In the period since the Budget in March a number of consultation papers and discussion documents have been published by HMRC. Draft legislation relating to many of these areas will be published on 6 December 2011. Click on the link below for a summary of these proposals.

Autumn Statement 2011

The Tax Catch Up Plan (TCUP) is aimed at individuals who provide private lessons, or who profit from tuition and coaching, as a main or secondary income where the correct tax has not been paid. The types of tuition, instruction or coaching covered by the TCUP include tuition of traditional academic subjects, fitness and dance instruction, musical instrument tuition, art, services provided by life coaches and others.

Under the TCUP, tutors and coaches have until 31 March 2012 to advise HMRC about their outstanding tax for the years up to 5 April 2010, and pay what they owe. HMRC have confirmed that those who come forward by the deadline are likely to receive the best possible terms for paying the tax owed. If they have to pay a penalty, it is unlikely to be more than 20%.

Those who wait for HMRC to come to them will find that they have to pay much higher penalties (as much as 100% and may even face criminal prosecution). After 31 March 2012, using information pulled together from different sources, HMRC will investigate those who have chosen not to come forward.

Marian Wilson, Head of HMRC Campaigns, said:

‘Our campaigns are designed to ensure tax is paid so that the money is available to spend on public services used by everyone. We are making it as easy as possible for people offering tuition and coaching to use this unique opportunity to put their tax affairs in order by making a full disclosure, and benefit from the best possible terms.

We are using various intelligence sources to identify and then target those who do not take advantage of this opportunity to declare their full income. The message is clear: contact us before we contact you.’

The Tax Catch Up Plan has two stages:

From 10 October 2011 to 6 January 2012, tutors/coaches/instructors must register with HMRC to ‘notify’ that they plan to make a voluntary tax disclosure.

By 31 March 2012 those who have registered to notify must tell HMRC what they owe and pay the tax, interest and penalties due.

If you would like further information on this or any other tax matters, then please contact Christine Harrison on christine@hannathompson.com

HAVE YOU MADE A PROTECTIVE VAT CLAIM?

Earlier this year the European Court of Justice (ECJ) ruled on a number of German cases concerning the vat liability on the supply of hot food as takeaway.  The outcome was that the ECJ ruled that such supplies should be subject to a reduced rate of vat.

As part of the EC this ruling potentially has an effect on UK traders selling takeaway food.  Currently the UK Revenue considers that the ECJ judgement has no implications for the UK treatment of supplies of hot food and the standard rate of vat should continue to be charged.

However, in light of the German case, it is anticipated that there will be a UK test case which will challenge the Revenue view that the standard rate should apply.  If such a case were successful and hot food sales became subject to a zero rate of vat then potentially traders affected could claim a vat refund.  However, it may be some years before such a case is decided.

A vat registered business can, however, make an error adjustment claim going back four years.  In the meantime, takeaways should consider making a protective vat claim.  This means that if there is a favourable change in the vat legislation then if that claim is made now, then any potential refund will go back to 2007.  If no decision is made until, say, 2014 the claim can only go back to 2010.  A protective vat claim is therefore strongly advisable.

If you would like to discuss how this case could affect your business and are interested in making a protective vat claim then please contact Christine Harrison on christine@hannathompson.com

As Tax Manager Angela specialises in Personal, Corporate and Capital taxes, as well as having expertise in cross border tax.

Angela lives in Warrenpoint with her husband, two daughters and chocolate Labrador Sadie. She enjoys camping and forest walks.

angela@hannathompson.com