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HMRC hammering down on auction sites

HMRC is bidding to gather as much information as possible from online auction sites, about online traders, as part of its e-marketplace campaign.

The e-marketplace campaign went live in March and is aimed at those people who buy and sell goods online as a trade or business, but who have failed to make a full disclosure of their income. Under the terms of the campaign, initial notifications of an intention to make a disclosure have to be made to HMRC by 14 June 2012. The full disclosure and payment of outstanding tax then has to be made to HMRC by 14 September 2012.

The auction sites have been reassured the notices do not mean a check of their own tax affairs and that the information requested is going to be used purely to check that their members are registered for tax. HMRC has left the online auction sites with no room to manoeuvre and in no doubt about the level of detailed information it requires.

If you have been trading online and have failed to disclose income, consider a voluntary disclosure using the e-marketplace campaign facility. HMRC accepts the majority of disclosures made through campaign opportunities at face value. The alternative will be more financially painful and far more stressful, with the real prospect of a full enquiry, or even a criminal investigation.

12,000 sent incorrect tax penalty notices from HMRC

HMRC has apologised to more than ten thousand people who were wrongly sent penalty notices after it believed they had failed to file self assessment tax returns. The 12,000 individuals are among many who have been removed from HMRC's self assessment database following a cleanse of the database and an invitation to taxpayers to contact HMRC if they felt they shouldn't be in self assessment.

The penalty notice letters warned individuals about £10 daily fines for non-filing which start on Tuesday, as well as a fixed penalty of £100. HMRC is to send letters apologising to those affected. According to national press, a spokesperson for HMRC said: "We are very sorry and can reassure these customers that we know who they are and that this letter is incorrect - they do not owe a penalty. We are writing to all of them to apologise and to explain this error." "We can reassure these customers that they have been removed from self assessment," they added.

HMRC is introducing new fine penalties this year, meaning that as well as the fixed £100 for late filing, individuals will also be fined £10 for each additional day from Tuesday 1 May, up to a maximum of £900 over three months. Returns that are six months late will be charged an additional £300 or five per cent of the tax due, whichever is the higher.

VAT – fed up with pasties?

The Government’s intended removal of ‘anomalies’ has revived the debate on fair taxation and a level playing field in relation to food stuff and catering. Despite the nation’s emotional attachment to zero-rated pasties, it would actually appear quite reasonable to subject hot pasties to the standard rate of VAT – just like all other hot take-away food. However, in relation to food and catering, anomalies seem to be pretty much the rule rather than the exception.

The UK has a derogation which permits slightly different rules to other EU member states. Further, the introduction and invention of new food and drinks over time, as well as the development of case law, makes it difficult to establish the VAT liability of many items with any certainty. Often-quoted examples are the different treatments of cakes versus biscuits and savoury snacks based on potatoes versus maize.

The fact that HMRC may grant different rulings to competing businesses for what would be in fact the same kind of supplies shows that we are currently far away from a level playing field.

HMRC's Real Time Information (RTI) pilot launched

A pilot project marking a significant change in the way that PAYE payments are calculated has been launched by HMRC, with the first volunteer employers testing the new Real Time Information (RTI) system.

Under RTI, employers and pension providers will inform HMRC about any PAYE payments, such as tax and NICs, each month as opposed to at the end of each tax year. 10 volunteer employers have now submitted their RTI returns, which HMRC hopes will make the PAYE process easier, more accurate and reduce HMRC administration and costs.

The majority of employers will join RTI from April 2013, with all employers switching to the service by October 2013. By this date, the RTI system will also support the operation of the Government's flagship Universal Credit welfare programme, which will calculate welfare claims and tax credits automatically based on real time earnings.