Previous blog entries have highlighted the distinction between tax avoidance (legally minimising the tax liabilities) and tax evasion (illegal methods of avoiding tax).
HM Revenue and Customs have recently announced a new weapon in their fight against people who illegally evade tax. The tax authorities have said that people who have committed tax evasion on or after 1 April 2010 will now not only have to settle the tax owed, pay interest on tax and suffer potential penalties but they will now also face the prospect of having their names and addresses put up on the Revenue’s website for everyone to see.
This will apply to people that have deliberately evaded tax of more than £25,000.
There’s a saying that “all publicity is good publicity” but I’m not sure that being publicly exposed as a tax cheat is something that a lot of people will be looking for in terms of good publicity!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-03-10 15:19:432010-03-10 15:19:43All publicity is good publicity but surely it should be avoided (evaded?) in this case?
Taxation and football have been in the news this week in the UK.
First of all we had winding up orders threatened on Southend, Cardiff City and the Premier League team Portsmouth on Wednesday. If a winding up order happens the clubs as corporate entities will be liquidated. In simple terms this means that the football clubs cease to exist.
The courts have allowed all of them a “stay of execution” but it’s not a great deal of time. Portsmouth, for example has to prepare a “statement of affairs” by 4pm next Wednesday.
The reason for the winding up order on Portsmouth is that HMRC (the UK tax authorities) took them to court over an unpaid tax bill of over £7 million. Whilst there are lots of emotional and community issues behind winding up a football club, HMRC take the view that it is simply another business that despite repeated requests has not settled its debt.
Another tax / football story in the press this week was yesterday when Harry Redknapp, the Tottenham Hotspur manager, was charged with tax evasion. He allegedly evaded tax on a payment made to him in Monaco. The case was adjourned to April.
This leads to a point which students often get confused about. Namely, the difference between “tax evasion” and “tax avoidance”.
“Tax evasion” involves methods of illegally reducing tax liabilities. “Tax avoidance” however is legitimately minimizing tax liabilities. It should be noted though that “tax avoidance” doesn’t sound particularly legitimate (even though it is) so a number of advisers are now referring to “tax avoidance” as “tax mitigation”!
All of this could be of little interest to the supporters of Portsmouth though if they are wound up next Wednesday. We shall wait and see.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-02-12 04:02:052010-02-12 04:02:05Avoiding or Evading? Do the tax authorities care…
Well it only seems like yesterday that we posted about the 31 October deadline for submitting the hard copy paper income tax returns. Today is 29 January and perhaps more importantly if you’re a UK tax payer who has yet to submit your Income Tax Return, Sunday is 31 January.
The deadline for submitting your UK tax return electronically is 31 January following the tax year in question. So for example, the deadline for submitting your tax return electronically for tax year 2008/09 (6 April 2008 to 5 April 2009) is 31 January 2010 – i.e. this Sunday! If you haven’t submitted your tax return yet then you’ve probably got a busy weekend ahead of you.
If you’re in the UK then there really is no excuse for forgetting the deadline. Moira Stewart, who worked for the BBC for over 30 years, has been fronting a campaign by HMRC to remind tax payers about the deadline. TV, radio and press adverts have been bombarding us in the UK for the last month or so.
What surprises a lot of people though is that when a tax payer registers for the online service they are sent details of their user name and password through the post. HMRC take up to 7 working days to register site users so if you were planning on spending this weekend doing your electronic tax return but have yet to register on the HMRC site then unfortunately you will receive the £100 fine for late submission as you won’t be registered before the 31 January deadline and hence won’t be able to submit the return before the deadline.
What is also important to remember is that 31 January 2010 is also the deadline for paying any outstanding amounts of tax for 2008/09. Payment of any outstanding tax after this date will be liable to interest.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-01-29 03:48:452010-01-29 03:48:4531 January or (31 January minus 7 days) deadline?
As we start the new year people who are not students of UK tax maybe mistakenly assume that we have just finished a fiscal year on 31 December and have started a new fiscal year on 1 January.
As good tax students we know however that this is not true! The fiscal year (tax year) for individuals in the UK ends on 5 April and starts on 6 April. For companies the financial year start on 1 April and end on 31 March although remember that companies are free to choose their accounting period end.
Other countries have an assortment of fiscal year ends. Individuals in Japan and UAE for example have a fiscal year ending on 31 December. In the US the fiscal year ends on 30 September and in Australia it’s 30 June. This is all very interesting but don’t worry it won’t be examined.
However, what is important with regard to the start of the year is that all of us here at ExP would like to wish you all a very Happy New Year and all the very best in your exams, professional and personal lives for 2010.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-01-06 20:04:432010-01-06 20:04:43We’ve just passed 31 December. So what?
Hopefully you’re taking a well deserved break after the ACCA F6 exam last Monday. That is of course unless you’ve got another exam coming up next week!
However, even though you can relax a bit now when it comes to learning tax rules for the December 2009 exam, tax is in the headlines in the “non exam world”. On Wednesday, Alistair Darling, the UK Chancellor delivered his pre-Budget report.
The press in the UK has been full of stories recently about the high bonuses that a number of banks were planning on paying some of their staff. This was causing uproar amongst the majority of the public given that the public had bailed out the banks earlier this year. The Chancellor announced in his pre-Budget report that banks will have to pay a 50% tax on bonuses in excess of £25,000 that are paid between now and April next year.
However, probably of more interest to the “tax people” amongst us is that he announced that all rates of National Insurance (for employer, employee and self-employed) will increase by an additional 0.5% from April 2011 (this is in addition to the 0.5% increase announced in his pre-Budget report last year.
This change alone is expected to raise in the region of £4bn in the financial year 2011/12.
Whilst this is interesting to know make sure that you refer to the latest set of our ExPress notes to find out what rates of National Insurance are actually examinable in the exam you’re sitting!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2009-12-14 20:03:412009-12-14 20:03:41Changes to NIC. In 2011…..
Last Thursday a small picturesque toll bridge across the River Thames about 65miles (100km) away from London was sold for more that £1m.
Cars pay 5p to cross the bridge whilst lorries pay up to 50p to cross. This may not seem like a lot of money but it mounts up and gross annual revenue is reported to be in the region of £200,000.
What is unusual about the bridge though is that the owner is exempt from paying income tax, CGT, inheritance tax or VAT on it due to an ancient law passed in the 1700s which only applies to this particular bridge. “Grossing up” the income to take account of the fact that it is tax free suddenly results in quite a nice rate of return!
You can rest assured though that this will NOT be examined in the F6 paper. Make sure however that you’re aware of other exempt income such as Individual Savings Accounts (ISAs) which could easily be examined.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2009-12-07 20:02:292009-12-07 20:02:29Tax free but it won’t be examined.
So what exactly was important about yesterday (31 October 2009)?
Yesterday was an important day for any individuals that submit their income tax returns as a hard copy paper return rather than filing them online.
31 October 2009 was the deadline for submission of an individual’s paper income tax return for 2008/09. To be precise, the paper tax return should have reached HMRC by midnight on Saturday 31 October 2009 to avoid penalties.
If the paper returns are submitted late then there is an automatic penalty of £100 for late submission of returns.
What will be interesting this year however is the impact that the postal strikes have had. For those of you reading this outside of the UK who are not aware, there have been a number of days of industrial action by workers from the Royal Mail and this has resulted in postal delays. HMRC have stated that there will be no extension to the 31 October deadline. If however you can prove that the strike delayed your submission then you may be able to appeal the penalty.
Either way, the key thing to remember for your exam is that the deadline for submission of the paper returns is 31 October.
I’m sure that all F6 students are aware that the deadline for submitting an online return is after the paper return deadline. The deadline for submitting an online return for 2008/09 is 31 January 2010 and one thing is for sure and that is that if the online submission is late you are unlikely to be able to appeal against the late submission penalty on the basis of the postal strike!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2009-11-01 17:53:542009-11-01 17:53:54So, what deadline is on 31 October?
We know the allocation of marks in the exam between the various taxes but what about the revenue generated?
ACCA F6 students will be well aware that the vast majority of marks available in the exam are in connection with income tax and corporation tax. Other taxes such as CGT and VAT also play an important part but not to the extent that income tax and corporation tax do.
Whilst these two taxes represent the bulk of the marks in the exam, how does it compare with the split of revenue generated by the various taxes?
HMRC have published their statistics for 2008/09 which provide the following information:
Over 50% of revenue is generated from income tax and national insurance alone. CGT on the other hand only generates 2% of the revenue.
I’m sure however that the key % in students minds at the moment is the 50% they need in the exams next month so good luck with your studies in the next couple of weeks!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2009-10-04 18:00:552009-10-04 18:00:55Marks vs revenue
Cristiano Ronaldo’s well publicized move from Manchester United to Real Madrid in the summer understandably received a lot of publicity. A world record football transfer fee of £80m is bound to catch the attention.
Ronaldo’s first year remuneration from Real Madrid is reported to be in the region of £11m. Students sitting the 2009 exams should be well aware that the 40% tax rate for the 2008/09 tax years applies to taxable income above £34,800. An individual in the UK with annual earnings of £11m would exceed the 40% threshold in just 2 days!
There were no doubt many factors that persuaded Ronaldo to move to Spain to play for Real Madrid. From a tax point of view though, Spain has favorable tax legislation that enables foreign players to pay tax in the region of 23%. When you compare this figure with the 40% top rate in the UK (and the upcoming 50% tax rate which is not examinable in the December exams) and apply the difference to the amounts of remuneration that Ronaldo is earning then the tax bill would be significantly lower in Spain than in the UK. Approximate figures show a difference in tax next year when the 50% rate is in place of nearly £3m per year. This adds up to a significant amount when looked at over his contract period of 6 years.
Of course the football purists amongst us would argue that it’s the football team and supporters that are important rather than the tax bill but then again I can’t be sure about this until somebody offers me £11m a year to live in the sun in Spain!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2009-09-23 17:59:532009-09-23 17:59:53The Premier League and the UK income tax rate…
Students should be well aware that the maximum personal UK income tax rate is 40% but how does this compare to the rest of the EU?
The EU have released the 2009 edition of their report on the “Taxation Trends in the European Union”. There are some interesting findings.
The top personal income tax rates in the EU range from a high of 59% in Denmark to a low of 10% in Bulgaria. The 40% top rate of income tax is also present in Greece, Hungary and Poland.
The arithmetic average of the 27 member states is 37.8% so the UK rate is slightly higher than the average for the EU. What is interesting is that the newer member states such as the Czech Republic, Romania and Slovakia all have relatively low income tax rates (15%, 16% and 19% respectively). When compared with the older EU member states the UK rate is relatively low.
This is all very interesting but the key thing to remember for the exams is that the top rate of income tax in the UK is 40%. In fact, ask anyone that has qualified since 1988 what the highest income tax rate is and they should say 40%. The top rate has been 40% since 1988!
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