Despite receiving the record number of 9.61 million self-assessment returns on time for the 2011-12 financial year, the department said that there were still a number of people who had failed to respond in time and will get the letters out to them by tomorrow (February 20th), which they should receive within seven days of posting.
The number of people filing by 31 January was a three per cent increase on last year and a further 60,000 filed after the deadline. This means that while they will still be given the £100 penalty, they will avoid the daily £10 charge.
However, some 790,000 taxpayers will be liable for the charge and interest, while if their return and tax bill is still outstanding at the end of July, the penalty increases to five per cent of the tax due or a minimum fine of £300, whichever is higher
HMRC is then entitled to give those who fail to file within 12 months a tax demand of up to 100 per cent of the tax due instead.
Having said that, taxpayers who feel that they have a reasonable excuse for not filing on time, such as bereavement or illness in the family can appeal to the taxman, as can people who receive a late filing penalty.
This should be done as soon as possible and, where the reason for late or non-filing is accepted by the department, the taxpayer will be taken out of self-assessment.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 521 )A senior Treasury minister has told the Financial Services Authority (FSA) that the banks must allow businesses that could have been mis-sold an interest rate swaps to cease making premium payments.
Financial Secretary to the Treasury, Greg Clark, told the FSA that its finding that more than 90 per cent of interest rate hedging products had probably been sold to small and medium-sized enterprises (SMEs) was a “game changer” and that the banks would be “crazy” to insist that affected businesses carry on paying their premiums.
Although several high street banks have agreed to suspend payments on a “case by case basis”, if a business can prove that paying is causing them “financial distress”, the FSA and the banks have been told to be more lenient.
However, if they do become generally more lenient, it is likely that thousands of SMEs would ask for their payments to be suspended, as it has been estimated that as many as 40,000 swaps have been sold since 2001.
Meanwhile, the FSA faces legal action over its compensation scheme for affected firms, as it has said that only cases under £10m can be reviewed, which many of the businesses feel is unreasonable.
But the regulator has countered that the process they unveiled last month will give redress where it is due and that through it, businesses will be put back into the position they would have been without the mis-sale.
The eventual cost to the banking industry of swaps mis-selling is likely to top £12bn but there are concerns that reforms to the way legal claims can be financed will limit the eventual number of actions banks face if the FSA scheme does not provide the type of redress affected firms believe they are owed.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 493 )In his penultimate Quarterly Inflation Report before retiring, Governor of the Bank of England, Sir Mervyn King said that UK inflation will remain stubbornly high for longer than previously thought but that recovery is “in sight”.
Sir Mervyn King now expects inflation, currently at 2.7 per cent, to rise to at least 3 per cent by the summer and to remain above the Bank's 2 per cent target for two years, whereas last year he said that it would fall back towards its target in the second half of this year.
According to the Governor, factors such as higher utility bills and university tuition fees, that are outside the Bank’s control, had added to inflation recently and there is nothing the Bank can do to make a difference.
However, Sir Mervyn King said that he could see a “more encouraging underlying picture” amidst the flat data experienced of late. He said that the two bulwarks of the economy, manufacturing and services, grew last year, which is a good sign and that the weakness in overall output reflects falls in the construction sector, which he feels is unlikely to be repeated this year.
Therefore, his prediction is for growth in the near future, albeit weak, while further down the line, a continued easing in domestic credit conditions, supported by the Bank's asset purchase programme and the Funding for Lending Scheme, together with the stronger global backdrop, will underpin a slow but steady recovery in output.
Because of these external factors, the Governor concluded that there is no point in attempting to bring inflation back to target sooner, as this would only risk derailing the recovery.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 2.9 / 485 )The National Audit Office has revealed that HM Customs & Excise (HMRC) missed its target to tackle tax credit fraud and error “by a mile” and has been told to “get a grip” by a senior MP.
In 2009 HMRC was given the task of cutting losses by £1.4bn, but, according to the NAO, only managed to make savings of just £500m during its two-year push on fraud, which Chair of the Parliamentary Margaret Hodge called a "deeply worrying" situation.
HMRC set itself the target of halving the rate of tax credit fraud and error from 9 per cent to 5 per cent by March 2011 and tasked an extra 40 employees to reach their goal.
However, the NAO noted that the rate had only been cut to 8.1 per cent and a total of £2.27bn had been lost though fraud and error in 2010-11. The report also noted that there had been little progress in dealing with people failing to declare partners' income or in checking claimants' stated work and hours and that one in five claims were still being overpaid.
The NAO congratulated the department for demonstrating innovation, but said it has further to go to achieve sustainable reductions in tax credits error and fraud.
Head of the NAO, Amyas Morse, said that to tackle error and fraud effectively, there must be an improved understanding of risks and better use of information in the department.
The report concludes that, while HMRC has made improvements to its approach and increased the amount of error and fraud it prevents, HMRC is not yet achieving value for money.
However, HMRC insisted that its strategy for tackling fraud and error was "sound", but agreed that it needed to make more progress.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 549 )Despite Government borrowing being more than originally planned and economic growth being feeble, the country will narrowly avoid a so-called triple-dip recession, as the economy should show growth in the first quarter of this year, according to a leading business lobby group.
The Confederation of British Industry (CBI) has downgraded its forecast for the economy from 1.4 per cent growth to 1 per cent but any growth at all will still prevent the country from sliding back into recession. The group kept its forecast for 2014 at 2 per cent.
The forecast comes after the economy shrunk in the last quarter of 2012, which was the first period in what some feared might be another six months of negative growth.
The reason for the guarded optimism is that it believes the country is seeing a return to organic growth, with trade, manufacturing and business investment expected to pick up in the months ahead.
However, the group warned that households will feel the squeeze for a third successive year, as average earnings grow at 1.7 per cent in 2013 against inflation of 2.6 per cent and does not believe that will earnings and inflation will equalise until 2014.
The employers’ group was more optimistic about jobs, though, saying that unemployment will fall by 40,000 this year.
The CBI said it believes the UK government had the right plan for growth but should look at projects which could have a quick impact, such as giving local authorities money for infrastructure.
It is expected that the Bank of England will also downgrade its growth forecast later today because of what it sees as "weakness in the economy and the prospect of a further prolonged period of above-target inflation".
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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