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January 2012 - E-NEWS
Please browse through this month's articles using the links below and contact us if any issues or questions arise.
- Employment Law Update
- Time to review your inheritance tax planning?
- What happens if you don’t have a Will?
- Changes to fuel advisory rates
- January’s money facts
- Pre-owned fixtures
- Patent box
- All internet and phone payments to be faster from 2012
- Employment tribunal fees plan unveiled
- ‘Excessive’ payment surcharges to be outlawed
- E-trader jailed over VAT fraud
In November Business Secretary, Vince Cable, announced proposals for sweeping changes to employment law. These proposals, which will be subject to public consultation, include:
- Introduction of “protected conversations”, i.e. a method by which an employer can have an off-the-record discussion with an employee, although it is not proposed that this will extend to discriminatory acts
- Introduction of a simplified form of compromise agreement, to be renamed ‘settlement agreement’
- An increase of the qualifying period to bring an unfair dismissal claim to two years of continuous employment
- Reducing the period for collective redundancy consultation to 60 (or fewer) days
- The ‘modernisation’ of maternity and paternity rights
- Removal of breach of an employment contract as a relevant breach for a whistleblowing claim
- A ‘rapid resolution scheme’ enabling simple claims to be settled within three months
- Compulsory mediation of all disputes through ACAS before a claim can be brought
- Financial penalties (payable to the Exchequer) on employers for breach of employment rights; and
- A fundamental review of the rules of procedure of the Tribunals inclusive of judges sitting alone on unfair dismissal claims.
We will give you more information on these areas as the details unfold.
Time to review your inheritance tax planning?
As with business plans, reviewing your personal finance plans will help you to make the most of your money. Inheritance tax (IHT) is an area that many overlook, but planning ahead is essential to make sure you don’t get caught out by hefty taxes.
Points to bear in mind include:
- Inheritance tax is payable on the sum of a person’s assets at death, plus any gifts that have been made within the last seven years, that exceed the current threshold of £325,000
- Gifts of less than £3,000 per tax year are exempt from IHT
- Regular gifts from income are also exempt from IHT as long as they do not reduce the usual standard of living and capital is not used
- Gifts to registered charities and the major political parties are exempt.
The draft clauses of the Finance Bill 2012 also set out legislative plans to provide a reduction in the rate of IHT from 40 per cent to 36 per cent, where 10 per cent or more of an estate is left to charity. This is due to take effect from 6 April 2012.
For more information about our Specialist Tax services click here
What happens if you don’t have a Will?
Recent figures suggest that as many as 60 per cent of Brits do not have a Will in place, but what happens if you don’t have a Will?
A Will allows you to plan, it means that your property and belongings are transferred and divided as you wish. It can also help you to plan to reduce inheritance tax and allows you to leave part or all of your estate in trust.
All these planning advantages are lost without a Will, in particular, a surviving spouse or civil partner will not automatically receive everything. While a partner where no marriage or civil partnership has taken place may receive nothing.
Changes to fuel advisory rates
HMRC has changed the fuel advisory rates for the third time this tax year. The new rates apply to all journeys on or after 1 December 2011 until further notice.
For one month after the date of change, employers may choose to use either the previous or new current rates.
The latest change is to the LPG rate, but the Diesel engine sizes also changed in June.
|
Engine capacity |
Petrol |
Diesel |
LPG |
|
Up to 1400cc |
15p |
12p |
10p |
|
1401 – 1600cc |
18p |
12p |
|
|
1601 – 2000cc |
15p |
||
|
2001cc + |
26p |
18p |
18p |
These rates are due for review in March 2012, unless the cost of fuel varies significantly in the meantime.
|
Current bank rate |
0.5% |
|
Quantitative Easing Scheme |
£275 billion |
|
Current inflation |
4.8% |
The introduction of a capital allowance for features integral to a building has created problems when the seller has pooled such assets.
A new clause requires the seller and buyer to agree a figure representing such assets and for both of them to use the same figure in their accounts. Such agreement must be within two years of the sale. HMRC has suspected that existing laws have been exploited for tax avoidance.
The clauses include the much-trailed scheme to impose a corporation tax rate of just 10% on the exploitation of patents and some other intellectual property. Using this arrangement is entirely voluntary.
Instead of ring-fencing such profits (as applies to tonnage tax and oil taxation), the new scheme involves ‘streaming’ income. Corporation tax is calculated in the normal way, but a deduction is then calculated to reduce the tax to 10 per cent on relevant income.
As usual, the arrangements are subject to many pages of detailed provisions, including anti-avoidance provisions.
All internet and phone payments to be faster from 2012
There is a new legal requirement for electronic payments to reach the recipient’s account by the business day after being sent at the latest.
Quicker internet and phone banking payments are set to become standard from 1 January 2012, enabling many consumers to pay their tax and credit card bills on a same-day basis for the first time.
The new maximum timescale for electronic payments, technically known as D+1, requires payments across the EU to reach the recipient’s account by the end of the next working day. However, all standing orders and one-off internet and phone banking payments in the UK will exceed this requirement, being processed end-to-end within two hours through the Faster Payments service.
The D+1 change, which forms part of the Payment Service Regulations*, is expected to bolster the number of Faster Payments by 25% next year, creating an additional 15 million internet, phone and standing order payments per month. So far in 2011, over £200 billion has been processed in more than 500 million Faster Payments transactions.
To help consumers make sense of the change, the Payments Council’s consumer education campaign PayYourWay.org.uk, has produced a factsheet.
For more information or to contact us about our Payroll Bureau, please contact James Alesbury, Payroll Manager on 023 8046 1200.
Link: CIPP
Employment tribunal fees plan unveiled
The government has outlined its plans for charging fees to take cases to employment tribunals, designed to cut a multi-million pound bill for the taxpayer and ease pressure on businesses.
Justice Minister Jonathan Djanogly launched a consultation on 14 December on two sets of proposals to ensure that people contribute financially for using the employment tribunal system, which is currently funded entirely publicly funded. There were 218,100 claims to tribunals in 2010-11, costing the taxpayer £84 million.
The proposals are also designed to help businesses by discouraging unmerited and unnecessary claims and encouraging early settlement of claims.
Mr Djanogly said: “Our proposed fees will encourage businesses and workers to settle problems earlier, through non-tribunal routes like conciliation or mediation and we want to give businesses – particularly small businesses – the confidence to create new jobs without fear of being dragged into unnecessary actions.”
He added: “We believe that people should pay a fair amount towards the cost of their case. Fee waivers will be available for people on low incomes to protect access to justice.”
The government will also continue to fund the cost of employment rights service Acas, which helps people in employment disputes to reach agreement without the need for legal proceedings and is free to users.
The two options put forward in the consultation are:
- an initial fee of between £150-£250 for a claimant to begin a claim, with an additional fee of between £250-£1,250 if the claim goes to a hearing, with no limit to the maximum award; or
- a single fee of between £200-£600, with a £30,000 limit on the maximum award and the option of an additional fee of £1,750 for those who seek awards above this amount.
In both options the tribunal would be given the power to order the unsuccessful party to reimburse fees paid by the successful party.
The consultation will close in March 2012, with a view to introduce the fees not before 2013-14.
Link: Introducing fees in employment tribunals and Employment Appeal Tribunal
‘Excessive’ payment surcharges to be outlawed
Businesses will be banned from levying “excessively high” surcharges on all forms of payment before the end of this year, under government plans.
Firms will be able to add a small charge to cover their actual costs for using any particular form of payment but following Office of Fair Trading (OFT) recommendations, the government announced on 23 December that it plans to:
- ban excessive surcharges on all forms of payment
- extend the ban across most retail sectors
- consult on implementing the EU Consumer Rights Directive, with the goal of banning above-cost surcharges on any form of payment (e.g. surcharges that exceed the costs the business incurs on a card payment) before the end of 2012, rather than mid-2014 as would be required under the European rules.
The government will publish a consultation in the new year setting out its next steps.
Consumer Minister Edward Davey said: "We want to make sure that consumers paying by card do not have to pay the excessively high surcharges being imposed on them by some airlines and other businesses. That is why we will consult on early implementation of the Consumer Rights Directive provision to protect consumers from excessively high credit and debit card charges."
The government move came after consumer rights group Which? made a super-complaint to the OFT in March 2011 about payment card surcharges in the passenger transport sector.
In its response, published in June 2011, the OFT found considerable evidence of companies using “drip pricing” practices for surcharges online – adding payment charges to the total price only after consumers have filled in a number of web pages during their purchase.
It concluded that surcharging for using a credit or debit card was potentially misleading to consumers when it came as a surprise and called for the government to ban surcharges on debit cards.
Link: Which? press release
E-trader jailed over VAT fraud
An online trader has been jailed for attempting to evade more than £420,000 of VAT, ahead of the launch of an HM Revenue & Customs (HMRC) campaign targeting people who use e-marketplaces to buy and sell goods and who fail to pay tax owed.
Gregory Allnutt, aged 40, from south-east London, was sentenced to 20 months imprisonment at Southwark Crown Court on 29 November after an investigation by HMRC. He had pleaded guilty to 12 counts of fraud.
Allnutt’s home was raided by HMRC officers in June 2011. Evidence uncovered proved that from 1 September 2007, he used a VAT registration number to obtain zero rated goods from suppliers within the EU and then sold them on through another online company, failing to declare and pay the tax to HMRC.
Mhairi Urquhart, senior lawyer in the Crown Prosecution Service’s Central Fraud Group, said: “Gregory Allnutt knew he was liable to pay VAT when he set up as a retailer of nutritional products.
“He soon worked out that he could make a lot more money selling electrical goods through eBay, and despite knowing that he was still liable to pay VAT when he did this, he instead pocketed £429,337 that was due to HMRC.
In early 2012, HMRC will be launching a campaign targeting people using e-marketplaces to buy and sell goods as a trade or business and who fail to pay the tax owed and has already begun gathering information needed to identify individuals and companies involved in this type of trade.
HWB
Chartered Accountants, Highland House, Mayflower Close, Chandlers Ford, Eastleigh,
Hampshire, SO53 4AR.
