The emergency Budget promised during the election process has been set for 22 June 2010 when George Osborne will set out the first spate of economic strategies intended to bring the country’s financial affairs more into balance. In addition to the strategies that will be embodied within the budget there is already on the table a commitment to speed up the process of reducing the budget deficit and the Chancellor has already made a commitment to reduce this by a policy of cutting out perceived waste of some £6 billion in the current year. It is thought that this process will be with almost immediate effect.
Some may remember the ill-fated Her Majesty’s Revenue and Customs (HMRC) ‘interventions’ pilot. This was an attempt to contact taxpayers more informally about potential errors on their tax returns. It failed because it was introduced with inadequate consultation and communication. The project was shelved. HMRC went back to the drawing board and it has now developed the concept of ‘compliance checks’.
These are a new form of checking environment for income tax, capital gains tax, corporation tax, NICs, PAYE and VAT. (Note it does not at this stage cover inheritance tax or other taxes). The ideas were put out for consultation last May. More information was released about them in a paper from HMRC on 10 January 2008 called ‘A new approach to compliance checks: responses to consultation and proposals” which can be viewed on the HMRC website. This is part of a consultation that closes on 6 March 2008.
It has been with us for nineteen years…..but still causes confusion!
The option to tax was introduced in 1989. It represented a major change in the world of VAT, in that it effectively gives a taxpayer the “option” to decide whether certain supplies involving land are going to be standard rated or exempt. This is quite a revolutionary concept……making your own decision about charging or not charging VAT!
We have been waiting some time for more details of the new relief for the disposal of businesses and business assets which will apply from 6 April 2008. Now that we have draft legislation and explanatory notes together with questions and answers on the HMRC website, we can be a little more sure what will – and what will not – attract relief.
The relief is very largely modelled on the old retirement relief, that many will remember. However the relief is much broader and much simpler than retirement relief, and is therefore likely to be more widely applicable.
Friend or foe? The flat rate scheme was introduced in 2003 with a great deal of anticipation – mainly because the Chancellor had been wetting everyone’s appetite in advance about the great time-saving benefits it would offer a small business in terms of administration.
However, nearly five years later, the conclusion of the profession is that the time-saving benefits are not great – but there are some taxpayers that can save significant amounts of VAT by adopting the scheme. In this article, I will focus on the potential tax savings of the scheme but it must not be forgotten that the flat rate scheme is just like football…..for every winner, there will also be a loser!