Good news for EU-resident seamen: HMRC finally allows SED claims retrospectively

It now appears that the efforts of numerous tax agents and tax lawyers in the UK have yielded some results. The HMRC have agreed that their decision to allow SED claims to EU-resident seamen ONLY from 6 April 2011 onwards is discriminative, and they will now allow for such claims to be made RETROSPECTIVELY - practically this covers all years back to 2006/07.

Until 5 April 2011 SED was only available to seafarers who were ordinarily resident in the UK. From 6 April 2011 SED was extended to non-UK resident seafarers who were resident in a European Union or European Economic Area state and performed duties partly in UK waters on which they paid income tax in the UK.

The change in the law to extend entitlement to SED to EU/EEA seafarers did not include any reference to retrospective entitlement for years before 2011/12. Consequently it was HMRC’s practice not to admit claims to SED from EU/EEA seafarers for earlier years.

Change of practice

HMRC now considers EU law requires that claims for SED for tax years before 2011/12, by those who were not UK resident or ordinary resident in the relevant tax year, should be allowed where the claims are made within the same time limits that apply for making such claims by those who were UK resident or ordinary resident in the relevant tax year.

Time limits

In view of the date of the making of this announcement, HMRC will extend by approximately 4 months the time limits for making claims for overpaid tax relating to claims for SED that would otherwise expire on 31 March or 5 April 2012. Accordingly, provided it is made on or before 31 July 2012, HMRC will consider retrospective claims relating to SED made -

• in respect of the tax year 2007/08 by a person who was not UK resident or ordinary resident for that year (whether or not that person’s tax affairs were, for that year, determined in accordance with Self Assessment); and
• in respect of the tax year 2006/07 by a person who was not UK resident or ordinary resident for that year provided that person’s tax affairs were, for that year, not determined in accordance with Self Assessment.

The relaxation of the time limits described above does not have effect in relation to any other claim. Claims relating to SED in respect of the tax year 2008/09 and later tax years must be made within the normal time limits for making claims in respect of such tax years (i.e. within 4 years of the end of the tax year in question).

HM Revenue & Customs (HMRC) has launched a new online video to help employers reduce the problems caused by inaccurate employee data.

Every year, HMRC receives thousands of employer returns, containing the details of millions of employees, including names, dates of birth and National Insurance numbers. While the vast majority of the employee data is correct, in some cases dummy, incomplete or incorrect information is included.

For example, a recent study of employer returns found that 128 staff were entered as Mr, Ms or Mrs Dummy, while 824 employees had the surname “Unknown”.

Another 40 employees, according to their dates of birth, were aged over 200. Many other employees had their forenames and surnames swapped around, or their first names replaced by initials, which can make it more difficult for HMRC to identify the individuals.

The short YouTube video discusses how inaccurate employer returns can affect employees, employers and HMRC, and offers basic advice on how employers can help reduce errors.

Jim Harra, HMRC’s Director of Customer Operations, said:

“It’s really important that employers get their employees’ information right, so that HMRC can match it to the right tax records. Otherwise, it can lead to more contact from staff, trying to sort out their tax, and from HMRC, trying to sort out the data issues.

“So, if you’ve got a spare few minutes, watch the video and see what you can do to help your organisation get things right, for you, your employees and HMRC.”

The video can be viewed on the YouTube website at http://bit.ly/xVazur

For more information on improving payroll data go to www.hmrc.gov.uk/rti/dip/index.htm

HMRC have announced that from mid-July they will start sending out PAYE tax calculations for the 2010/11 tax year, starting with repayments where HMRC think too much tax has been paid

Not everyone will get a P800 tax calculation. Some people fill in tax returns, so their tax affairs will be sorted out in that way. For most others, PAYE works well so that you pay everything you owe during the year. Based on their information, HMRC estimate that more than 80% of people will neither owe tax nor be due a repayment. But watch out – HMRC might not know everything they need to know to get your tax right, so check your position even if you don’t receive a calculation.

Sometimes, however, PAYE doesn’t quite work, particularly if you have more than one job or source of pension income, change jobs frequently or move in and out of work. In some (hopefully few) cases, employers or pension providers make mistakes so the wrong tax is deducted. And in some cases, HMRC also get things wrong.

This means that, after the end of each tax year, HMRC have to ‘reconcile’ individuals’ records to tally up your income taxed under PAYE and check that the tax which has been collected matches the amount they think you should have paid overall.

HMRC will begin 2010/11 reconciliations in mid-July, issuing calculations if they think you have paid too much tax, closely followed by a cheque.HMRC hope to have dealt with most repayments by September. They will then start issuing calculations to those who they think have not paid enough tax.

It is important to note that the P800 is only an estimate, produced by HMRC’s computer. So the calculation is only as good as the data held on the computer. Therefore it is vital to check you calculation.

Source: http://www.litrg.org.uk

On Wednesday 23 March 2011, The Chancellor of the Exchequer, George Osborne, presented his budget to parliament. Below you will find some of the key announcements on tax and national insurance contributions that will affect both private individuals:

Income Tax Allowances
The personal allowance for those aged under sixty five for 2012-2013 will be £8,105 and the basic rate limit will be reduced to £34,370 for 2012-2013. All other income tax, personal allowances and limits that are subject to indexation will be increased in line with the retail prices index.

IR35
The Government has considered the three options on IR35 (the anti-avoidance Intermediaries legislation in Chapter 8, Part 2 of the Income Tax (Earnings and Pensions) Act 2003) set out in the Office of Tax Simplification’s report on its review of small business, published on Thursday 10 March 2011 on the HM Treasury website. The Government has decided that it cannot put substantial tax revenue at risk and has therefore decided to retain IR35 and to achieve simplification by making improvements to the way in which it is administered.

Restricting pensions tax relief
The Government announced on Thursday 14 October 2010 that the annual allowance for tax relief on pension savings for individuals will be reduced from £255,000 to £50,000 from 2011-2012 and the lifetime allowance will be reduced from £1.8 million to £1.5 million from 2012-2013. Following consultation, the Government published additional draft legislation on Thursday 3 March 2011 containing provisions to enable individuals to meet high annual charges from their pension benefits. Individuals with charges above £2,000 will be able to elect for their liability to be met from their pension benefit. In these situations, the tax will be paid at the point the charge arises.

During January, February or March 2011 you may get a PAYE Coding Notice from the HMRC telling you what your new tax code will be for the tax year 2011-12. Your new tax code will be used by your employer or pension provider from the 6 April 2011 to make sure you pay the right tax and get the tax allowances and reliefs to which you are entitled.

Not everyone needs to get a Coding Notice, so don’t worry if you don’t receive one - your employer or pension provider will still be able to update your tax code on the 6 April.

Your Coding Notice is for you to keep. The HMRC will tell your employer or pension provider what your new tax code is – if you have an agent acting for you make them aware of the change.

The UK tax authority, HMRC, is preparing for a mass of enquiries after having sent out new tax calculations.

The first 45,000 of about six million taxpayers will receive letters informing them that they have paid the wrong amount of tax; the remaining new tax calculations will be posted by the end of the year.  The mistakes were brought to light following the introduction of a new computer system.

Refunds and additional tax will generally be recovered by a tax code change in the following financial year.  However, if the amount due is over £ 2,000, taxpayers could be asked to pay a lump sum.

For those who receive the letters tax experts strongly recommend checking the documents to make sure the new calculations correlate properly to their personal and professional situation.  In some case it may be possible to contest claims for additional payments.

Source: http://www.aegistaxswitzerland.com/

We are glad to confirm that the new SA Tax Return and most popular supplements for 2009/10 have been uploaded in our Tax Forms section.

If you need any form or tax return supplement which is not listed, please do not hesitate to contact us on query@taxundo.com

You can also visit our Tax Calculator section, where you will find a selection of handy tools to calculate your tax online. The rates and allowances for the current year 2010/11 have been implemented, so you can make calculations for the whole period up to 5 April 2011.

Who is likely to be affected?
1. EU and European Economic Area (EEA) residents who pay UK tax on their earnings as a seafarer. Broadly speaking a seafarer is a person who works on a ship.
General description of the measure
2. Legislation will be introduced in Finance Bill 2010 to extend the Seafarers’ Earnings Deduction to EU and EEA resident seafarers, ensuring the provisions are compatible with the EU Treaty.
Operative date
3. The measure will have effect on and after 6 April 2011.
Current law and proposed revisions
4. Seafarers’ Earnings Deduction can provide 100 per cent UK tax relief for the earnings from carrying out duties as a seafarer wholly or partly outside the UK, during an eligible period. One of the qualifying conditions for Seafarers’ Earnings Deduction is that the claimant must be ordinarily resident in the UK. This condition will be extended so that seafarers who are EU or EEA residents can claim Seafarers’ Earnings Deduction on their earnings as a seafarer that are liable to UK income tax. There are no other changes to the provisions for Seafarers’ Earnings Deduction.

HM Revenue & Customs (HMRC) is committed to providing access to face to face advice for customers who need this form of support. Most of their Enquiry Centres open standard hours – five days a week from 8.30am to 5pm regardless of local customer visits, but as more customers contact them online or by telephone, visits to Enquiry Centres have fallen 40 per cent since 2006/07.

They tested shorter opening hours in 10 Enquiry Centres in 2008 and feedback from the pilot was that customers were broadly happy with the change in opening hours. Following extensive consultation with national and local representative customer groups, their staff and other affected parties, they have changed the opening hours of a further 58 Enquiry Centres to reflect when their customers are most likely to want appointments for advice. A list of the opening hours for each office is available see Enquiry Centres opening hours. They have also published an Equality Impact Assessment of the wider changes they are making to the opening patterns across our Enquiry Centre network.

HMRC will still be able to assist the elderly and people with disabilities to access face to face advice in its Enquiry Centres, including wheelchair access, induction loops and (by appointment) signing support for customers with hearing disabilities as well as lighted magnifiers for customers with sight disabilities. These services are based on individual needs, and will not alter as a result of any changes to Enquiry Centre opening hours.

In order to protect vulnerable customers, they have a made an important change to the way in which they allow Tax Credits claimants to access emergency payments in the 58 locations where they have moved to new opening patterns. Where needed, these will in future be accessible over the phone, rather than from the Enquiry Centre, to ensure customers are not disadvantaged.

Most of the time freed up by the shorter opening hours for some Enquiry Centres will be recycled to other customer service work.

All agent registrations and changes to agent details relating to Self Assessment (SA) and PAYE are now dealt with by a centralised team based in Longbenton. Such registrations and changes should be made in writing and sent to:

HM Revenue & Customs
Central Agent Authorisation Team
Agent Maintainer
Benton Park View
Longbenton
Newcastle upon Tyne
NE98 1ZZ

The Central Agent Authorisation Team (Agent Maintainer) are now responsible for creating agent records within SA and PAYE and keeping them up to date. New agent codes will be notified by letter.

All agents acting for taxpayers within these systems must be allocated a national agent code. Once you have a code, it should be quoted on all 64-8 agent authorisation applications. Your agent code can also be used to register for appropriate online services.

Centralising this process will provide a single route for agent codes which will be dealt with by a specialist team. Centralisation will also help HM Revenue & Customs (HMRC) provide a more efficient, effective and consistent customer service.

There may be exceptional circumstances when you need to discuss issues around this process. HMRC are looking at the best way to do this and will provide an update in the near future.

Any written correspondence to change the details of agents who are based abroad (including Channel Islands and Isle of Man) should be sent to:

HMRC
CAR Residency
Abroad Agent Maintainer
St Johns House
Unit 353 Merton Road
Liverpool
L75 1BB