services Authority.

HM Customs & Excise – International Trade

The blueprint report, which outlines plans to modernise Customs & Excise’s approach and procedures to international trade, in particular examines ways in which the level of paperwork involved can be reduced, partly by moving towards, electronic submission of data.

Landfill Tax

H M Customs & Excise have released a consultative document entitled “Possible changes to the landfill tax credit scheme”. The scheme allows landfill site operators to claim a tax credit for certain contributions they make to environmental bodies.

The scheme is under review; if you would like more details on the proposed changes or wish to discuss any other aspects of the landfill tax please contact us.

Pension Scheme Transfers

The Savings and Pension Schemes Office (SPS) have taken action to counteract scheme, which may involve improper transfers out of pension schemes, colloquially known as “trust busting”.

The changes take effect from 1 July 2002. After that date, where a transfer payment is requested from a tax-advantaged arrangement the scheme trustee or administrator must prior to the transfer, ascertain the type of scheme the transfer is to be made to and ensure that the correct transfer procedures are followed.

The SPS have re-iterated that:

Before making any transfer to a small self-administered scheme from a tax-advantaged scheme, prior written consent must be obtained from the Inland Revenue.
Transfers are not permitted either way between personal pension and occupational pension schemes.

Revised Guidelines for Statutory Payments

Revised sets of guidelines for changes from 6 April 2003 have been released by the Government, covering the following statutory payments:

Statutory maternity pay
Statutory paternity pay
Statutory adoption pay

If you want a copy of the guidelines or wish to discuss how the changes will affect your business then give us a call.

Double Tax Treaty - Lithuania

A proposal to bring into force, the United Kingdom. Lithuania double tax convention is to be laid before the House of Commons.

When accepted, the convention will come into force from 6April 2002 in the United Kingdom and 1 January 2002 in Lithuania.

Hair & Beauty Industry

An industry-specific guide aimed at those operating in the hair and beauty sector has been released by the Government.

The guide covers setting up and running a business dealing with the Inland Revenue and HM Customs & Excise, employment issues and health and safety

If you would like a copy of the guide please contact us.

New Interest Rates for Importation

The compensatory interest rates for inward processing relief and temporary importation to be applied from 1June 2002 are 3.41% for euro area member states and 4.17% for the UK.

Internet Retailers

The European Union Council of Ministers has confirmed that non-European Internet retailers wishing to set up in Europe must register in one of the 15 European Union states.

The country in which the foreign exporter registered will collect the tax and distribute it to the other member state. The scheme is to be introduced in July 2003. Under the scheme foreign exporters of digital products downloaded from the Internet will have to pay VAT, as the goods are consumed within the European Union.

Jersey Agrees to Exchange of Information

Jersey have acquiesced in calls for it to fall in line with Guernsey and the Isle of Man to introduce exchange of information provisions with the United Kingdom.

The agreement however would appear to be predicated upon the EU implementing the revised directive whereby information between states has to be exchanged, but dropping the necessity to impose a minimum level of withholding tax. It is also likely that, prior to the provisions been put in place, Jersey would wish to ensure that other non-European Union states such as Switzerland were going to enact similar provisions.

Legal Professional Privilege

The House of Lords have reversed the court of appeal decision in Regina v Special Commissioners and another ex parte Morgan Grenfell & Co Ltd, requiring taxpayers and their accountants to disclose correspondence with legal advisers.

The Lords held that legal professional privilege (LPP) is a fundamental human right and that existing powers under the Taxes Management Act did not empower the Inland Revenue to gain access to documentation protected by LPP.