HMRC accused of failing to monitor tax reliefs

26 Mar 2015

MPs on the Public Accounts Committee (PAC) have accused HM Revenue & Customs (HMRC) of underestimating the number of tax reliefs being used by businesses.

The PAC has expressed concern on the cost these reliefs put on public finances.

Chairman of the PAC, Margaret Hodge, said: ‘HM Treasury and HMRC do not keep track of those tax reliefs intended to influence behaviour.

‘They do not adequately report to Parliament or the public on whether reliefs are working as intended and what they cost and whether they represent good value for money.

‘HMRC does not effectively monitor changes in the cost of tax reliefs, so is slow in identifying instances where a relief is being exploited for a purpose Parliament did not intend.’

An HMRC spokesperson responded: ‘As a result of our compliance efforts and the £1 billion extra investment over this Parliament, we have secured more than £100 billion in additional revenues in the past five years to pay for essential public services, raised penalties for tax evasion to 200% of tax owed and increased prosecutions five-fold.’

Business groups welcome zero inflation and dismiss fears of deflation

25 Mar 2015

Very low inflation rates could help Britain’s economic growth, business lobby group the British Chambers of Commerce (BCC) has said.

Official figures have shown that the rate of Consumer Prices Index (CPI) inflation fell to 0% in February, the lowest rate since estimates of the measure began in 1988.

The zero rate has surprised many analysts, who were expecting a figure of 0.1%, and some are now worried that there is a risk of deflation which could depress economic activity.

However, David Kern, the BCC’s chief economist, said: ‘We remain convinced that there is very little risk of a long period of deflation. Inflation in the service sector, which accounts for 80% of the UK economy, remains firmly above the Government’s 2% target, and core CPI inflation in February was 1.2%.

‘Together with higher earnings, lower inflation is boosting people’s spending power, and will contribute to economic growth in the year ahead.’

The CBI gave a similar response. Rain Newton-Smith, CBI director of economics, said: ‘Despite inflation dropping to zero, it is unlikely we will see falling prices for a prolonged period, particularly as the pressure from lower oil prices fades.’

Lower prices for food and computer games contributed to the drop in the rate from 0.3% in January. The February figure means that the cost of living is the same as it was a year ago.

Labour party makes pre-election tax promises

24 Mar 2015

Shadow Chancellor of the Exchequer Ed Balls is expected to announce a Labour party pledge to freeze VAT should they win the general election.

Mr Balls will unveil the new manifesto promise, saying: ‘Today I can announce a clear pledge to the British people. The next Labour government will not raise VAT’.

In response to previous Labour pledges to increase taxes across the board, a Conservative party spokesperson said: ‘Labour has already announced a raft of tax rises, but all but one of these would fund their spending pledged. It is time that they came clean with the British public about which taxes they will raise.’

Mr Balls is expected to use his speech to reply, insisting that ‘Labour can make this manifesto commitment for the next Parliament because, unlike the Tories, all of our promises are full funded and paid for.’

In order to raise funds for their pledges, Labour have announced plans to raise the top level of income tax to 50% and close the loopholes that have contributed to the tax gap.

CBI sets out 100-day action plan for new government

23 Mar 2015

The Confederation of British Industry (CBI) has set out its action plan for the first 100 days of the next government, which it argues will help to keep the UK economy on track.

The business group has warned of the dangers of a ‘power vacuum’ if no single party secures an outright majority win in the General Election on 7 May. It added that any post-election uncertainty would pose a very real threat to economic stability.

Director General of the CBI, John Cridland, called on the new administration to keep on top of public finances, tackle the housing crisis and break the current ‘gridlock’ and ‘ambitious’ reform of the EU.

‘Whether we have a majority, minority or coalition government, we ask those involved to ensure that the period of post-election uncertainty is kept to a minimum,’ commented Cridland.

‘We cannot afford a power vacuum that delays urgent policy decisions and unsettles potential investors, so any new Cabinet must get down to business as soon as possible.

‘But if horse-trading is required to form a new government, politicians must not duck the tough questions just to reach agreement and risk undermining the recovery before the ink has dried.’

The CBI has also urged any incoming government to make swift decisions on the terms of its next spending review, which is likely to cover the period between 2016 and 2020.

Retailers welcome business rates review

20 Mar 2015

Retailers and business groups have welcomed Government plans to carry out a ‘radical review’ of the business rates system in England.

Chancellor George Osborne confirmed the review in his 2015 pre-election Budget, stating that the current business rates system ‘has not kept pace with the needs of a modern economy and changes to our town centres’.

Business rates, which date back to the Poor Law established in 1601, are currently calculated according to the rental value of the property a company uses.

However, businesses have long campaigned for an overhaul of the system, with the Confederation of British Industry arguing that its ‘outmoded, clunky and regressive’ nature is contributing to the demise of the UK High Street.

The review will examine how businesses use property, what the UK can learn from other countries about local business taxes, and how the system can be modernised so it better reflects changes in the value of property.

John Longworth, from the British Chambers of Commerce, applauded the move: ‘It is good to see that the Government is looking at a wide-ranging review of business rates, as this iniquitous tax hammers businesses across the country, before they’ve even made single pound in profit.’

Helen Dickinson, Director General of the British Retail Consortium, said: ‘To guarantee that this review is a success it’s absolutely crucial that the Government seeks authoritative and independent analysis as it progresses, with solutions based on the objective consideration of supporting evidence.’

However, some experts have warned that the scope of the review may be limited if the outcome is ‘fiscally neutral’, as many reports have suggested.

The review is set to report back by the 2016 Budget.

We are recruiting – Payroll Advisor Position

Nunn Hayward LLP is a Chartered Accountancy firm based in Gerrards Cross where an exciting opportunity has arisen for a Payroll Advisor to work in our expanding payroll department.

Our ideal candidate needs to be a motivated self-starter with previous payroll experience processing payroll with Sage.  You will need a good working knowledge of payroll legislation.  Your main duties would incorporate a variety of payroll processes including inputting hours and pay details, calculating absence payments and answering employee queries.  This role will suit you if you have the initiative to work on your own but also the ability to be a key team member.

The role also involves maintaining a small portfolio of client accounting records on Sage 50 software and you must be able to prioritise workload between payrolls.

The successful candidate will be friendly, confident and enthusiastic with good organisational and communication skills.  They should be somebody who is computer literate, with a good working knowledge of Microsoft packages, Sage accounts package (including IRIS but not essential).

Salary range according to experience

The successful candidate would be based at our Gerrards Cross offices but there will be travel to clients as necessary.

Please send your CV and covering letter to Suzanne Precious at sprecious@nhllp.com

2015 Budget Special: all the news

2015 Budget Special : measures for savers

The Chancellor’s Budget Speech focused on four key areas, which formed the foundation of proposed Government policies for the next few years.

As previously announced, up to five million pensioners are being given the opportunity to cash in their existing pension annuities. When the changes come in, savers will be allowed to take their whole pot in a single lump sum, or make withdrawals as they see fit.

The new flexible ISA will allow individuals to withdraw their savings and then make further investments up to their annual allowance, without being penalised, so long as the transaction occurs within the same tax year. From 6 April this year, the ISA allowance will be set at £15,240.

The Help to Buy: ISA, which combines an ISA with the Help to Buy scheme for first time house buyers, means that the Government will top up savings by £50 for every £200 saved. These ISAs are intended to help individuals save for a mortgage deposit. Government contributions will go up to a maximum of £3,000 per Help to Buy: ISA.

Additionally, the Personal Savings Allowance means that the first £1,000 of savings income will be free from tax for most individuals from April 2016.

The Chancellor said that these measures will create tax-free banking for almost the entire population.

2015 Budget Special: the political reaction

Chancellor George Osborne unveiled a number of measures in his Budget Speech today, revealing employment figures and growth predictions for the rest of the decade. He spoke positively on the progress that the Government has made in reducing the deficit and the possibility of a budget surplus. However, the other political parties were less encouraged.

In response to the Budget Speech, Leader of the Labour Party, Ed Miliband, said: ‘The working people of Britain are worse off under the Tories . . . and since the election working people’s living standards are £1600 a year down’.

He continued: ‘Today the Chancellor simply reminded people of the gap between the Chancellor’s rhetoric and the reality of peoples’ lives’.

Green Party leader Natalie Bennett described Mr Osborne’s tone as ‘triumphalist’, and said: ‘It’s not like our current growth economy has delivered for people’s lives. What we need to do is invest in a huge range of things’.

Stewart Hosie, Scottish National Party (SNP) deputy leader and Treasury spokesman, commented: ‘Today George Osborne could have delivered a Budget focused on delivering economic growth by tackling inequality.

‘He has not – he has decided to continue with his utterly failed austerity agenda.’

Prime Minister David Cameron defended the Government’s successes, saying: ‘The highest employment rate in our history is not a dry fact, it means more people with the security of a pay packet and a brighter future’.

2015 Budget Special: ‘Britain is walking tall again’, proclaims Chancellor

Chancellor George Osborne delivered his 2015 ‘pre-election’ Budget in bullish mood. Proclaiming that ‘Britain is walking tall again’, the Chancellor announced that the national debt target has been met and predicted the ‘end of austerity’ a year early.

The Office for Budget Responsibility has revised economic growth slightly upwards from 2.4% to 2.5% for 2015, while inflation has been revised down to 0.2%. A budget surplus of 0.2% has been forecast for 2018/19, with borrowing levels revised downwards from the previous Autumn Statement forecast, to £90.2bn for 2014/15.

However, despite a £6bn windfall resulting from lower oil prices and welfare costs, the Chancellor announced that further savings to the tune of £30bn would be needed by 2017/18.

While keen to emphasise the benefits of ‘sticking to the fiscal path’, the Chancellor found room for a number of measures for individuals and businesses.

Among the headline measures for individuals was the announcement of plans to scrap annual tax returns, replacing them with ‘digital tax accounts’. The income tax personal allowance will also rise to £10,800 next year and £11,000 the following year, while the higher rate threshold will see an above inflation rise from £42,385 to £43,300 by 2017/18. Meanwhile, the pension lifetime allowance will fall from £1.25m to £1m from 2016/17.

The Chancellor also unveiled some key reforms for savers, confirming that 5m existing pensioners will be given access to their annuities from 2016. In addition, cash ISAs are set to be made more flexible from the Autumn. A new personal savings allowance will make the first £1,000 of interest on savings tax-free for most savers, while first time buyers will be offered a helping hand onto the property ladder, via a new Help to Buy ISA.

Having already confirmed the launch of a business rates review in the run-up to the Budget, the Chancellor announced that the planned reduction in the Annual Investment Allowance to £25,000 will no longer take effect from 1 January 2016. Additional news for businesses included further measures aimed at supporting regional growth and tax cuts for the North Sea oil and gas industry.

Other measures announced include a 1p cut in beer duty, together with a cancellation of September’s planned fuel duty increase, which the Chancellor claimed would cut the price of a tank of petrol by £10.

2015 Budget Special: the business reaction

CBI Director-General, John Cridland, said: ‘It’s positive that the Government has accepted the independent Low Pay Commission’s (LPC) recommendations on the adult and youth rates. The Commission struck a careful balance, helping many low-paid workers without damaging their job prospects’.

However, he voiced concern that the Government chose to increase the minimum wage for apprentices to higher than recommended.

EY Managed Services Partner, Graeme Swan, reacted to plans to completely abolish self-assessment tax returns, saying it is ‘a necessity and a reality in the digital world we live in. The move to an online individual tax account will make it much easier and simpler for customers’.

In response to the proposed pensions changes, allowing individuals to trade their annuities, TUC General Secretary, Frances O’Grady, said: It’s hard to see how such a trade in so-called ‘death bonds’ could work without a strong risk that many retired people will get a poor deal’.

John Longworth, Director General of the British Chambers of Commerce (BCC), said: ‘The Budget unveiled today recognises both short-term and electoral horizons and long-term economic needs. The Chancellor’s focus on business growth and prosperity will receive a warm welcome from businesses of all sizes’.

‘Businesses in every corner of the UK want more sustainable public finances, and they also want governments to take steps to support growth. Once again, it appears that the Chancellor has pulled off a difficult balancing act, maintaining fiscal discipline while ensuring that necessary deficit reduction doesn’t undermine the UK’s growth prospects.’

2015 Budget Special: the business reaction

CBI Director-General, John Cridland, said: ‘It’s positive that the Government has accepted the independent Low Pay Commission’s (LPC) recommendations on the adult and youth rates. The Commission struck a careful balance, helping many low-paid workers without damaging their job prospects’.

However, he voiced concern that the Government chose to increase the minimum wage for apprentices to higher than recommended.

EY Managed Services Partner, Graeme Swan, reacted to plans to completely abolish self-assessment tax returns, saying it is ‘a necessity and a reality in the digital world we live in. The move to an online individual tax account will make it much easier and simpler for customers’.

In response to the proposed pensions changes, allowing individuals to trade their annuities, TUC General Secretary, Frances O’Grady, said: It’s hard to see how such a trade in so-called ‘death bonds’ could work without a strong risk that many retired people will get a poor deal’.

John Longworth, Director General of the British Chambers of Commerce (BCC), said: ‘The Budget unveiled today recognises both short-term and electoral horizons and long-term economic needs. The Chancellor’s focus on business growth and prosperity will receive a warm welcome from businesses of all sizes’.

‘Businesses in every corner of the UK want more sustainable public finances, and they also want governments to take steps to support growth. Once again, it appears that the Chancellor has pulled off a difficult balancing act, maintaining fiscal discipline while ensuring that necessary deficit reduction doesn’t undermine the UK’s growth prospects.’