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“A quick round-up of the latest news from HMRC.
All that you need to know to lower your tax burden & save yourself money.
If you have a question you would like me to answer about this or any other UK Tax issue please email me directly“
Reducing Tax Fraud Using Credit & Debit Card Data
Under new powers to reduce tax fraud, HMRC has begun to receive the first data on credit and debit card transactions of UK businesses. HMRC can now access information from the UK’s eight companies that process card payment transactions, to find out the number and value of transactions completed by a trader.
HMRC matches the data from merchant acquirers against taxpayer records to identify people who fail to report, or deliberately under-report, their business income.
HMRC said that it will be using the data to check businesses are declaring all of their income and improve fraud detection
“If you’re already declaring the right income you don’t need to take any further action. If your business accepts credit and debit cards and you’re not confident you’re declaring all your income you need to check your processes. If you have an accountant then you may want to talk to them about this.”
A HMRC spokesman
Access to this data is the latest step in what is becoming a much more intrusive official stance on banking data and details and you’re left wondering what their next move will be, access to your phone record maybe (Oh I forgot, GCHQ already does this!).
HMRC’s Direct Access to Bank Accounts
Even more controversially, MPs on the Treasury select committee have criticised HMRC’s plans to deduct outstanding tax directly from your bank account (for more detail see my Blog “HMRC Powers Extended” posted on 12th May).
VAT On Benefits In Kind
Not content with charging individual punitive levels of tax on the perceived benefits have having a car supplied by your employer, HMRC-VAT are now targeting vans.
Their argument is that as there is likely to be some private as well as business use of the vehicle, some of the VAT that was reclaimed from its purchase should be handed back and their solution is for VAT to be payable on the Benefit-in-kind value of the vehicle.
Then applying the same logic to the Benefit-in-kind charge for fuel for private use, presumably because (as I understand it), the scale charges do not apply to commercial vehicles as there are no emission figures listed for such to calculate the scale charges from.
As most individuals who take their vans home only do so because they tend to be used out-of-hours or on-call, and they wouldn’t be seen dead out in them socially, this new move strikes me as a particularly draconian sledgehammer to crack a very small nut.
What Is & Isn’t Corporate Entertainment
As a result of a recent Tax Tribunal decision, HMRC have posted a message on their website clarifying what is and what isn’t classified as entertainment and therefore disallowable for tax purposes.
Are you telling me that this hasn’t been entertaining?
The case revolved around a firm that purchased 2 season tickets for Manchester United and they were then offered to customers based on raffle tickets issued with purchases over a certain amount. The firm claimed that the cost of the tickets (around £2,000) was clearly allowable as an expense in a promotional campaign.
HMRC disagreed and argued that as the tickets were awarded by way of a lottery arrangement, there wasn’t a clear correlation to any of the exemptions listed on their website, which are:
- Discuss a particular business project
- Maintain an existing business connection
- Form a new business connection
The Tribunal ruled against HMRC citing clause 2 of the above rules. In their written judgement they said that as the “entertainment” was provided by way of an automatic entry into a draw for all customers who spend in excess of £250, with a draw every week of the football season there was a clear link to cementing existing business relationships.
Now this has got me thinking; if I spent £1,500 on two season tickets for Liverpool, offered them to clients as an incentive to pay their bills immediately, my interpretation of the clarified rules would be that they would be allowable as an expense. And if the winner couldn’t go, well it would be a crying shame to waste them, don’t you think!
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David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.