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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 http://www.bankofengland.co.uk/monetarypolicy/Pages/qe/default.aspx.

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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1,773 happy returns at Christmas

HM Revenue and Customs (HMRC) received 1,773 online tax returns on Christmas Day – a 13 per cent increase on last year’s total of 1,566.

HMRC’s Christmas data logs reveal the busiest time for online returns on 25 December was between midday and 1pm, when 148 Yuletide returns were delivered electronically.

Christmas Eve, traditionally a much busier day for festive filing than the big day itself, saw 17,644online returns successfully submitted. This was up 4 per cent on the 17,000 received on 24 December 2013.

Another 4,811 online returns ticked all the boxes on Boxing Day – a 7 per cent increase on the 4,493 received last year.

In total, 24,228 online returns were received over the three-day festive period – up 5 per cent on the 2013 total of 23,059.

HMRC Director General of Personal Tax, Ruth Owen, said:

“You can file your online return at any time of day or night – even Christmas Day, if it suits you. But don’t leave it too late. Give yourself plenty of time to resolve any problems and if you need to call us, do it now, as our phone lines get much busier as the 31 January deadline approaches.”

The deadline for sending 2013/14 tax returns to HMRC, and paying any tax owed, is 31 January 2015.

All outstanding 2013/14 tax returns must now be submitted online, as the 31 October paper-filing deadline has passed.

For help with your tax return, contacts Davenports today on Faringdon 01367 602011 or Swindon 01793 230472

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HMRC turns attention to horsebox owners in evasion clampdown

Horsebox owners dishonestly claiming horseboxes worth hundreds of thousands of pounds as company expenses are set to be the subject of HM Revenue & Customs investigation, as it continues its clampdown on tax evasion.

Top 50 firm UHY Hacker Young believes HMRC suspects some farmers and rural business owners of buying horseboxes through their company, either falsely claiming the cost as a business expense for tax purposes, or failing to declare personal use of the horsebox and paying tax on it as a “benefit in kind”.

Horseboxes can be valuable assets, with the one used by Zara Phillips at the 2012 Olympics valued at around £500,000 – albeit complete with capacity for six horses and its own bedroom, kitchen and living room complete with satellite television. There is no suggestion that Phillips has evaded tax.

HMRC officials can now identify connections and discrepancies between an individual or company’s official tax records and information from multiple third party sources via the department’s computer system, Connect.
UHY Hacker Young says that HMRC uses DVLA databases, and even Google Streetview, to monitor the lifestyle of suspected tax evaders.

UHY Hacker Young partner Charles Homan said: “Underpaid tax relating to horseboxes is a drop in the ocean but HMRC seems to be focussing attention in this area because they can now be such valuable assets.”
“It shows how determined HMRC are to close down every little loophole and capture every mistake made in tax returns. Without the correct documentation, even owners of horseboxes who have done nothing wrong could find themselves on the receiving end of a lengthy and uncomfortable tax investigation.”

Story from Accountancy Age

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Solicitors targeted in new tax clampdown

Solicitors are being given the chance by HM Revenue and Customs (HMRC) to bring their tax affairs up to date or face tougher penalties, as part of a new tax campaign.

The Solicitors’ Tax Campaign is the latest voluntary, intelligence-led disclosure opportunity giving specific groups of taxpayers the chance to get their tax affairs in order on the best terms available.

Previous campaigns have included medical professionals, plumbers, tutors and coaches, electricians, online traders, landlords and health professionals. This approach has so far raised almost £1 billion from voluntary disclosures and follow-up activity by HMRC.

Solicitors have until 9 March 2015 to tell HMRC that they would like to take part in the campaign, and until 9 June 2015 to disclose the tax they owe and pay it.

By using this campaign to come forward voluntarily, any penalties they might have to pay will be lower than if HMRC has to approach them first.

Caroline Addison, Head of Campaigns, HMRC, said:

“Information gathered by HMRC has allowed us to identify solicitors who thought they could operate without declaring income and paying the taxes that others have to pay.

“If you have not declared all of your income, you need to put your tax affairs in order. Take this chance to come forward and put things right in a straightforward way and on the best possible terms. It will be easier and cheaper for you to come to us than for us to come to you.

“Those who make a deliberate decision not to pay the taxes due could face a penalty of 100% or more of the tax due, or even a criminal prosecution.”

Solicitors can take part in the Solicitors’ Tax Campaign by:

  • Telling HMRC they want to take part in the campaign by 9 March 2015
  • Disclosing details and paying what they owe by 9 June 2015

For more details, plus help and support on the campaign, solicitors can phone a dedicated helpline on 0300 013 4749 or visit www.gov.uk/solicitors-tax-campaign online.

For independent help and support contact Davenports Accountancy today on 01367 602011

 

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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: http://youtu.be/cZdDIVNaL18

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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Tax reconciliation errors affect ‘thousands’

HMRC has “stopped” issuing income tax repayments after a leaked email revealed that end of year tax reconciliations for thousands of taxpayers may have been calculated wrongly, the Telegraph reported this morning. An HMRC spokesman told AccountingWEB that the process is “continuing as normal”. But the email, now reproduced below, said that some large employers were involved “so several thousands of employees may be affected”.

The Telegraph reported that “HMRC said tens of thousands would ultimately be affected but admitted it currently had no idea about the scale of problem”.

It added that a spokesman for HMRC said the incorrect letters were not demands but merely tax summaries, and that “no one has been asked to hand a penny over in tax because of this”.

HMRC told AccountingWEB: “The majority of the errors have happened because an employer failed to make a final payment statement for the 2013/14 tax year meaning our records were incomplete despite reminders that these submissions had to be made. We are sorry this has happened and we will issue corrected calculations in the next few weeks.”

HMRC has provided a copy of the note sent to stakeholders including employers, professional bodies and business groups. It is reproduced in full below.

“We are today emailing our stakeholders to explain that we are aware that a number of employees recently received a form 2013-14 P800 which was issued during our bulk 2013-14 End of Year reconciliation exercise.

The 2013-14 P800 shows an incorrect overpayment or underpayment where the pay and tax shown on the P800 is incorrect and does not match that shown on their 2013-14 P60.

The most common scenarios are where:

  • An incorrect overpayment is created as the 2013-14 reconciliation is based upon the Full Payment Submission (FPS) up to month 11 although the employment continued all year.
  • Where the year to date figures supplied are incorrect, for example where an employer reference changed in-year and the previous pay and tax is incorrectly included in the “year to date” (YTD) totals.
  • We have received an “Earlier Year Update” (EYU) and this is yet to be processed to the account.
  • There is a duplicate employment (often caused by differences in works numbers and other changes throughout the year)

We are urgently investigating these cases and will look to resolve the matter in the next 6-8 weeks.

We currently do not know the scale of the issue, but some large employers are involved, so several thousands of employees may be affected.

Next Steps

We are very sorry that some customers will receive an incorrect 2013-14 P800 tax calculation.

We are urgently investigating these cases and will look to resolve the matter and issue a revised P800 to the employee in the next 6-8 weeks.

Employers and their agents should not send any 2013-14 EYUs unless requested by us. We are aware that there are still some 2013-14 EYUs which we have yet to process to the relevant account.

If an employee asks about a 2013-14 P800 which they think is incorrect, they should advise them:

  • Not to repay any underpayment shown on the P800
  • Not to cash any payable order they may have received
  • Employees will not be affected by the incorrect tax code as we will issue a revised P800 before Annual Coding.”

Story from AccountingWeb

If you’ve received a P800T and you believe it’s incorrect contact Davenports Accountancy today on 01367 602011 to see how we can help.

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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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