03.07.2009

New systems for filing corporate tax returns & VAT online. Take note of the new minimum wage rate penalties.

COMPANIES - FILING YOUR CORPORATION TAX RETURN
The mandatory system for filing corporation tax returns online will come into force in April 2011, in respect of returns due for filing after 31 March 2011. Some companies will therefore already be in an accounting period affected by the new rules. Essentially a corporation tax return will in future have to be accompanied by the accounts and corporation tax computations in XBRL format. HMRC will be producing free software that will allow companies to file their own returns using XBRL, but you should be aware of the changes that are in progress

ONLINE VAT RETURNS
VAT must be paid and filed online next year - for VAT accounting periods starting on or after 1 April 2010. Smaller businesses which are already registered for VAT on 31 March 2010 will not have to file online from 2010, but businesses registering after that date will have to make their returns online from the outset. VAT online is very simple and well liked by those businesses which have already adopted VAT online - they get an extra 7 days to file the return and an additional 3 working days before payment is taken if they register for direct debit.

NEW MINIMUM WAGE PENALTIES
The new penalty regime for minimum wage breaches sets a penalty of between £100 and £5,000 for breaches of the minimum wage rules. The penalty is 50% of the arrears that have built up as a result of the failure to pay minimum wage, but is never more than £5,000 or less than £100. In some cases HMRC will consider prosecuting employers in the courts for which there is an unlimited fine. Where an employer has been in breach, the arrears are calculated at the rate applying when the breach is discovered, not the rate ruling at the time of the breach, which means that settlements will be more significant in future.

ADVISORY FUEL ONLY RATES
The advisory fuel rates are intended to allow employers to adopt a simple method for reimbursing employees for their fuel when using company cars on business journeys. These employees are not provided with free fuel for private motoring, thus saving potentially significant tax bills in relation to the benefit in kind; however this leaves the employer to arrive at the cost of fuel for business purposes, and the advisory fuel rates allow employers to reimburse these costs without fist obtaining approval by HMRC. The revised rates use a price for unleaded fuel of 97.5p and diesel of 103.4p. Fuel prices have risen quite rapidly in the short period since the rates were announced.

AMENDED EMPLOYER CD-ROM ON ITS WAY
The Employer CD Rom has been updated to reflect changes made in the Budget which affect the current tax year. Copies are being distributed to employers during June. Employers who have problems with the CD Rom installation are advised to contact HMRC.

EMPLOYER BULLETIN
The current issue of Employer Bulletin explains new penalties for minimum wage breaches, and improvements to PAYE systems which are being introduced over the next month. The PAYE changes will result in some delays when employers and employees contact HMRC by telephone for information about details on the PAYE computer system. It is an invaluable resource for employers, enabling them to keep up to date with all changes in relation to employment and HMRC. There are also some general business updates in the publication.