The tax gap for 2016 – 2017 has fallen to 5.7%, HMRC has confirmed. The “tax gap” relates to the tax that should be paid and the actual tax paid to HMRC.

In a statement, Mel Stride, Financial Secretary to the Treasury, said: ‘These really positive figures show that the tax gap is the lowest in the last five years, which reflects the hard work that HMRC and I have been doing to ensure we support businesses to pay the right tax at the right time and clamp down on tax evasion and avoidance.’

She added, ‘Collecting taxes is essential for funding our vital public services such as the NHS. Indeed, had the tax gap remained at its 2005/06 level the UK would have lost £71 billion in revenue destined for public services, enough to build 200 hospitals.’

It is understood that HMRC considers the improvement to be linked to the department’s sustained efforts to tackle evasion and avoidance. From the findings in the Tax Gap publication, it was noted that small businesses made up the largest proportion of unpaid tax of £13.7 billion.

Additional findings include:

  • 9.2 billion of unpaid taxes were due to errors and failure to take reasonable care.
  • £5.4 billion made up by criminal attacks.
  • £7.9 billion from income tax, national insurance contributions, and capital gains tax, equivalent to 16.4% of self assessment liabilities.
  • The VAT gap indicates an improving trend, falling from 12.5% in 2005/06 to 8.9% in 2016/17.

RTI filing extended by HMRC until April 2019

The payroll Real Time Information (RTI) late filing easement has been extended by HMRC until April 2019. For the RTI payroll, it is a requirement for employers to submit details of payments made to employees on or before the day that salaries/wages are paid. The new amended easement applies when a Final Payment Submission (FPS) is late but is completed within three payment days of the employee’s pay day.

The easement applies from 6 March 2015 to 5 April 2019, but it must be noted that HMRC has clarified that employers who persistently file after the payment date but within these three days may be contacted or considered for a penalty. This could range from £100 to £400, depending on the size of the company.

Fraudsters stopped by HMRC, saving the public £2.4m

Fraudsters have been tackled by HMRC, with a focus on the use of premium rate phone numbers for services HMRC provide for free. The reported fraudsters create fake websites for HMRC and then look to charge for what are actually free services from HMRC, through re-direction to premium rate phone numbers. HMRC has confirmed that its genuine 0300 numbers are mainly free, or at least charged only at the local landline rate.

Mel Stride, Financial Secretary to the Treasury, said, ‘We know that HMRC is the most spoofed government brand, as criminals try to take advantage of the fact that everyone has some involvement with the tax authority. In this particular case, scammers try to dupe the public into paying large sums for services that are available for free or low cost.’

She added, ‘This is a brazen con, charging premium rates whilst simply redirecting calls to the real HMRC numbers that are available at low or no cost. It is a testament to the hard work of HMRC that they have prevented criminals extracting £2.4 million from the public.’

Latest edition of Employer Bulletin for employer guidance

In the latest edition of the Employer Bulletin, published by HMRC, there are a number of articles, including:

  1. P11D and P11D(b) filing and payment deadlines.
  2. Benefits in kind with cash allowances, flexible benefit packages, and salary sacrifice.
  3. National Living and Minimum Wage increases.
  4. Student Loans – to update payroll if you receive an SL1 for an employee.
  5. Fitness at Work – to help employers cut these costs and take advantage of the significant tax savings.
  6. Childcare voucher information and contracted childcare schemes.
  7. The Apprenticeship Levy – Levy-paying employers can then create an account on the apprenticeship service to spend levy funds on apprenticeships.
  8. CIS – Construction Industry Scheme with key pointers for subcontractors.

HMRC proposes new VAT rules for construction services

Subject to consultation, HMRC proposes to introduce new VAT rules for construction services, which have been published in a draft statutory instrument for consultation. It suggests, under the draft legislation, that supplies of standard or reduced-rated construction services between construction or building businesses will be subject to a domestic reverse charge. The result would mean that the customer will be liable to account for VAT due rather than the supplier. This legislation is expected from the 1st October 2019.

HMRC publish list of software providers for Making Tax Digital

HMRC has published the Making Tax Digital for VAT Guide, the Software Suppliers Supporting Making Tax Digital List, and HMRC Stakeholders Communication pack on the GOV.UK website. All can be found on the MTD for VAT collection page.

The notice gives guidance on digital record keeping and should be read in conjunction with other VAT notices.

  • HMRC notes that more than 150 software suppliers have stated their interest in providing software for Making Tax Digital for VAT. Currently, there are just over twenty developers with VAT-MTD ready products.
  • Of the 150, over forty have said they’ll have software ready during the first phase of the VAT-MTD pilot.
  • The pilot will be opened to allow more businesses and agents to join later this year.

There is also the MTD for Business – Stakeholder Communications pack, which is intended to support businesses that need to make the transition to digital VAT business record keeping as well as the submission of VAT returns using MTD-compatible software from 1 April 2019.

If your business is above the VAT turn-over threshold of £85,000, please discuss with your accountant how QuickBooks Online can help get you ready to file for MTD for April 2019.

Becoming self-employed? Here are five recommended rules to help you.

1. Have clear goals and be realistic about what you want to achieve.

Consider what you want to achieve, whether this be the dream of building your business, eventually having staff, or giving something back to society. Do you want to work less hours, have a better work / life balance, or just be your own boss?

Once you decide, make sure you make your goals realistic and ensure you determine your process goals – the things you will need to do to get you to your overall goal.

Have your goal and objective clear and written down at the start, and keep referring to it to avoid straying off course. Building a business takes time and any distraction is time you will not get back.

2. Be brutal with your time and leverage support around you.

Be strict about working hours, as this may be one of the main reasons you went self-employed in the first place. Don’t be tempted to waste your time: balance your working hours between building your new prospect base, networking for business, and delivering to your customers.

Make sure you have a support network around you. It can be lonely working alone and it is great to have others with whom to share ideas and thoughts to help you and your business improve. These can be colleagues, networking groups, or industry bodies.

3. Have professional standards.

Consider all you do to put the customer at the heart of your business and be professional at all times. Be on time for all appointments and be dressed appropriately, acting professionally on the clients’ premises and following appropriate business etiquette.

Balance what you do as a professional off-line with that online. Make sure your website, invoices and methods of payment are all to a high professional standard. With cost effective business solutions such as QuickBooks Self-Employed, you can easily manage all aspects of your business process in a professional way.

4. Keep close and connected to your industry.

Whatever industry you are in, it will be constantly evolving, and it is key to keep connected, staying close to new developments, compliance, regulations, and best practices. This will help you get the training and certifications you need, as well as remaining an expert in your industry.

5. Maintain your work / life balance.

Focusing only on work is not good for anyone, so do consider what other hobbies or family activities you might enjoy. Maintain your social and family balance and avoid being over-worked.