With the rise of the gig economy and the increasing number of individuals making money online, the UK government is introducing new measures to tackle tax evasion.

As part of these measures, popular online platforms such as eBay, Airbnb, and Etsy will now be required to report the income of their sellers directly to HM Revenue and Customs (HMRC). The move, dubbed the “Side Hustle Tax,” aims to ensure that individuals and businesses are paying the correct amount of tax on their online earnings.

The decision to implement these regulations comes as HMRC seeks to crack down on tax evasion and ensure a level playing field for all taxpayers. The rise in online marketplaces and the growing popularity of side hustles have made it easier for individuals to generate additional income outside of their primary employment.

By requiring platforms like eBay, Airbnb, and Etsy to report seller income directly to HMRC, the government aims to increase transparency and ensure that all taxable income is declared. This move will make it harder for individuals to evade their tax obligations and level the playing field for traditional businesses that have been subject to strict reporting requirements for years.

According to recent statistics, the number of individuals making money online has skyrocketed in recent years. The gig economy, which includes various types of freelance work and side hustles, has witnessed significant growth, with an estimated 4.7 million people in the UK now working in this sector. However, concerns have been raised that some individuals may not be accurately reporting their online earnings, resulting in lost tax revenue for the government.

The implementation of the Side Hustle Tax aims to address these concerns, ensuring that online sellers are paying their fair share of taxes. By requiring platforms to report income, HMRC will have access to accurate data about individual earnings, enabling them to identify potential tax evaders and take appropriate action.

While the new regulations may be seen as a positive step towards increasing tax compliance, some individuals and businesses are concerned about the potential impact. Small-scale sellers on platforms like eBay and Etsy, who may rely on their online income to supplement their primary earnings, may find the additional reporting requirements burdensome.

Experts suggest that the new regulations could result in increased costs for businesses, as they may need to invest in systems to automate the reporting process. Additionally, there are concerns that the Side Hustle Tax could discourage individuals from engaging in online entrepreneurship, stifling innovation and creativity in the digital economy.

However, supporters argue that the regulations will create a fairer tax system, ensuring that everyone pays their fair share. They believe that the increased transparency will help deter tax evasion and promote a more level playing field for all businesses, both online and offline.

In response to the new regulations, a spokesperson from eBay stated, “We are committed to ensuring that our sellers comply with tax regulations. We will work closely with HMRC to ensure a smooth implementation of the reporting requirements.”

It is worth noting that the Side Hustle Tax is not unique to the UK. Countries such as the United States and Australia have also implemented similar measures to address tax evasion in the digital economy.

As the gig economy continues to grow and more individuals turn to online platforms to generate income, it is crucial for governments to adapt their tax policies to keep pace with these changes. The Side Hustle Tax represents the UK government’s efforts to ensure that individuals and businesses are paying their fair share and contribute to the overall tax revenue.

While the new regulations may face some challenges and concerns, it is hoped that they will ultimately contribute to a fairer and more transparent tax system, benefiting both the government and the individuals and businesses involved in the online marketplace.

Read more:
HMRC introducing new side hustle tax targets Britons making money online

HMRC aren’t known for their Christmas spirit, but there is one area where some taxpayers can benefit from a little cashflow bonus if they act now.

Stefanie Tremain, from eading tax and advisory firm Blick Rothenberg, said: “Most people are aware that the normal filing deadline for a Self-Assessment tax return (and to make any payments due) is 31 January, which means 2022/23 tax returns and tax payments are due by 31 January 2024.

“What is less well known is that if your tax liability is less than £3,000 and you have a source of PAYE income (e.g., employment or private pension income), and your tax return is filed by 30 December, your tax can be collected through your PAYE code in the following tax year.”

She added: “For example, if you owed tax of £2,500 for 2022/23, you would either need to pay this in full by 31 January 2024, or HMRC could take a deduction from your pay in 12 instalments, starting in April 2024. This can be a huge boost to cashflow at what is already an expensive time of year.”

Stefanie said: “Taxpayers need to make sure that they have enough PAYE income in the relevant year to collect the additional tax, and make sure they would not end up paying more than half of their income in tax.”

She added: “For any taxpayers filing their own tax returns who would like to take advantage of this, HMRC should do this automatically when they process your return, provided you leave the relevant box unticked.”

She added: “It’s also important that taxpayers remember whether any tax was collected through their PAYE code when they file their tax return for the relevant year in the future (e.g., for 2024/25, in this example) as you they otherwise mistakenly think they are due a refund!”

Read more:
A Christmas tax bonus from HMRC for some UK taxpayers

Navigating the complex world of pensions can be a daunting task, especially when you’re dealing with multiple pots from different periods of employment.

As the workforce becomes more fluid, with individuals frequently changing jobs or embarking on varied career paths, the likelihood of accumulating several pension plans has significantly increased. The management of multiple pensions is not only cumbersome but could also be less cost-effective and make it harder to strategise for retirement. Consolidating these pensions could be the solution you need, and here’s why considering a transfer could be crucial to maximising your retirement savings.

Understanding Pension Transfer

When you decide to transfer a pension, you’re essentially moving the value of one or more old pensions into a new plan, or into another existing one. This process is aimed at simplifying your retirement savings, potentially reducing charges, and giving you better control over your investment strategies. The UK’s pension landscape allows for various transfers, but it’s important to tread carefully. You’ll need to weigh up the benefits of consolidating against any potential risks or losses, such as safeguarded benefits that might be forfeited when you transfer a pension out of a defined benefit scheme.

Benefits of Pension Consolidation

Easier Management

Having one pension pot instead of several scattered ones makes for simpler, more effective management. You’ll have a clear view of your total savings, which can be invaluable in planning your retirement. With one set of paperwork and a single point of contact, the administrative burden is significantly reduced.

Potential Cost Savings

Multiple pensions mean multiple management fees. By consolidating your pensions, you may reduce the total amount you pay in charges, as you’ll only be subject to one set of fees. This could potentially save you a substantial amount of money in the long term, which can instead remain invested and grow.

Improved Investment Choices

Transferring your pensions can also open up a wider range of investment options. Some older pension schemes may have limited choices, whereas a new plan could offer a diverse selection of funds, allowing you to tailor your investments more closely to your risk appetite and retirement goals.

Enhanced Performance Monitoring

With just one pension pot to focus on, it’s easier to monitor performance and make adjustments as necessary. You can respond more swiftly to market changes or shifts in your personal circumstances, ensuring your retirement planning remains on track.

Considerations Before Transferring

Assessing Transfer Costs and Benefits

Before you transfer, it’s essential to weigh the benefits against any costs involved. Some pensions may have exit penalties, or you could lose valuable benefits like guaranteed annuity rates. It’s worth getting a detailed comparison of the costs and benefits before making a decision.

Risk of Losing Safeguarded Benefits

Particularly with defined benefit or final salary schemes, transferring out could mean you lose certain safeguarded benefits. These types of pensions promise a certain income in retirement, which is a valuable benefit not to be given up lightly. Always take professional advice before moving away from these types of pensions.

Regulatory Protections

Make sure you understand the regulatory protections in place when transferring pensions. If you’re transferring from a defined benefit scheme worth more than £30,000, you’re required to take independent financial advice. This is to ensure you’re fully aware of the implications of transferring.

The Role of Professional Advice

Given the complexities and potential risks, obtaining professional financial advice is not just prudent but often necessary. A qualified advisor can help you understand your current pensions, the benefits and drawbacks of transferring, and whether it aligns with your long-term retirement plans.

Final Thoughts

For many, consolidating multiple pension pots into a single scheme can bring a sense of clarity and control over their retirement planning. It can simplify your financial landscape, potentially reduce costs, and offer a better platform for managing your retirement investments. However, the decision to transfer a pension should not be taken lightly. It requires a thorough analysis of your current pension benefits, the transfer process, and the long-term impact on your retirement funds. Engaging with a financial advisor can ensure you’re making the most informed decision, tailored to your specific financial situation. With the right approach, transferring your pensions could be a key step towards a more secure and prosperous retirement.

Read more:
Do You Have Multiple Pensions? Here’s Why A Transfer is Key

From the 13th of November, businesses will need to complete their VAT registration online as part of HMRC’s Making Tax Digital (MTD) strategy.

With only one week to go until the changes come into effect, Mariana Príncipe, Head of VAT Compliance at Ryan, outlines the benefits and gives advice for firms registering online for the first time.

Three Advantages of Going Digital

There are three key advantages to digital-only VAT registrations that will benefit both HMRC and businesses, including:

• Faster turnarounds for VAT numbers – As the digital process will be quicker and can be completed from anywhere, there should be less of a wait for firms to get their VAT numbers.
• Reducing the amount of paperwork – Completing the registration online will reduce the administrative burden for firms, as well as its impact on the environment.
• More secure process – VAT registration in the UK requires highly sensitive information, including the passport details of the legal representative and the trade register. This information could be intercepted if sent by post, and emails can also be hacked easily. By completing the registration through HMRC’s secure online portal, the risk of private information falling into the wrong hands is reduced significantly.

Advice for People Registering Online for the First Time

While 95% of firms are already registering for VAT online, next week’s change could be daunting for the 5% that haven’t completed it this way before—but they shouldn’t panic.

HMRC’s online portal is one of the most user friendly in Europe, offering access to videos and webinars that are easy to follow. The tutorials go beyond VAT registration and cover topics like how to pay owed VAT, returns, and how to reclaim VAT, as well as sector-specific advice and access to other relevant forms.

What Could Be Digitalised Next?

HMRC is making fantastic strides on its MTD strategy, especially compared to other European countries. In Spain for example, to perform a VAT registration, it still requires an individual to book a meeting at a tax office and physically bring in the paperwork.

Coming up next, all eyes should be on the Form VAT652. This is the form that you have to complete if you are making a correction to your VAT return. At the moment, you can complete this form online or via a paper form, but I am sure it won’t be long before the paper option will be removed.

Read more:
Only Seven Days until Paper VAT Registrations Are Scrapped by HMRC

Claire Johnson, a partner in Clarke Willmott’s private capital team, looks at the implications associated with the so-called ‘Bank of Mum and Dad’ and how parents can make informed choices about contributing to their child’s property purchase.

Making an outright gift

Parental loans

Investing in your child’s property purchase

Trust planning – a best of both world’s solution?

Read more:
The implications of the bank of Mum & Dad

iwoca, one of Europe’s largest SME lenders, today announces a new funding line with initial commitments of £200 million from Barclays and Värde Partners.

In January this year, iwoca secured an increase and extension to its existing funding line, with long-standing partner Pollen Street Capital – from £125 million to £170 million – as demand for SME finance soared. With the new £200 million funding line from Barclays and Värde, this now takes the total debt commitments to over £850 million.

Bridging the SME funding gap

As high-street banks reduce access to capital for SMEs, this funding line equips iwoca to meet the growing SME demand for working capital. According to iwoca’s Q2/23 SME Expert Index, more than four in five brokers (84%) say high street banks are reducing their appetite for funding SMEs. This increased by 7 percentage points since Q1 2023.

A similar proportion of SME finance experts (81%) predict demand for finance for SMEs will increase by the end of the year, indicating that the funding gap for SMEs is set to widen without support from alternative lenders.

Supporting the full range of SMEs

Across the UK and Germany, iwoca has lent over £2.5bn since its launch in 2012 across more than 120,000 business loans. As of Q3 2023, the lender is on track to end the year having doubled the number of small business loans it has funded when compared to 2021.

iwoca‘s top-funded sectors to date are as diverse as construction (15% of total funding); retail (11%); and manufacturing & food production (10%).

Christoph Rieche, iwoca CEO and co-founder, (pictured) said: “We started iwoca after the financial crisis to offer SMEs the support that was so badly needed during uncertain times. Now, over 10 years later, we are fully tested and have proven that we can be there for SMEs when they need us the most. With this new funding, we’re in an even better position to help smaller businesses in the UK and Germany at a time of economic uncertainty. These SME businesses form the basis of a strong economy, and iwoca will lead from the front to help them thrive and achieve their goals.”

“We are pleased to support the expansion of commercial financing opportunities in the UK through iwoca,” said Aneek Mamik, Global Head of Financial Services & Diversified Private Credit at Värde Partners. “iwoca’s differentiated sourcing and underwriting capabilities give us access to a high quality portfolio of commercial businesses. This builds on our leading position in providing commercial lending and leasing solutions to parts of the economy increasingly underserved as banks are less able to meet the full spectrum of the demand.”

iwoca is reaching nearly 3 million businesses across the UK and Germany through its embedded lending technology, which allows businesses to access loans directly through a range of platforms such as accountancy software apps and digital neo-banks. In addition to its Flexi-Loan, the lender offers an omni-channel B2B payment solution – iwocaPay, and a Revenue-Based Loan, which it launched with eBay in 2022, where repayments are a percentage of a business’s monthly sales.

Read more:
SME lender iwoca raises new £200 million funding line after reaching £2.5bn in finance lent

Taxpayers need to be honest with the Revenue as soon as their affairs are challenged and not call HMRC’s bluff; otherwise, they will end up in the position that Bernie Ecclestone finds himself, say leading tax and advisory firm Blick Rothenberg.

Bernie Ecclestone, the former boss of Formula 1 Racing, pleaded guilty to tax evasion before the High Court today regarding £400m of assets which he controlled in Singapore. This is despite having – in 2015 – previously declared that he had no such overseas assets under his control.

Fiona Fernie, a Tax Disputes and Resolutions Partner with the firm, said: “By not admitting to the offence when initially challenged by HMRC in 2015, Mr Ecclesone will face significantly more punitive penalties than might have been the case.”

She added: “If Mr Ecclestone had admitted to the position in 2015, he might only have faced a tax penalty of 15% of the tax due (depending on HMRC’s assessment of his behaviour up to that point) and would probably have avoided a criminal record. Even if HMRC had considered Mr Ecclestone’s behaviour to be both fraudulent and deliberately concealed, had he come clean in 2015, it should have been possible to reduce the penalty to just over 100% of the tax due.”

Fiona said: “However, by trying to hide the position in the way which he has, Mr Ecclestone became liable for a penalty for foreign tax evasion, which is likely to be as high as 200% of the tax which was illegally avoided, together with a criminal record. The poor behaviour of Mr Ecclestone in this case helps explain why the overall liability he now faces (ca. £652m of tax, penalties and late payment interest) is so high.”

She added: “This case represents a perfect example to taxpayers with ‘problematic tax positions’ of how they should not handle something.

“It is always better to be honest and pro-actively look to ensure that an incorrect position is corrected. Such a response to HMRC challenge helps ensure that any penalties etc. are minimised and the taxpayer’s position is resolved as quickly, cheaply and cleanly as possible.”

Read more:
Bernie Ecclestone’s £652M fine – A Lesson for Other Tax Evaders?

Rent out your home on Airbnb? Drive for Uber? Freelance on Fiverr? From January, these platforms will record your income and soon report it to HMRC…

The growing number of gig workers, people with side hustles and those earning money from the likes of Airbnb, Upwork, Uber, Deliveroo and Etsy have been urged to ensure their tax compliance – given from 1st January 2024, HMRC has instructed these digital platforms to record how much money people make by selling their services on them.

It’s part of a wider tax crackdown from HMRC on people boosting their income via side hustles, freelancing and self-employment, which will see the rapidly growing number of gig platforms responsible for recording and, in time, reporting sellers’ earnings to the tax office.

Individuals themselves will be expected to continue submitting and paying tax on their self-employed income every year to HMRC as part of the self-assessment tax return.

The reason behind the introduction of the ‘Model Reporting Rules for Digital Platforms’ is so HMRC can spot discrepancies between information provided by a digital platform and the individual, giving the tax office grounds to launch an investigation.

These rules will come into effect on New Years Day, with digital platforms to start recording sellers’ income from then before reporting it to HMRC a year later. HMRC will invest £36.69m in this initiative and employ 24 full-time staff to launch and enforce these measures, which aim to “bear down on”, “detect and tackle tax evasion”.

Commenting on the rapidly approaching roll-out, Seb Maley, CEO of tax insurance provider for self-employed workers, Qdos, said: “This legislation has flown under the radar, but will have big implications for anyone renting their place out on Airbnb, freelancing on Upwork or Fiverr, or driving for Uber – whether that’s as a side hustle or full-time job.

“The crux of it is that HMRC doesn’t trust the growing number of people with side hustles in the UK to accurately report how much money they’re making this way – so the tax office will go directly to these platforms, who will become responsible for recording this information and handing it over to HMRC.

“HMRC will then compare it with the tax returns submitted by these people. If the numbers don’t add up, HMRC has everything it needs to launch a tax investigation. Needless to say, it’s vital that people earning money this way make sure of their tax compliance.

“The Minimum Trading Allowance is £1000 a year. So anyone earning more than this via self-employment, and above the personal allowance, needs to pay tax on that income. The latest figures suggest there are 7.25m gig workers in the UK, with one in six adults working a gig job once a week – with this in mind, the incoming measures are set to impact millions.”

Read more:
Millions of gig workers and people with side hustles braced for tax crackdown

Thousands more nudge letters being sent out by HMRC are causing needless worry to UK taxpayers, and are unnecessary.

Robert Salter, an international tax expert at tax and advisory firm, Blick Rothenberg, said: “HMRC have sharply increased the number of ‘nudge letters’ sent to UK taxpayers in the 2022/23 UK tax year, because of international data sharing. Nudge letters increased to almost 24,000 for the year ended 5th April 2023 compared to ca. 21,000 in the previous tax year up by some 15%.”

Salter added: “The problem is that many of these nudge letters are the result of poor HMRC data analysis and create needless worry for the individuals concerned and result in unnecessary professional costs.”

Salter said: “HMRC often appears to simply take the data it receives from international sources at face value and sends out letters to taxpayers in a shotgun-like manner. It does not properly assess whether the foreign information is actually taxable in the UK, for example, or whether it has already been reported in the individual’s UK tax return declarations.”

Salter added: “Even where the income or gains apparently haven’t been reported on a UK tax return, there can be a number of perfectly legitimate reasons for this including:

• The ‘domicile’ basis of the individual concerned – non-domiciled individuals are not automatically taxable in the UK on foreign source income or gains.
• The differences between UK and foreign tax years; and
• The fact that certain foreign income may not be taxable in the UK under Double Tax Agreements.”

Salter concluded: “Whilst it is clearly correct for HMRC to use the data it receives from international data sharing agreements, to target those taxpayers who are deliberately (and illegally) concealing income and capital gains outside the UK, the Revenue should not simply be targeting taxpayers in a helter-skelter, shotgun approach.

“By simply issuing nudge letters in this pell-mell approach, the Revenue is causing needless anxiety and actually creating additional work (and costs) for taxpayers, their advisors and in many respects its own staff.”

He added: “It would be much more efficient for everyone concerned, if the Revenue did a proper analysis of the data it receives, assessing this against factors such as the information which has already been filed, a taxpayer’s domicile status and the terms of the UK’s Double Tax Agreements before issuing enquiry letters to those taxpayers with missing data.”

Read more:
HMRC nudge letters cause needless worry to UK taxpayers and often achieve nothing

Rosehill Polymers Group has finalised a multi-million-pound deal with Virgin Money and UK Export Finance to complete a refinancing and management buyout of the business and accelerate their worldwide growth ambitions.

Since 1988, Rosehill Polymers have established themselves as a market leader in sustainable polymer systems design, development and manufacturing at their state-of-the-art facilities in Sowerby Bridge, West Yorkshire.

The business serves a diverse array of markets and industries, including offshore energy, highways, rail, sports & play, and security. They aim to provide the best in sustainable polymer innovation at the rapid speed needed to help its customers keep pace with the demands of their ever-changing environments.

Rosehill export products to over 550 customers in 52 countries across the world, and many of their products are manufactured using recycled and low carbon impact materials which sets the company apart from their competitors.

The funding package from Virgin Money will help Rosehill to complete a management buyout, continue their worldwide growth and accelerate the move into new international markets. A key growth area that Rosehill will focus on is the decarbonisation and modularisation of construction materials used within the rail and highways sectors, by expanding its design, development and production of products primarily based on the use of recycled materials as a primary raw material for the manufacture of key elements within capital infrastructure projects.

Rosehill anticipates its continued development within this sector will create new highly skilled job opportunities, both across its production sites in West Yorkshire as well as in its supply chain.

Virgin Money’s Business Development and Trade Finance teams worked closely with UK Export Finance (UKEF) to get the deal finalised. The funding package includes a UKEF General Export Facility (GEF) loan guarantee which covered 80% of the financing, enabling Virgin Money to complete the transaction. The GEF product is a flexible government-supported scheme that helps UK export businesses to access working capital facilities, helping to improve cashflow or speed up international trade growth.

Dr Alexander Celik, managing director of Rosehill Polymers Group said: “This new funding package from Virgin Money will enable Rosehill to pursue our growth strategy as we focus on developing sustainable solutions for both the infrastructure and energy markets across the globe. I would like to express my thanks for the exceptional support and service that Rosehill have received from Virgin Money and we look forward to a long, successful, and profitable relationship with them.”

Craig Wilson, head of FX sales & trade finance at Virgin Money said: “Rosehill Polymers are an innovative business with an incredibly wide reach. It has been fantastic to see our international trade finance specialists and business development colleagues working alongside UK Export Finance to deliver a truly bespoke and innovative banking package for the Rosehill team. At Virgin Money we aim to ensure businesses have access to key specialists that can add value at the right time, and by bringing together the skills of all three parties involved we have delivered a winning package for the customer.”

Alissia Deane, export finance manager for West Yorkshire, added: “UKEF exists to help businesses nationwide win and deliver export contracts, offering free, impartial advice through its regional Export Finance Managers. It is great news that our GEF guarantee has enabled Virgin Money to issue this funding package to Rosehill Polymers, supporting the global growth of an innovative business.”

Read more:
New funding package supports Yorkshire business in developing sustainable solutions for global infrastructure and energy markets

New research has found staggering dissatisfaction with HMRC service levels.

Those surveyed by the Chartered Institute of Taxation (CIOT) said they experienced long wait times to connect with an HMRC adviser, with 85% waiting for more than half an hour to speak with someone at the tax office. The full study can be found here.

Qdos CEO, Seb Maley, commented: “I can’t recall a time when trust in HMRC has been lower. I’m not naive enough to think that self-employed workers and businesses will ever sing the tax office’s praises, but this research paints a damning picture.

“The fact of the matter is that the problems at HMRC – which run very deep indeed – are having a hugely negative impact on millions of people working for themselves in the UK. Whether it’s the tax office’s scattergun approach to tax investigations or basic customer service, rather than helping people and businesses, HMRC is hindering them.

“The tax burden is at its highest for 70 years, while the tax system itself is needlessly complex. This, combined with HMRC’s nosediving service levels, is a constant thorn in the side of self-employed taxpayers and businesses.”

CIOT president Gary Ashford, added: “These results speak for themselves. Tax advisers and taxpayers have told us of their deep dissatisfaction with HMRC’s service levels. Poor service levels can have a significant impact on their ability to do business. Worryingly, they have little confidence that things will improve any time soon.”

Read more:
‘Nosedive’ in HMRC service levels impacting millions of self-employed taxpayers 

The Prompt Payment Code (PPC) was introduced to the UK in December 2008 as a voluntary code of practice, administered by the Office of the Small Business Commissioner (OSBC), on behalf of Department for Business and Trade (DBT).

As Pat Bermingham, CEO, Adflex explains it set standards for good payment practices between UK-based organisations and their suppliers. It was introduced in response to calls from UK businesses for a change in payment culture: at the time, one in four businesses were going insolvent due to invoices being paid late, and the problem was felt more acutely by smaller businesses with less cash in the bank.

The code initially received a positive response from the market and despite remaining a voluntary initiative, over 4,000 UK businesses from a variety of industries are signed up today. Does that mean it has solved the problem of late payments? Many feel it has failed to meet its initial objective.

Research from the Federation of Small Businesses (FSB) has found that 50,000 businesses are closing each year in the UK due to suppliers not being paid on time. So where has it gone wrong and what can be done to correct the path toward prompt payment paradise?

How the Prompt Payment Code evolved

The initial code outlined three core principles:

1. Buyers should pay suppliers on time, within agreed terms.
2. Buyers should give clear guidance to suppliers on terms, dispute resolution and prompt notification of late payment.
3. Buyers should support good practice throughout their supply chain by encouraging adoption of the Prompt Payment Code.

Despite its introduction, over the ensuing 13 years, poor payment practices continued to plague UK businesses. When the pandemic hit in 2021, company insolvencies rose and late payments became a critical priority in order to keep the UK economy moving. The UK government announced an overhaul of the PPC, cracking down on delayed invoices and a number of changes designed specifically to help small businesses.

Reforms to the Prompt Payment Code in 2021 introduced a new set of payment standards, the most important of which was “the 95% rule”. This required that:

1. 95% of invoices must be paid within agreed terms.
2. 95% of invoices must be paid within 60 days.
3. 95% of invoices must be paid within 30 days for small businesses with less than 50 employees.

Some have found these terms unclear, as views differ on what the starting point is during the 30/60-day payment cycle. Suppliers typically view the initial sharing of the invoice as the start of the cycle, but manual processes on the buyer side can result in human error, with invoices being lost due to incorrect contact details or landing in spam folders. This leads to disagreement between buyers and suppliers on when the payment cycle began, and the resulting confusion can cause delays and harm important business relationships.

Also in 2021, the government published the Procurement Policy Note 08/21. This specifically addressed payment practices for government contracts worth £5 million or more. The note effectively makes it more difficult for companies to bid for government contracts without a proven track record of paying promptly. The hope was that these new standards would help address the shortcomings of the original code, and as a result, late payments would decrease.

Counting the cost of late payments

Despite the overhaul of the PPC and the Procurement Policy, late payments in the UK remained prevalent. According to research by PwC, in 2022 the length of time taken for invoices to be paid to SMEs reached a five-year high. In addition, a 2022 survey showed that on average, 25% of UK small businesses had reported an increase in late payments in the three months prior. Not only was the overhauled PPC failing to reduce late payments, but they were actually becoming more common.

When Carillion collapsed under billions of pounds worth of debt in 2018, it impacted 75,000 people working in its supply chain, highlighting the risk that suppliers run when buyers do not pay promptly.

Despite such high profile cases, and industry efforts to tackle the problem, the proportion of late invoices significantly in construction increased to 52.9% in 2022, a rise of 13 per cent compared with 2021. In a 2022 survey, 55% of the British public stated they would support more controls to prevent late payments. It is clear that current legislation and initiatives, while commendable, are failing to improve the situation.

So, why has the Prompt Payment Code not been more effective? Many feel that the voluntary nature of the code undermines any attempt to address poor payment practices. By comparison, some states in the US, such as Texas, require that payments are made on time by law – for both public and private contracts. The payment deadlines are also shorter in the US. Where in the UK 30-60 days is the ambitious target, in the US, 21-35 days is the standard.

The UK’s poor international standing was highlighted by Tina McKenzie, the Financial Stability Board Policy Chair, in March 2023: “The UK is almost unique in being a place where it is acceptable to pay small businesses late, and that will remain the case without further action.”

B2B payments are going digital

The problem of late payments is a collective one. Therefore, the solution requires collective action. Buyers and suppliers must work together to communicate and deliver the benefits of faster reconciliation to their organisations. After all, everyone benefits from prompt payments: businesses have a clearer picture of cashflow; some suppliers offer incentives for early payments; and others accepting commercial card payments are willing to waive merchant service charge costs, all to encourage speedy settlement.

In the last fifteen years, technology has also advanced dramatically. Consumer payments can be made quickly and easily from mobile devices, for example. B2B payments are more complex to manage but have also seen great innovation that is transforming payments in and out. Straight-through processing (STP) is one example that flips the traditional payment process on its head. STP allows the buyer to automatically ‘push’ commercial card payments to the supplier, instead of the supplier needing to initiate the payment via a payment gateway, such as a Virtual Terminal.

This reduces the cost of acceptance and can be used to automate transactions, removing additional friction and human error from the payment process, thus speeding up settlement.  Meanwhile, suppliers that can offer buyers choice in preferred payment methods removes further friction from the payment process and strengthens relationships crucial to repeat business.

Does digital transformation remove the excuses?

Despite many challenges, the Prompt Payment Code signalled a turning point in UK business payment practices. Over 4,000 businesses signed up and abiding by the code indicates the success it has already enjoyed, but if the UK is to become a thriving hub for business growth over the next fifteen years, it’s clear that more needs to be done.

Now that B2B payment technology is catching up with its B2C counterpart, businesses have access to a multitude of tools that can do the heaving lifting for them and enable them to focus on building and maintaining relationships that remain critical to growth. Responsibility ultimately lies with buyers and suppliers both large and small, and the financial partners with which they work.

In a world where digital payments are becoming the norm, there really is no excuse today for failing to pay promptly. In the end, those that do so will reap the benefits of closer relationships throughout the supply chain, and those that fail to do so may find themselves “promptly” removed from preferred buyer lists.

Read more:
15 years since the Prompt Payment Code was introduced, has it prompted faster payments?

The latest figures from HM Revenue and Customs show that inheritance tax receipts increased to £3.2 billion in the five months from April 2023 to August 2023.

This is a £300 million increase from the same period in the previous year, and continues the upwards trend over the last decade.

One in every 25 estates pay inheritance tax, but the freeze on inheritance tax thresholds, decades of house price increases and high inflation are bringing more and more estates above the threshold.

For those that are paying this death tax, Wealth Club calculations suggest the average bill could increase to just over £234,000 this 2023/24 tax year. This is a 11% increase from the £214,000 average paid just three years ago.

Inheritance tax is typically paid at a rate of 40% over certain thresholds, although you can pass on money IHT free to your spouse or civil partner, who will then also inherit your allowance for when they pass away. The main threshold is the nil-rate band and applies to the vast majority of people in the UK, enabling up to £325,000 of an estate to be passed on without having to pay any IHT. That has been unchanged since 2009. However, there is also a Residence Nil Rate band worth £175,000 which allows most people to pass on a family home more tax efficiently to direct descendants, although this tapers for estates over £2 million and is not available at all for estates over £2.35 million.

Nicholas Hyett, Investment Manager at Wealth Club said: “The Treasury raked in an extra £300 million from inheritance tax from April to August 2023, compared to the same period a year earlier. This increase is being fuelled by years of soaring house prices and frozen allowances.

While just 4% of estates pay inheritance tax at the moment, given the nil-rate and residence nil-rate bands have been frozen for years people with more regular incomes and average value homes will end up getting caught out by this most hated of taxes. Moreover, with the government’s wallet under pressure from all angles, there’s unlikely to be any respite soon.

The good news is that there are still lots of legitimate ways to pass on money free of inheritance tax, which is why inheritance tax is referred to as a ‘voluntary tax’ in some circles.”

Paul Barham, Partner at Mazars commented: “The IHT nil rate freeze has been worth its weight in gold for the treasury boosting the government’s coffers by £3.2 billion in April to August. This, in combination with high asset values across property and investments, means HMRC is well on its way to another record IHT year. Although, the future of IHT is under the spotlight with rumours that it could be scrapped altogether come 2024, you can’t plan your finances on speculation and people should look at ways that they can reduce their potential IHT liability. Maximising personal gift allowances, and doing so early, having a valid will and using clear expression of wishes documents are steps that are often overlooked. The latest figures are a timely reminder to pay these some attention.”

Read more:
Inheritance Tax Receipts reach £3.2Bn from April to August 2023, up £300M from same period year earlier

Changes to regulations regarding Capital Gains Tax (CGT) and separating couples could alert people to the fact that they may have failed to pay sufficient tax in the past.

New measures to ease difficulties over the transfer of assets experienced by spouses or civil partners who are separating and enable them to split in a tax-efficient manner have been widely welcomed.

Announced by the Government in the last Budget and applying with effect from April 6 2023 the regulations extend the time allowed for ‘no gain/no loss’ asset transfers to up to three years, or unlimited time if it is the family home that is transferred under an agreement or a court order.

Under the previous regime, couples had only until the end of the tax year of permanent separation to benefit from the no gain/no loss relief, often creating great stress at an already difficult time. If they happened to separate in March, this would create only a very small window of time to transfer assets without triggering a potential CGT charge.

Experienced Private Client tax specialist Tracy Underwood, Azets Partner, based at the firm’s Guildford office, has welcomed the changes as a major step forward.

However, she said: “For many couples separating, it appears the previous rule that applied up until 5 April 2023 was not well known or understood. Separating couples may assume the transfer of assets between themselves continued on a no gain no loss basis up until the point the separation was finalised by divorce or dissolution, Unfortunately, this was not the case

“Although many lawyers will recommend that tax advice is acquired in these situations, this is not always followed up. However, the tax implications of divorce is an important part of understanding the full ramifications of a financial settlement.

“Individuals who have previously gone through this process and are now concerned that they may have underpaid tax should get specialist advice on how to quantify and report this to HMRC.

“And if you are going through this process at the moment, then please do make sure you get appropriate tax advice so that you fully understand your position.”

Underwood added that the situation often becomes more complicated if a business is involved.

She said: “This extension may be of particular interest where one of the parties is a business owner and where shares may form part of that settlement.

“The valuation of private business shares can take a long while to agree and may well have previously extended beyond the period where a no gain no loss transfer was possible.

“It could also be relevant where properties are involved and formal valuations may be required, particularly where the financial settlement is dependent on a sale. The new rules include special provisions which apply in circumstances where an individual retains a financial interest in their former family home after a separation and the home is then sold.

“Publicity surrounding these CGT changes will hopefully alert people both to the fact they may need to take action to avoid certain pitfalls to ensure that their financial settlement on separation takes into account the effect of any tax liability – not just capital gains tax – and the correct tax is paid.”

Latest figures from the Office for National Statistics show that in 2021 there were 113,505 divorces granted in England and Wales, a 9.6% increase compared with 2020 when there were 103,592 divorces.

CGT is the tax on the gain arising which applies when certain assets are sold. If the asset has increased in value from when it was acquired, then a tax on this gain may be payable – although a number of reliefs and allowances are available.

It is payable on assets such as property that is not the main home, shares, business assets and certain personal possessions valued at more than £6,000.

Underwood also warned that CGT benefits that apply to separating couples, old or new, do not apply to unmarried couples or those not in civil partnerships.

Read more:
Capital Gains Tax changes may reveal underpaid tax

UK businesses could be exposed to greater risks of money laundering under new proposals being put forward by the UK government, warns the Association of Accounting Technicians (AAT).

Plans being considered in a new consultation issued by HM Treasury include using a single private company to police anti-money laundering (AML) rules for accountants and lawyers who work with businesses to protect them against financial crime.

Currently, accountants follow strict laws on money laundering. Their compliance with these regulations is checked and overseen by specialist professional body supervisors, ensuring businesses are protected from economic crime. The National Crime Agency estimates that the amount of money laundered in the UK could be between £36 billion and £90 billion.

The relatively unknown consultation is considering proposals to consolidate AML supervision to just one body, potentially a single private company, to oversee all of the accountancy profession. AAT has warned that this could cause enormous disruption, expose businesses to money laundering risk, and weaken AML oversight across the country.

Adam Harper, Director of Professional Standards and Policy at AAT, warned: “AAT members and other accountants have to meet strict anti-money laundering regulations to ensure their clients are not at risk. Some of the government’s new proposals, including plans to create a private body to police money laundering rules for all professional services, could potentially open the floodgates to organised criminals seeking to launder money in the UK.

“The current system, whilst not perfect, ensures that each profession meets anti-money laundering rules which are tailored to their specific professions. Dramatically shifting to a new model, as set out in some of the Treasury’s plans, could lose that specialist know-how and weaken the anti-money laundering system that is in place.

“We are urging the Treasury to strengthen the current system rather than attempt to dismantle and rebuild the whole AML regime, which brings with it major risks for the UK’s small and medium sized businesses, who make up the backbone of UK plc.”

Read more:
UK businesses face money laundering threat under Treasury shake-up

Contractors and their clients alike have welcomed the news that HMRC is on the verge of scrapping the controversial ‘double taxation’ of IR35 under the off-payroll working rules – in a positive development for contractors who have had their contracts cancelled as a result of these rules.

The legislative flaw sees businesses overtaxed in the event of non-compliance and has led businesses to stop engaging contract workers.

Now, it has emerged that HMRC is trialling scrapping the double taxation ahead of a possible April 2024 implementation, with some businesses currently facing IR35 investigations reportedly told that HMRC will offset tax already paid should they find an organisation non-compliant.

Under the off-payroll working rules, HMRC doesn’t account for taxes already paid by a contractor when calculating the tax liability payable by a business in the event of non-compliance. It means HMRC nets more than it’s actually owed if a business is found non-compliant. The government is currently considering resolving the issue, after holding a consultation from 27th April to 22nd June.

This development comes at a time when businesses are facing increased scrutiny from HMRC, which is progressing low-level compliance checks into rigorous investigations regarding ways organisations have determined the IR35 status of contractors.

Qdos CEO, Seb Maley, commented: “Sense seems to be prevailing and businesses caught up in IR35 enquiries will be relieved that HMRC plans to offset the tax already paid by contractors, should the tax office find them non-compliant. This is a significant breakthrough.

“The bigger picture is that HMRC seems poised to scrap this ridiculous flaw in the legislation – better late than never. By not offsetting tax already paid by the contractor when a business is hit with a tax bill, HMRC is netting more than it should.

“It’s plain wrong and has had a hugely detrimental impact on independent workers. Thousands of freelancers and contractors have had contracts cancelled because businesses are worried about the cost of non-compliance, which has been unfairly inflated by this gaping hole in the rules.

“If and when this is finally resolved, businesses will have fewer reasons not to engage freelancers and contractors – which can only be a good thing for flexible workers.”

Read more:
HMRC poised to scrap ‘double taxation’ of IR35 in welcome move for contractors and their clients

The UK’s 4.3m self-employed workers have been advised to prioritise their tax compliance after official HMRC data shows that the tax authority opened 299,000 tax enquiries last year – a 52,000 jump equivalent to 21% compared to two years before.

The statistics, gathered from HMRC’s quarterly performance updates, show that the number of tax enquiries (referred to as ‘civil compliance checks’) opened by HMRC rose from 247,000 in the 2020/21 financial year, to 265,000 in 2021/22 and 299,000 in 2022/23. In total, this marks a 21.05% increase across these years.

The significant increase in compliance activity saw the tax office net £814bn in tax revenue in 2022/23 – an 11.3% jump compared to the previous year.

In the first quarter of the 2023/24 financial year (April to June 2023), the tax office has already opened 77,000 enquiries, meaning HMRC is on course to increase this for the third year running (308,000).

As a result, tax insurance provider, Qdos, has urged millions of self-employed workers and the growing number of people with side hustles to take note of HMRC ramping up its compliance activity.

Qdos CEO, Seb Maley, commented: “HMRC is clearly on a mission to increase tax receipts and we’re seeing first-hand experience of this. The number of self-employed workers being investigated by the tax office is noticeably on the rise.

“A far more active HMRC means that anyone working for themselves – whether a full-time freelancer or someone with a side hustle – should make sure they file their tax returns and pay their bills on time, as the bare minimum.

“But this is just a starting point. What’s often overlooked is that HMRC can investigate anyone at any time. You can never rule out a tax enquiry and all too often, people who have done nothing wrong are investigated. Without representation and protection, this can be a really stressful and expensive process.”

Read more:
HMRC tax enquiries jumped by over 20 per cent last year in the space of just two years with 2999,000 enquiries last year

HM Revenue and Customs (HMRC) has announced that the rollout of the new additional information form that is required to support all claims for Research and Development (R&D) tax relief or expenditure credit has been pushed back by seven days.

Originally set for the 1 August 2023, the new changes will now come into force from the 8 August 2023, giving businesses an extra week to prepare.

Nigel Holmes, Director of Tax, Catax, a Ryan company, explains what businesses need to do to complete a claim.

What additional information is needed?

Before the change, the provision of project information and cost analysis was recommended but optional. Now HMRC makes it mandatory for firms to include the following before submitting their Corporation Tax return:

· Project details – the scientific or technological advances, uncertainties, baseline, and activities undertaken.
· Project costs, including details of qualifying indirect activities.

Why is this change needed?

While this new step requires more administrative work, it is necessary so that HMRC can more easily identify fraud and error in claims. The additional information should help to sift out dishonest advisors who—until 8 August—haven’t included sufficient project information.

This change will also enable HMRC to have a better overall understanding of the claims being made. By having access to clear claim breakdowns and project justifications, rather than just total qualifying expenditure, HMRC can tackle claims with particular features or from particular sectors.

How should businesses prepare?

· Maintain robust recordkeeping – Businesses should be able to discuss all expenditure on a project-by-project basis rather than an overall collective. By having project information captured and readily available, firms will be able to complete the form more easily.
· Start the process early – The new claims process is more demanding and therefore more time consuming. Avoiding last-minute rush can prevent firms from making silly and costly mistakes. If you are using an advisor to complete your claim, consider the time needed to provide them with more information—more calls and email exchange may be needed.
· Consider speaking to an R&D specialist – Some advisors may have made only a handful of claims before, without an accompanying report or comprehensive narrative that’s now expected from HMRC. Consider outsourcing your R&D tax relief claims to a specialist advisor that’s experienced in delivering this level of information to HMRC and already set up to deliver this change.

Holmes adds: “The extension will be very much welcomed by businesses that are yet to start preparing for the additional R&D form. They now have three weeks left to make sure they have all the information required to submit a successful claim.

“Remember that regardless of when the accounting period was, all claims submitted on or after 8 August need to submit the additional information form to HMRC. Businesses should be careful not to confuse the 8 August deadline with any other R&D changes that are due to come in this year.”

Read more:
HMRC Gives Businesses Extra Week to Prepare for New R&D Information Form

HM Revenue & Customs has calculated that in the 2020-21 financial year, £1.1 billion was taken due to fraud and mistakes from two separate programs targeting both larger and smaller companies.

The tax authority has acknowledged that a quarter of the funds provided through a multi-billion tax relief program were lost to fraud and mistakes.

HM Revenue & Customs has significantly increased their estimate of losses stemming from error and fraud for research and development tax incentives for small and mid-sized firms from 2020 to 2021, with a shocking figure of 24.4 per cent being calculated — one of the highest rates of loss across any government spending programme, including Covid-19 emergency schemes.

The National Audit Office’s comptroller & auditor-general, Gareth Davies, qualified his opinion of HMRC’s annual accounts when they were published yesterday, due to the issue at hand.

The prediction of Lord Agnew of Oulton was that “no one from the government would be brought to task over this debacle”.

Agnew of Oulton, a past counter-fraud minister, commented: “This instance is another example of the incompetence that pervades the halls of Whitehall.

Justin Arnesen, Partner in the R&D Tax team at Evelyn Partners comments: “R&D tax reliefs are instrumental in encouraging businesses to invest in R&D, which brings broader benefits to the UK economy in the form of developing new products and creating jobs. However, this latest update from HMRC highlights the size of the problem that HMRC is tackling in its attempts to combat fraud and error within the system.  Concern over abuse and boundary-pushing has grown in recent years, and HMRC has introduced a number of measures, including more than doubling the number of people working on R&D compliance and setting up a dedicated R&D Anti-Abuse Unit, to crack-down on unscrupulous advisers and fraudulent and erroneous claims for R&D tax reliefs.

“Improved guidance is part of the wider plan to reduce error and fraud within the R&D regimes, and HMRC has committed to making further improvements as part of its plan. To have an impact, however, considerable changes are required, particularly to guidance around ‘modern/relatable examples’ of both qualifying and non-qualifying activities. This is important as technology is moving at an unprecedented pace – the R&D Guidelines have a qualification example pertaining to the development of a DVD player, for example, this technology is obsolete and provides little relatable guidance/reference points for taxpayers.  Guidance improvements will need to be accompanied by plans to bring HMRC caseworkers up to speed on both the new guidance and the technical qualification criteria.

“To tackle this worrying problem, a range of additional changes have been introduced.  These range from requiring additional information from the claimant and requiring claims to be made digitally, to reducing the amount of payable relief in the SME scheme.  Some of these changes are already in place and others come into effect from August 2023.  Even though HMRC will share a further update on its approach to improving compliance with R&D tax reliefs in winter 2023, given the 2 year time lag on the estimates, we may not know for some time whether these measures have had a meaningful impact.  It may be that additional measures, such as requiring additional information directly from advisers, or an annual adviser audit, will need to be considered.”

Adding her opinion to the data,  Jenny Tragner, Director and Head of Policy at the UK’s leading R&D tax relief consultancy, ForrestBrown, said: “HMRC’s annual report recognises that R&D tax reliefs are vital to the government’s economic strategy, helping to drive innovation, growth and productivity. High levels of non-compliance in such a vital incentive are clearly not acceptable and need to be called out, but it’s equally important to effectively address the root causes.

“The revised estimates in HMRC’s annual report show that fraud makes up a small fraction of non-compliance cases, with the majority relating to other behaviours. The report accepts that this encompasses a range of behaviours, from genuine errors, to carelessness, to negligence. It was expected that HMRC would provide a more detailed breakdown of the scale of these different behaviours, but the report stops short of doing so.

“More detail on the causes of non-compliance is essential if HMRC is to form an effective strategy to address the problem. HMRC has poured new resources into compliance activity, however more work is needed to ensure businesses have access to clear and accurate guidance, and to minimise complexity in the scheme itself.

“Making sure HMRC has both sufficient resources and the right quality of staff in this specialist and complex area would go some way to tackling the issues at source. There are increasing reports of companies with legitimate R&D claims apparently falling foul of an over-zealous stance from HMRC caseworkers. Such cases would fall into non-compliance in HMRC’s data. With this data informing critical policy decisions, this point warrants further investigation.

“Alongside its annual report, HMRC published its “compliance approach to R&D tax reliefs”. It is not clear if this is what the annual report calls its “R&D Compliance Action Plan”. In terms of planned actions, most of the plan is not new. There are commitments to improve guidance and to ‘use existing communication channels to promote uptake of the R&D Advance Assurance’. Both recommendations from the House of Lords finance bill sub-committee earlier this year.

“In the meantime, companies claiming R&D tax relief should continue to expect increased scrutiny of their claims. It’s more important than ever to ensure you understand the definition of R&D for tax purposes, what costs are eligible for relief, and what information you need to provide to HMRC to demonstrate your projects meet the criteria.”

Read more:
HMRC says 25% of R&D Tax Relief Scheme Disbursements are Unaccounted For

After losing the argument over Gary Lineker’s employment status, HMRC plans to appeal the ruling at the Upper Tribunal

The First Tier Tribunal ruled in favour of Lineker in March this year, after he appealed a tax demand from HMRC for unpaid tax of £4.9m related to earnings between 2013 and 2018 for TV presenter work for the BBC and BT Sport.

In total, HMRC is pursuing Lineker for £3,621,735.90 in income tax and £1,313,755.38 in national insurance contributions (NICs).

The litigation involved the IR35 intermediaries legislation which is designed to clamp down on contractors who charge for their services through personal service companies.

Lineker provided his services via a partnership through Gary Lineker Media LLP and this type of arrangement was not covered by the IR35 rules. Unless the rules are changed retrospectively it would seem unlikely that HMRC could win the argument.

At the First Tier Tribunal, Judge John Brooks said: ‘As a matter of law when Mr Lineker signed the 2013 BBC contract, the 2015 BBC contract and the BT Sport contract for the provision of his services, he did so as principal thereby contracting directly with the BBC and BT Sport.

‘As such, the intermediaries legislation cannot apply – it is only applicable ‘where services are provided not under a contract directly between the client and the worker’. In this case, Mr Lineker’s services were provided under direct contracts with the BBC and BT Sport.’

Read more:
HMRC to appeal Gary Lineker IR35 case

Women’s private pension pots in the UK are typically worth 35% less than those of their male colleagues by the time they reach 55, according to the first major government study into what has been termed “the great gender pension chasm”.

Having analysed the data for both sexes between 2018 and 2020, government researchers concluded that, on average, for every £100 accumulated in men’s private pensions, women have just £65. Women could end up losing out on thousands of pounds of retirement income as a result of the imbalance.

Lower overall earnings, time off for childcare and other caring duties, and the greater numbers of women doing part-time work are all thought to be factors in why women’s pension pots grow to just two-thirds the size of men’s.

Although several reports have been published in recent years on the topic of the gender pensions gap, this is the first time the government has calculated the true scale of the problem.

Researchers found that the gap varied for different age bands and was lowest for people in their 30s, suggesting time off for childcare was a big factor.

For workers eligible for automatic enrolment, the gap is smaller and stands at 32%. Overall, the gap rises to 47% for those aged 45-49.

The study also uncovered a gap in contributions made by men and women. In 2021, about £52bn was paid into the private pensions of women eligible for automatic enrolment, compared with £62.6bn into men’s pensions – a gap of 17%.

Helen Morrissey, the head of retirement analysis at Hargreaves Lansdown, described the 35% figure as “less of a gap, more of a gaping chasm”. “The government recently announced childcare reforms which should help more women keep working and contributing to their pensions, but the gender pension gap looks set to remain with us for some time yet,” she said.

Laura Suter, the head of personal finance for the investment platform AJ Bell, said the figures showed that once women hit their 40s, they dropped behind men in their pension savings.

“A lot of this will be due to women taking career breaks to have children, working part-time around caring responsibilities, or the gender pay gap meaning they earn less – which all filters through to lower incomes and lower pension contributions.”

The figures do not include those people who have no pension wealth when they hit retirement age, which Suter says would make the gap even larger as women are more likely than men to have no pensions.

The pensions minister, Laura Trott, said: “The success of automatic enrolment has transformed the UK pensions landscape and brought millions of women into pension saving for the very first time. However, while the participation gap has closed, the wealth gap persists.

“The publication of an official annual measure will help us track the collective efforts of government, industry and employers to close the gender pensions gap.”

Read more:
Women’s private pensions worth 35% less than men’s in the UK

Non-departmental funding body UK Research and Innovation (UKRI) must pay HM Revenue & Customs (HMRC) £36m in back-dated tax.

UKRI is a body sponsored by the Department for Science, Innovation and Technology (DSIT). It is the latest public sector body to have mismanaged the off-payroll working rules.

The tax bills issued to public sector bodies due to non-compliance now amount to approximately £300m.

IR35 specialist Qdos CEO, Seb Maley, commented: “Public sector bodies have now been hit with around £300m worth of IR35 bills. It’s astonishing. These bodies should be leading by example, showing private sector businesses how to successfully manage the off-payroll working rules.

“I’m not sure what’s more worrying – the sheer size of this bill or the fact that it’s something we’ve come to expect in the public sector. And I can’t help but wonder who’s next.

“It’s difficult not to see the irony in this one. As a body that champions innovation, getting to grips with the off-payroll working rules shouldn’t be an issue for UKRI in theory.

“It’s wooden dollars in the public sector, but if a private sector business was hit with a £36m bill, it could be curtains. With this in mind, private sector firms must prioritise their compliance.”

Read more:
UKRI hit with £36m IR35 bill, taking non-compliance in public sector to £300m

Inheritance tax receipts hit £600 million in April 2023 according to data released by HMRC this morning. This is £100 million higher than in April of the previous tax year.

Years of house price increases, soaring inflation, and tax freezes have pushed an increasing number of families that would not consider themselves to be wealthy above the threshold for inheritance tax.

There is a tax-free inheritance allowance called the nil-rate band that applies to everyone. Each person can pass on up to £325,000 of their estate without them having to pay any IHT. Anything above £325,000 could be subject to up to 40% inheritance tax. The nil-rate band has stayed at the same level since April 2009, even though inflation has cut the value of the relief by 32.8% over that time and the average house price has increased nearly 85%.

Some homeowners can also benefit from a ‘residence nil-rate band’ of up to £175,000 on top of the nil-rate band. This, however, only applies when you pass on your main residence to a direct descendant. The ‘residence nil-rate band’ has been frozen at £175,000 since April 2020.

Alex Davies, CEO and Founder of Wealth Club said: “The 2023/24 tax year is looking likely to be yet another record-breaking year for inheritance tax. It really is a cash cow for HMRC.

There are rumours inheritance tax cut could be cut in the run up to the next General election, with the government potentially increasing the threshold at which an estate becomes liable for inheritance tax. Alternatively, the government might consider a cut in the headline rate of tax. Either would be very welcome by the large numbers of affluent, but far from uber rich, households that are being hit by this most hated of taxes.

But in some circles, inheritance tax is already called the voluntary tax because so much can be avoided or mitigated through government backed investment schemes and careful tax planning. Writing a will is a good start. If you don’t your assets will be distributed according to intestacy rules and could be subject to IHT which could otherwise be avoided.

Read more:
Inheritance Tax Receipts raise £600 million in a month

UK businesses overpaid £11.9bn in corporation tax the past year says UHY Hacker Young, the national accountancy group.

UHY Hacker Young warns businesses that HMRC will not automatically refund them if they overpay corporation tax. They must reclaim any overpayment themselves – and if they fail to realise they have overpaid, they will miss out on much needed cashflow.

Large businesses pay their corporation tax based on estimated profits for the upcoming year. An overpayment in corporation tax is a sign that companies’ accounts teams overestimated profits and therefore overestimated the amount of tax they would need to pay.

The problem can be particularly bad when the economy is weak, and a businesses’ profits have fallen from the previous year.

Nikhil Oza, Corporate Tax Director at UHY Hacker Young says: “Overpayment of corporation tax is a multi-billion-pound problem. Most large corporates spot overpayments, or at least have good tax advisors which do they checking for them, but small companies without dedicated tax advice can lose out on thousands in overpaid tax if they don’t look out for the problem.

HMRC won’t tell a business that it is overpaying corporation tax, they don’t see it as their job, and the money will simply sit in HMRC’s account, earning a very low rate of interest. Businesses need to take the initiative and approach HMRC to get their money back so that they can put those funds to better use.”

“Many businesses are struggling due to rising costs and a slump in consumer spending, so they should pay special attention to ensure they aren’t making unnecessary overpayments.

Read more:
UK companies overpaid £11.9bn in corporation tax last year

News that the government has launched a consultation to address the ‘double taxation’ of IR35 under the off-payroll working rules has been universally welcomed.

The consultation, launched today, will explore ways HMRC can account for taxes already paid by a contractor when calculating the tax liability owed by a business in the event of non-compliance.

As things stand, HMRC does not factor in the tax already paid by the contractor during the engagement. It means businesses (which are liable for IR35 under the off-payroll working rules) are overtaxed, should HMRC find non-compliance.

The consultation will run for 8 weeks, until 22nd June.

Qdos CEO, Seb Maley, commented: “This is potentially game-changing. The double-taxation of IR35 under the off-payroll rules is a massive problem. HMRC doesn’t offset the tax already paid by a contractor when handing a business a tax bill. Put differently, it means HMRC collects much more than it should. It’s morally wrong.

“A consultation marks progress. In theory, it’s an issue which can and should be solved relatively easily too. Even so, I’m amazed that the government has refused to look into this until now. Westminster knew this was a problem some time ago, but has done nothing about it.

“The double taxation of IR35 gives needlessly risk-averse businesses another reason not to engage contractors – because if they’re found to be non-compliant, HMRC will over-tax them.”

Read more:
Consultation launched into double-taxation of IR35 

Government proposals to streamline the research and development (R&D) tax relief system have been called into question by top 10 accountancy firm Azets.

The plans would mean merging the two current schemes and potentially revamping permissible qualifying activity and claimant criteria.

A consultation on the proposals by HM Treasury and HM Revenue & Customs concluded last month, with a new scheme could be set to be implemented by perhaps as early next April.

Azets, the UK’s largest regional accountancy and specialist business advisor to SMEs, surveyed 42,000 client businesses as part of its response to the proposals.

Just 12.8% of respondents thought the proposals for a single scheme to be positive, 51.3% considered it negative and 35.9% were undecided as to its potential impact.

Tim Croft, Azets’ National Head of R&D Tax, has written to the Government detailing the results of these two surveys and adding the firm’s own technical queries.

He said: “The reason we sent in the letter was severalfold. We are a significant player in this field of tax advice and we should let the Government know our own thoughts. We have a voice that should be listened to.

“Also, because we are the largest firm in the country with access to the SME market, we went out to our SME client base and polled them to garner their important opinions. Their feedback is important.”

Tim added: “We did two surveys to 42,000 clients – and most respondents agreed that a single scheme was desirable but, as proposed, would be to the detriment of the SME community. Simplification of process and clarification of qualifying expenditure were the main attractions of a single scheme.

“However, almost everybody who replied or we spoke to said this was actually going sideways around the issue and minimising even further what the small companies scheme looks like.

“It is great news for simplification, speed and processing, but we need some better guidance on what is allowable because at the moment it is massively subjective – very much dependant on how each tax inspector determines what is in front of them.

“To be effective in its primary purpose of encouraging innovation, any single scheme needs absolute clarity on permissible qualifying activity, clear compliance guidance on claimant criteria, sufficiently attractive financial reward to both encourage claims and avoid overseas migration and be simplistic to administer.

“There is some doubt as to whether what is currently proposed will achieve this. It is hugely frustrating. The scheme needs to be set out in a better way than the Government is proposing.

“It is unlikely that the scheme, as it is described, will encourage the SME market to innovate. That 74% of Innovate UK funding is awarded to SMEs demonstrates that, in a competitive environment (which the Innovate UK application process largely is), SMEs are deemed to be undertaking crucial R&D activities.

“The proposed scheme is skewed towards the existing RDEC scheme, and the overall approach appears to be to penalise SMEs due to the actions of a minority in abusing the system.”

He also warned that a less attractive scheme might lead to a talent drain to the near continent where businesses might enjoy better trading conditions.

The current R&D tax credits system goes back to 2000 when the European Union, concerned that innovation was being lost to other continents, established what is now known as the SME Scheme, deliberately aimed at small to medium sized companies.

In the UK large companies lobbied the Government heavily for a second scheme. This led to the formation of the large company scheme in 2002, which has been through a number of iterations over the intervening years and is known as the RDEC (Research and Development expenditure credit) scheme.

Accounting for the two schemes has remained completely different. In the SME scheme all adjustments are made on the Corporation Tax return, with very little, if any, disclosure in the accounts whatsoever or note to say that innovation is taking place.

If claims are successful it appears as a credit in the tax part of the profit/loss account and it is not taxed in any way. Anything can be done with that money, not just innovation, leaving it open to abuse.

The RDEC scheme works in a different way – above the line, the RDEC is calculated as a percentage of a company’s qualifying R&D expenditure and is taxable as trading income.

Following Brexit the Government found itself having to fund the SME scheme which previously didn’t fully impact on the UK Treasury.

The decision to implement a single scheme was also made against a background of slowing UK productivity since the global financial crisis which was exacerbated by the pandemic and war in Ukraine.

Over 50 years, innovation, broadly defined as multifactor productivity, drove around half of the UK’s productivity growth, but the rate of increase has slowed considerably, more so than other countries, particularly the USA.

The Government’s last Autumn and Spring statements have more closely aligned the generosities of the two R&D tax relief schemes, helping with the case for a simpler scheme.

Read more:
R&D tax reliefs revamp questioned

Bitcoin could reach $100,000 by the end of next year, an analyst at Standard Chartered has claimed.

Geoffrey Kendrick said he expected investors to pile their money into cryptocurrency markets now that the “crypto winter” was over.

This month the digital currency’s value rose above $30,000 for the first time since June, although it has slipped back in recent days.

Despite this, Kendrink, the bank’s head of digital assets research, said the recent turmoil around the global banking sector had helped to re-establish bitcoin’s status as a safe-haven asset class.

Kendrick also highlighted other factors, including the improved profitability of crypto mining; the stabilisation of risk assets; and expectations that the Federal Reserve would ease its monetary tightening policy.

These should make the pathway to the $100,000-mark clearer, he said, adding that regulatory developments should provide further tailwinds. Kendrick noted the European Union’s Markets in Crypto Assets regulation, which he believes “could have constructive implications for investor interest and volatility”.

Bitcoin, the world’s most popular cryptocurrency, embarked on an extraordinary rally in late 2020, through into 2021 and peaking at a cent shy of $69,000 in November 2021. Its worth declined sharply last year, with the currency losing more than two thirds of its peak value, as appetite for it waned amid worries about the health of the global economy and the demise of the now-bankrupt FTX exchange.

The next bitcoin halving — a process whereby the reward for mining a new block is halved every four years for every 210,000 blocks produced — is also poised to be a positive driver for its value. “While we note that previous halvings have had a successively smaller impact on bitcoin prices, prices have bounced around each halving,” Kendrick said. “ This should add a cyclical tailwind to the structural positives at play.”

Predictions of sky-high valuations have been commonplace during bitcoin’s past rallies. In 2020, analysts at Citigroup said they believed it could climb to as much as $318,000 by the end of 2022. However, it closed last year down about 65 per cent at $16,500.

Read more:
Bitcoin on track to hit $100,000, says Standard Chartered

Sky Sports tennis presenter has lost an IR35 tax case against HMRC on a technicality.

Barry Cowan had appealed a previous decision by HMRC that he should be treated as an employee of Sky for tax purposes, relating to work carried out between the 2014 and 2019 tax years.

The appeal was made by a partnership intermediary, Cranham Sports, in which Cowan is a member.

In June 2021, HMRC said after looking at communications between Sky and Cranham Sports, the relationship between Sky and Cowan was one of service, and Cowan should be treated as employed by Sky.

Part of the appeal rested on a claim by Cranham Sports that some of the correspondence from Sky was not shown to them before the decision was made.

HMRC initially sent its decision to Cranham Sports in December 2021, outlining that Cranham Sports and Cowan could take up an offer of an internal review if requested within 30 days.

Although the opposing side replied to the email, alleging HMRC had failed to reply to points outlined in an email at the end of July that summer, HMRC ruled that no request for a review had been made for 30 days.

Cowan’s representatives later argued that the dispute should remain open until HMRC had fully responded to these points.

A request for a review was eventually sent through in February 2022, 60 days from the decision letter, which was refused by HMRC.

The tribunal judge, Amanda Brown KC, said: “The applicant concedes that the delay had no reason other than the representative made a mistake and essentially did not realise or believe, in light of the email of 8 December 2021, that time was running against the applicant.

“Rather than seek to remediate the position as soon as possible the representative continued to lock horns with what he considered to be the outrageous conduct of HMRC.

“He did not appeal but continued to make complaint to HMRC,” she said.

Dave Chaplin, chief executive officer of IR35 Shield, said had this case gone to a tribunal the outcome may have been different.

“This highlights the importance, particularly in IR35 cases, why taxpayers should engage with specialist advisors to defend them.

“Losing a fight on a procedural point, without even stepping into the ring will obviously be very disappointing for Mr Cowan.”

Commenting, Dave Chaplin, CEO and founder of IR35 Shield, a tax advisory firm which specialises in IR35 and Off-payroll matters said: “This is the second person to fall foul of the basics, and lose their IR35 case on a procedural point, following the same mistakes made in the case of Michael Lynagh.

“By not responding to the HMRC view of the matter letter and failing to appeal it within 30 days, this basic error has resulted in the case being lost, and the ability to appeal not permitted. Had it gone to tribunal, the outcome may have been different.

“This highlights the importance, particularly in IR35 cases, why taxpayers should engage with specialist advisors to defend them. Losing a fight on a procedural point, without even stepping into the ring will obviously be very disappointing for Mr Cowan.

“Reading the ruling, it appears an opinion was formed by HMRC, without the taxpayer having full access to the material upon which the opinion was made. That doesn’t chime with the concept of treating taxpayers fairly, and whilst HMRC has won a case, without a full hearing, the manner about which they have done so, raises concerns.

Qdos CEO, Seb Maley, added: “You have to feel for Barry Cowan. Through no fault of his own, he won’t have the chance to appeal. If recent IR35 cases involving Sky Sports presenters are anything to go by, this huge error could have cost him a fortune.

“Filing an application to appeal is simple stuff – it should be bread and butter for Cowan’s representatives. What’s really worrying is that it’s not the first time we’ve seen this happen. Late last year it emerged that another Sky Sports presenter, Michael Lynagh, had his request to appeal denied because his accountant missed the deadline.

“It goes without saying that in the event of an IR35 investigation, you need support you can count on. IR35 cases can carry millions in tax liability and HMRC is noticeably ramping up its compliance activity in this area.”

Other cases

At the end of last month, Eamonn Holmes also lost an appeal against HMRC over whether he was directly employed by ITV as a presenter on This Morning.

In the same month, Gary Lineker won his battle over nearly £5mn in what HMRC said was unpaid tax.

Read more:
Sky Sports presenter loses IR35 appeal in latest high profile case brought by HMRC

Some £177.6 million was lost to impersonation scams last year, with more than 45,000 cases reported, according to a finance industry trade body.

UK Finance, which leads the Take Five campaign, highlighting the dangers of fraud, said there were 45,367 cases of this type of fraud in 2022.

The figures were released during Take Five Week (April 17 to 21).

Impersonation scams take place when a criminal contacts someone pretending to be a trusted organisation such as a bank, the police, a delivery or utility company, or perhaps a friend or family member.

Scams often start with a call, text, email or direct message with an urgent request for money or personal and financial information.

The campaign encourages people to take a moment to stop and think before parting with their money or personal information.

It is reminding people that it is OK to reject, refuse or ignore any requests – as criminals will sometimes try to pressure people into making quick decisions that they will later regret.

If someone believes they have been scammed, they should contact their bank immediately and also report it to Action Fraud.

Katy Worobec, managing director of economic crime at UK Finance, said: “We receive genuine communication from trusted organisations on a daily basis, meaning it’s not always easy for us to spot when an approach for information is in fact from a criminal.

“Anyone can be caught out by a scam in the heat of the moment and criminals are constantly adapting their tactics to appear legitimate.

“It has never been more important to take steps to check for genuine communication and follow the advice of the Take Five to Stop Fraud campaign and to stop, challenge and protect.”

Celebrity impressionist Jess Robinson, who has joined forces with Take Five, said: “We all think we’d spot the signs of a criminal trying to scam us but fraudsters have improved their tricks and are rolling out increasingly sophisticated scams.”

Many banks have signed up to a voluntary code which helps blameless victims who have been tricked into transferring money to a fraudster to be reimbursed.

Consumer campaigners have raised concerns about inconsistencies over how the voluntary reimbursement rules are being applied.

New financial regulations being considered by the Payment Systems Regulator (PSR) will require banks and building societies to fully reimburse victims of authorised push payment (APP) scams, where the loss is more than £100.

Some account providers, such as TSB and Nationwide Building Society, offer their own customer guarantees around bank transfer fraud.

NatWest recently announced it was imposing cryptocurrency payment limits, amid concerns over rising numbers of scams.

It said a daily limit of £1,000 and a limit of £5,000 over a 30-day period were being implemented, to help protect customers from losing life-changing sums of money.

Emily Thornberry, Labour’s shadow attorney general, said: “It is absolutely right for UK Finance to advise consumers how to protect themselves from scams, but it is equally incumbent on the Government to prevent these scams from targeting consumers in the first place.

“Labour would take immediate action to stop scammers using UK numbers when calling from overseas, and we urge the Government to do the same.”

Read more:
Almost £180m lost to impersonation scams as 45,000 cases reported

The government has removed two identified tax avoidance schemes from its official list after legislation which allows for a scheme to be publicised only allows it to be made public for 12 months.

The move has been described as “ridiculous” and “appalling” by two industry experts, who have called on the government to do more to stop the proliferation of tax avoidance schemes.

The schemes removed from the government’s list of tax avoidance schemes, promoters, enablers and suppliers are Absolute Outsourcing and Equity Participation Scheme (EPS), promoted by Purple Pay Limited (PPL).

Julia Kermode, founder of IWORK – the body championing independent workers – commented: “This is a particularly ridiculous piece of legislation. Naming a tax avoidance scheme only to delete it from an official list a year later is crazy. How can anyone steer clear of tax avoidance schemes when HMRC’s own list isn’t up to date? It’s beyond belief. This list isn’t a deterrent for tax avoidance schemes – it’s merely a temporary blip in the history of these so-called companies.

“These schemes wreck lives. They lure in unsuspecting individuals upon the pretence that they are legal and compliant. Then, when HMRC comes calling, the individual is left with a devastating tax bill. Meanwhile, the scheme, along with the people running it, have disappeared into thin air.”

Fred Dures, founder of specialist payroll auditor, PayePass, added: “This would be laughable if it wasn’t so serious. As it stands, the government’s list of tax avoidance schemes is only the tip of the iceberg. Now we find out that due to an absurd piece of legislation, one year on from a scheme being identified, it’s removed from the list. It’s appalling.

“What’s more, the government has only been naming and shaming these schemes for one year. Fast forward a few weeks and months and, at this rate, the list will continue to shrink. It’s one step forward, two steps back – a farcical loophole.

“Few will deny that the umbrella industry needs regulating, yet the government still hasn’t delivered it. It means the responsibility will continue to fall on businesses engaging umbrella companies to ensure compliance and operate transparent payment processes.”

Read more:
Farcical loophole sees tax avoidance schemes removed from government’s list

A sharp rise in bitcoin prices has pushed the cryptocurrency above $30,000 (£24,118) for the first time since 10 June last year, just before the Celsius crypto lending company froze withdrawals in the run-up to its collapse.

Even given that recovery, the token is still well below its all-time high of $68,000 in November 2021, and far below where it was before the failure of the Terra stablecoin caused the “crypto winter”.

Nevertheless, bitcoin’s recent steady increase in value has sparked discussion of another cryptocurrency boom – and reignited fears of widespread manipulation in the market.

The collapse of Silicon Valley Bank last month and the broader contagion it has sparked across financial markets led some cryptocurrency fans to buy bitcoin, the original and most valuable token in the sector, as a way of protecting against fears that the entire traditional “fiat” economy would crumble.

That attitude was typified by the US venture capitalist Balaji Srinivasan, who in March bet $1m that the price of a single bitcoin would top $1m by June this year. His claim was that the US dollar would shortly experience hyperinflation, causing the dollar value of a bitcoin to soar.

“This is the moment that the world redenominates on bitcoin as digital gold, returning to a model much like before the 20th century,” he tweeted, explaining the bet. “Everything will happen very fast once people check what I’m saying and see that the Federal Reserve has lied about how much money there is in the banks. All dollar holders get destroyed.”

Alex Adelman, the chief executive of the bitcoin rewards app Lolli, said Monday’s rally “did not have a clear catalyst”, but that it was “a bellwether of bitcoin’s newly bullish market conditions and strong investor confidence. Bitcoin’s ongoing strength suggests that bitcoin is emerging from so-called ‘crypto winter’ into a new phase of strength and renewed interest from retail and institutional investors.”

But the recovery, after bitcoin prices hovered at $28,000 for almost a month before leaping the final $2,000 in a day, has also led to concern about market manipulation.

A 2022 report published by the US National Bureau of Economic Research found that “wash trading”, the practice of selling cryptocurrencies between related parties to influence the reported price, averaged “over 70% of the reported volume” on 29 unregulated exchanges.

In June 2022, the US Securities and Exchange Commission (SEC) refused permission to launch a bitcoin-linked exchange traded fund, which would allow investors to buy exposure to the cryptocurrency on the public stock markets, after concluding that it was impossible to prevent fraud and manipulation in the market from affecting the price.

As well as wash trading, the SEC said the market could be influenced by individuals with a “dominant position” in bitcoin manipulating its pricing, through fraud and manipulation at trading platforms, and through manipulative activity involving stablecoins “including tether”.

Read more:
Bitcoin price rises above $30,000 for first time since June 2022

Despite the raft of tax hikes introduced this month, on the two-year anniversary of private sector IR35 reform, the legislation still tops contractors’ concerns

The arrival of the 2023/24 tax year and with it an array of tax increases impacting freelancers and contractors does not detract from the fact that the IR35 legislation remains these workers’ stand-out concern, research from IR35 specialist Qdos reveals.

Despite the increase to Corporation Tax (increasing from 19 to 25%), the reduction of the additional-rate income tax threshold (from £150,000 down to £125,140) and the slashing of the tax-free dividend allowance (£2000 down to £1000), the IR35 rules are still considered by contractors as the biggest threat to their business.

More than one in three of more than 700 contractors surveyed by Qdos view IR35 as the issue which has the most potential to impact their business negatively. This is ahead of concerns over the cost of living and the raft of tax increases introduced for the 2023/24 tax year (25%).

Reform to the IR35 rules were introduced in the public sector in 2017 and in the private sector in 2021. The changes saw freelancers’ clients become responsible for determining these workers’ tax status, unless the freelancer is engaged by a small company.

In last year’s Mini-Budget, it was announced that the off-payroll working rules would be repealed effective from 2023/24 tax year, before the newly appointed Chancellor, Jeremy Hunt reversed this decision. Just 7% of contractors surveyed by Qdos are ‘confident’ that the reform will be repealed in future. 43% are ‘not at all’ confident and 39% are ‘not very confident’.

On the two-year anniversary of the roll out of reform in the private sector – and six years since the changes were enforced in the public sector – Qdos CEO, Seb Maley said: “The tax burden on the UK’s smallest businesses is spiralling yet it is IR35 which worries freelancers and contractors most – this is saying something. The government’s heavy-handed way of tackling IR35 compliance has understandably put freelancers and their clients on edge.

“HMRC has a scattergun approach to IR35 compliance, pursuing cases for years only for it to be found that the freelancer has done nothing wrong. Take Gary Lineker, who HMRC wrongly believed owed £4.9m in tax. The same goes for Adrian Chiles, who had a £1.7m IR35 bill hanging over his head.

“With the off-payroll rules in force, HMRC is ramping up its compliance activity among businesses. And if the tax office’s policing of IR35 among freelancers and contractors is anything to go by, compliance must remain a priority for organisations engaging these flexible workers.”

Read more:
Tax hikes arrive but IR35 remains freelancers’ biggest fear

Gary Lineker has won his £4.9 million tax battle with HMRC.

The Match Of The Day host was told by the taxman he should have been classed as an employee of the BBC and BT Sport for his presenting duties, rather than as a freelancer.

The tax authorities pursued him for £4.9 million it claimed should have been paid on income received between 2013 and 2018.

It comes as part of legislation known as IR35, designed to clampdown on tax avoidance by so-called disguised employees, who charge for their services via limited companies.

Throughout proceedings the presenter, 62, insisted all taxes were paid on the income via a partnership set up in 2012 with his ex-wife Danielle Bux.

Tribunal Judge John Brooks found the IR35 legislation did not apply because there were direct contracts between the presenter and both the BBC and BT Sport.

The tribunal found that while Gary Lineker Media (GLM), which he set up with his then wife in 2012, was a partnership to which IR35 legislation applies, the appeal was still dismissed in full because contracts existed.

The judge said: “As a matter of law, when Mr Lineker signed the 2013 BBC Contract, the 2015 BBC Contract and the BT Sport Contract for the provision of his services, he did so as principal thereby contracting directly with the BBC and BT Sport.

“As such, the intermediaries legislation cannot apply – it is only applicable ‘where services are provided not under a contract directly between client and the worker’.

“In this case Mr Lineker’s services were provided under direct contracts with the BBC and BT Sport.

“Although such a conclusion might appear inconsistent with my conclusions that the intermediaries legislation can apply to partnerships… that is not the case.”

In response to the news, Waqar Shah, Tax Disputes partner at law firm Kingsley Napley LLP, says: “IR35 is such a wide-ranging regime with lack of clarity embedded in the rules that it is unsurprising it is increasingly an area for dispute with HMRC. Despite the under-resourcing challenges it faces, HMRC is in the process of contacting more and more organisations and individuals with respect to their IR35 compliance. They have extensive powers to claim backdated Income Tax and NICs, assess for interest and issue penalties so investigations are not to be taken lightly. However today’s win by Gary Lineker shows that HMRC is not always right. Until the government puts reform of IR35 back on the agenda, we will continue to see high profile disputes of this nature.”

Read more:
Gary Lineker wins £4.9 million tax battle with HMRC

A businessman who presided over one of Britain’s worst “pension liberation” scandals was branded evasive, hostile and guilty of “highly regrettable conduct”, according to the judgment in a tax tribunal published yesterday.

Craig Tweedley, founder of the pension scheme company Ark LLP, displayed “a total disregard for due diligence and careful administration and was primarily motivated by a desire for personal financial gain”.

His main scheme to enable people to access their pensions tax-free before the age of 55 was “fatally flawed”, while his due diligence on one potential investment, a luxury hotel development in St Lucia, amounted to “little more than a Caribbean holiday”, the tribunal said. Nevertheless, it ruled in favour of HM Revenue & Customs, which is pursuing the 500 victims of the affair for more than £5 million in unpaid taxes.

The judgment means that they will end up with only around £4 million of the original £27 million in pension savings they were persuaded to transfer into newly created Ark-managed pension schemes more than 12 years ago.

The £9.5 million members successfully extracted from the pension funds will now incur taxes. They have already seen the bulk of their savings disappear in poor investments or get swallowed in £9 million of fees by advisers appointed to wind down the arrangements.

It is not known whether Tweedley has been investigated by regulators for his role in Ark, which wrongly told pension fund members that they could gain access to their pensions through a complex system of reciprocal loans.

The Pensions Regulator has refused to comment, but said yesterday: “We note the tribunal’s decision. This is a matter for HMRC. The trustee Dalriada is considering the ruling and we will monitor the outcome.” Dalriada Trustees was appointed by The Pensions Regulator to take over the running of the Ark schemes in 2011.

HMRC said: “The decision of the tribunal confirms our position that members of this scheme made unauthorised withdrawals from their pension savings and therefore it is our legal duty to collect the tax which is due as a result.”

The tribunal, headed by Judge Tony Beare and Gill Hunter, said the system devised by Tweedley, known as a “pensions reciprocation plan” was “disastrous for every member who chose to participate in it” and “fatally flawed from the commercial perspective”.

Tweedley “repeatedly sought to avoid answering the questions which had actually been put to him, tried to anticipate future questions which had not actually been put to him, sought to defend the indefensible and was generally evasive and hostile”.

“Many of his answers were inconsistent with the documents with which we had been provided and, in some cases, with his own evidence.”

Dalriada, which has in the past unsuccessfully pursued Tweedley for damages, told the members: “Clearly the decision is both incredibly disappointing and frustrating for the members and Dalriada.”

“We considered that the approach to taxation that we argued for in the tribunal was both correct and resulted in a fair and reasonable outcome for members and the schemes. Unfortunately, the tribunal disagreed.”

Sean Browes of Dalriada said that the members were innocent victims. “They were not wealthy well-advised tax avoiders. They were often financially vulnerable individuals who were told by the perpetrators of the Ark schemes that they could access funds in a completely legal manner.”

Dalriada will now apply to the Fraud Compensation Fund, part of the Pension Protection Fund, for compensation for the burnt members. To qualify it will have to show dishonesty took place.

Tweedley, who was approached for comment, has previously defended his behaviour, saying: “We took extensive advice about the validity of these schemes before launch.”

So-called pension liberation schemes exploded after the financial crisis as under-55s sought to unlock valuable pension benefits both in defined benefit schemes and in defined contribution pots. Dalriada has been appointed to manage more than 100 such schemes.

There are strict rules on accessing pensions before the age of 55 (and 57 from 2028). The only exceptions are those forced to retire early because of ill health or where the member receives medical advice that they have less than 12 months to live. The precise tax owing by scheme members will vary depending on the nature of the reciprocal loan arrangements entered into with other members.

The scandal has already led to suicides, marriage break-ups and in some cases members being forced to sell their homes.

Read more:
Members of ‘pension liberation scheme’ lose tax case

Binance faces a ban in the United States after being sued by an American watchdog for breaking and ignoring a host of financial and market rules.

In a searing court filing, the Commodity Futures Trading Commission alleged that the world’s largest crypto trading platform had put its commercial success over compliance with US law in what it quoted company executives as saying was a “biz decision”.

It listed complaints including that Binance had helped its customers to evade its own controls, had actively grown its American customer base despite claiming that it was restricting it from the platform, and had failed to properly supervise its activities.

Binance deliberately chose not to have a global headquarters, the watchdog said, in order to avoid regulation. It cited Changpeng Zhao, 46, Binance’s chief executive, who is also being sued by the regulator, as saying its base was wherever he happened to be.

Binance — which could now be fined or banned from trading — described the complaint as “unexpected and disappointing”, adding: “The best path forward is to protect our users and to collaborate with regulators to develop a clear, thoughtful regulatory regime.”

The commission claimed Binance had refused to provide it with information, such as the address of Samuel Lim, its chief compliance officer, and had used messaging apps with autodelete functions, such as Signal, to cover its tracks “about inculpatory matters”.

According to the CFTC, “while acting as CCO, Lim advised, directed and assisted Binance employees and customers in circumventing compliance controls”.

In August 2020 the platform earned $63 million in fees from derivatives transactions; in May 2021, its monthly revenue from derivatives transactions had risen to $1.14 billion.

The company had “disregarded applicable federal laws while fostering Binance’s US customer base because it has been profitable for them to do so”, the regulator said. Customers were encouraged to obscure their location by using virtual private networks and it did not conduct the requisite identification checks.

To comply with US law, it should have registered with the commission and had these controls in place to prevent money laundering and terrorism financing.

The lack of controls around the crypto industry has been in the spotlight since the collapse last year of the FTX exchange, a rival to Binance.

A Binance spokesman said the complaint “is unexpected and disappointing as we have been working collaboratively with the CFTC for more than two years. Nevertheless, we intend to continue to collaborate with regulators in the US and around the world.”

The CFTC’s lawsuit rattled market confidence in the wider crypto sector yesterday. Shares in Coinbase, the exchange, fell by $5.29, or 7.8 per cent, to close on $62.54 in New York.

Read more:
Binance faces US ban for ‘breaking laws’

Almost two thirds of consumers cannot answer basic questions about their finances correctly, according to a survey from PwC and YouGov.

Asked how much they would expect to pay for their mortgage if interest rates suddenly went up, only 37 per cent gave the right answer and only 31 per cent could identify what would happen to a personal loan. People on higher salaries showed a greater financial understanding, with those paid more than £70,000 twice as likely to respond correctly as those paid under £20,000.

The survey, which interviewed more than 2,000 people about personal finances, found “no sign of improvement in financial literacy,” over the years, with little difference in correct response rates since the questions were asked in 2017. But 88 per cent of those surveyed said they felt “confident” or “very confident” in making financial decisions.

Bobby Seagull, a maths teacher and an ambassador for the National Numeracy charity, said: “Consumer inability to answer basic financial questions often stems from negative experiences of maths in school.”

He added: “It’s a tragedy that income bands can almost predict financial literacy, which means that those who are under the greatest financial strain are less able to evaluate the impact of their financial decisions.”

The survey also indicated that three million people, or 10 per cent of the working population, opted out of their pension schemes in the past year, a figure which rose to 17 per cent among those aged 18 to 24. The relevant question was included in the poll after a senior associate within PwC told colleagues that she had stopped paying into her pension, which surprised them.

Almost half of the respondents said they had curbed their heating use because of soaring energy prices, 43 per cent had cut their Christmas spending, 37 per cent had started shopping at cheaper grocers and a quarter had cancelled one or more of their subscription services.

Household debt has hit £2 trillion for the first time, almost the level of the nation’s GDP, which equates to £71,000 a household, with 80 per cent secured against property.

The total of unsecured debt grew by more than 7 per cent in the past year to a record high of more than £400 billion, equivalent to £14,300 per household, a rise of £900 each. Rising debt is concentrated in certain brackets, with young people 50 per cent more likely to have increased what they owe.

Although debt has been more affordable than before the global financial crisis because of lower interest rates and levels of unemployment, rising mortgage rates and job losses could “erode financial resilience,” the survey organisers said.

Lack of savings meant that a quarter of the population would need to borrow money to meet an unexpected £300 payment in the next year. Those renting their homes were at a greater risk of “financial fragility”, the survey in January found, with 17 per cent having missed a meal to pay a bill compared with 5 per cent of homeowners.

Simon Westcott, strategy and financial services lead at PwC UK, said: “There appears to be a disconnect between these confidence levels and consumers’ actual understanding of everyday financial products.”

Despite the shaky grasp of personal finance, when it comes to asking for guidance, only about a quarter of people said they turned to financial institutions such as banks, while another quarter did not ask for financial advice or information from anyone at all.

Read more:
Two thirds of UK consumers say personal finance doesn’t add up for them

People have been given more time to plug gaps in their National Insurance record – to ensure they can maximise their state pension entitlement.

Initially, people had until 5 April to make voluntary adjustments for gaps between 2006 and 2016, but the cut off has been extended to the end of July.

The original deadline had led to blocked phone lines.

In general, people need 35 years of qualifying contributions to get the full state pension.

‘Surge’ in calls

Some people may have spaces in their National Insurance record, for example if they have lived abroad or taken time off for caring responsibilities.

Top-ups have been permitted, as part of the transition to the flat-rate state pension which was introduced in 2016.

But blocked phone lines to HM Revenue and Customs left some worried they would miss the April deadline, and led to the latest extension which the government said was to ensure nobody would miss out.

“HMRC and the Department for Work and Pensions have experienced a recent surge in customer contact,” said financial secretary to the Treasury, Victoria Atkins.

“We’ve listened to concerned members of the public and have acted. We recognise how important state pensions are for retired individuals, which is why we are giving people more time to fill any gaps in their national insurance record to help bolster their entitlement.”

Check your circumstances

Pensions experts say that extra contributions may not suit every individual in these circumstances, so it is important to check whether it is worthwhile for their finances.

Anyone can look on their personal tax account to view their National Insurance record and obtain a state pension forecast without charge to decide if making a voluntary contribution is a good decision for them.

Sir Steve Webb, a former Liberal Democrat pensions minister who is now a partner at consultants LCP, said: “For most people, paying voluntary National Insurance contributions to deal with a shortfall in their state pension makes excellent financial sense.

“But it is also important to make sure that extra contributions are right in your individual case as sometimes additional contributions may not boost your pension.”

Helen Morrissey, head of retirement analysis at investment platform Hargreaves Lansdown, said: “It is vital that you check before handing over any money as you may be able to plug these gaps in a different way – by backdating a benefit claim for instance.”

Read more:
Deadline extended for National Insurance top-ups

The Super Deduction Tax Break was brought into action in April 2021 to help kickstart the economy post-Covid and provide businesses with an incentive to make additional investments in machinery and tools.

However, this will be the last month the scheme will run.

Coming to a close on March 31st 2023, this month will be the last opportunity for businesses to take advantage of the tax deduction enabling companies to claim a 130% capital allowance on qualifying plant and machinery investments, along with a 50% first-year allowance for qualifying special rate assets.

Over the last two years, the super-deduction has allowed businesses to cut their taxes by up to 25p for every £1 invested.

Most tangible capital assets a business uses can be considered plant and machinery to claim capital allowances. Qualifying assets include solar panels, computer equipment, commercial vehicles, power tools, office furniture and refrigeration units. You can find more details about investment eligibility on the Gov.uk website.

This tax reduction can benefit many businesses that may have suffered financial losses during the pandemic; however, this support was unfamiliar to many business owners. In a previous survey conducted by asset disposal specialists BPI Auctions, only one in eight of those questioned said they were aware of the Super Deduction Tax Break.

Whilst the tax relief may still tempt organisations to invest in new equipment and tools, purchasing used or second-hand machinery, primarily via auctions, can provide many valuable benefits for your business both practically and financially. Purchasing used machinery is not uncommon in the manufacturing and construction industry, with nearly half of those (39%) surveyed claiming they would look into purchasing used machinery first and a further 45% saying they have no preference for the state of the items.

Machinery availability is a common cause of delays in projects, with the survey finding that one in five (20%) of respondents faced delays in work due to delivery times of machinery, and in some instances, deliveries were delayed by nearly three months. While purchasing machinery new can take weeks or months to process, ship and arrive, purchasing through auctions can allow machinery to be on your premises in a matter of days.

Despite availability being a huge advantage, with over one in five of those surveyed claiming it was the main benefit of purchasing machinery through auction, almost three-quarters of respondents said that lower prices and cost savings is what attracts them most to machinery auctions.

Purchasing used machinery can help improve the sustainability and environmental responsibility of your business, such as cutting down emissions from manufacturing new machinery and air miles if ordering products internationally.

While over 80% said they would like to see a reduction in their carbon footprint, when questioned if they would prioritise this over cost savings or their carbon footprint, 80% chose to prioritise saving costs.

David Boulton, Managing Director at BPI Auctions, summarises, “The Super Deduction Tax Break has been a significant opportunity for businesses across the manufacturing, construction and engineering sectors to receive extra financial support, especially those that have been affected most by the pandemic.

“Purchasing used machinery through auctions is not only an effective way to lower equipment costs but winning lots can be with you within a few days, completely removing shipping delays and delivery times you may get from purchasing brand new equipment.”

“Selling machinery assets through online auctions can ensure your items will be sold in a much shorter time period and will remove the expectancy to manage unreasonable buyers potentially faced using public marketplaces. If you’re planning to upgrade your equipment and make the most of the tax break this month, BPI can help dispose of your existing equipment quickly and efficiently.”

Read more:
Last chance for businesses to take advantage of Super Deduction Tax Relief

Gary Lineker’s lawyers have told a legal hearing that a tax inquiry into the footballer’s finances has been “looking in the wrong place”.

The Match Of The Day host was told by HM Revenue and Customs (HMRC) that he should have been classed as an employee of the BBC and BT Sport for his presenting duties, rather than as a freelancer.

HMRC is now pursuing him for £4.9m that it said should have been paid on income received between 2013 and 2018.

It comes as part of legislation known as IR35, designed to clampdown on tax avoidance by so-called disguised employees, who charge for their services via limited companies.

Lineker says all taxes were paid on the income via a partnership set up in 2012 with his ex-wife, Danielle Bux, and is appealing against the demand.

On Monday, a preliminary hearing in London was told Lineker has now paid the income tax in full.

James Rivett KC, representing Lineker, argued: “What should have happened is that HMRC should have assessed the BBC for tax and that isn’t what happened.

“IR35 has nothing to do with it, they just looked in the wrong direction, and it proceeds from this assumption that a partnership is in some way an entity, and it isn’t, not this type of partnership.”

Rivett said the case the HMRC is setting out “cannot apply” in this instance.

He went on: “HMRC are looking in the wrong place here; if they thought there was a quasi-employment relationship between Mr Lineker and the BBC and BT Sport they should have assessed them.

“They shouldn’t have used this torturous machinery to do it which gives rise to all sorts of issues of double taxation.”

He added: “We’re in front of you to argue an appeal in respect of an amount of income tax that everybody acknowledges has been paid.”

It follows similar attempts by HMRC to target broadcasters including Lorraine Kelly and Kaye Adams, who both won their cases on appeal.

Lineker is disputing the bill, according to tax tribunal documents.

The presenter is expected to argue that his partnership, Gary Lineker Media, is required to funnel his income through because of the wide variety of work he does.

HMRC will say his extensive work for BT Sport and the BBC means he should be classed as an employee for tax purposes.

Read more:
Gary Lineker’s lawyers say HMRC tax inquiry ‘looking in the wrong place’

HM Revenue and Customs (HMRC) is reminding VAT registered businesses to file their VAT returns and pay on time, ahead of new penalties being applied.

The new penalties will be fairer and more proportionate for businesses who submit their VAT returns or pay their VAT late. The first monthly returns and payments affected by the penalties are due by 7 March 2023.

The late payment penalties and points-based late submission penalties were introduced from 1 January 2023, replacing the VAT default surcharge, and apply to accounting periods which start after that date.

The penalties for late VAT returns also apply to businesses that submit nil returns and repayment returns. Changes have also been made to how interest is calculated.

Paul Riley, director of Tax Administration, HMRC, said: “Our aim is to help customers get things right before monetary penalties are applied; a points-based system for late VAT returns will not punish the occasional error.

“We are contacting 2.5 million VAT registered businesses about the changes and will continue to support customers to help them manage their tax affairs and payments.”

The changes to VAT penalties and interest payments are:

Late submission penalties – These work on a points-based system. For each VAT return submitted late, customers will receive a penalty point until they reach the penalty point threshold – at which stage they will receive a £200 penalty. A further £200 penalty will also apply for each subsequent late submission while at the threshold, which varies to take account of monthly, quarterly and annual accounting periods.

Late payment penalties – If a VAT payment is more than 15 days overdue, businesses will pay a first late payment penalty. If the VAT payment is more than 30 days overdue, the first late payment penalty increases and a second late payment penalty will also apply. To help customers get used to the changes HMRC will not charge a first late payment penalty on VAT payments due on or before 31 December 2023, if businesses either pay in full or a payment plan is agreed within 30 days of the payment due date.

Payment plans – HMRC will help businesses that cannot pay their VAT bill in full. Customers may be able to set up a payment plan to pay their bill in instalments. After 31 December 2023, if a customer proposes a payment plan within 15 days of payment being due and HMRC agrees it, they would not be charged a late payment penalty, provided that they keep to the conditions of the payment plan. Late payment penalties can apply where proposals are made after the first 15 days, but the agreement of the payment plan can prevent them increasing.

Interest calculations – HMRC has introduced both late payment and repayment interest, which will replace previous VAT interest rules. This brings the new regime in line with other taxes.

Further details on the changes can be found on GOV.UK.

HMRC is also reminding businesses to be mindful of scams as they adjust to the changes. Never share your HMRC login details. Someone using them could steal from you or make a fraudulent claim in your name. Never give out personal information if you are unsure of who is contacting you. For more information, go to GOV.UK and search for ‘phishing and scams’.

Read more:
HMRC reminds businesses about new VAT penalties and interest ahead of filing deadline

HMRC raked in £5.9 billion from inheritance figures from April to January 2023 according to figures released this morning.

This is £0.9 billion more than in the same period a year earlier, continuing the recent upward trend. While the average bill was £216,000 in 2019/20, research conducted by Wealth Club suggests the average inheritance tax bills could reach £270,831 by 2025-26 and £288,611 by 2027-28 if current inflation expectations are met.

The government’s inheritance tax take seems to be increasing thanks largely to years of house price increases, especially in London and the South East That’s pushing families that probably wouldn’t consider themselves wealthy, over the threshold. In the Autumn Statement in November it was also announced that the inheritance tax threshold of £325,000 will be frozen until April 2028.

Alex Davies, CEO and Founder of Wealth Club said: “The revenue generated from inheritance tax plays an important part in the government’s spending programme. But this is no longer something just the very wealthy need to worry about. Thanks to years of frozen allowances, paired with house price growth and soaring inflation, families up and down the UK, most of which would not consider themselves to be especially affluent are also increasingly being affected.

No one likes to pay more tax than they need to, but the good news is that with a little bit of planning, there are a number of perfectly legitimate ways to reduce your liability. One of the great IHT threats arguably comes from where you least expect it: your ISA. Whilst tax efficient in so many other ways, ISAs form part of a person’s taxable estate along with other savings, investments and possessions, so up to 40% of could be eaten up by inheritance tax rather than passed to your loved ones.

Read more:
Inheritance Tax Receipts reach £5.9 billion in the months from April 2022 to January 2023

A company which charged taxpayers significant sums to make claims for tax refunds has been stopped from operating.

Tax Credits Ltd (TCL) can no longer trade as a repayment agent after HM Revenue and Customs (HMRC) found they had committed serious anti-money laundering breaches.

As a result of breaching the regulations, which are predominately designed to prevent businesses being exploited by criminals to launder money, it is now a criminal offence for TCL to trade as a tax repayment agent.

The move comes weeks after HMRC outlined greater protections for customers using repayment agents.

Taxpayers can use repayment agents to make claims for repayment of tax, and while many customers are happy with the service they receive, a large number of taxpayers have complained about the lack of transparency in agents’ processes for signing up clients and high charges for using their services.

Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said:  “TCL have ignored their responsibilities under the anti-money laundering measures designed to protect us all from financial crime.

“We will not allow a small number of bad actors to tarnish the reputation of the whole tax agent sector.

“It is crucial taxpayers understand the entitlements they can claim directly from HMRC and are properly protected from the misleading tactics used by some repayment agents. The greater protections we’re bringing in will help to stop people unwittingly losing their hard-earned money to misleading agents.”

Around 11,000 TCL clients, whose claims had been paused during investigations into TCL, will now receive their tax refund directly from HMRC.

HMRC will contact all affected clients by the end of March to explain their refund. The refunds will be made automatically – customers do not need to contact HMRC to receive their payment.

In response to public concern, HMRC recently consulted on how to protect taxpayers using repayment agents and unveiled a package of measures last month, which included stopping the use of legally-binding ‘assignments’ as part of claiming an Income Tax repayment, improving agent standards and a requirement for repayment agents to register with HMRC.

HMRC urges anyone thinking of using a tax repayment agent to carefully consider their options when appointing a tax adviser to act on their behalf. Taxpayers are urged to do their research before committing to anything, and are reminded that they, not the tax agent, are ultimately responsible for their own tax affairs.

Taxpayers are advised to be particularly careful when clicking on online ads as some unscrupulous repayment agents have made their customer sign-up pages appear to be mere requests for more information.

Read more:
Tax agency stopped from operating by HM Revenue and Customs

Figures released by HMRC today show that the Treasury raked in £5.3 billion in inheritance tax receipts in the months from April to December 2022. This is £700 million more than in the same period a year earlier, continuing the upward trend.

The government’s inheritance tax take seems to be increasing thanks largely to years of house price increases, especially in London and the south-east, pushing families that wouldn’t probably consider themselves wealthy, over the threshold. In the Autumn Statement in November it was also announced that the inheritance tax threshold of £325,000 will be frozen until April 2028.

The revenue generated from inheritance tax plays an important part in the government’s spending programme. While the average bill was £216,000 in 2019/20, research conducted by Wealth Club shows the average inheritance tax bills could reach £304,567 by 2025-26 and £345,084 by 2027-28.

Alex Davies, CEO and Founder of Wealth Club said: “Contrary to popular belief, inheritance tax doesn’t just affect the super-rich, many who would not consider themselves wealthy at all will also bear a considerable burden. Rampant inflation and years of frozen allowances and soaring house prices mean many more families will find themselves hit with a hefty inheritance tax bill which they might not have envisaged or planned for.

“No one likes to pay more tax than they need to and Inheritance tax is probably the most hated of all taxes. But with a little planning, there are a number of perfectly legitimate ways to reduce your liability. Pensions can be passed on to the next generation relatively tax efficiently. The greatest IHT threat probably comes from where you least expect it: your ISA. Contrary to what many think, ISAs are not IHT free. So, if you do nothing, up to 40% of your long-term savings could eventually be eaten up by tax. An alternative is to invest in an AIM ISA, a managed portfolio of AIM shares that can be IHT free after two years. You still get the ISA benefits of tax-free income and growth for as long as you live, but you don’t need to worry about IHT on top.

And if you are prepared to take more risk, consider investing in early-stage businesses through EIS and SEIS. Not only are they very tax efficient, but also your money goes to entrepreneurial companies, which is great for economic growth and job creation.”

Read more:
Inheritance Tax Receipts reach £5.3 billion in the months from April to December 2022

Former professional rugby player and now rugby commentator Stuart Barnes wins his won his IR35 case of £695k in tax against HMRC.

Speaking about the decision, Ryan Dawson, Project Manager at contract insurance specialists Kingsbridge said, “This is clearly another blow for HMRC in the list of ongoing IR35 cases but it should signal another huge win for the contingent workforce. I hope, as others will agree, this is a reminder to those businesses who needlessly blanket ban PSC’s that contractors can legitimately and compliantly be engaged outside IR35, without the need to utilise umbrella companies or payroll through fear of the tax risk.”

Dawson continued, “Whilst media cases can differ in their facts and circumstances to a ‘typical’ contractor, I believe there is an important message to Mr Barnes successful appeal. It was concluded in the hypothetical contract that based on the parties conduct and intention, the tribunal considered the contracts would not have been contracts of employment, thus upholding the appeal made by Mr Barnes.”

This result comes despite the tribunal finding that there was a sufficient framework of control over Mr Barnes in the performance of his services, and there being an obligation for Mr Barnes to perform the services personally. Some businesses operating OPR may find that concept slightly difficult to understand but it signals the importance yet again of thorough IR35 status determination to understand both the engagement and the wider context of how the Personal services company you engage operates.

Mr Barnes has won his appeal based on being ‘in business on his own account’ in large part down to sound management of his business and personality. Dawson concluded, “HMRC are actively conducting off-payroll compliance checks at the moment, but there should be no stigma attached to receiving a letter from HMRC. With the right guidance, process and accurate determinations, your position can be successfully defended.”

A spokesman for HMRC said: “We note the decision of the tribunal and will carefully analyse this outcome before considering next steps.

“The off-payroll rules ensure that people who work like employees, but through their own limited company, are taxed like employees, creating a level playing field with other workers.

“It’s our duty to ensure everyone pays the right tax under the law, regardless of wealth or status.”

Read more:
Stuart Barnes scores another IR35 win against HMRC

Just a year ago, Washington DC’s Hirshhorn art museum – the capital’s preeminent contemporary art museum – was asking whether non-fungible tokens (NFTs) were “fad or the future of art”. Twelve months on, it looks like “tax write-off” might have been the right answer.

This year was not just the year that cryptocurrency values were burned by investor fears, rising interest rates, inflation and scandals, it was the year that crypto’s cartoonish art cousin the NFT – an electronic identifier confirming a digital collectible is real – collided with reality.

In March 2021, Christie’s sold a digital collage NFT by the artist Beeple for nearly $70m (£58m). In January pop star Justin Bieber paid $1.29m (£1m) for a “Bored Ape” NFT, a graphic of a, well, bored ape. Everyone from Michael Jordan to former first lady Melania Trump was in on the game.

Now – alongside the broader crypto market – the appetite for NFTs is so diminished that a specialized market has sprung up for collectors looking to sell off their once-valuable “digital collectibles” as tax losses to offset their income tax bills.

A recently launched service, Unsellable, aims to help collectors do exactly that. Think of it as a distressed asset fire sale.

“While every investment class has its losers, many of the NFTs we invested in were not only down big; they were now totally worthless … illiquid … unsellable,” the service says on its website.

Unsellable – which says it is “building the world’s largest collection of worthless NFTs” – buys the underlying tokens for a fraction of their original price and provides an official receipt for tax purposes.

The company then collects the NFTs into “The Unsellable Collection” – currently containing 1,600 digital collectibles – with the aim of creating the “ultimate artifact of the early days of Web3”.

It’s easy to see why buyers may be keen to sell for a fraction of their original investment. Demand for digital certificates of ownership that underlie NFTs has evaporated. More than $19bn (£16bn) was spent on NFTs between January and March 2022. Since then, according to blockchain analysis firm Chainalysis, monthly spending has dropped by 87%.

Just $442m (£368m) was spent in November, and the number of active NFT traders is down around two-thirds from its peak a year ago. According to the Nonfungible.com market tracker, 144,000 NFTs were sold for $142m (£118m) on 16 January 2022. This Wednesday, there were 17,000 sales for $28,000 (£23,294).

The most traded collection of NFTs are images from the Bored Ape Yacht Club (BAYC), like the one Bieber bought. Each Bored Ape image features a unique combination of 170 possible traits, including expression, headwear, clothing and more. “All apes are dope, but some are rarer than others,” the company says.

Yuga Labs, the company behind Bored Ape, was recently hit with a class-action lawsuit claiming it had unrealistically hyped the value of its intangible goods. The lawsuit named celebrities – and former NFT evangelists – including Bieber, Paris Hilton, Madonna, Jimmy Fallon and Kevin Hart, as co-defendants.

“Defendants’ promotional campaign was wildly successful, generating billions of dollars in sales and re-sales,” the lawsuit, filed on 8 December in a district court in California, said.

“The manufactured celebrity endorsements and misleading promotions regarding the launch of an entire BAYC ecosystem (the so-called Otherside metaverse) were able to artificially increase the interest in and price of the BAYC NFTs during the relevant period, causing investors to purchase these losing investments at drastically inflated prices.”

The NFT market is a long way from where it sat in October 2021, when Mike Winkelmann – the digital artist known as Beeple – sold his work at Christie’s, making him “among the top three most valuable living artists”.

Last week, Winkelmann remained upbeat about the internet’s place in creating art, but he conceded: “The market is a bit crap right now,” he told Bloomberg. “Do I think it’s going to go back to where it was? I don’t know … I definitely think it’s going to go up from here.”

And one former celebrity, and US president, agrees. Earlier this month Donald Trump launched a collection of digital collectibles depicting him as, among other things, an astronaut, a cowboy and a superhero. It sold out in less than a day.

Read more:
Investors convert ‘totally worthless’ NFTs into tax write-offs

Retail investors have seen their gains since the onset of the pandemic all but wiped out in the midst of a torrid year on global markets.

The average private investor’s holding was up just 0.38 per cent since January 2020 by the end of September this year, according to an index produced by a leading investment platform.

That performance is only marginally better than that of the FTSE 100, which finished last month up 0.34 per cent on the start of 2020. It has declined 8.6 per cent this year.

Interactive Investor’s performance index, which tracks users with assets of at least £20,000, underlined the impact of stock declines this year. Its average customer was down 1.8 per cent in three months, 9.9 per cent in six and 13 per cent in nine.

This year’s turbulence has eroded much of the gains recorded during the rally that took hold in equity markets following the Covid sell-off of spring 2020. Fears over the economic outlook continue to weigh on global indices.

Interactive said that its average female customer was up 0.8 per cent since January 2020, while its average male customer was down fractionally by 0.01 per cent. Younger investors had broadly enjoyed the best returns, with the average customer aged 18-24 up 4 per cent over the period, while the average customer over 65 was down 0.65 per cent.

The wealthiest fared best, however. As of last month, the average Interactive customer with a portfolio worth at least £1 million was up 5.78 per cent on January 2020.

Richard Wilson, chief executive of Interactive, said the index was “a timely illustration” of the periods of volatility that had punctuated the stock market’s underlying long-term growth.

Interactive Investor, which was acquired by the FTSE 100 group Abrdn for £1.49 billion this year, has about 400,000 private customers using its service to buy shares and funds.

Read more:
Covid gains fade for small investors

The chancellor is considering extending the government’s mortgage guarantee scheme, after UK bank bosses raised concerns over the state of the UK’s mortgage market at a high-level meeting at No 11 Downing Street.

The meeting on Thursday – which was attended by chief executives including Alison Rose of NatWest, Charlie Nunn of Lloyds Banking Group, HSBC UK’s Ian Stuart, Mike Regnier of Santander and TSB’s Robin Bulloch – was scheduled amid mounting fears about the potential fallout from rapidly rising mortgage rates.

Executives, including those from Barclays, Nationwide, Virgin Money and Starling Bank, were asked to weigh in on a number of options to support consumers struggling to secure mortgages after the government’s mini-budget sent UK financial markets into meltdown last week.

It is understood the chancellor, Kwasi Kwarteng, is now considering extending the mortgage guarantee scheme beyond its December deadline.

The scheme gives banks and building societies the chance to buy a guarantee from the government on the slice of the mortgage between 80% and 95% of the property’s value. It means that if a borrower gets into financial difficulty and their property is repossessed, the government will cover that portion of the lender’s losses.

The programme was revived last year during the pandemic, in order to keep 95% mortgages available to borrowers, amid fears house prices might crash.

However, the pandemic ended up pushing house prices even higher. Analysis from April 2021 found single buyers in their 30s on the UK median wage would still be unable to buy a home in about half of local authority areas in England and Wales, despite the help the scheme would supposedly provide.

While the mortgage guarantee scheme does not directly tackle the issue of rising rates on new fixed home loan deals – as it is money market “swap rates” that largely determine their pricing – the policy will provide reassurance to lenders at a time when a number of forecasters are predicting house price falls of perhaps 10% or more. The government will be hoping that feeds through to the pricing of low-deposit mortgages in particular, as it may mean lenders do not feel they have to price in a sizeable premium because of the uncertain economic climate.

The guarantee compensates a lender for losses suffered in the event of the property having to be repossessed.

The meeting with bank bosses came after a challenging week in which the average two-year fixed mortgage rate rose above 6% for the first time since 2008.

Interest rates on mortgages have surged after the mini-budget, which pushed the pound to record lows and caused UK government bond prices to collapse, amid concerns over the country’s long-term economic health.

The meltdown ultimately raised long-term interest rate expectations and made it more difficult for UK banks to properly price mortgages. That resulted in a mass withdrawal of home loans last week, with nearly 40% of mortgage deals being pulled at one point before banks started to return with new products often priced 1-2% higher.

Supervisors at the Financial Conduct Authority (FCA) have since been asking banks how they plan to step in to support mortgage borrowers.

The average new two-year fixed rate – which was 4.74% on the day of the mini-budget – rose again on Thursday to 6.11%, according to the data firm Moneyfacts. That is compared with 5.75% on Monday, then 6.07% on Wednesday. Meanwhile, five-year fixed mortgages rose to an average rate of 6.02% on Thursday.

While one executive described the meeting as “productive and supportive”, bankers were understood to have stressed that recent volatility in markets had hurt the mortgage market.

The Labour leader, Kier Starmer, also took a swipe at the government’s impact on the mortgage market on Thursday. “The prime minister has taken the economy, driven it into a wall, and [is] pretending that this is pro-growth,” he said during a visit to Bilston, Wolverhampton. “If you have consequences that increase mortgage payments by hundreds of pounds per month, that is anti-growth. It’s a destroyer of growth. It certainly isn’t pro-growth.”

UK bank executives are also understood to have raised concerns about the FCA’s incoming consumer duty regulations during the meeting on Thursday. While the rules are meant to put consumer interests at the heart of financial services’ decision making, bosses claimed it could block banks from offering products that could help customers long term.

Some bosses also raised questions about ringfencing regulation that separates regular savings and current accounts from investment banking operations, while executives from smaller banks discussed lowering the amount of loss-absorbing capital they need to raise and hold against risky assets.

Thursday’s meeting followed similar ones with asset managers and investment bankers last week, who were quizzed about their own ideas to stimulate growth and investment from the City and how the government could calm markets.

Kwarteng and Liz Truss have tried to emphasise their pro-business, pro-City stance, including scrapping the EU banker bonus cap and planning “an ambitious package of regulatory reforms” schedule to be unveiled by the end of October.

Read more:
Kwarteng considers extending mortgage guarantee scheme after banks raise concerns

Investors in Neil Woodford’s collapsed investment fund will receive another £20 million from its administrator but further payouts are likely to be hit by a downturn in market conditions.

After this fifth capital distribution, a total of £2.56 billion will have been distributed to investors since the start of the winding up of the fund, Link Fund Solutions said.

Rising interest rates and slowing economic growth have affected the value of companies originally backed by the fund. “Investors are reminded that the assets that remain to be sold are the less liquid assets and it is expected that some of these may not be sold before mid-2023,” the administrator’s letter said.

A large proportion of the recent writedowns in the fund come from Benevolent AI, a drug discovery company that listed in Amsterdam this year. Its shares fell from €8 to €3.91 after progress on new treatments proved disappointing and this cut the value of the fund’s stake by £31.2 million.

Woodford had been a star stock-picker but the collapse of his fund in 2019 left thousands of small investors out of pocket. The administrator, Link, must respond this week to a draft warning notice from the Financial Conduct Authority over its “failings in managing the liquidity” of the Woodford fund, a view with which Link disagrees.

Read more:
Woodford investors get £20m from administrator but further payouts likely to be hit by downturn

With the reversal of the 1.25% rise in National Insurance Contributions happening on the 6th of November, employers across the nation have an opportunity to attract and retain talent and must ensure that they are fully prepared for the change.

Bhanu Dhir, Group CEO of employment support specialists, Steps To Work, discusses the National Insurance Contributions reversal and what employers can do to prepare for November.

‘’The decision to reverse contributions is especially welcomed by smaller businesses and those sectors heavily impacted by the pandemic, such as hospitality, as it reduces the cost of employing people, and therefore doing business. However, employers should not remain passive and accept the reduced cost of employment. Now companies should make sure that they reinvest funds saved into growing their businesses, whilst attracting and retaining talent.

‘’This can be through increasing financial pension contributions, supporting staff through benefits or training, or reinvesting back into the business to support growth or help mitigate the impacts of inflation. In an increasingly competitive market, to entice and keep great talent, companies can even increase staff wages.

“We are eager to work with employers to introduce them to new sources of talent and the change in policy over National Insurance Contributions gives employers a chance to reflect upon the adequacy of their supply of talent.

‘’Although the change does not come into effect until November, it’s crucial for employers to begin taking action and having conversations with their staff and HR departments about changes that will impact them.’’

Read more:
National Insurance Contributions reversal – what can employers do now?

High earners will benefit most from today’s mini budget announcement.

Speaking to Business Matters Paul Haywood-Schiefer, Senior Manager at leading tax and advisory firm Blick Rothenberg said: “The reversal of the recent increase to NIC rates will provide savings to all earners, where their income is above around £10,000 per annum (and assuming similar reductions are made in the devolved administrations in Scotland and Wales).

“Whilst the reduction provides welcome relief, the additional borrowing required to fund this, and the other introduced measures could cause substantial headaches for future governments.”

He added: “High earners will particularly benefit following the abolishment of the additional rate of tax, effective from April 2023, meaning that income over £150,000 will no longer incur a further 5% tax charge and instead be taxed at 40%. This measure itself only affects 629,000 taxpayers out of a total of 34 million in the UK, but the tax savings for these individuals will be significant. For example, a single earner on a £1million salary will save over £50,000 in tax and NIC from April 2023. This compares somewhat strikingly to a single earner on a £20,000 salary who will save only £218.

“A surprising “bumper” winner here could be directors of companies. Due to a quirk in the way NICs are calculated, a director pays on an “annualised basis” rather than a weekly or monthly figure. As such, the increase to the NIC rate from November may actually apply retrospectively from April for these individuals. The exact detail/mechanics will need to be checked here when further details are published.”

Haywood-Schiefer said: “The savings are slightly lower for a self-employed person, although that will be softened by class 4 NIC kicking in at a later amount.

“The ever-struggling pub and bar industry may feel some relief from the cancellation of the planned alcohol duty increases, but with rising costs on utilities, this is a small help to solve the ever-growing issues within this industry.

“Amendments to the rates of stamp duty land tax (although this is yet to be confirmed for Scotland and Wales) for all individuals provide some welcome relief in the face of ever-increasing mortgage interest rates, particular winners here are first time buyers who have seen a vast increase in both their 0% band for SDLT to £425,000 alongside an increase in the maximum property value that qualifies. Additionally, the plans to lower the barriers for development of land could provide further assistance in battling the housing crisis, although will potentially place the Government on a collision course with their usual support in the countryside.

“Small business owners and entrepreneurs will be relieved to hear that the tax incentivised investment schemes are being enhanced and expanded. They will also benefit from equivalent cuts to employer NIC, as well as cuts to the dividend rate from April 2023 which would see the top rate of tax on a dividend reduced from 39.35% to just 32.5%.”

Losers

Haywood-Schiefer said that the losers are: “Individuals who have paid stamp duty land tax in recent months, since the cancellation of the reliefs introduced during lockdown, will have been unfortunate to have fallen in this period of comparatively higher tax rates.

“Additionally, low-income individuals with income below the personal allowance will not receive any additional assistance in this period of high inflation. Whilst all households will receive the £400 to assist with energy bills, this is the only relief for the individuals who are typically the hardest hit by inflation.

“The real losers will be who has to pay for all these cuts later down the line. No costings have been provided for these measures, but the borrowing will be significant, especially in combination with the energy crisis help being offered. These cuts may well be short lived, but long felt.”

Read more:
The Chancellors’ winners and losers