Member Since: 1st Feb 2002
10th Oct 2012
Not straight forward is it.
A client sells training. On full day courses a lunchtime break is taken at a local pub. The costs are usually a reasonable £5-£10 per person.
I have treated these costs as disallowable business entertaining as opposed to the tea and coffee provided, with biscuits, in the morning and afternoon breaks which I treat as an allowable business expense.
Am I correct or is it possible to treat the lunches as an allowable business expense?
28th Sep 2012
I agree the use of (Zero) 0T is a more appropriate and better solution in these circumstances. My initial rant was aimed at the lack of an inbuilt system check to prevent this situation arising. HMRC allocate the codes and I would think it is reasonably foreseeable that the situation my client found themselves in could arise. I take your points that the taxpayer should have realised they were not having sufficient tax deducted and should have taken steps to minimise the shock when the inevitable tax bill would arrive.
I still maintain that HMRC's tax code specification should include an inbuilt check to increase the rate of tax applied if gross income exceeds a specified amount.
Thanks to everyone for your views and opinions.
27th Sep 2012
stretching things a bit
if someone did make enough pension contributions and/or charitable donations sufficient to extend their BR band into 6 figures I would have thought they would be knowledgeable enough about tax to make repayment claims if they overpaid.
I still think HMRC's specification is dumb to use the BR code enabling this situation to arise. Its even more ridiculous for HMRC to issue BR codes when a new employee doesn't supply a P45. Surely it would be more appropriate to use the emergency tax code. I just find it so hard to believe that HMRC think it is appropriate to use the BR code in the situation they state below:
Other tax codes and what they meanCodeReason for useBRIs used when all your income is taxed at the basic rate - currently 20 per cent (most commonly used for a second job or pension but may also be used if you’ve started a new job, don’t have a form P45 and haven’t completed a form P46 before your first pay day)D0Is used when all your income is taxed at the higher rate of tax - currently 40 per cent (most commonly used for a second job or pension)D1Is used when all your income is taxed at the additional rate of tax - currently 50 per cent (most commonly used for a second job or pension)NTIs used when no tax is to be taken from your income or pension
Why not use the following code which is emminently more sensible:
You might get an emergency tax code if:
you've started a new job and haven't got a P45 from your previous employer for the same tax yearyou've started your first job since the start of the tax year and haven't been receiving any taxable state benefits or a state or company pensionyou've started a new job but you've had another job or other jobs or received taxable state benefits during the yearyou've started a new job and were previously self-employedthere's been a change in your tax code during the year because, for example, you've started to get company benefits or the State Pension
27th Sep 2012
Why am I surprised?
Because it is ridiculous that software should be specified to allow a situation like this to arise. I cannot think of any circumstances where a wage or salary in excess of twice the higher rate limit would only be subject to basic rate tax. Why on earth would a payroll package allow this situation to continue, common sense alone dictates that this is an improbable scenario.
It's all well and good to say that the consultant (not a tax expert by the way) should realise that he was underpaying income tax, but I suspect that a lot of taxpayers under PAYE only look at the net pay figure and assume that the amounts taken for statutory deductions are correct. The same reasoning would apply to the payroll department, most will assume that the calculations are correct and not look at individual pay slips unless the payee raises a query. These are automated processes and in a large organisation there can be hundreds of employees.
I'm still of the mind that the payroll software should be written to prevent this scenario arising. And as I assume software packages are written to meet HMRC specifications then HMRC should accept responsibility for allowing this to occur. I can't think any half decent programmer couldn't build in a check to increase the rate of tax applied when wages or salaries are above a certain figure.
26th Sep 2012
so as BR only ever takes the Basic Rate
That's precisely my point, in what circumstances will a five figure income only be liable for tax at the basic rate?
I can't think of any situation where that level of income will only be liable for income tax at the basic rate. If that is correct why on earth would anyone program a computer to disregard what is a highly probable scenario.
6th Aug 2012
A new client had failed to submit returns by the due dates although he had paid the amounts of tax he thought was due. When the returns were submitted the receipts were allocated in an arbitary way.
This resulted in a repayment being made for the apparent overpayments followed by demands for underpayments and penalties and interest.
My first letter was dismissed with a reply that HMRC's calculations were correct. A follow up phone call and subsequent discussion with a sensible HMRC officer resulted in the payments being reallocated and the penalties and interest charges being removed.
28th Jun 2012
What are the coins?
CG78308 - Foreign currency: coins: legal tender
Sovereigns minted in 1837 and later years and Britannia gold coins are currency but, like all sterling currency, are exempt because of TCGA92/S21 (1)(b).
"Taxation of Chargeable Gains Act 1992
21Assets and disposals
(1)All forms of property shall be assets for the purposes of this Act, whether situated in the United Kingdom or not, includingâ€”
(a)options, debts and incorporeal property generally, and
(b)any currency other than sterling, and"
Negatively defined but quite clear that sterling currency is excluded from Capital Gains Tax
Brittanias have a face value of £100 but the market value is currently around £1000.
7th May 2012
very low monetary limit for same day payment?
I think you should check with them again. Santander's limit for Faster Payment Service is £100k
16th Mar 2012
I have a client in a similar situation. I came across this tribunal decision whilst exploring the issue. The tribunal found that although HMRC were in possession of all material facts it was not incumbent on them to search them out and use them! They used the following High Court case to support their decision:
Nicholson v Morris concerned fraud or wilful default, the only material point being that it was held in the High Court in that case that the onus was on the appellant to show that the estimated assessments were wrong. In the course of his judgment in the High Court, Walton J said (at p110):
“… the Taxes Management Act throws upon the taxpayer the onus of showing that the assessments are wrong. It is the taxpayer who knows and the taxpayer who is in a position (or, if not in a position, who certainly should be in a position) to provide the right answer, and chapter and verse for the right answer, and it is idle for any taxpayer to say to the Revenue, "Hidden somewhere in your vaults are the right answers: go thou and dig them out of the vaults." That is not a duty on the Revenue. If it were, it would be a very onerous, very costly and very expensive operation, the costs of which would of course fall entirely on the taxpayers as a body.”
What arguments can be used to refute this precedent?
9th Mar 2012
The photo book can be charged separately
it is not necessarily an ancillary supply within the total.
Cost of wedding photography can be charged plus VAT with the photo book itemised separately on the invoice and Zero rated.