Weekly Tax Update - Monday 3 December 2012

1 General news

1.1 Agent view

HMRC has recognised the concerns raised by agents in response to last year's consultation - 'Establishing the future relationship between the tax agent community and HMRC' about proposals for an 'agent view' (bringing information together on agents and their clients) and improving standards.

This work will now proceed at a slower pace and HMRC has made a commitment to the professional agent bodies through the Joint Tax Agent Strategy Steering Group (JTASSG) that there will be full transparency and consultation. 60 agents have been selected for a pilot, each with at least 200 self-assessment clients where either less than 80% of clients submit returns on time or less than 60% of clients pay on time.

www.hmrc.gov.uk/news/agent-view-pilot.htm

1.2 Removing Barriers to Legacy-Giving: A Report to the Department for Culture, Media and Sport

The culture secretary, Maria Miller, is supporting eight out of ten proposals made by a report by Legacy10 into legacies, including the appointment of a 'charities tsar' to coordinate government policy on charities. Other accepted recommendations include encouraging the top 250 companies to provide assistance to members of their staff who wish to make charitable gifts through their wills.

Mrs Miller refused to endorse two of the suggestions put forward by the report. These were a top tax rate cut for those who have made financial commitments to charity over a number of years, and a requirement on businessmen nominated for a knighthood to show evidence of charitable involvement.

Mrs Miller said: "Some of our arts and heritage bodies have built great relationships with their supporters in this area, but for all that, only 7 per cent of people currently leave a legacy in their will. And too many companies and organisations in the arts and heritage world still have no legacy giving scheme in place.

So they need to get better at asking for this kind of support. I want many more cultural organisations to benefit from legacies, and we will be happy to help make this a core element of greater giving to culture across society as a whole"

Mrs Miller will respond in full to the recommendations in the report by the end of January.

The report by Legacy10 is one of three commissioned by Miller's predecessor, Jeremy Hunt, to look at ways to encourage philanthropy to support the cultural sector. The other two are as follows:

How to improve digital giving and smaller donations, being carried out by Matthew Bowcock, chair of the Community Foundation Network; how to strengthen fundraising outside London being carried out by Peter Phillips, chair of Birmingham Opera Company. www.legacy10.com/sites/default/files/downloads/Removing%20Barriers%20to%20Legacy-Giving_0.pdf

2 IHT and trusts

2.1 Inheritance Tax (Market Makers and Discount Houses) Regulations

Regulation SI 2012/2093 has been issued amend the Inheritance Tax Act 1984 to apply Business Property Relief to any property if the business concerned is a market maker anywhere within the European Economic Area.

www.legislation.gov.uk/uksi/2012/2903/pdfs/uksi_20122903_en.pdf

3 PAYE and employment matters

3.1 HMRC Employment Related Securities bulletin November 2012

HMRC has issued its November Employment Related Securities bulletin which covers:

New telephone number. Scheme approvals – company resolutions. Scheme approvals – process. Share Incentive Plan – Notice to participants. Real Time Information and PAYE deadlines – expatriate workers and employees receiving employment-related securities. www.hmrc.gov.uk/shareschemes/erss-bulletin4.pdf

3.2 Penalties for late reporting under real time information (RTI) reporting

HMRC has now published guidance on late and inaccurate returns for 2012/13 and 2013/14.

Penalties for late returns 2012/13 and 2013/14

There will be no change to the penalties for late filing of returns for the tax years 2012/13 and 2013/14. The current penalty regime will continue to apply at the tax year end. There will be no penalties if in-year Full Payment Submissions (FPSs) are submitted late.

Employers and pension providers must submit an FPS 'on or before' they pay an employee or pensioner. If they still have information to send after 5 April, they can send this on an FPS until 19 April, then on an Earlier Year Update after that. To avoid a late filing penalty for 2012/13 and 2013/14, they must report the final payment made to an employee or pensioner by 19 May following the end of the relevant tax year.

Penalties for inaccurate returns 2012/13 and 2013/14

For the tax year 2012-13, HMRC will not charge penalties for inaccuracies identified on in-year FPS. But penalties may be charged after the end of the tax year, based on the final FPS for the year.

Penalties for inaccuracies may apply to in-year returns from the 2013-14 tax year. HMRC will use the same considerations which apply now under Schedule 24, Finance Act 2007 and continue to use a risk-based approach to identify employers who may be submitting incorrect returns.

www.hmrc.gov.uk/news/payerti-payments.htm

4 Business tax

4.1 Registering for Self-Assessment and National Insurance using form CWF1

Recent analysis has shown that a high proportion of the CWF1 forms received by HMRC are old versions which sometimes include incorrect contribution rates or exception levels.

From 1 February 2013...