2012

‘Digitally excluded’ losing out as Government moves online - LITRG press release LITRG has today published a new report highlighting the growing problem of ‘digital exclusion’. It provides new evidence that government efforts to move services and transactions online are disadvantaging older people, those with disabilities and the self-employed in particular.
5.1 million tax reconciliations – not errors HMRC has been attacked for making 5.1 million ‘errors’ in people’s 2011/12 tax. This is unfounded and derives from a misunderstanding of what the PAYE system is currently capable of achieving. As HMRC starts to send out notifications of up to 3.5 million refunds averaging £379 and up to 1.6 million underpayments averaging £537, we reflect upon how these occur and what HMRC can do to make PAYE more accurate during the year.
Are you an electrician needing to sort out your tax? HM Revenue and Customs (HMRC) have announced the Electricians Tax Safe Plan (ETSP) to encourage those who work in the electrical industry and who have not disclosed their earnings to HMRC to come forward. HMRC will soon follow this up by sending 50,000 letters to electricians who may have income to declare urging them to get their tax affairs in order.
Benefits for those who lose a partner – what does a 21st century system look like? The Government has consulted on a number of benefits issues over the last 18 months, claiming to be reviewing the welfare system and adjusting its design for the 21st Century. But do their plans really match their aims?
Budget for those on low and middle incomes? Today the Chancellor said that he was delivering a Budget for those on low and middle incomes. Did he succeed? For those on the lowest incomes the answer must be “no”, for those on lower middle incomes the answer is “perhaps”.
Campaigners welcome new exception for carers from tax credit cutbacks A coalition of charities working for carers and disabled people, led by the LITRG, very much welcome the Government’s decision to allow couples where one partner is entitled to carer’s allowance to continue getting working tax credit (WTC) by working just 16 hours a week. Without this change, they would have been required to work 24 hours a week, with one partner working at least 16 hours, or face losing WTC.
Can tax cuts alone make people better off? The Coalition Government has a policy of raising the personal tax allowance for the under 65s by stages to £10,000 per annum. In 2012/13 the allowance will have reached £8,105. The Lib Dem part of the Coalition wants the allowance to be raised faster and the £10,000 figure reached sooner than just before the next election. But how much does raising the tax allowance by itself improve the household finances of those on low to middle incomes?
Check your 2012/13 PAYE coding notice Between mid-January and early March 2012, HMRC are issuing PAYE Coding Notices for the 2012/13 tax year. LITRG explains that you should check yours, and highlights particular points regarding ‘underpayment restrictions’ relating to tax for an earlier year.
Child benefit and tax – uncomfortable bedfellows? Even if the Government solve the potential unfairness of withdrawing child benefit from a claimant immediately he, she or his or her partner or spouse becomes a higher rate taxpayer, that will still leave a host of administrative problems to resolve. At worst the new policy could spell the end of independent taxation, or become effectively a new tax on marriage.
Consolidated tax credits legislation now available for advisers Since 2002, there have been a large number of amendments to the tax credits legislation. For any advisers who need to understand the law as it applies today, the task of applying numerous pieces of amending legislation to the original versions is very time consuming and makes reliable interpretations extremely difficult.
Contact HMRC – or your tax credits might stop From 6 April 2012, HMRC will stop working tax credit for most couples with children who do not work at least 24 hours a week between them. This includes some who will still be entitled from 6 April because they are covered by one of the exceptions to this rule. HMRC have failed to tell these claimants that they must contact them by 6 April if one of those exceptions applies to them.
Did you miss the Self Assessment deadline? If you have missed the deadline for submitting a Self Assessment (SA) tax return and you can show that you should not have been in the SA regime in the first place, then you may be able to avoid any penalties.
Grannytax? A press storm is growing about the nature of changes to the age allowance provisions announced in the Budget, with some commentators characterising these as a Grannytax. We do not like the way the proposed changes have been introduced and explained, but we think this characterisation as a tax is misleading.
HMRC “apps” initiative welcomed HMRC have been working in conjunction with software providers to provide "apps" (applications on smartphones) which enable small businesses to keep their records more easily. LITRG welcomes such "educational" initiatives which can show HMRC in a far more favourable light than some of their compliance campaigns aimed at the same businesses.
HMRC keep telephone callers waiting 30 minutes Over recent years HMRC have consistently failed to answer their telephone helplines in anything like a reasonable time-scale. Back in 1997/98 the Inland Revenue aimed to answer a telephone call within 30 seconds 91% of the time. But now, in 2012/13, you can spend four times as much time pushing buttons before you even get in a queue. The subsequent wait can be excessively costly for the caller on a low income.
HMRC strike leads to extended filing deadline LITRG understands that the strike action planned by some HMRC staff on 31 January is to focus particularly on their telephone contact centres. As a result, HMRC say they recognise that some Self Assessment online customers who need to talk to them on 31 January may not be able to get through on the phone.
HMRC’s ‘Digital by Default’ response strikes right balance Having long advocated that digital by default should not mean compulsion, we are pleased that HMRC’s response to the Digital by Default consultation recognises the need to take an inclusive approach and not a mandatory, statutory one. However, we believe this approach should be consistent across all taxes, including VAT.
Late filing penalties and reasonable excuse February is the month when HMRC issue most £100 penalty notices for late filing of self-assessment tax returns. For 2010/11 tax returns, the £100 fixed penalty is charged if HMRC have not received your tax return on time, even if you have no tax to pay or if you have already paid all the tax you owe.
Modernising the personal tax system LITRG has welcomed a recent HMRC consultation on modernising personal tax and the ideas it contains for creating a more transparent system. It is good to look forward and consider how technology can enhance individuals’ understanding of their taxes, so long as due consideration is given to those without access to technology who might be left behind.
PAYE reforms could backfire for small employers and individuals We still have significant concerns about the impacts of the next stage of PAYE reform particularly for small and very small employers and vulnerable groups such as care and support employers.
Press Release - Pensioner tax simplification report welcomed by age-old campaigners The Low Incomes Tax Reform Group (LITRG) has welcomed the Office of Tax Simplification’s (OTS) interim report on pensioner taxation and looks forward to supporting the OTS’s ongoing quest for improvements
Selling things online? HMRC are after you HMRC have announced that they are now on the trail of people who buy and sell things online. They suspect that not everyone is paying the tax they should on their trading profits. Who is trading, and who is not, is often difficult to decide and the results of that decision have wider effects than just income tax or VAT. In this article we seek to shed some light on this complex area.
Tax credits – listen to HMRC and lose thousands of pounds A misleading statement in an HMRC letter sent to over a million tax credits claimants may persuade people to leave the tax credits system. This could mean they miss out on future payments. Some people, such as those who are pregnant, or in danger of losing their jobs, or who want to take a new job and incur childcare costs, or may be disabled, could lose out on thousands of pounds as a result of misleading information from HMRC.
Tax credits changes in 2012 - the facts From tomorrow, the already very complicated tax credits system is undergoing more changes. Overall this will result in a second round of tax credits cuts, although not everyone will lose out. This article explains those changes in more detail.
Tax debt: not like ordinary debt As some football clubs are finding out, owing money to the tax man can be a significant problem. For people on low incomes tax debt is something to avoid, but if it happens then it needs to be dealt with quickly and knowledgeably. Tax charities, led by Tax Aid, have produced a series of videos to help you do just that.
Tax information obligations will present problems for small employers - LITRG press release The Low Incomes Tax Reform Group (LITRG) has said that HM Revenue and Customs’ (HMRC’s) assessment of the impact of the introduction of Real Time Information (RTI) on small employers is inadequate. LITRG is concerned that employers who lack internet access or who are not computer savvy will find it very difficult to fulfil their obligations under RTI.
Using tax data for child maintenance – LITRG concerns remain Draft regulations set out how the Government intends to base the new system of calculating child maintenance on tax data obtained direct from HM Revenue and Customs. LITRG is concerned that there will be gaps in the data and that child poverty could increase as a result.

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