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Bank of England maintains Bank Rate at 0.5% and the size of the Asset Purchase Programme at £375 billion

The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target and in a way that helps to sustain growth and employment. At its meeting ending on 13 July 2016, the MPC voted by a majority of 8-1 to maintain Bank Rate at 0.5%, with one member voting for a cut in Bank Rate to 0.25%. The Committee voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion. Committee members made initial assessments of the impact of the vote to leave the European Union on demand, supply and the exchange rate. In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August. The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.

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Chancellor unveils the design of the brand new £1 coin

A teenager’s design is set to line millions of pockets and purses across the UK within the next 2 years after the winner of a public competition to design the ‘tails’ side of the new £1 coin was unveiled by the Chancellor today.


David Pearce, 15, and a pupil at Queen Mary’s Grammar School in Walsall, beat off fierce competition from over 6,000 entries with his winning design being chosen following a public competition organised by the Royal Mint on behalf of Her Majesty’s Treasury.


The teenager took a surprise telephone call from the Chancellor earlier this week who delivered the good news. Yesterday David joined a group of other young entrants whose designs were highly commended at Downing Street for a special reception to celebrate their success.


Competition entrants were asked to create a design which symbolises Britain and entries included cups of tea, flags, maps, the weather, famous writers, seaside piers, and even the Rolling Stones motif.


David’s design takes in 4 well known symbols of the UK with a rose, leek, thistle and shamrock emerging from a Royal Coronet and it will now be taken forward to be struck onto the new £1 coin being introduced in 2017.


The final design, which is entirely true to David’s original entry, has been refined for use on the final coin with the support of the renowned coin artist David Lawrence and lettering expert Stephen Raw.


The £1 coin is being replaced for the first time in over 30 years because of its vulnerability to sophisticated counterfeiters.


The new £1 coin, which was announced by the Chancellor at last year’s Budget, will have the same shape as the 12-sided 3 pence piece or ‘threepenny bit’ and will be the most secure coin in circulation in the world.


The Royal Mint estimates that about 3% of all £1 coins (or 45 million) are now forgeries. In some parts of the United Kingdom, it could be as high as 6%. Over the past few years, around 2 million counterfeit £1 coins have been removed from circulation each year and the new, highly secure coin will reduce costs to business and the taxpayer.


The proposed new coin has a number of features which the Royal Mint confirms will make it the most secure coin in the world.


These features include:


  • bi-metallic construction, of 2 colours
  • 12-sided design
  • inclusion of the Royal Mint’s new anti-counterfeiting technology, which can be authenticated by high-speed automated detection
  • This project represents a great success for UK science and manufacturing with the new, world-leading security technology having been developed in-house at the Royal Mint’s headquarters in Llantrisant, South Wales.


Chancellor of the Exchequer George Osborne said:


Designing the new £1 coin was a brilliant opportunity to leave a lasting legacy on what will be the most secure coin in circulation anywhere.


The competition captured the imagination of thousands of people and David Pearce’s winning design will be recognised by millions in the years ahead. It was fantastic to congratulate him and other young entrants in person in Downing Street.


Coin design winner David Pearce said:


I was really excited to hear that I had won the competition to design the new £1 coin but hugely shocked as well! I heard about the competition through my design teacher at school and I thought I had nothing to lose so I decided to enter. I spent a lot of time researching what coin designs looked like and what sort of designs would represent all parts of the UK before submitting my idea and I honestly cannot believe I have won.


Adam Lawrence, Chief Executive of the Royal Mint said:


We are delighted to have the opportunity to support Her Majesty’s Treasury in modernising the iconic £1 coin and helping to re-define the world of coinage. Made from 2 different metals and including ground-breaking technology developed at the Royal Mint, this new 12-sided coin will be the most secure circulating coin in the world.


As an organisation we have been established for over 1,000 years but we are constantly looking to the future, so it’s fantastic to see the work of a talented young artist like David Pearce being replicated on a coin, that will be used by millions of people in Britain and recognised world-wide for years to come.

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National minimum wage to rise by 20p an hour to £6.70

The National minimum wage to rise by 20p an hour to £6.70


The changes will benefit more than 1.4 million workers.


The hourly rate for younger workers will also rise, and for apprentices it will go up by 20% – or 57p – to £3.30 an hour.


The rates were recommended by the Low Pay Commission but the government has gone further than the 7p an hour increase suggested for apprentices.


Prime Minister David Cameron said the across-the-board increases would offer “more financial security” to workers.


Labour said the minimum wage had been “eroded” since 2010 while unions said the increases would not address “in-work poverty”.


The 3% increase in the national minimum wage for adult workers is the biggest real-terms rise in seven years.


Story from BBC

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Bank of England maintains Bank Rate at 0.5% and the size of the Asset Purchase Programme at £375 billion

The Bank of England’s Monetary Policy Committee at its meeting today voted to maintain Bank Rate at 0.5%. The Committee also voted to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion.

The Committee’s latest inflation and output projections will appear in the Inflation Report to be published at 10.30 a.m. on Thursday 12 February.

The minutes of the meeting will be published at 9.30 a.m. on Wednesday 18 February.

The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009. A programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009. The previous change in the size of that programme was an increase of £50 billion to a total of £375 billion on 5 July 2012.

Information on the Asset Purchase Facility can be found on the Bank of England website at

The Bank will continue to offer to purchase high-quality private sector assets on behalf of the Treasury, financed by the issue of Treasury bills, in line with the arrangements announced on 29 January 2009 and 29 November 2011.

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Digital services suppliers urged to register for new EU VAT service

Businesses supplying digital services across the European Union will be able to register for a new online VAT service from 20 October.

This will mean that they do not have to register VAT separately in each country where they do business.

To help the estimated 34,000 or so small-to-medium-sized enterprises (SMEs) affected by the changes, HM Revenue and Customs (HMRC) has released a short YouTube video:

The digital services affected include most types of broadcasting, telecommunications and e-service supplies. Examples range from telephone services, supplies of music, films and games to downloads of apps, images, text or other information.

From 1 January 2015 the place of supply, and therefore taxation, of EU business-to-consumer supplies of digital services is changing. Currently the place of taxation is where the supplier is established, but from January it will be where the consumer lives.

On 1 January all EU Member States will also implement the VAT Mini One Stop Shop (VAT MOSS), to avoid additional administrative burdens and costs if a business is required to register for VAT in every Member State where it has consumers.

Sally Beggs, Deputy Director, Indirect Tax, HMRC, said:

“The VAT MOSS will save digital services suppliers from having to register for VAT in every Member State where they do business, removing a significant administrative burden. Businesses with their main operation or headquarters in the UK will register with HMRC to use the service.”

Between 27,000 and 42,000 UK businesses are expected to register for VAT MOSS in the UK.

While they will be able to register from 20 October 2014, the service will start operating from 1 January.

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HMRC gains pay packet tax debt collection powers

HM Revenue & Customs will be able to deduct up to £17,000 per year of tax debts from high earners’ pay packets under powers coming into force this week.

The move represents a significant increase on the previous annual tax collection ceiling, which was previously set at £3,000.

Over the course of the year there has been controversy over HMRC’s increasing powers in the area of debt recovery in recent months, with ICAEW tax faculty technical committee chairman Paul Aplin warned the measures would have to be “bomb-proof” when they were initially extended in March’s Budget.

In that speech, the chancellor announced HMRC would be given powers to take money from bank accounts on debtors who owe more than £1,000 in tax or tax credits and had repeatedly failed to respond. Crucially, too, HMRC said it would leave at least £5,000 across debtors’ accounts.

HMRC sought to increase the limits on the debt it can collect through PAYE because it was “inefficient and unfair” to be forced to use more expensive debt pursuit methods when collecting larger sums. It added the new rules would also potentially help debtors on higher incomes as they would be able to stagger their debts over the tax year, instead of having to pay upfront.

The increased threshold is expected to bring in an additional £115m in 2015/16 and has attracted less concern from practitioners than the direct debt recovery powers because it will not affect those earning below £30,000, who will still operate under the £3,000 limit. An incremental scale will be in place, with £17,000 limit reserved for those earning £90,000 or more.

A spokesman for HMRC said: “Taxpayers welcome the option to have tax debt collected by instalment. This is a very longstanding feature of the payroll system but the increase in the current threshold will allow more tax debts to be paid in this way.

“We will issue letters advising taxpayers that collection through their PAYE tax code is being considered to collect their outstanding arrears. The amount of debt to be collected through the PAYE code will then be shown on the Annual Coding Notice (P2) which is sent to the taxpayer between January and March 2015 before the new tax year starts on 6 April 2015.”

Story from Accountancy Age

For advice or help with any tax issues contact Davenports Accountancy today on 01367 602011

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Abolition of the vehicle tax disc

From 1 October 2014, the paper tax disc will no longer need to be displayed on a vehicle. If you have a tax disc with any months left to run after this date, then it can be removed from the vehicle and destroyed. This includes customers with a Northern Ireland address, however they will still need to display their MoT disc.

You can apply online to tax or SORN your vehicle using your 16 digit reference number from your vehicle tax renewal reminder (V11 or V85/1) or 11 digit reference number from your log book (V5C)

The DVLA’s latest video explains the changes to vehicle tax from 1 October 2014

What this means to you

To drive or keep a vehicle on the road you will still need to get vehicle tax and DVLA will still send you a V11 or V85/1 renewal reminder when your vehicle tax is due to expire. This applies to all types of vehicles including those that are exempt from payment of vehicle tax or have a nil rate of Vehicle Excise Duty (VED).

Buying a vehicle

From 1 October, when you buy a vehicle, the vehicle tax will no longer be transferred with the vehicle. You will need to get new vehicle tax before you can use the vehicle.

You can tax the vehicle using the New Keeper Supplement (V5C/2) part of the vehicle registration certificate (V5C) online or by using our automated phone service – 24 hours a day, 7 days a week on 0300 123 4321.

Alternatively, you may wish to visit a Post Office® branch.

DVLA are unable to check the vehicle insurance details for new keepers in Northern Ireland online or by phone. If you’re a Northern Ireland new keeper, you will need to tax at a Post Office® branch that deals with vehicle tax.

Selling a vehicle

From 1 October, vehicle tax is not transferable so you won’t be able to include any remaining tax when you sell a vehicle. If you sell a vehicle after 1 October and you have notified DVLA, you will automatically get a refund for any full remaining months left on the vehicle tax. The refund will be sent to the keepers details on DVLA records so you need to make sure that these are correct.

Vehicle tax refunds

You will no longer need to make a separate application for a refund of vehicle tax. DVLA will automatically issue a refund when a notification is received from the person named on DVLA vehicle register that the:

  • vehicle has been sold or transferred
  • vehicle has been scrapped at an Authorised Treatment Facility
  • vehicle has been exported
  • vehicle has been removed from the road and the person on the vehicle register has made a Statutory Off Road Notification (SORN)
  • person on the vehicle register has changed the tax class on the vehicle to an exempt duty tax class

Parking permits or car parking spaces

All local authorities have been informed that no tax discs will be issued after 1 October 2014.

Driving your vehicle abroad

DVLA have informed the European Union that from 1 October 2014, UK registered vehicles that are travelling in the EU will not display tax discs.

Paying vehicle tax by Direct Debit

From 1 October 2014 (5 October if setting up at a Post Office®), Direct Debit will be offered as an additional way to pay for vehicle tax. This will be available for customers who need to tax their vehicle from 1 November 2014:

  • annually
  • 6 monthly
  • monthly (12 months tax paid for on a monthly basis)

Tax will be automatically renewed and the Direct Debit payments will continue to be taken providing an MOT is in place at the point of tax renewal. Payments will continue automatically until you tell DVLA to stop taking them or you cancel the Direct Debit with your bank. Valid insurance should also be in place for vehicles registered in Northern Ireland.

The Direct Debit will be cancelled and payments automatically stopped when you tell DVLA that you no longer have the vehicle, or the vehicle has been taken off the road and a Statutory Off Road Notification (SORN) has been made. The Direct Debit will also be cancelled if a vehicle is scrapped by an ATF, exported or if the tax class of the vehicle is changed to an exempt duty tax class.

When the Direct Debit scheme can’t be used

Paying by Direct Debit will not be available to:

  • first registration vehicles
  • fleet vehicles licensed in bulk schemes – Direct Debit can be set up on fleet vehicles individually
  • HGVs that pay the Road User Levy (all other HGVs can pay by Direct Debit)

Checking the tax status of a vehicle

You can check the tax status of any vehicle online. This can also be used for rental vehicles.

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Experts warn over VAT digital services rules

Businesses who make and sell apps or provide digital services to consumers in the European Union will see their paperwork increase in January due to new legislation to counter tax avoidance, experts have warned.

Currently VAT on digital services is charged at the national rate where the supplier is. Providers of electronic services such as Amazon have been criticised for basing their European headquarters in countries such as Luxembourg where VAT rates used are much lower than the UK.

From the 1 January 2015, businesses supplying broadcasting, telecommunications and digital services to consumers will have to charge customers VAT at the rate of the country where the customer buys the service from.

So a UK business selling an app to a customer in Luxembourg, will have to charge VAT at 15%, but at 27% for same app if the customer lives in Hungary.

“There are 28 countries in the EU with 30 different VAT rates [which] creates a high administrative burden, plus enormous potential for mistakes,” said Ruth Corkin, VAT senior manager at accounting firm James Cowper.

Tax rules on digital transactions are further complicated because different technology platforms are categorised differently by the new tax rules.

Apple’s App Store, for example, is considered a marketplace with purchasers buying directly from Apple, and Apple automatically accounting for the VAT, Corkin said.

In contrast, Google Play acts as an agent taking a commission on sales, leaving the retailer having to account for the VAT themselves.

“A business selling the same app from both Apple’s app store and Google Play will have to account for VAT in completely different ways,” Corkin added.

In the UK, businesses can register once with HMRC for VAT in every EU country they supply electronic services to.

The online registration – called the VAT Mini One Stop Shop (MOSS) – is intended to make it easier for businesses to comply with the new VAT rules.

The service will start on 1 January but businesses can register to use it from October. HMRC consulted on the registration service over the summer.

Businesses will have to submit separate VAT returns for their cross-border digital services and pay tax due every three months. But the government’s online service won’t apply to Britain’s smallest businesses, which trade below the threshold for VAT registration, which is £81,000. These businesses will have to register for VAT in each EU country they sell digital services to.

This and other implications of the new VAT rules were discussed by tax experts during an AccountingWEB webinar in August.

Kevin Hall, a VAT specialist at Gabelle, said it may be hard for some businesses to work out if their service is defined as an electronic service for consumers under the new VAT rules. He advised businesses to start planning for the new rules.

“They may even need to consider whether some countries are not worth targeting [because of the new VAT rules],” he said.

Tax expert Rebecca Benneyworth said some small businesses below the VAT threshold – who will not be able to register with HMRC’s VAT registration service for electronic services – will have an “unenviable task”.

As a director of a small tax software company with European customers, Benneyworth said she would also be affected by the rules.

Story from AccountingWeb

If you need help with the transition or any other VAT issue, call us today on 01367 602011

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Automatic RTI penalties delayed again for small companies

HMRC has announced that the introduction of automatic penalties for late RTI submissions will be delayed another five months for small employers.

Under the revised timetable announced back in February, automatic penalties were due to start from 6 October. This date will still apply for companies that employ 50 or more people, but smaller companies will get an extra five months until the automated regime starts to bite from 6 March 2015.

The Revenue said it will send electronic messages to all employers shortly to let them know when the penalties will apply to them, based on the number of employees shown in the department’s records.

Ruth Owen, HMRC director-general for personal tax, said that RTI is “working well”.

”Our most recent figures show that over 95% of PAYE schemes making payments to individuals are successfully reporting in real time, and 70% say that it is easy to do.”

HMRC added that where employers believe they have a reasonable excuse for sending a return late, they will be able to appeal using HMRC’s new online appeals process for automated penalties.

It added it would look at other ways to encourage employers to comply with the rules, in addition to financial penalties, in the run up to March 2015.

Chas Roy-Chowdhury, head of tax at ACCA, welcomed the announcement as a “commonsense” solution. With the complex RTI system still bedding in, he said the delay would save businesses from situations where they might have incurred automatic penalties.

Initial comment – John Stokdyk, Editor, AccountingWEB: We have contacted HMRC to clarify some of the questions raised by yesterday’s announcement, which follows a similar penalty delay back in February.

In the official announcement, Ruth Owen said how the transition would be easier for “customers” if it was introduced in stages – but why was this formula not set out eight months ago?

The statement says the extra time will allow HMRC to update its systems and enhance its guidance and customer support, but once again shifts the focus of the policy change from its internal processes to taxpayers. “We know that those who have had most difficulty adjusting to real-time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty,” she said.

For most of this year AccountingWEB has been hearing from companies and agents mystified by reconciliation errors and inaccurate figures that go through the RTI system, which has seen many firms harassed by HMRC debt collection agents for tax they do not owe.

Many of these issues were caused by the system creating duplicate records when companies changed their payroll systems (and payroll ID numbers) and other minor administrative changes. Owen told us earlier in the year that HMRC had sorted out 95% of the duplicate record issues by the end of the tax year, but that still left 20,000 people with the wrong codes.

In some instances, employers are fouling up the system by not following the complex requirements set down by HMRC.

But the announcement of yet another change of tack on penalties indicates that HMRC is not confident enough of its data quality to pull the level and set off a torrent of wrong automatic fines. That would set off an even bigger furore than the outcry we saw with penalty warnings in February.

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Summertime ends 2013

Summer time will end on Sunday 27 October at 2.00am GMT throughout European Union Member States. The Clocks go backwards an hour. This means that at 2.00am British Summer Time (BST) the UK will move to 1.00am Greenwich Mean Time (GMT).

The 9th EC Directive on summer time harmonised, for an indefinite period, the dates on which summer time begins and ends across member states as the last Sundays in March and October respectively. Under the Directive, summer time begins and ends at 1.00am GMT in each Member State. Amendments to the Summer Time Act to implement the Directive came into force on 11 March 2002.

Time zones are the responsibility of individual Member States and vary across the EU. The UK is not planning to move to Central European Time.

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