27thFeb
News article

Minister warns 'Tourist Tax' unlikely to be reversed in Spring Budget

The so-called 'Tourist Tax' is unlikely to be reversed in the Spring Budget, Nigel Huddleston, Financial Secretary to the Treasury, has warned.

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The so-called 'Tourist Tax' is unlikely to be reversed in the Spring Budget, Nigel Huddleston, Financial Secretary to the Treasury, has warned.

Eradicating the tax would allow international visitors to shop in the UK tax-free. However, Mr Huddleston emphasised the complexity associated with removing the tax, and highlighted challenging legislative hurdles involved with abolishing the tourist tax and introducing an alternative.

Huddleston, sad it was 'not possible to introduce the same system as before, given that it would now need to be open to visitors from the EU as well as the rest of the world'. 

He added: 'Any new scheme, no matter the design, would take time to legislate for and implement in order to prevent non-compliance risks and ensure operation.'

Business groups, such as the British Chambers of Commerce (BCC), have urged Chancellor Jeremy Hunt to use the Budget to ditch the Tourist Tax.

Shevaun Haviland, Director General of the BCC, recently said: 'It was great to be at Heathrow . . . to hear how a new internationally competitive tax-free shopping scheme would turbocharge Britain's economy, helping retailers and hospitality venues across the country.'

The BCC estimates that the tax costs the British retail sector £1.5 billion per year and adversely affects the UK tourism and hospitality sector.

26thFeb
News article

500 firms named and shamed for underpaying staff

The government recently named and shamed more than 500 UK employers for underpaying their employees.

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The government recently named and shamed more than 500 UK employers for underpaying their employees.

524 businesses were named for failing to pay the minimum wage, with offending employers ordered to pay nearly £16 million plus an additional financial penalty to 172,000 workers.

The National Living Wage (NLW) is set to rise to £11.44 an hour from 1 April 2024.

Offending employers include major high street brands, the government said. It stated that anyone entitled to be paid the minimum wage should receive it, and that enforcement action will be taken against employers who do not pay their staff correctly.

Patricia Rice, Independent Commissioner at the Low Pay Commission (LPC), commented: 'Since its introduction nearly twenty-five years ago, the National Minimum Wage (NMW) has played a vital role in protecting the earnings of the lowest-paid workers in the UK. At a time when the cost of living is rising, it is more important than ever that these workers receive the pay to which they are entitled.

'NMW underpayment not only cheats workers of their rightful due, it leaves compliant firms undercut by those who do not abide by the law. By naming the firms responsible for significant underpayment, we raise awareness of the nature and the scale of underpayment and encourage all employers to ensure that they fully comply with the law.' 

23rdFeb
News article

HMRC publishes guidance on MTD for ITSA for sole traders and landlords

HMRC recently published guidance on the Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) requirements for sole traders and landlords.

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HMRC recently published guidance on the Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) requirements for sole traders and landlords.

MTD for ITSA will require businesses and landlords with qualifying income to maintain digital records and update HMRC each quarter via compatible software.

In the guidance, HMRC stated that MTD for ITSA will be introduced in two phases:

  • from April 2026 for those with qualifying income over £50,000
  • from April 2027 for those with qualifying income over £30,000.

HMRC said that MTD 'exploits the opportunities offered by digitalisation to make it easier for everyone to get tax right'. It said that digitalising government tax services helps to reduce the risk of unintentional customer errors; save taxpayers time when they submit their tax returns; supports wider productivity and less time managing paperwork; and enables HMRC to better tailor its services to its customers.

In its latest guidance, HMRC estimates a transitional cost to business of around £561 million and a net increase in the continuing costs of tax compliance of around £196 million for businesses mandated to use MTD for ITSA.

The guidance can be found here.

22ndFeb
News article

Less than 3% of individuals paid CGT over decade to 2020, research shows

Research carried out by the London School of Economics has revealed that less than 3% of adults in the UK paid capital gains tax (CGT) over the last decade to 2020.

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Research carried out by the London School of Economics has revealed that less than 3% of adults in the UK paid capital gains tax (CGT) over the last decade to 2020.

The research showed that total capital gains nearly tripled over the last decade, reaching £65 billion by 2019/20.

According to the research, capital gains are 'incredibly concentrated', with three in every seven pounds of gains in the UK going to individuals earning over £150,000. 52.2% of all taxable gains in 2020 went to just 5,000 people, and gains are 'strongly concentrated' in southern England.

Almost 40% of individuals with incomes exceeding £5 million received some gains, the research highlighted.

Commenting on the data, Arun Advani, Associate Professor at the University of Warwick's Economics Department and CAGE Research Centre, said: 'Capital gains are absurdly concentrated, with half the gains in the entire country going to as many people as could fit in the Albert Hall. Less than one in thirty people have any gains at all over the course of a decade.'

21stFeb
News article

Number of tax fraud cases opened by HMRC fallen by more than half

The number of civil investigations into alleged tax fraud has fallen by more than a half, data has shown.

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The number of civil investigations into alleged tax fraud has fallen by more than a half, data has shown.

The number of investigations into wealthy, offshore and corporate taxpayers fell from 1,417 in 2018/19 to just 627 in 2022/23. According to HMRC, its fraud investigation units focus on the 'highest value' tax fraud.

It stressed that the number of investigations into wealthy, offshore and corporate taxpayers does not take into account overall compliance activity, which saw 300,000 investigations started in 2022/23.

Robert Palmer, Executive Director at Tax Justice UK, commented: 'We know HMRC is underfunded and resources have been diverted for work on Covid and Brexit.

'Parliamentary research shows that when the government invests in HMRC, the return on investment is significant. Until the department is properly funded, vast sums of money owed, often by the richest people and companies, will go unrecovered.'

A spokesperson for HMRC said: 'These specific figures relate solely to the work of our fraud investigation service and do not take account of our overall compliance activity. In 2022/23, we opened 300,000 compliance interventions across a range of tax risks, including avoidance and evasion, and secured £34 billion in additional tax revenue.'

20thFeb
News article

Business group urges Chancellor to outline 'sustainable growth plan'

The British Chambers of Commerce (BCC) has urged Chancellor Jeremy Hunt to use the Spring Budget to outline a 'sustainable growth plan'.

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The British Chambers of Commerce (BCC) has urged Chancellor Jeremy Hunt to use the Spring Budget to outline a 'sustainable growth plan'.

It said the government must work in partnership with business to develop a plan to help firms combat 'multiple economic crises'.

The BCC's Quarterly Economic Survey for quarter four of 2023 revealed that many firms are seeing no improvement to sales, cashflow or investment.

Commenting on the matter, Shevaun Haviland, Director General of the BCC, said: 'The Chancellor has shown he is in listening mode. At the Autumn Statement we were pleased to see Full Expensing made permanent and business rate relief. The Budget is an opportunity to build on that good work and further accelerate help for business.

'Our latest research shows that many SMEs are struggling because of business rates, and are limiting their expansion plans because of the VAT threshold. The Chancellor should use his statement next month to announce plans to make rates fairer and restart the VAT registration review.'

19thFeb
News article

AAT outlines top asks in Budget representation

The Association of Accounting Technicians (AAT) has outlined its wishlist for the upcoming Spring Budget on 6 March.

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The Association of Accounting Technicians (AAT) has outlined its wishlist for the upcoming Spring Budget on 6 March.

The AAT has called on Chancellor Jeremy Hunt to create a 'simpler, fairer and more effective' tax system that 'benefits everyone in the country'. It has called for the creation of a new body, separate from government, dedicated to the design, administration and delivery of tax policy.

It said that simplifying and streamlining tax obligations for small and medium-sized enterprises (SMEs) can help alleviate costs and 'reduce the time spent on tax issues, allowing them to focus on growing their business'.

Additionally, the AAT said that late payments are 'an increasing threat to SMEs', and called for the government to take further action to ensure large businesses are held accountable for paying their suppliers on time.

The AAT also called for 'continual delays' in the implementation of Making Tax Digital (MTD) to be addressed immediately. It said the pilot schemes for the next phase of MTD must start as soon as possible.

The AAT's full Budget submission can be found here.

16thFeb
News article

HMRC warns self assessment taxpayers as scam referrals rise

HMRC is warning people to be wary of bogus tax refund offers following the self assessment deadline on 31 January.

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HMRC is warning people to be wary of bogus tax refund offers following the self assessment deadline on 31 January.

The tax authority says that fraudsters could set their sights on self assessment taxpayers, with more than 11.5 million submitting a tax return by last month's deadline.

HMRC warns that taxpayers who completed their tax return for the 2022/23 tax year by the 31 January deadline might be taken in by an email, phone call or text message offering a tax rebate.

These phishing scams are designed to use personal details for selling on to criminals, or to access people's bank accounts, says HMRC.

The warning comes after HMRC responded to 207,800 referrals from the public of suspicious contact in the past year to January. This is a 14% increase from the 181,873 reported for the previous 12 months. More than 79,000 of those referrals offered bogus tax rebates.

Kelly Paterson, HMRC's Chief Security Officer, said: 'With the deadline for tax returns behind us, criminals will now try to trick people with fake offers of tax rebates.

'Scammers will attempt to dupe people by email, phone or texts that mimic government messages to make them appear authentic.'

15thFeb
News article

UK fell into recession at the end of 2023

The UK economy fell into recession during the final three months of last year, according to the Office for National Statistics (ONS).

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The UK economy fell into recession during the final three months of last year, according to the Office for National Statistics (ONS).

GDP dropped by 0.3% during the fourth quarter of 2023, which was a sharper fall than expected. That follows a 0.1% fall between July and September.

The UK is considered to be in recession if GDP falls for two successive three-month periods - or quarters.

The figure for the final three months of last year was worse than a 0.1% fall widely forecast by financial markets and economists.

According to the ONS, there a slowdown in all the main sectors it measures to determine the health of the economy, including construction and manufacturing.

Alex Veitch, Director of Policy and Insight at the British Chambers of Commerce, said: 'Businesses were already under no illusion about the difficulties they face, and this news will no doubt ring alarm bells for Government. 

'The BCC's last Quarterly Economic Forecast suggests annual growth below 1.0% for the next two years as firms remained gripped by uncertainty and the twin perils of high inflation and interest rates remain.?? 

'The Chancellor must use his Budget in just under three weeks' time to set out a clear pathway for firms and the economy to grow. 

'Businesses are crying out for a long-term economic plan that reduces the cost pressures they are facing and unlocks the investment they so sorely need.' 

14thFeb
News article

Inflation unchanged but remains top concern for business

UK inflation remained unchanged in January at 4% as food prices fell, according to the latest data from the Office for National Statistics (ONS).

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UK inflation remained unchanged in January at 4% as food prices fell, according to the latest data from the Office for National Statistics (ONS).

However, the British Chambers of Commerce (BCC) warned that inflation remains the top concern for many businesses.

Food and non-alcoholic drink prices fell at a monthly rate of 0.4% in January, the first monthly decline since May 2021, the ONS said.

Core inflation – which excludes energy, food, alcohol and tobacco, and is closely watched by the Bank of England – remained unchanged at 5.1%, according to the latest figures from the ONS.

Services inflation rose to 6.5% in January, up from 6.4% a month earlier.

Alex Veitch, Director of Policy at the BCC, said: 'Businesses need price stability, so today's news that inflation remained unchanged in January is welcome.

'However, firms consistently tell us inflation is their top concern.

'The Bank of England has already warned that inflation is likely to remain volatile over the coming months because of global uncertainty. The Red Sea crisis is causing supply chain disruption and price rises for businesses.

'Next month's budget is an opportunity for the government to reassure and support businesses. Companies across the UK will be looking for a clear plan from the Chancellor that prioritises investment and skills.'