News round up… January
W/C 24th January
Protesters target big business over tax avoidance
Demonstrators from protest group UK Uncut plan to target big businesses, in particular Boots, in a campaign brainstormed on social networking site Twitter. The protest group will set up hospitals within Boots stores to show what the NHS could have done with money the company saved through tax avoidance. UK Uncut, which formed in October, claims that since Boots moved its headquarters to Switzerland, the tax it pays has dropped from 33% to 3%, saving £150m a year. Ben Miller, a spokesman for the group said of the protest meeting, conducted on Twitter, ‘We used the session not to choose any concrete targets but more to give our supporters across Britain the chance to give their opinions and network.’
High-rate tax hold-ups costing Treasury millions
A hold-up in HM Revenue & Customs imposing the new higher tax rate on people earning above the £150,000 means that the Treasury is short of millions if pounds in revenue. Tax officials failed to collect the new higher tax rate of 50p in the pound from about 24,000 of the richest people in the country. Mark Serwotka, the general secretary of the Public and Commercial Services union said, ‘It defies belief that HMRC wasn't able to get its computer system geared up for this and it now means high earners will be getting away without paying their dues while ordinary taxpayers face a VAT rise and cuts in public services.’
W/C 17th January
HMRC pays for yet more mistakes
Around 250,000 pensioners will have their tax bills written off after HM Revenue & Customs admitted making errors on their tax codes. HMRC will waive payments because an incorrect tax code meant that tax wasn’t deducted automatically from the pensions. Those concerned will not be made informed of the mistake. On top of this, HMRC last week confirmed that one million people will receive new tax demands, having made over and under payments in the past. Last year it was revealed that since the introduction of a new computer system in 2008, HMRC had incorrectly taxed almost 6million people.
Small business ‘shunned’ by HMRC
More small firms and sole traders are seeking assistance with tax bills than previous years. The numbers increased by 41% on last year according to finance company Syscap. With HM Revenue & Customs tightening flexibility on deferred tax payments through their Time to Pay scheme, small business are feeling the strain. Syscap chief executive, Philip White, said, ‘Shunned by the banks and HMRC, business owners and partners are increasingly looking for alternative sources of funding.’ A Revenue statement responded, ‘HMRC has an outstanding track record in supporting those who are experiencing genuine difficulty paying their tax debts and this approach will continue.’
W/C 10th January
Another week, another expenses hearing
Former Labour MP Eric Illsley has admitted to fraudulently claiming more than £14,000 in expenses. Appearing at Southwark Crown Court, former MP for Barnsley Central pleaded guilty to three false accounting charges, including council tax claims for his second home. He had previously denied all charges. Mr Justice Saunders, adjourned the hearing for four weeks to compile a pre-sentence report. Illsley’s trial comes just a few days after Justice Saunders sentenced former MP David Chaytor to 18 months in prison after he was found guilty of falsely claiming in excess of £22,000 in parliamentary expenses.
HMRC sees surge in filing tax returns online as deadline looms
According to figures published by HM Revenue and Customs, the Christmas period saw a surge in the number of people filing their tax returns online. A total of 845 people filed their tax returns on Christmas day, while a further 2,408 others did so on Boxing Day. It is estimated that 3.5 million people have completed their tax returns online so far this year, ahead of the 31st January deadline. In the ten years since the HMRC launched the function the number of people filing their tax returns online has jumped from 38,981 in 2001 to last year’s total of 6.4 million.
W/C 3rd January
VAT rise will cost households £500 a year
According to price comparison website Kelkoo, the VAT increase from 17.5% to 20% will cost households £520 a year. Economists predict that the hike, which was implemented from 4th January, will spell a reduction in consumer spending, and knock-on fall in retail sales. Labour leader Ed Miliband described the increase as ‘regressive’ and suggested George Osborne should ‘come out and apologise for misleading the British people.’ Analysts are speculating that gyms, mobile phone companies, restaurants and shops will use the 2.5% rise in tax to obscure other price increases.
Local shops benefit from ‘little and often’ shoppers
Local grocery shops may benefit from the VAT hike as cash-strapped consumers opt for ‘little and often’ shopping in place of a weekly supermarket shop. Independent Retail News said that the 2.5% rise in tax will change consumer habits to the benefit of local business. Richard Bennett, retails director of Spar UK said, ‘The tough economic conditions are likely to remain, but as 2010 has shown us this brings benefits to independent retailers as customers seek to shop more often and closer to home.’