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Proposals to pay doctors pension tax bills: update

In an attempt to encourage working overtime shifts, doctors have been promised that their tax bills for higher rate pension relief will be covered by the NHS. This development follows the refusal by doctors to work overtime because of tax penalties received on their pensions due to the £40,000 annual allowance limits.

The amount people can put into pensions tax free was reduced for all pension savers in 2010, when the £255,000 allowance was cut to £40,000 a year. This problem originally arose in 2016 when a tapered annual…

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Should I register for VAT?

In broad terms, and subject to certain exceptions, a business will be required to register to charge and pay VAT once annual sales reach a pre-set annual threshold, which is currently £85,000. This threshold is determined by total sales and is not the same as total profits (which is generally sales minus expenses).

However, a business can register for VAT even if its turnover (total sales) is below the threshold and it may actually save tax by doing so, particularly if its main clients or customers are organisations that…

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Salary or bonus?

As 31 December approaches, many companies will be getting ready to tie up tax matters for their financial year-end and giving consideration to salaries, bonuses and dividends.

Given current tax rates, paying a dividend rather than a salary will often be a more cost-effective way of withdrawing profits from a company. However, if the company is loss-making and has no retained profits, it will not be possible to declare a dividend, and an alternative will need to be considered. This often involves an increased salary or a one-off bonus…

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Probate fees changes abandoned

The government has confirmed that controversial increases in probate fees will not go ahead as planned. Fees will now remain at a flat rate, after proposals for a new tiered approach met with strong opposition on the grounds they amounted to a ‘stealth tax’ on bereaved families.

Following a period of consultation, plans to charge higher probate fees were set out in the Non-Contentious Probate (Fees) Order in November 2018. This proposed abandoning the existing fixed fee of £155 for grant applications made by solicitors and a charge of…

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Losses in the first years of trade

If a new business makes losses in its first few years of trading, there may be scope to carry back those losses and set them off against other income received in the years prior to commencement of the trade. This is commonly referred to as ‘early trade losses relief’ and it applies to losses sustained in the tax year in which a trade is first carried on, or in any of the next three years.

The provisions may be particularly useful to new businesses as they may be used…

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Recognising genuine HMRC contact

Broadly, phishing is the fraudulent attempt to obtain sensitive information such as usernames, passwords and credit card details by disguising oneself as a trustworthy source in an electronic communication. This is generally carried out by email spoofing or instant messaging, and it often directs users to enter personal information at a fake website which matches the look and feel of the legitimate site.

Most people are aware of the increase in volume and sophistication of phishing campaigns in recent years, but worryingly, there has also been a notable rise…

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Tax-free expenses for home-workers

Providing certain conditions are met, no tax liability will arise if an employer makes payments to employees for reasonable additional household expenses, which the employee incurs in carrying out duties of their employment at home under ‘homeworking arrangements’.

‘Homeworking arrangements’ are arrangements between the employee and the employer under which the employee regularly performs some or all of the duties of the employment at home. There is no requirement for any part of the employee’s home to be used exclusively for the purposes of the employment.

HMRC will accept that…

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HMRC win IR35 case

Following a series of defeats, HMRC have won a First Tier Tribunal (FTT) case concerning the employment status of three BBC presenters who used personal service companies (PSCs).

The case concerned the working arrangements for presenters Joanna Gosling, David Eades and Tim Willcox. Unusually, the judges disagreed about the IR35 status of the presenters, although they were unanimous that the ‘imbalance of bargaining power’ between the presenters and the BBC was a significant factor in the case, saying "The BBC were in a unique position and used it to…

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Delay in implementation of domestic reverse charge VAT for construction services

HMRC have published Brief 10 (2019), which explains that the introduction of the domestic reverse charge for construction services will be delayed for a period of 12 months until 1 October 2020.

A domestic reverse charge is an anti-fraud provision, which means that the UK customer who receives supplies of construction services must account for the VAT due on these supplies on their VAT return, rather than the UK supplier.

To allow for potential cash-flow and administrative impacts the change could have on businesses, there has been a long…

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HMRC publish Agent Update: Brexit Special

HMRC have published a Brexit edition of their Agent Update publication, which contains some useful information on changes to various procedures after Brexit.

In particular, articles are included on the following topics:

Grants for businesses completing customs declarations: £16m in new government funding is now available to help businesses train staff in making customs declarations, and to help businesses who support others who trade goods to invest in IT. This will ensure that trade with the EU continues as smoothly as possible after Brexit on 31 October.

Customs agents currently help…

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