HMRC in Beta Test for Online Complaints System

It is one of life’s great frustrations for tax payers. You have a problem or question about your tax code, PAYE etc. You try to take it up with HMRC. You spend what seems like forever trying to speak to somebody on the telephone and give up because you have lost patience or cannot navigate the impenetrable interactive voice response options. Or you try the old fashioned method and send HMRC a letter. A reply takes longer to arrive (if it ever does) than you walking to the Moon and back.
By now at your wits’ end you want to make a complaint but to do so means another tortuous adventure in HMRC-land even Hercules would decline.

What do you do?

There may be salvation coming your way. HMRC, perhaps finally acting on the “bad rap” they have for customer service, is beta-testing an online complaints system aimed at those poor unfortunates amongst us who have issues with our tax, PAYE and “can’t get no satisfaction” from HMRC about it.

For the moment at least, the online test is for complaints from individual taxpayers – employees and pensioners – who wish to raise their complaint online should that complaint relate to tax deducted from their wage or pension and the service provided (or not) by HMRC.

If you fall in to the above category and wish to register a new complaint then you may try the online service.

The Online complaint form can be found here:

https://www.tax.service.gov.uk/forms/form/make-your-complaint-online/new

You will require a government gateway account. If you already have one, log-in. If you do not, register here:

https://www.tax.service.gov.uk/coafe/government-gateway/register?accountType=individual&continue=%2Fforms%2Fform%2Fmake-your-complaint-online%2Fnew

Perhaps if the beta test proves successful, HMRC will adopt the system more widely.

Should you have an existing complaint on-going with HMRC or wish to make a new complaint about anything other than tax deducted from your wage or pension then you are, at this time, limited to the telephone or letter routes.

General information and contact points for making general complaints to HMRC can be found here:

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/complain-about-hmrc

It is encouraging to see HMRC seeking to become easier to contact and more response to customer service and complaints issues. It has been a long time coming.

Have you been affected by tax issues and currently trying to sort it out with HMRC? Please leave a comment to share your experience. If you use the beta trial of the online complaints form, please leave a comment about that. We would be interested to read about your experiences.

Construction Industry Scheme. Does it Affect You?

Attention all contractors. Are you aware of the Construction Industry Scheme (CIS) and how it affects you? If not, take note!

The CIS includes, with some exceptions, construction work including site preparation, decorating, demolition and refurbishment.

The CIS applies to construction work carried out throughout the UK even including territorial waters up to the twelve mile limit.

If you are a contractor who uses sub-contractors then under the CIS you must deduct money from payments to your sub-contractors and instead pay it to Her Majesty’s Revenue and Customs (HMRC). This takes the form of an advance payment of the sub-contractor’s tax and national insurance contributions.
You must register for the CIS if you are a contractor. This is defined as you pay sub-contractors for construction work or your business doesn’t do construction work but you spend an average of more than £1 million a year on construction in any three year period.

Register as a sub-contractor if you do construction work for a contractor. You do not have to register if you are a sub-contractor however if you do not register it could mean that stoppages by the contractor are at a higher rate.

If you are both a contractor and sub-contractor then register under both categories.

If you are not involved in the construction industry normally you may still fall under the CIS and be a “deemed contractor”. For example if your business is in in the catering industry but for whatever reason you have a significant construction spend perhaps on new premises which goes over the £1 million threshold in any three year period then you will be a “deemed contractor” until such time your construction spend falls below the threshold and you can satisfy HMRC of that.

If you are liable for the CIS then after registration you will be required to keep certain records and make a monthly return to HMRC which includes details of the amounts paid to each of your sub-contractors and any deductions.

Under the CIS, payments from contractors to sub-contractors must reflect the tax status of the sub-contractor. Thus if you are a contractor it is essential that you clarify that tax status with your sub-contractors and if in doubt, HMRC.

Any relevant deductions must be taken and paid to HMRC under the scheme. You must keep and retain accurate records including a statement of deductions to the sub-contractor ready for you to complete your monthly CIS return to HMRC.

Your monthly CIS return must be with HMRC within 14 days of the end of the tax month they are for. You risk penalties if you do not comply with that deadline. Returns can be filed electronically or by post.
Monthly returns must still be made even if you have not paid any sub-contractors during the period of the return.

If you think that you may fall under the CIS but would like some additional help and advice, please contact us to discuss how we could assist you.

Property Landlords – An Unfair Hit on an Easy Target

On 6th April 2016 new rules come into play that will deny higher rate tax relief for any interest and other finance costs against rental income. It has long been established that interest is a cost that all businesses can offset against their income. This however will not be the case for landlords in the future.

To replace the deductibility of interest and related costs, landlords will be able to claim a tax deduction based upon the finance costs multiplied by the basic rate of 20%. This will have the effect in some cases of artificially making basic rate tax payers become higher rate tax payers, which could in turn lead to a loss or claw-back of benefits such as child tax credits and personal allowances, and cause landlords to pay tax on profits that they have not made.

Consider this example. Dave is already a higher rate tax payer through his employment. He also has rental income of £30,000 but pays mortgage interest of £35,000. Thus Dave has a monetary shortfall of £5,000 from his rental business that he must fund out of his other earnings. Surely he should not have to pay tax on his rental earnings, should he? Under the new rules he will. By 2020/21 his rents of £30,000 will incur tax of £12,000 (£30,000 @ 40%) and will get a reduction of only £7000 (£35,000 @ 20%). Despite making a monetary loss of £5,000 he will have to pay tax of £5,000 (£12,000 – £7,000).

Why can the Government get away with this bizarre unfairness? Due to the capping of tax rates during the current term of this Government, the Treasury, which is short of revenue and needing to close the Lending Gap, must be more inventive in it’s ways of raising taxes. Landlords are relatively easy targets. Despite Dave making a loss, he is perceived as a fat cat landlord, taking advantage of the poor working majority. Taxing landlords in this way, not only raises revenue for the Government, but also wins popular support and votes. A win-win for the government.

To make matters worse for landlords, they will also face increasing Stamp Duty on the purchase of buy-to-let properties, and when they come to sell properties they will be required to pay the tax they owe much earlier than all other tax payers. Currently the existing rules deny tax relief for genuine business expenses such as renewals of things such as carpets and white goods. Whilst this anomaly will be partially addressed after 6th April 2016 with the introduction of new rules, these rules are still purposely limited and will leave certain genuine business costs for landlords un-relievable.

At DEB we believe that this attack on landlords is likely to be the thin edge of a wedge with landlords likely to face increasing costs and threats to their businesses in the future. To keep landlords informed about these changes, as part of the DEB Business Wise Forum initiative, we are holding a free seminar on the afternoon of 28th April 2016 at DEB House which is open to both clients and non-clients to attend. Places are limited so please book your place early by contacting Ben Morley on 01226 245824.