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Bates
Weston Tax Alert. |
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HMRC
penalties and reasonable care |
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If you are in business or have
complex tax returns to submit you should be taking an interest in the new
penalty regime which applies from 1 April
2008. Returns affected will
be: 1. Self assessment returns
for 2008-09 Amounts of
penalty The penalty rates rise
according to the behaviour of the taxpayer giving rise to the inaccuracy.
The rates of penalty are as follows:
The rate of penalty for an
error where the taxpayer has taken reasonable care is zero – thus if
taxpayers take care and despite this make a mistake they will not be
penalised for that mistake. Disclosure The current scheme of mitigated
penalties will no longer apply, but taxpayers will be able to reduce the
gross penalty shown above by making a disclosure of an inaccuracy. A
disclosure of the inaccuracy is defined by the legislation
as:
Reasonable
care A key consideration is the
definition of reasonable care. It you are seen to be taking reasonable
care you should be able to avoid penalties, if not penalties will
automatically apply. Back to
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IHT
planning points post 5 April 2008 |
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We have highlighted below a
number of estate planning issues that you may want to review, now that a
new tax year is underway. Transferable nil rate
band It is now possible for married
couples and civil partners to pass any unused proportion of the nil rate
band on a first death to the surviving partner. When the second partner
dies their estate can claim the additional
allowance. The nil rate band is the amount
of chargeable assets that you can transfer during your life or when you
die, without paying inheritance tax. Currently this is set at
£312,000. An important point for estate
management post the second death is that a formal claim for the unused
proportion of the first death nil rate band, must be made within 2 years
of the second death. The transfer is not automatically
given. The future for will
trusts The following strategies may
still be of value: 1.
If assets are likely to
increase in value faster than the annual increase in the nil rate band
there may be an advantage in transferring the assets into a discretionary
trust on the first death. 2.
In certain circumstances it may
be possible to cater for the needs of children using discretionary
trusts. 3.
Taxpayers who hold assets that
would qualify for business or agricultural property relief could consider
leaving these assets to a discretionary trust. This would protect
beneficiaries whose estates may not be able to claim continuing relief on
the second death. Review your Will
now! There is no doubt that changes
to inheritance tax in recent years have radically altered the impact of
inheritance tax. If you have not reviewed your will recently, now may be
the time to act. Back to
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VAT
reverse charge accounting for buyers |
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Question: Under
what circumstances can standard rated goods be sold by a VAT registered
business in the Answer: The
sale of mobile phones or computer chips to another VAT registered business
in the You may have received an
invoice from a supplier of mobile phones or computer chips (invoice value
exceeding £5,000) with a cryptic comment added, (we have assumed a supply
of £10,000 of mobile phones or computer chips):
“No VAT charged – output
tax of £1,750 to be accounted for by customer to
HMRC.” This of course throws everyone
in accounts into a state of confusion. This is what the accounts team
should do: 1.
Post the £10,000 cost to the
usual nominal code, purchases etc. If using Sage or similar accounting
software “T0” the transaction so that no VAT is added to the purchase by
the software. 2.
Pay your supplier the amount
charged, in our example £10,000. 3.
Keep a copy of the invoice(s)
in a file which you can access when the VAT return is being
prepared. 4.
When preparing your quarterly
return add £1,750 to So although notionally you have
paid the £1,750 to HMRC by adding the amount to That’s all you need to
do. Back to
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DISCLAIMER - PLEASE
NOTE: The ideas shared with you in
this email are intended to inform rather than advise. Taxpayers
circumstances do vary and if you feel that tax strategies we have outlined
may be beneficial it is important that you contact us before
implementation. If you do or do not take action as a result of reading
this newsletter, before receiving our written endorsement, we will accept
no responsibility for any financial loss
incurred. |
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Bates Weston Canal
Street DE1
2RJ Tel: 01332 365855 Fax:
01332 291294 web:
www.batesweston.co.uk BW Business Services Limited
t/a Bates Weston registered office The Mills, Directors: R J Carman FCA, R J
Smith FCA, I K Neal FCA CTA, G Evans FCA, W D Thomas
ACA Associate: M Morton
FCA Registered to carry on audit
work and regulated for a range of investment business activities by the
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