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Hot Topics
HMRC: A new era of penalties and time to pay
From 1 April 2009, HM Revenue & Customs (HMRC) have introduced new penalties when a tax payer does not pay the right amount of tax on time.
The new regime applies to returns filed from 1 April 2009 and cuts across all of the major taxes. As from 1 April 2010 the same penalties regime will also be extended to include taxes such as Stamp Duty Land Tax and Environmental Taxes.Under the new system if you take reasonable care to get your tax right, HMRC will not penalise you, even if you make a mistake. Taking reasonable care includes:-
• keeping accurate records to make sure your tax returns are correct
• checking the correct position when you don’t understand something
• telling HMRC promptly about any error you discover in a tax return or document after you’ve submitted the return
If you don’t take reasonable care and there are inaccuracies in your tax, the chances are you will be penalised. Telling HMRC about inaccuracies will substantially reduce any penalty due, in some cases to zero.
To speak to an expert on how you can ensure your tax is correctly filed, call 0845 880 0320 or email info@streetsweb.co.uk
Your dividend payments could be illegal
To avoid paying high taxes, many business owners pay themselves low salaries which are topped up with dividends from their company. This tax planning technique, however, may not be as simple and straightforward as it appears; there is a danger that you could be paying illegal dividends if your company does not have sufficient ‘distributable reserves’ to cover the dividend payable.
Companies increasingly fall into this trap during economic downturns, particularly if the shareholders continue to take dividends based on historical profits without any regard to current profitability or where dividend waivers are used.
With HM Revenue & Customs now taking a keen interest in dividend payments and in particular looking to re-classify illegal dividend payments as earnings (thereby making them subject to income tax and national insurance) it is time to review your dividend policy
To speak to an expert about how you can improve your tax planning, call 0845 880 0320 or email info@streetsweb.co.uk
Offshore Tax Havens
A reduced penalty of 10% has been offered as an incentive for offshore account holders who make a disclosure between 1 September 2009 and 12 March 2010 of offshore income previously not disclosed
This incentive, of course, has its small print. If you bank with one of the five retail banks identified in the 2007 amnesty, you may be subject to a 20% penalty, even if you disclose within the above dates.
On the plus side, HM Revenue & Customs is addressing those with offshore accounts on a case-by-case basis. It would appear that you may not pay a fine at all for “innocent errors” if it is proved they are due to mitigating circumstances.
If you have an offshore account and are concerned about what you should do, call Streets on 0845 880 0320 or email info@streetsweb.co.uk to speak to an expert.
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