Ease the deadlines for VAT & PAYE/NIC payment

Small businesses, however defined, should be allowed greater 'time to pay' to HMRC VAT and Payroll Taxes.  Businesses like Football Clubs, owing millions in back taxes to HMRC are seen to be entering administration, negotiating a few pence in the pound deals and then carrying on as before.  Small businesses need either extended time to pay in the current climate or access to bank finance at reasonable rates and not the 14% the banks are quoting.

Why is this idea important?

Small businesses, however defined, should be allowed greater 'time to pay' to HMRC VAT and Payroll Taxes.  Businesses like Football Clubs, owing millions in back taxes to HMRC are seen to be entering administration, negotiating a few pence in the pound deals and then carrying on as before.  Small businesses need either extended time to pay in the current climate or access to bank finance at reasonable rates and not the 14% the banks are quoting.

P11D return of benefits and expenses

The P11D return of benefits and expenses needs to be filed by all employers every year by 6 July following the end of the tax year.  The return is required to disclose taxable benefits so that the correct tax can be collected (fair enough) but also any expenses payments to directors / employees, even if it is simply the reimbursement of costs wholly for business.  A "dispensation" can be applied for to limit the reporting requirement of expenses, but is rather bureaucratic and is difficult to use when there is only one director.

My idea is to remove the requirement to report reimbursement of business expenses to directors / employees where they are clearly for business.

Why is this idea important?

The P11D return of benefits and expenses needs to be filed by all employers every year by 6 July following the end of the tax year.  The return is required to disclose taxable benefits so that the correct tax can be collected (fair enough) but also any expenses payments to directors / employees, even if it is simply the reimbursement of costs wholly for business.  A "dispensation" can be applied for to limit the reporting requirement of expenses, but is rather bureaucratic and is difficult to use when there is only one director.

My idea is to remove the requirement to report reimbursement of business expenses to directors / employees where they are clearly for business.

Stagger the vat threshold for business

Make the vat threshold for business staggered e.g. Turnover up to 70k = 5% up to 140k = 10% over 140k = 15% and make the de-registration rate the same as the registration rate.

Why is this idea important?

Make the vat threshold for business staggered e.g. Turnover up to 70k = 5% up to 140k = 10% over 140k = 15% and make the de-registration rate the same as the registration rate.

HMRC should not be a preferential creditor

When a company becomes insolvent HMRC still (although somewhat reduced since 2003) enjoys the status of preferential creditor. This is quite simply unfair. Many other small companies, who are ordinary, unsecured creditors, will be far less able to endure a bad debt and may well be forced into closure themselves as a result. I've seen this happen to other companies. HMRC should be at the back of the queue rather than at the front, ensuring that other companies are not undermined by the failure of the one. HMRC should ensure that other creditors have been paid before they look for their share of funds.

Why is this idea important?

When a company becomes insolvent HMRC still (although somewhat reduced since 2003) enjoys the status of preferential creditor. This is quite simply unfair. Many other small companies, who are ordinary, unsecured creditors, will be far less able to endure a bad debt and may well be forced into closure themselves as a result. I've seen this happen to other companies. HMRC should be at the back of the queue rather than at the front, ensuring that other companies are not undermined by the failure of the one. HMRC should ensure that other creditors have been paid before they look for their share of funds.

Stop Exploitation By Employers Calling an Employee – Seft Employed

Some  firms are employing people and calling them self employed.

In this way they can avoid National Insurance contibutions and they dont even have to pay them the mimimum wage as it does not apply to the self employed (so they say).

These poor workers often have to claim benefits such as Working Tax Credits as their wages are so low.

They can not be truely Self employed as they work when they are told to. Meaning they can not work elewhere due to these restrictions.

They can have their work withdrawn without notice. They have no protection from employment legislation (yet to be tested fully).

No paid holidays. No sick pay.

Infact nothing if you dont work you dont get paid and can be sacked without notice.

STOP THIS EXPLOITATION.

You would think this a third world country, but it happening in Britain today.

Why is this idea important?

Some  firms are employing people and calling them self employed.

In this way they can avoid National Insurance contibutions and they dont even have to pay them the mimimum wage as it does not apply to the self employed (so they say).

These poor workers often have to claim benefits such as Working Tax Credits as their wages are so low.

They can not be truely Self employed as they work when they are told to. Meaning they can not work elewhere due to these restrictions.

They can have their work withdrawn without notice. They have no protection from employment legislation (yet to be tested fully).

No paid holidays. No sick pay.

Infact nothing if you dont work you dont get paid and can be sacked without notice.

STOP THIS EXPLOITATION.

You would think this a third world country, but it happening in Britain today.

Incentive for small building works to existing residential properties

As a small architectural practice of some 37 years in business I wish to emphasise the importance to the country’s economy that is contributed to by the many ten’s of thousands of small to medium sized building projects that are carried out each year in our field of work.

 

With the current economic downturn in the economy it is not possible for people to buy and sell houses to meet their particular requirements of family life. However the opportunity to expand their existing property is now a serious option to consider as it is much more of an economic possibility as it is not dependant on the housing market status.

 

Thus there is massive potential for a value-added market waiting to move forward, but it is completely frustrated by the penalty of a 17.5% (in January it will be 20%) VAT surcharge on all building works to existing properties.

 

The previous Government was vigorously selling the concept of reduction of the carbon footprint of new buildings, suggesting that the family home was one of the major contributors to this problem. They insisted that it was essential for old properties to improve their efficiency in ‘U’ value performance to reduce the carbon footprint. On reviewing the VAT guideline on Buildings and Construction it is noted that any improvement to existing fabric such as windows, doors and walls with insulation could be eligible to 5% VAT. Ironically any NEW component or extension, which was fully compliant with to the new ‘U’ values would not enjoy the 5% VAT incentive. Another of Gordon Brown’s devious ideas or smoke and mirror dishonest incentive!

 

I would ask that all works to existing properties whether for upgrading or for additional accommodation, which will improve the ‘U’ value efficiency be eligible for the 5% VAT.

This adjustment would have an enormous impact on the Treasury Revenue income and would give rise to reducing the numbers of unemployed tradesmen in the building industry and add a great deal of added value to the Nation’s economy.

 

Our trades and local industries need to be encouraged to grow or else these skills will be lost in future generations.

 

This will also stimulate the economy from the ground up – as a flurry of activity in the construction sector will increase confidence, allowing money to circulate again. With interest rates at such a low level, does it not make sense for individuals to re-direct their savings into bricks and mortar as an investment while also improving their quality of life?

 

Activity in the building industry should be embraced and not stifled.

Why is this idea important?

As a small architectural practice of some 37 years in business I wish to emphasise the importance to the country’s economy that is contributed to by the many ten’s of thousands of small to medium sized building projects that are carried out each year in our field of work.

 

With the current economic downturn in the economy it is not possible for people to buy and sell houses to meet their particular requirements of family life. However the opportunity to expand their existing property is now a serious option to consider as it is much more of an economic possibility as it is not dependant on the housing market status.

 

Thus there is massive potential for a value-added market waiting to move forward, but it is completely frustrated by the penalty of a 17.5% (in January it will be 20%) VAT surcharge on all building works to existing properties.

 

The previous Government was vigorously selling the concept of reduction of the carbon footprint of new buildings, suggesting that the family home was one of the major contributors to this problem. They insisted that it was essential for old properties to improve their efficiency in ‘U’ value performance to reduce the carbon footprint. On reviewing the VAT guideline on Buildings and Construction it is noted that any improvement to existing fabric such as windows, doors and walls with insulation could be eligible to 5% VAT. Ironically any NEW component or extension, which was fully compliant with to the new ‘U’ values would not enjoy the 5% VAT incentive. Another of Gordon Brown’s devious ideas or smoke and mirror dishonest incentive!

 

I would ask that all works to existing properties whether for upgrading or for additional accommodation, which will improve the ‘U’ value efficiency be eligible for the 5% VAT.

This adjustment would have an enormous impact on the Treasury Revenue income and would give rise to reducing the numbers of unemployed tradesmen in the building industry and add a great deal of added value to the Nation’s economy.

 

Our trades and local industries need to be encouraged to grow or else these skills will be lost in future generations.

 

This will also stimulate the economy from the ground up – as a flurry of activity in the construction sector will increase confidence, allowing money to circulate again. With interest rates at such a low level, does it not make sense for individuals to re-direct their savings into bricks and mortar as an investment while also improving their quality of life?

 

Activity in the building industry should be embraced and not stifled.

Allow very small companies (under £30K turnover) to claim VAT back without having to charge VAT.

Very small and nascent business struggle – especially in this climate to stay afloat when crippled by VAT charges, in order to be competitive charging VAT is impossible, but having to pay it seems really unfair when your trying to start something new.

Why is this idea important?

Very small and nascent business struggle – especially in this climate to stay afloat when crippled by VAT charges, in order to be competitive charging VAT is impossible, but having to pay it seems really unfair when your trying to start something new.

Becoming self-employed and registering for NI contributions and/ or tax. How to speed up the process.

Currently registering on line as advised by HMRC takes 4-6 weeks to have unique 10 digit reference number. It is registered by the department accepting the email, who then send out a confirmation of receipt. There is then a queuing system whilst it is registered, then forwarded on to your local office, who apparently then mail the details to you.

Why is this so long winded? It is soul destroying for those struggling to earn a living who are charged tax deductions at 30% whilst waiting for the number to eventually arrive.

Please change the system to either emailing your local tax office direct or for the unique number to be emailed back to the applicant. 

Why is this idea important?

Currently registering on line as advised by HMRC takes 4-6 weeks to have unique 10 digit reference number. It is registered by the department accepting the email, who then send out a confirmation of receipt. There is then a queuing system whilst it is registered, then forwarded on to your local office, who apparently then mail the details to you.

Why is this so long winded? It is soul destroying for those struggling to earn a living who are charged tax deductions at 30% whilst waiting for the number to eventually arrive.

Please change the system to either emailing your local tax office direct or for the unique number to be emailed back to the applicant. 

Allow companies to statutorily merge – a fast cheap process to reduce the number of corporate entities

In the UK to get rid of a company, it has to be struck off or merged. But there can be issues re assets, eg small pieces of land and other rights, and issues re people who were employed by the company which cause groups to leave the company as dormant rather than have it struck off or liquidated. Liquidation is also expensive.

Companies are not allowed to statutorily merge in the UK – it is this position which must be scrapped.

in the USA where there are two companies owned eg within the same group, one company can be statutorily merged with the other. All the rights, assets and liabilities of the first company are passed to the second so the two can continue as one company. The first company is simply then deleted as no longer existing. This enables unwanted corporate structures to be efficiently and cheaply done away with , enabling the UK to be more efficient and waste less on administration in contrast to the UK where tens of thousands of dormant and low activity companies continue to file tax returns, computations and accounts (at both HMRC and Companies House) often for decades.

Why is this idea important?

In the UK to get rid of a company, it has to be struck off or merged. But there can be issues re assets, eg small pieces of land and other rights, and issues re people who were employed by the company which cause groups to leave the company as dormant rather than have it struck off or liquidated. Liquidation is also expensive.

Companies are not allowed to statutorily merge in the UK – it is this position which must be scrapped.

in the USA where there are two companies owned eg within the same group, one company can be statutorily merged with the other. All the rights, assets and liabilities of the first company are passed to the second so the two can continue as one company. The first company is simply then deleted as no longer existing. This enables unwanted corporate structures to be efficiently and cheaply done away with , enabling the UK to be more efficient and waste less on administration in contrast to the UK where tens of thousands of dormant and low activity companies continue to file tax returns, computations and accounts (at both HMRC and Companies House) often for decades.

Simplify Gift Aid

Gift Aid has been great, but it could be better.  Some people don't use it because they are unsure of their tax status, or worried by the legalese.  Furthermore tax at the higher rate cannot be reclaimed by the charity.

My proposal is th set an average Gift Aid rate, based on the average rate of tax paid by all adults in the UK, taking into account basic rate taxpayers, higher rate taxpayers, and those who pay no income tax or capital gains tax at all. 

Then let all gifts from private individuals attract gift aid at that rate, regardless of the tax status of that indivual, without the individual having to give any info about their tax status, or fill in a gift aid declaration, or having the right to claim tax on their tax returns.

Why is this idea important?

Gift Aid has been great, but it could be better.  Some people don't use it because they are unsure of their tax status, or worried by the legalese.  Furthermore tax at the higher rate cannot be reclaimed by the charity.

My proposal is th set an average Gift Aid rate, based on the average rate of tax paid by all adults in the UK, taking into account basic rate taxpayers, higher rate taxpayers, and those who pay no income tax or capital gains tax at all. 

Then let all gifts from private individuals attract gift aid at that rate, regardless of the tax status of that indivual, without the individual having to give any info about their tax status, or fill in a gift aid declaration, or having the right to claim tax on their tax returns.

Private companies only file one group tax return, but no individual company returns, no accounts and no tax computations

In the USA (the land of the free) a group of say 250 private companies only has to file one group consolidated tax return ie one document. No tax computations and no accounts.

In the UK such a group would file 250 individual tax returns, 250 individual tax computations and also file 250 individual set sof company accounts twice (once with Companies House and once with HMRC). So the UK Group of 250 companies files 1,000 documents compared to one in the USA!

The USA business environment and tax collection function very effectively with their requirements. All the extra filing in the UK does is create unneccsary paperwork.

In addition, on each of the three documents for each company now filed with the HMRC (tax return, tax computation and accounts), HMRC is now requiring that companies purchase special software (various different kinds – not supplied by HMRC) to electronically tag each cell to file each document electronically under the IXBRL system. Electronically tagging just one set of accounts takes a trained person two days.

One can immediately see why the USA is more successful commercially.

Tens of thousands of the accounts that have to be filed at Companies House are for dormant companies that are not even trading. Even accounts for dormant trustees limited by guarantee (which have no actual figures in them) for residential management trusts have to file accounts with draconian penalties if they miss deadlines even by a day.

So scrap all filings of tax returns, tax computations and accounts for individual companies for each group of companies or for an individual company bnot part of a group, make it so  they file only one tax group tax return and no tax computation or accounts. 

 

Why is this idea important?

In the USA (the land of the free) a group of say 250 private companies only has to file one group consolidated tax return ie one document. No tax computations and no accounts.

In the UK such a group would file 250 individual tax returns, 250 individual tax computations and also file 250 individual set sof company accounts twice (once with Companies House and once with HMRC). So the UK Group of 250 companies files 1,000 documents compared to one in the USA!

The USA business environment and tax collection function very effectively with their requirements. All the extra filing in the UK does is create unneccsary paperwork.

In addition, on each of the three documents for each company now filed with the HMRC (tax return, tax computation and accounts), HMRC is now requiring that companies purchase special software (various different kinds – not supplied by HMRC) to electronically tag each cell to file each document electronically under the IXBRL system. Electronically tagging just one set of accounts takes a trained person two days.

One can immediately see why the USA is more successful commercially.

Tens of thousands of the accounts that have to be filed at Companies House are for dormant companies that are not even trading. Even accounts for dormant trustees limited by guarantee (which have no actual figures in them) for residential management trusts have to file accounts with draconian penalties if they miss deadlines even by a day.

So scrap all filings of tax returns, tax computations and accounts for individual companies for each group of companies or for an individual company bnot part of a group, make it so  they file only one tax group tax return and no tax computation or accounts. 

 

Abolish VAT on e-books

Printed books are zero rated for VAT which is fine.  e-books which use far less energy to produce and distribute are VAT rated.  This is anomalous.  e-books are still the printed word – even if virtual – and are likely to become the preferred method of reading books.  To encourage their use e-books should be zero rated.

Why is this idea important?

Printed books are zero rated for VAT which is fine.  e-books which use far less energy to produce and distribute are VAT rated.  This is anomalous.  e-books are still the printed word – even if virtual – and are likely to become the preferred method of reading books.  To encourage their use e-books should be zero rated.

Partnership Tax Returns – Late Penalty

Late Partnership Tax Returns incur a penalty of £100 per partner. this should be a single penalty, regardless of the number of partners, especially if the partnership has made little, or no profit (or even a loss).

If there must be a penalty, this should be a fixed penalty for the nominated responsible person. The other partner(s), should not be penalised individually.

Why is this idea important?

Late Partnership Tax Returns incur a penalty of £100 per partner. this should be a single penalty, regardless of the number of partners, especially if the partnership has made little, or no profit (or even a loss).

If there must be a penalty, this should be a fixed penalty for the nominated responsible person. The other partner(s), should not be penalised individually.

Re-instate tax relief on dividends to protect pension funds

 

Before the Labour government took power, company pension funds were given a tax break to allow a build up of capital that could be paid out to employees when they retire.

Labour scrapped this tax relief resulting in a reduction of collected pension funds by £5 billion a year.  At the time, the rising stock market compensated for this.

However, today, due to changing economical conditions, we have lost around £100 billion over the last 12 years. 

Why is this idea important?

 

Before the Labour government took power, company pension funds were given a tax break to allow a build up of capital that could be paid out to employees when they retire.

Labour scrapped this tax relief resulting in a reduction of collected pension funds by £5 billion a year.  At the time, the rising stock market compensated for this.

However, today, due to changing economical conditions, we have lost around £100 billion over the last 12 years. 

Simply pension scheme minimum retirement ages

Remove the complexities and unfairness which surrounds the recent changes in the minimum retirement age from 50 to 55, including:

  • the detailed exemptions which allow some people to keep a minimum retirement age of 50
  • the detailed rules by which that exemption can be lost as a result of certain types of transfers from one pension scheme to another.

A fairer approach would be to revert to the minimum pension age of 50 for all, providing individuals with the maximum flexibilty.

If the government wishes to encourage working beyond age 50 then this could be done simply by limiting the availability of the Pension Commencement Lump Sum (commonly known as the tax-free cash) to retirements at age 55 or above. 

Anyone retiring before age 55 who takes a lump sum from their pension would be subject to income tax on that lump sum, unless retiring for reasons of permanent ill-health (which is already allowable at any age).

Why is this idea important?

Remove the complexities and unfairness which surrounds the recent changes in the minimum retirement age from 50 to 55, including:

  • the detailed exemptions which allow some people to keep a minimum retirement age of 50
  • the detailed rules by which that exemption can be lost as a result of certain types of transfers from one pension scheme to another.

A fairer approach would be to revert to the minimum pension age of 50 for all, providing individuals with the maximum flexibilty.

If the government wishes to encourage working beyond age 50 then this could be done simply by limiting the availability of the Pension Commencement Lump Sum (commonly known as the tax-free cash) to retirements at age 55 or above. 

Anyone retiring before age 55 who takes a lump sum from their pension would be subject to income tax on that lump sum, unless retiring for reasons of permanent ill-health (which is already allowable at any age).

Zero Rate All Supplies Between VAT registered businesses

With a few exceptions (Builders etc.) when one registered business supplies another registered business the former pays the vat and the latter reclaims it.  It is only when supplies are made to non vatable entities and or people (the retail sector) that HMRC actually gain a net benefit.

All supplies made between registered businesses (with a few exceptions) should be zero rated,

Why is this idea important?

With a few exceptions (Builders etc.) when one registered business supplies another registered business the former pays the vat and the latter reclaims it.  It is only when supplies are made to non vatable entities and or people (the retail sector) that HMRC actually gain a net benefit.

All supplies made between registered businesses (with a few exceptions) should be zero rated,

Harmonise the application of VAT on bailiff fees

Fees paid by debtors to bailiffs are currently subject to various VAT rules.  Since 1 September 1994, debtors were no required to pay VAT on bailiff fees as the bailiff provided the service (to enforce warrants) to the local authority.  The principle establshed at this time was the 'direction of the supply of service' – from the bailiff to the creditor.

On 1 September 1998, the same principle was applied to enforcement of unpaid magistrates' courts fines and those debtors were also no longer required to pay VAT on bailiff fees.

In both these cases, the bailiff submits an invoice to the client (local authority or HMCS) for the VAT element of fees paid to the bailiff by debtors.  The two bodies then recover the VAT paid to the bailiff in the usual way.  A lot of work for no gain.

However, for enforcement of civil parking debt (parking penalties) and other forms of distress and execution, the debtor has to pay VAT on bailiff fees, despite the fact that the same principle of the direction of the supply of service must apply – debtors do not hire the services of bailiffs to enforce warrants against them!

The simple solution would be to make all forms of bailiff action (distress and execution) exempt from VAT.  This would reduce the financial burden on debtors and remove the expensive money-go-round of creditors paying VAT to bailiffs, who pay it to HMRC, who give it back to the creditor! 

Why is this idea important?

Fees paid by debtors to bailiffs are currently subject to various VAT rules.  Since 1 September 1994, debtors were no required to pay VAT on bailiff fees as the bailiff provided the service (to enforce warrants) to the local authority.  The principle establshed at this time was the 'direction of the supply of service' – from the bailiff to the creditor.

On 1 September 1998, the same principle was applied to enforcement of unpaid magistrates' courts fines and those debtors were also no longer required to pay VAT on bailiff fees.

In both these cases, the bailiff submits an invoice to the client (local authority or HMCS) for the VAT element of fees paid to the bailiff by debtors.  The two bodies then recover the VAT paid to the bailiff in the usual way.  A lot of work for no gain.

However, for enforcement of civil parking debt (parking penalties) and other forms of distress and execution, the debtor has to pay VAT on bailiff fees, despite the fact that the same principle of the direction of the supply of service must apply – debtors do not hire the services of bailiffs to enforce warrants against them!

The simple solution would be to make all forms of bailiff action (distress and execution) exempt from VAT.  This would reduce the financial burden on debtors and remove the expensive money-go-round of creditors paying VAT to bailiffs, who pay it to HMRC, who give it back to the creditor! 

Child Benefit for children not living in the UK

I have been told (and could be wrong) that some foreign nationals come here, work for a short period then return home with their Child Benefit continuing until the child reaches school leaving age.  That child, or children may have never set foot in the country never mind have any intention of contributing into our welfare system by living and working here themselves.

Child Benefit should be for Brits only, or those who have proven loyalty to the country by living and working here whilst contributing taxes and NI payments into our system for a minimum of 5 years.

Why is this idea important?

I have been told (and could be wrong) that some foreign nationals come here, work for a short period then return home with their Child Benefit continuing until the child reaches school leaving age.  That child, or children may have never set foot in the country never mind have any intention of contributing into our welfare system by living and working here themselves.

Child Benefit should be for Brits only, or those who have proven loyalty to the country by living and working here whilst contributing taxes and NI payments into our system for a minimum of 5 years.

Charities – why do we have to pay VAT?

As the Executive Director of a UK based Charity (Institute for Human Rights and Business) which is recognized as an expert institution by the UK Government and receives support from a number of Governments around the world, I am perplexed by the VAT rules as they apply to charities – as is our accountant.

The best financial advice we have is that we should not register for VAT given that only a minority of our operational work is conducted in the UK (and nearly all our funding comes as donations) and obviously the book-keeping cost of registered and maintaining VAT records is significant. Yet, we are having to pay VAT on most of our administrative costs here in the UK.

It does beg the rather naive question as to why Charities are required to pay VAT at all. If our role is really one of public purpose (and perhaps this is not always the case for every Charity – e.g. some of the private schools with charity status) then it would it not be a wonderful thing to free us from paying VAT at all – allowing this resource to be channeled into our work – in our case in many emerging and developing countries as well as the UK.

I guess it might work by all interested Charities receiving a special VAT number – and being able to reclaim all VAT on a quarterly basis, but not required to charge VAT to others. It will also assist in dealings with other contractors based in the EU – to whom we currently have to pay VAT if not so registered in the UK.

Why is this idea important?

As the Executive Director of a UK based Charity (Institute for Human Rights and Business) which is recognized as an expert institution by the UK Government and receives support from a number of Governments around the world, I am perplexed by the VAT rules as they apply to charities – as is our accountant.

The best financial advice we have is that we should not register for VAT given that only a minority of our operational work is conducted in the UK (and nearly all our funding comes as donations) and obviously the book-keeping cost of registered and maintaining VAT records is significant. Yet, we are having to pay VAT on most of our administrative costs here in the UK.

It does beg the rather naive question as to why Charities are required to pay VAT at all. If our role is really one of public purpose (and perhaps this is not always the case for every Charity – e.g. some of the private schools with charity status) then it would it not be a wonderful thing to free us from paying VAT at all – allowing this resource to be channeled into our work – in our case in many emerging and developing countries as well as the UK.

I guess it might work by all interested Charities receiving a special VAT number – and being able to reclaim all VAT on a quarterly basis, but not required to charge VAT to others. It will also assist in dealings with other contractors based in the EU – to whom we currently have to pay VAT if not so registered in the UK.