Following closely on the heels of new research on the EU VAT gap and policy gap, the report begins by reiterating that VAT revenues collected by states are often far below what could theoretically be collected, were all concessionary rates of VAT revoked.
While the report applauds some member states, such as Belgium and Portugal, for recent efforts to broaden their VAT bases by extending the application of their standard VAT rate, it suggests that other countries, such as the UK, should broaden their VAT bases and make their VAT regimes more efficient.
The report points out that the UK, Greece, Spain, Italy, Latvia and Portugal exhibit a VAT revenue ratio significantly below the EU-28 average, which indicates that these countries in particular could “improve either the structure of VAT or tax compliance in order to increase its efficiency."
The report adds that the ratio in these countries is also below the EU average in Slovakia, France, Belgium, Ireland, Poland and Lithuania, signaling scope for increasing VAT efficiency.
However, the UK does come in for praise in its treatment of non-compliance and for the steps taken to counter offshore tax evasion, tax avoidance and aggressive tax planning, including VAT avoidance.
In conclusion, the report touches on the role that VAT rates can play in achieving the EU's environmental goals by deterring polluting activities, and fostering innovation. It encourages states to dismantle VAT concessions in place for fossil fuels and discusses the tax treatment of the motor vehicle and car rental sectors.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 581 )New figures from HM Revenue & Customs (HMRC) have revealed that in 2013-14, the best-paid 1 per cent of workers will contribute 29.8 per cent of all income tax, thereby fulfilling Chancellor George Osborne’s pledge that those with the ‘broadest shoulders must bear the biggest burden’.
To qualify for the top 1 per cent, an individual would have to earn in excess of £160,000 a year, while those who earn more than £1m a year will contribute 11.8 per cent of all tax.
In 1997, the same group accounted for 20 per cent, and in 2007, before the financial crisis began, the richest 1 per cent paid 24.4 per cent. HMRC's figures also showed that there were around 29 million individual income taxpayers in 2010-11 and of those, about 28 million paid the basic rate, while roughly 290,000 paid the top rate of tax.
At the same time, the top rate of tax paid by those earning more than £150,000 a year has dropped from 50p to 45p in the pound, leading to claims from the Labour party that the rich would pay less.
However, commenting on the data, Conservative MP, Harriett Baldwin, said the new figures undermined Labour's argument. She said that the statistics will “once and for all end the Labour myth of millionaire tax cuts”.
In fact, she added, the 24 million people who have seen their tax-free threshold increased every year are the basic rate taxpayers, who are quite rightly getting a tax cut.
Interestingly, separate data published this week shows that the UK’s top rate of tax dropped from the fifth to the 11th highest in the EU and the Government’s reduction in the top rate of tax was the largest cut anywhere in the world this year.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 2.9 / 583 )Despite cutting its forecast for global growth in its half-yearly assessment of the worldwide economy, the International Monetary Fund (IMF) has upgraded its July prediction for growth in the UK from 0.9 per cent to 1.4 per cent, making it the highest for any economy in the G7.
The Washington-based fund now expects growth of 1.9 per cent for the UK next year, which it has raised from a prediction of 1.5 per cent. However, its forecast for global growth in 2014 has been trimmed by 0.2 per cent to 3.6 per cent.
The fund said that growth was expected to return to its long-term trend of 2-2.5 per cent in the medium term but added that output levels would remain below potential for "many years".
It added that further repair work was needed to the UK banking system in order to boost credit and demand, and urged the Government to come up with a strategy for returning the Royal Bank of Scotland to the private sector following its sale of part of its stake in Lloyds.
The fund also gave its backing to the Bank of England's policy of forward guidance, under which the Bank has pledged to hold interest rates at 0.5 per cent at least until unemployment comes down to 7 per cent.
Commenting on the upgrade, a Treasury statement said that the IMF’s forecast has confirmed that the UK economy is turning a corner, by revising up its forecast for growth over the next two years by more than for any other developed economy.
However, a spokesperson for the department added: “risks to the global economy remain high, which is why the Government will no let up in implementing its economic plan.”
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 590 )Thousands of higher earning parents could be fined hundreds of pounds after failing to register the child benefit that they received this year before last Saturday's deadline (October 5).
HM Revenue and Customs (HMRC) has estimated that around 165,000 individuals missed the deadline, and fines will now be decided on a case-by-case basis, leading the department to suggest that families should register now before they face even more penalties.
A spokesperson for the taxman said that more than 29,000 people registered for self-assessment over the weekend, taking the total registrations to 160,000.
However, this means that 165,000 people still need to take action and the department is expecting more people to register in the coming days in a bid to minimise any penalties they may face.
The benefits system has recently undergone a series of changes by the coalition government, where if one parent earns more than £60,000 annually, they will have to return the entire amount received unless they had originally opted out of receiving the benefits in the first place. The amount taken away will then be on a sliding scale for parents who earn between £50,000 and £60,000.
HMRC can levy fines up to the total amount of child benefit received between January 7 and April 5 this year but the Revenue has said that it does not want to impose penalties simply because people have failed to take action in time and added that the penalty would be reduced to nil if the tax bill is paid by January 31 2014, so people need to act now.
Meanwhile, HMRC Chief Executive Lin Homer has revealed that the number of families who chose to opt out from receiving the benefit was double the figure predicted.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 601 )New research has revealed that optimism amongst the owners of the UK's small firms has risen to its highest level in five years, with more than 80 per cent of entrepreneurs believing that their businesses will grow by at least 10 per cent over the next year, the highest number since the survey began in 2008.
Their confidence is not only confined to their own business either; 88 per cent of them expect the economy to grow by as much as 2 per cent in the coming twelve months.
In addition, the owners of small firms are less focused on stockpiling cash now that the economy is reviving. While 32 per cent were saving every penny they could get in 2012, only 15 per cent are doing so now.
However, although they are keen to go for growth, entrepreneurs are not expecting to go to their banks for help. More than half the business owners polled said they were confident enough to start using their cash reserves to finance expansion.
In fact, only a fifth thought banks are as willing to lend today as they were a year ago and only 17 per cent are planning to fund investment through bank loans or overdrafts.
As far as growth strategy is concerned, nearly a third said they will be investing in new products and exporting to new markets as their primary growth strategy, while just under half will use organic growth to expand.
The most important foreign market for the entrepreneurs surveyed was Western Europe, with 45 per cent saying it was a major export destination. Interestingly, given the move today to push for a referendum on Europe, when asked whether leaving the EU was a good idea, 52 per cent thought it would have a negative impact on their business and only 7 per cent believed they would see a benefit.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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