The View from No 50
K P Bonney & Co
Chartered Accountants and
Chartered Tax Advisers
Ilkley LS29 6JA
Tel: 01943 870933
Fax: 01943 870925
Like London buses, here comes the next amnesty. This one is for traders who should have registered for VAT but haven’t.
The amnesty runs until the end of September.
The carrot is a late registration penalty of 10% (normally 15% - 100%).
Our Advice: If your VATable sales exceed the registration threshold you should give serious consideration to participating in the amnesty. You have been enjoying an unfair advantage over your competitors. Be brave enough to compete on equal terms.
I mentioned the amnesty for plumbers in my May newsletter. Since that amnesty closed HMRC have arrested six ‘ghost’ plumbers and have opened investigations into 600 others. No doubt those guys now wish they had come clean when they had the chance.
“Due to a higher than anticipated number of Self Assessment statements to be issued this year HM Revenue & Customs will not be able to issue paper Self Assessment tax statements to all customers who should receive them during the normal July period for issue.”
So read the press release posted on the HMRC website on 25 July.
Some of HMRC’s ‘customers’ have to make payments of tax twice a year. They make one payment at the end of January and another at the end of July. HMRC knew who these customers were in January so it beggars belief that they were caught out by the number of statements to be issued in July.
This is another example of what happens to an organisation when it lets all of its good people go.
What a shame for the ‘customers’ who have no alternative but to keep on ‘buying’ from HMRC.
DO YOU KNOW ANYONE WHO HAS UNDERGONE AN IVA?
First up, what is an IVA? IVA is short for individual voluntary arrangement. It is an arrangement struck between an individual and his or her creditors. Typically, the individual, sometimes called the debtor, is not able to pay his or her debts as they fall due. The debtor appoints a licensed insolvency practitioner. The insolvency practitioner helps the debtor to draw up and implement a plan to pay the creditors some or all of their money over a defined period of time.
The services of the insolvency practitioner do not come free.
Up until recently the insolvency practitioner charged VAT on his fee. But in July a tribunal held services of this kind are exempt from VAT. HMRC has stated it will not be appealing against the decision.
Our Advice: Do you know anyone who has undergone an IVA? Anyone in that position should now contact their insolvency practitioner and ask for a refund of the VAT originally charged. Don’t feel sorry for the insolvency practitioner. HMRC will make a corresponding repayment to him.
STATE PENSION TAXABLE?
Quick question. State pension. Taxable or not?
I recently prepared a tax return for a pensioner in my capacity as a volunteer with Tax Help for Older People. His only source of income is the state pension. Having worked all his life his state pension is a very respectable £10,000. As an elderly person he is entitled to an age related personal allowance of £9,500. I advised him the excess of £500 is chargeable to tax and that tax at 20% means he has to pay £100.
Disgusted, he arranged to see his MP. Fair enough.
What took me aback was the MP confidently informed his constituent the state pension is not taxable and that he would write to Mr Bonney and put him right.
Well, time has gone by and I am still waiting.
I suspect the MP concerned has passed the matter to a researcher who has found the state pension is indeed taxable and the whole matter has been swept under the carpet without a word of apology to the pensioner.
It really surprised me that a member of parliament did not know the state pension is taxable. But then taxation is my bread and butter. Perhaps I am being harsh.
If you answered ‘not’ to the original question may be you have some sympathy with the MP. But then again……
Why does the confusion arise?
I suspect the reason is this. The Department of Work and Pensions (or whatever it is called this week) unlike all other pension providers, does not operate PAYE. Isn’t that bizarre? Instead of retaining the tax at source it pays out the state pension gross and expects others to work out the tax liability and pay it to HMRC.
So the state pension is taxable but is not subjected to tax by deduction at source.
From 1 November children under the age of 18 will be able to have ISA’s too.
The contribution limit is set at £3,600 per annum.
The investor can decide how much of the contribution goes into shares and how much goes into cash.
Hitherto some parents have been discouraged from setting up savings plans for their children because they, the parents, can be charged to tax on the resulting income.
Junior ISA income is not taxable on the parents.
Will the banks and building societies rise to the challenge by offering some attractive savings rates?
I am sceptical. There is no loyalty flowing from banks to customers. If you have children who could benefit from this new measure you will probably have to teach them to become rate tarts.
FROM KABUL TO THE KOP
The Liverpool manager flies to Kabul to watch a young Afghani play football, is suitably impressed and arranges for him to come over.
Two weeks later Liverpool are 4-0 down to United with only 20 minutes left. The manager gives the young Afghani striker the nod and on he goes.
The lad is a sensation. He scores five goals in 20 minutes and wins
the game for
When the young lad comes off the pitch he phones his mum to tell her about his first day in English football.
'Hello mum. Guess what?' he says 'I played for 20 minutes today. We were 4-0 down but I scored five and we won. Everybody loves me, the fans, the media, they all love me.'
'Wonderful,' says his mum, 'Let me tell you about my day. Your father got shot in the street and robbed. Your sister and I were ambushed and beaten and your brother has joined a gang of looters, and all while you were having such a great time.'
The young lad is very upset. 'What can I say mum, but I'm really sorry.'
Sorry?!!!' says his mum, 'It's your fault we came to
My thanks to Bob for that one.
All offerings gratefully received.
Copyright: K P Bonney & Co LLP 2011. All rights reserved. No part of this publication may be produced, stored in a retrieval system, or transmitted in any form or by any means, electronic mechanical, photocopying, recording or otherwise without prior written permission of the publishers. Disclaimer: The publishers have taken all due care in the preparation of this publication. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the authors or the publisher.
Back to the home page