Tax Update Bulletin - September 2007

TAX BULLETIN SEPTEMBER 2007

1. VAT on Home Computers

Following the cessation of the home computing initiative on 6 April 2006, H M Revenue & Customs have at last issued their views concerning the availability of an employer reclaiming VAT input tax on the cost of computers made available to employees at their home. Since 13 August 2007 H M Revenue & Customs view is that full VAT input tax recovery is only available where the provision of a computer is necessary for the employee to carry out their duties of employment, and that under these circumstances there are unlikely to be significant private use. In all other cases an apportionment should be considered, between private and business use to determine the appropriate input claim based on business use only.

2. VAT Registration

H M Revenue & Customs are still taking a significant time to deal with VAT registrations and continue to apologise for this and are still trying to improve the timing of this. As mentioned in our July 2007 bulletin, this causes traders un-necessary additional burdens.

3. Pension Schemes and Online Filing

From 16 October 2007, it will be become mandatory for a number of documents to be filed online, including the Annual Tax Return, and it will not be possible to file these in paper form. Pension scheme administrators should register with H M Revenue & Customs pension scheme online service at https://online.hmrc.gov.uk/registration and select “pensions” to obtain an ID. The helpdesk number is: 0115 974 1600.

4. PAYE Annual Return Penalties

From 24 September 2007 H M Revenue & Customs have been issuing penalty notices, where they have not received completed 2006/07 employer Annual Returns and/or 2006/07 Subcontractor Annual Returns. It is definitely worth ensuring that these penalty notices have been issued correctly and appealing against them if they have not.

5. VAT Registration/Deregistration Centralisation

From 1 October 2007, all general VAT Registration and Deregistration, or any changes of details to existing registrations, should be addressed to Wolverhampton and not other UK area addresses as in the past, as this is becoming the principal processing office for this purpose.

6. National Minimum Wages

From 1 October 2007 the revised national minimum wage rates are as follows:

Age 22 and above                                       £5.52 per hour
Age 18 – 21                                                  £4.60 per hour
Under 18 years of age                               £3.40 per hour

7. CIS Monthly Returns

Any returns that are outstanding on or after 20 October 2007 will attract penalties, back dated to when they should have been filed (normally within 14 days of the end of each month, or 17 days of the end of each month if payment is made electronically). These are automatic penalties, even if there was a nil return that should have been made. Therefore it is important to ensure that all monthly returns are up to date by 20 October 2007. This applies to monthly returns due from 6 April 2007 only.

8. PAYE Settlement Agreements

The due date for payment of tax and Class 1B National Insurance contributions, under these agreements for 2006/07 is 19 October 2007. These are normally agreements which employers make with H M Revenue & Customs locally, in respect of any general benefits provided to employees, to avoid the need to issue numerous P11D’s for each employee.