Download our flyer about the new workplace pension scheme that will be introduced in 2012 click here

HMRC’s director of customer operations recently disclosed that: “Most employers get their PAYE returns right. The few who do not can cause problems for their employees, for example, incorrect deductions of tax.”

Here’s a few examples of a number who did not get their returns right! Based on incorrect returns submitted HMRC now have the following data in their files:

• 40 people were apparently 200 years old or more, according to incorrect dates of birth on their paperwork.
• 824 employees with forenames but the surname recorded as “unknown”.
• 75 people have simply been named “casual”, 11 as “cleaner”, nine as “worker” and six as “students”.
• 572 people are listed as Mr or Mrs X on their PAYE forms.
• 128 staff are known in their workplace as Mr, Ms or Mrs “Dummy”.

HMRC conclude:
“Around 80% of errors in employee data are due to an incorrect name, date of birth or national insurance number; straightforward information that can be collected and checked quite easily.

So, whether you are employing ‘Mr or Mrs J Smith’ – or even ‘Mr or Mrs A N Other’, please use the full and official name on your PAYE paperwork. First names are very important, especially for common surnames.”

Thank you to everyone who came to the Expo.

Charities only need to account for VAT on those parts of its activities that are within the scope of VAT. A quick checklist follows:

• Sale of donated goods from a charity shop – zero rated supply
• Investment income, bank interest etc – outside the scope of VAT
• Donations from general public – outside the scope of VAT
• Fundraising events – exempt from VAT
• Grants, see below

The VAT status of the charity shops is advantageous. Even if the zero rated sales are below the current registration limit of £73,000, it would be worthwhile registering the trade voluntarily as any associated costs that include VAT can be reclaimed.

Grants received

Although most grants received by a charity are outside the scope of VAT, occasionally grant providers will require the charity to provide services to individuals or groups as a direct condition of grants made. If this is the case the grant is a standard rated transaction. In most cases this will not cause difficulties as most grant providers are Local Authorities that are VAT registered and can claim back any VAT charged.

Nevertheless charities should take care to seek advice and ensure that they charge VAT on grant income when appropriate.

The Pensions Regulator has published information about proposed workplace pension changes that are due to be phased in from next year.

Workers who will need to enrol in the new workplace pension arrangements are:

• Employees who earn more than the minimum earnings threshold, and
• Are aged between 22 and state pension age, and
• Work in the UK.

Each employer will be given a date from which changes will have to be in place. This will be known as your staging date. Larger employers will have the earliest staging dates. The process will begin October 2012 and continues through to 2016.

Readers may find the following notes useful:

• Find out what your likely staging date will be at www.tpr.gov.uk/staging
• You will be required to contribute at least 3% of worker’s earnings.
• Workers will be required to make a contribution such that the minimum, combined contribution is 8%.
• Workers will qualify for tax relief on their contributions.
• Existing pension arrangements may qualify; you will need to check with your pensions advisor.

More general information on the changes is available at www.dwp.gov.uk/policy/pensions-reform

Members of the ICAEW Business Advice Service offer a free initial consultation to new clients.

Visit www.businessadviceservice.com

VAT registration

HMRC are of the opinion that there are a number of businesses that should be registered for VAT, and so far, they have not registered. They are in the process of sending out 40,000 letters to traders who they believe may be in this category.

HMRC are offering businesses that “come clean” and notify HMRC of an intention to register before the end of September 2011, reduced or nil penalties. Subsequently formal applications have to be submitted on VAT form 1 before 31 December 2011.

The current VAT registration threshold is £73,000. If you have already passed this annual limit in the last twelve months, are about to, or expect to in the next 30 days, you might like to respond to this offer.

Penalties for late registration can be up to 100% of additional VAT due.

Fast Food Outlets

HMRC believes that there are a number of fast food outlets that are deliberately falsifying their records and miss-declaring their true sales levels in order to avoid paying their correct taxes.

They have set up yet another specialist task force to tackle this avoidance.

Penalties will be levied in addition to recovery of unpaid taxes. Those businesses discovered may also face criminal prosecution.

With effect from 1^st October 2011 the following changes will be made to the National Minimum wage:

Adult Rate for Workers age 21 and over £6.08 per hour 

Development rate for workers aged 18 – 20 inclusive £4.98 per hour

Young Workers Rate for workers aged 16 – 17 years old £3.68 per hour

Apprentice Minimum Wage £2.60 per hour 

The apprentice rate applies to apprentices under 19 or 19 and or over and in the first year of their apprenticeship.

If you charge a customer VAT and subsequently discover that the supply of goods or services was exempt, zero rated or outside the scope of VAT you can make a claim to HMRC to refund the VAT overcharged.

The phrase “unjust enrichment” means that you are required by HMRC to refund any VAT repaid to you in this way to your customers, you cannot keep the refund for yourself!

HMRC have a special reimbursement scheme that deals with claims for repayment. When making a claim you will have to agree to:

1. Sign a formal undertaking that you will comply with the terms of the reimbursement.
2. Make all refunds to your customers within 90 days.
3. Repay any residual amounts not returned to customers within 14 days of the 90 day time limit.
4. Pass on any statutory interest paid with the refunds to your customers.

Additionally you will have to keep the following records:

• Names and addresses of the customers you intend to reimburse.
• Total amount paid to each customer.
• Amount of interest paid to each customer.
• Date you refunded the money.

HMRC will also seek to reduce refunds due if the supply resulted in a claim for associated VAT input tax. For example if you supplied services at standard rate and there were associated costs where you recovered input tax, and then you discovered that the supply should have been an exempt supply, then HMRC would reduce the refund of over-declared output tax by the over-claimed, associated, input tax.

If you need to make a claim under the reimbursement scheme you will need to submit a formal undertaking in writing. Please contact us and we will organise this for you.

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