If you intend to make amusement machines available for play, you must register under the Machine Games Duty (MGD) regulations. MGD was introduced for existing operators from 1 February 2013. The published list of person’s who may be affected is anyone who:

• holds, or is required to hold, a licence or permit which allows them to provide gaming machines for play on premises
• owns, leases or occupies premises on which machine games may be played
• controls the operation of machines games
• controls admission to premises on which machine games may be played
• is responsible for the management of premises on which machine games may be played or provides goods or services to people who are admittedl.

Penalties may be applied if you don’t register for MGD, don’t make your MGD returns on time, don’t pay the MGD that you owe, and if you make a mistake on your return.

If you had dutiable machines available for play at 1 February 2013, or since that date, and you have still not registered to make MGD returns, you should apply as soon as possible in order to minimise any penalties payable.

The rates of MGD depend on the type of machine. There are two for MGD purposes:

• Type 1: all machines that do not qualify as Type 2 machines.
• Type 2: to qualify as a Type 2 machine it must be demonstrated that:

(a) the cost to play each dutiable machine game on the machine once does not exceed 10p, and

(b) the maximum cash prize for each dutiable machine game on the machine does not exceed £8.

The standard rate of MGD (20%) applies to Type 1 machines, and the reduced rate of 5% to Type 2 machines.

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 1 September 2013 – Due date for Corporation Tax due for the year ended 30 November 2012.

 19 September 2013 – PAYE and NIC deductions due for month ended 5 September 2013. (If you pay your tax electronically the due date is 22 September 2013.)

 19 September 2013 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2013.

 19 September 2013 – CIS tax deducted for the month ended 5 September 2013 is payable by today.

 1 October 2013 – Due date for Corporation Tax due for the year ended 31 December 2012.

 19 October 2013 – PAYE and NIC deductions due for month ended 5 October 2013. (If you pay your tax electronically the due date is 22 October 2013.)

 19 October 2013 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2013.

 19 October 2013 – CIS tax deducted for the month ended 5 October 2013 is payable by today.

 31 October 2013 – Latest date you can file a paper copy of your 2013 Self Assessment tax return.

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Businesses should be aware that HMRC polices the National Minimum Wage (NMW) legislation. Not only do they fine employers who breach the regulations, they also enforce the payment of underpaid wages to staff.

HMRC have recently released figured confirming that 26,000 workers were paid less than the minimum wage.

• 708 employers had been fined with charges of up to £5,000, after it reviewed 1,693 complaints in 2012-13, and
• affected workers were given an average of £300 each in back-pay.

Investigated cases included the illegal use of interns, unpaid extra hours and workers being forced to buy company clothes as uniform. The NMW is currently £6.19 an hour for workers aged 21 or over.

From 1 October 2013 the NMW rates are:

• 21 and over: £6.31 per hour
• 18 to 20: £5.03 per hour
• Under 18: £3.72 per hour
• Apprentices under 19 years or in the first year of their apprenticeship: £2.68 per hour.

If you are unsure if your working practices comply with the NMW legislation you should take professional advice.

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In a previously unreported settlement with the UK Government, Vodaphone appears to have made a large payment to HMRC. The additional taxes related to the tax returns of an Irish subsidiary. Although the overall amount settled was not disclosed Vodaphone were required to reclaim approximately £57m from the Irish Government in tax that should have been paid in the UK.

For a four year period Vodaphone had used the Irish subsidiary to collect royalties from most countries and to remit more than one billion Euros of dividends to the low tax jurisdiction of Luxemburg. Vodaphone are reported as saying:

“In all respects and at every point, Vodaphone has conducted itself with the highest integrity and in full compliance with the law.

The settlement with HMRC related to a number of technical factors regarding inter-group transfer pricing arrangements.”

HMRC added:

“We do not comment on the affairs of individuals or companies, but we do ensure that multinationals pay the tax which is due under the law.”

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The period April – June 2013 has seen positive economic growth for the second quarter. The economy expanded by 0.7%. Hopes of rebalancing the economy towards trade and investment were given a boost by an impressive 3.6% increase in exports in the same period.

However, the good news may too good for the Bank of England. It has pledged to hold the current low interest rates until unemployment drops below 7%. This is not expected to happen until 2016. The markets are now discounting a rise in interest rates as early as March 2015 on the basis that the economy is recovering faster than expected.

Business investment is also on the up, increasing by 0.9%; pay has increased by 2.6%, although this was distorted by delayed bonuses taken during April 2013; and household spending in the UK rose by 0.4%.

These statistics are by no means exceptional but they do point to a more encouraging outlook.

Economist warn that when the next election is past we will likely see Government returning to the reduction of Government expenditure; this will no doubt be a drag on any long term growth in UK trade and investment.

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HMRC closed their consultation on the proposed changes to the taxation of partnerships and LLPs on 9th August.

Any subsequent changes will be introduced in the Finance Bill 2014, and be effective from 6 April 2014. Two possible changes are worth highlighting.

1. Disguised employment

HMRC aim to create a new concept for LLPs, a salaried member. They believe that the present presumption, that all members of an LLP are self-employed, has been abused. In effect, salaried employees have been elevated to member status and their previous employed status changed to self-employed status. In certain circumstances this can lead to significant National Insurance savings.

From April next year it is likely that this type of arrangement will be reversed.

2. Allocation of profits

The second area that HMRC want to tackle is the artificial allocation of profit and losses by partnerships with corporate members and schemes involving the transfer of profits between members with different tax status.

Many partnerships allocate profits to corporate partners in order to pay tax at the lower corporation tax rates. In this way the partnership retains more of its working capital.

Partnerships likely to be affected should start to reconsider their planning options, although it would be sensible to delay implementation of changes until the scope of the new legislation is confirmed.

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Online betting companies that have based their operations in offshore tax jurisdictions, to avoid Britain's gambling taxes, will be hit with a new levy to be introduced from December 2014. It is estimated that the new tax may raise £300m for the UK taxpayer.

The Government is to impose a 15% tax on operators in the £2bn remote gambling market. In a somewhat controversial approach, the UK will tax gambling revenues based on where the customer is located, rather than where the business is based.

Economic Secretary to the Treasury, Sajid Javid, said:

"It is unacceptable that gambling companies can avoid UK taxes by moving offshore, and the Government is taking decisive action to ensure this can no longer happen. These reforms will ensure that remote gambling operators who have UK customers make a fair contribution to the public finances."

The shift will affect some of the industry's largest players including: Ladbrokes, William Hill and Betfair, all of which have online operations based in Gibraltar, where taxes are levied at 1% and capped at £425,000.

If introduced, the 15% levy would mean that offshore operators are taxed at the same level as domestic internet betting companies.
 

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The Office for Tax Simplification has published a new list of tax issues for review. They include:

• Increasing the present £8,500 limit, below which employees (not directors) do not suffer benefit in kind charges. This limit was introduced in 1979 and was apparently based on the amount at which a married man started to pay higher rate tax. An inflation adjusted figure now would be close to £40,000. It’s unlikely HMRC would seek to increase the present limit to this level!

• Payrolling certain benefits so that tax is paid as the benefits are provided rather than at the end of the tax year.

• Changes to the cycle to work scheme.

There are also a number of suggestions to smooth the differences between the tax and National Insurance treatment of certain benefits.
OTS director John Whiting says:

“It is clear the current system for reporting expenses and benefits is simply not working well for employers or employees and also, in many cases, HMRC.

Time and again, through our workshops and in submissions, people have told us the rules around travel and subsistence, accommodation or HMRC admin, are causing them problems and costing them time.”

The Treasury will now have to consider whether the OTS proposals are worthy of serious consideration and new legislation.
 

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Ten new tax defaulters have been added to HMRC’s rogues’ gallery. This follows the publication of twenty tax offenders’ details last year. So far only one of the original twenty has been caught.

HMRC has statutory authority to “name and shame” taxpayers who they consider to be deliberate tax defaulters. Generally speaking these are persons who have received penalties for:

• deliberate errors in their tax returns or

• deliberately failing to comply with their tax obligations.

HMRC may publish information about a deliberate tax defaulter where:

• HMRC have carried out an investigation and the person has been charged one or more penalties for deliberate defaults, and

• those penalties involve tax of more than £25,000.

However, their information will not be published if the person earns the maximum reduction of the penalties by fully disclosing details of the defaults.
HMRC will publish sufficient information to identify the deliberate tax defaulter, the penalties imposed for their deliberate defaults and the amount of tax on which those penalties are based.

HMRC publish this information once these penalties are final. A penalty becomes final on

• the day after the end of the appeal period if the person does not make an appeal, or

• the date when an appeal is finally determined, or

• the date when a contract settlement is made.

The law requires that HMRC do not publish any information about the person for more than 12 months from the date HMRC first publish it.  

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In a recent case heard by the Upper Tribunal, Interfish Ltd were denied tax relief for sponsorship payments made to a local rugby club, Plymouth Albion.

The sponsorship payments were significant; over £1.2m over a number of years. The payments were used to fund the purchase of players as well as propping up the club’s finances.

During the hearing it became apparent that Mr Colam, the managing director of Interfish Ltd, was a staunch supporter of the club and had personally purchased shares that allowed him a measure of influence at board level.

In their judgements both the First Tier and Upper Tribunal panels held that the payments had been made with a duality of purpose and not, as the law demanded, wholly and exclusively for the purposes of the company’s trade.

Accordingly, the payments to the rugby club were disallowed for corporation tax purposes. Readers who may be contemplating large sponsorship payments should ensure that they take advice before signing the cheque!
 

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