Member Since: 4th Jan 2002
14th Aug 2019
I have a client who was referred to me specifically (and only) to deal with HMRC's Debt Management Unit as regards the tax debt thrown up by HICBC having been omitted from the SATRs by the existing accountant. (I'm told that no questions were asked of the client as to whether he even had any children, so no surprise there!)
HMRC attempted to code out the tax debt by issuing a massive K code in MARCH of a particular tax year (and for that tax year). Naturally this didn't work and so the tax debt simply rolled over (and doubled up into the next tax year). That wasn't entirely successful either. Anyway, to cut to the chase, despite multiple years and mounting tax debts, they didn't impose penalties, even though they were entitled to. As other posters have said, Revenue practice on this is inconsistent.
On the question of the imposition of penalties, the answer is this. If the taxpayer is within the SA system TMA requires penalties to be charged on the "tax difference": that is the difference between the tax determined to be due after enquiry and the tax liability shown on the return. This "difference" is after claiming any reliefs or making other tax adjustments which emerge from such an enquiry. So, in the example mentioned, the penalties would be on the net £2,500, not on the £4,000.
If however, the taxpayer is not within SA then the HICBC tax shortfall alone would be the figure on which any penalty would be levied. Fair? Certainly not! But that's income tax for you, isn't it?!
18th Jul 2019
I received one of these, too. It could just be a failure at HMRC's end to properly distinguish between MSBs and ASPs on their database. But the cynic in me thinks it more likely to be the deliberate use of scare tactics by the AML Unit. Perhaps because they think issuing "gypsy's warnings" like these is sufficient to fulfil their AML supervisory role. I don't think they're staffed up to do actual AML "audits".
This "grouse beater" approach puts me in mind of the so-called "Nudge" letters which HMRC bombarded our clients with a few years ago when all they [we] had done was to claim loss relief! These were the letters that insinuated some kind of wrongdoing because the taxable income had gone down!! Flush 'em out!
24th Jun 2019
"Dividend tax for a higher rate taxpayer is 32.5%...."
The OP mentioned utilising the client's PAs so one assumes that in this case there would be no HR liability (or it could easily be avoided via timing).
24th Jun 2019
I can think of nothing that would prevent the making of a CT-disallowable pension contribution by a non-trading, non-dormant company. However I would challenge the wisdom of doing that from a tax-efficiency viewpoint. In effect the company "loses" 19% CT on the disallowed contributions. But, assuming that ER is due, if the company were put into members voluntary liquidation the client would pay just 10% (presumably after the CGT annual exemption, so probably only c9% net).
The dividend allowance is only £2k pa and so, unless there is absolutely no other income, any divis on top of that are probably going to be taxed at 7.5% anyway. I cannot see the advantage of paying this and (in effect) losing 19% on the company pension contribution. Once the money has been extracted via an MVL, there must surely be some other way of utilising the PAs from the income generated? Even before the pension income kicks in.
Ay any rate, all other options would need to be carefully weighed.
19th Jun 2019
"If a car is 'available' for private use, then it is BIKable."
Absolutely correct. Unless, very exceptionally, private use is forbidden and does not ever take place - see EIM23400 (link below):
I acknowledge that the payment for p/u is probably in order to prevent a car fuel benefit from arising but, by the same token, if the driver currently pays for (even minimal) private use, it's hard to see how it could be argued that there is NO private use - even if the employer were to agree, which is probably unlikely.
As other posters have pointed out, the only realistic alternative to company car BIK is run your own. Hey Presto, BIK avoided. You then just have to buy your car, pay the loan/HP interest, tax and insure it, service/maintain it, accept the depreciation, etc, etc. BARGAIN!! IMHO, too many people get hung up about the tax they pay on a company car without working out whether they'd truly be better off without one.
Obviously, the decision becomes more finely balanced if there is a car cash alternative on offer but that is a separate discussion.
12th Jun 2019
HMRC don't knowingly "allow" monetary payments to be included in a PSA. (They might "look the other way" if discovered post-event and the amount is not significant and, yes, I have seen that myself.) In truth, unless cash payments are discovered via an employer compliance visit, HMRC won't be any the wiser as the PSA Unit is merely a processing team.
If someone asks me "What is the legal limit on a motorway?", I tell them 70mph. If they ask "What can I get away with without a speeding ticket?" I might say 78mph. But 70 is the only bombproof answer.
As to "Why would they not?", well there at least two good reasons. The first is our old friend, cashflow: getting the money in the kitty up to 15 months earlier. The second is that if it goes thru payroll it attracts E'ees NICs, whereas E'ees NI is not charged in a PSA. That's the real reason why monetary payments are excluded.
12th Jun 2019
As I've already posted, cash (= monetary) payments are simply NOT permitted within a PSA. HMRC has just withdrawn what was effectively a concessional treatment to include non-exec directors' reimbursed travel costs in a PSA for the same reason.
Anyway, why would you want to? A PSA will result in a gross-up. Putting it thru the payroll wouldn't.
12th Jun 2019
You can't include monetary payments in a PSA. PSAs are purely for benefits IN KIND which are minor, irregular or difficult to apportion between a group of employees. Plus, as one poster has already stated, a PSA cannot be applied for re years prior to the most recent one (and even for the latter, must be before 6 July).
This is something that should have gone through payroll and been subject to PAYE and E'ers and E'ees NIs. In this situation (and as its not a director) THERE IS NO GROSSING UP.
A Voluntary disclosure should be made to the HMRC Employers Unit at Longbenton. An unprompted voluntary disclosure may well escape any penalty, provided it was not a 'deliberate' act, but merely a misunderstanding of the commuting costs rule.
10th Jun 2019
We're not going to agree on this. Please note the following from the CCA 1974 Official Guidance:
Importantly, where the agreement is a non-commercial agreement (under section 74(1), CCA 1974), Part V largely does not apply. Therefore, in most cases of non-commercial employee loans, the onerous formalities required by Part V of the CCA 1974 described below can be dispensed with. Non-commercial agreements should cover transactions that are merely occasional (for more information, see Is a consumer credit licence required?).
Furthermore, interest has to be charged to require a Consumer Credit licence. As I read it, the Act doesn't apply (or I should say a licence isn't required) as regards interest-free loans.
10th Jun 2019
I still disagree. Under the CTW scheme the bike is owned by the employer and so is being HIRED to the employee. That makes it more like HP, not a loan.