The number of penalties issued for late tax returns has fallen by around 40%, HM Revenue & Customs (HMRC) has revealed.

The tax authority is issuing some 850,000 late filing penalties over the next two weeks – 550,000 fewer than last year.

Individuals who missed the deadline are being issued with an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time.

However, individuals have until 31 March to appeal against the automatic fine if they believe they have a ‘reasonable excuse’ for missing the deadline.

The Government is facing further pressure to announce tax cuts in the forthcoming Budget, in order to stimulate economic growth and improve business confidence.

Shadow Chancellor Ed Balls has called on Chancellor George Osborne to cut VAT, which he said would be ‘the fastest and fairest way’ to boost confidence.

Other suggestions put forward by the Shadow Chancellor include cutting income tax by 3p, raising the income tax threshold to above £10,000, or increasing tax credits for working people.

The Institute for Fiscal Studies recently urged the Government to introduce ‘temporary and targeted’ tax cuts, to help Britain avoid further recession.

The Work Foundation has also urged the Chancellor to use the Budget to bolster business confidence. Charles Levy, senior economist at the think tank, said, ‘The Government urgently needs a coordinated plan for boosting investment, innovation and exports, and it must signal its intention to do this immediately’.

Meanwhile, the Chancellor has separately been urged to scrap the planned fuel duty rise, as the average price of

The Government has launched a new on-line training tool to encourage experienced business owners to mentor fledgling SMEs.

The free on-line tool, which can be found at www.getmentoring.org, is designed to make it easier for individuals to join the growing on-line network of business mentors.

Provided by the Small Firms Enterprise Development Initiative, the facility is part of the Get Mentoring scheme which was launched in November.

Some 15,000 new mentors are being recruited in a bid to help entrepreneurs fulfil their potential. Entrepreneurs searching for support will be able to access mentors through www.mentorsme.co.uk.

Launching the new tool, the Business and Enterprise Minister, Mark Prisk, said: ‘This training tool is vital to help build our growing network of trained mentors.

‘Mentoring is a very effective way for aspiring entrepreneurs to get the help and support they need to succeed. It enables business people to harness the knowledge and expertise of those who have been there and done it before.’

The move was welcomed by the Forum of Private Business (FPB). ‘We believe there is a rich supply of would-be mentors working in businesses across the country, willing to share their years of experience,’ commented the FPB Chief Executive, Phil Orford.

‘The online course supports a consistent and quality approach to volunteer mentoring which we think is essential for new and growing busine

HM Revenue & Customs has launched a new campaign aimed at reducing the number of employers who include incorrect or dummy information in their employer returns.

Every year, thousands of returns containing dummy, incomplete or inaccurate information are submitted to the Revenue.

The inaccuracies relate to the personal details of employees, including their names, dates of birth and national insurance numbers.

A recent study of employer returns revealed that 824 employees had been allocated the surname ‘Unknown’, while 128 had been recorded as Mr, Ms or Mrs Dummy.

In addition, according to the dates of birth listed on the returns, 40 of the employees would be aged over 200. Many employees also had their forenames and surnames swapped around, or initials in the place of their first names.

HMRC is urging employers to ensure that the information they provide is accurate and complete, and has launched an online video highlighting the consequences of inaccurate returns for both employers and employees.

Jim Harr of HMRC commented, ‘It’s really important that employers get their employees’ information right, so that HMRC can match it to the right tax codes. Otherwise, it can lead to more contact from staff, trying to sort out their tax, and from HMRC, trying to sort out the data issues’.

We can help with all your tax planning needs, including dealing with your tax returns – please contact us for assistance.

Higher-rate tax relief on pension savings could be halved to 20%, under plans reportedly being considered by the Government.

The Treasury chief secretary, Danny Alexander, has suggested that wealthy individuals are receiving overly-generous tax relief – a concession which he says the Government can no longer afford.

For every £1 currently saved in a pension by a higher-rate taxpayer, the Government contributes another 40p. However, this may be cut to 20p, in line with the basic rate of income tax.

According to Mr Alexander, the move would net the Treasury an estimated £7 billion and could help fund the Liberal Democrats’ ambition to exempt those receiving the national minimum wage from paying income tax.

‘If you look at the amount of money that we spend on pensions tax relief, which is very significant, the majority of that money goes to paying tax relief at the higher rate,’ Mr Alexander told The Daily Telegraph.

‘It’s very important that in these difficult times that we are asking those with the broadest shoulders to bear the greatest share of the burden. That is very important practically and philosophically.’

The plans are likely to prove controversial, particularly in view of the recent changes to the pensions annual allowance.

The annual allowance for tax-privileged pension saving was reduced from £255,000 to £50,000 in April last year, while the lifetime allowance on money that can be accrued in a pension fund and still receive tax relief, is set to fall from £1.8 million to £1.5 million from April 2012.

We can help you plan for a prosperous retirement – please contact us for advice.

Tradespeople will be the focus of a new campaign aimed at flushing out tax evaders, HM Revenue & Customs (HMRC) has revealed.

Building on previous campaigns which targeted plumbers and electricians, the tax authority will now turn its attention to those in the construction sector, including roofers, bricklayers, joiners, window fitters and carpenters.

As with previous campaigns, individuals will be given the opportunity to disclose any unpaid tax in return for favourable settlement terms. Those who do not come forward by the deadline will face higher penalties thereafter.

HMRC will also focus on people who fail to complete tax returns, particularly higher-rate taxpayers, as well as those who receive an income from buying and selling goods directly to others, such as on the doorstep.

We are offering all the people targeted the opportunity to come forward,’ said Marian Wilson of HMRC.

‘Penalties will be higher if we come and find people after the opportunity. A criminal investigation may also result. I therefore urge them to disclose unpaid tax voluntarily.’

HMRC also confirmed its intention to target those who trade on e-marketplaces such as e-bay.

Gary Ashford, of the Chartered Institute of Taxation, said: ‘These campaigns are a real statement of intent from the Government.’

A record 9.45 million self assessment tax returns were filed on time this year, with 7.65 million of these being filed on-line, HM Revenue & Customs (HMRC) has revealed.

Overall, more than 90% of taxpayers met the deadline for filing their 2010/11 tax return, representing an increase of 4% on the previous year.

The on-line filing deadline of 31 January was effectively extended this year, when HMRC announced that no penalties would be issued for online returns received by midnight on 2 February, following concerns over the likely impact of strike action by Revenue staff, which coincided with the deadline.

31 January proved to be the busiest day for on-line returns, while many other taxpayers chose to file their returns during the Christmas break. Over 1,000 people filed their returns on Christmas day, while a further 11,648 chose New Year’s Day to settle their tax affairs.

Taxpayers who have not yet filed their returns or paid any outstanding tax are being urged to do so as soon as possible. Under HMRC’s new penalty regime, taxpayers who fail to file their returns on time are liable to an immediate £100 penalty, even if there is no tax to pay or the tax due is paid on time. This is followed by a series of further penalties where returns remain unfiled, or payments remain outstanding.

HM Revenue & Customs (HMRC) will be adopting a ‘fresh approach’ to its Business Records Checks programme, following a recent review of the system.

Under a pilot scheme launched in April 2011, HMRC had been carrying out checks on the adequacy of the statutory business records kept by small and medium-sized businesses, with the aim of improving standards of record-keeping and reducing levels of underpaid tax.

The scheme found that 28% of businesses visited had an issue with their record-keeping, while an additional 11% had issues that were serious enough to require a follow-up visit.

HMRC had originally planned to carry out a further 20,000 checks on small businesses during 2012/13, but recently announced that it would be conducting a strategic review of the project, following concerns voiced by trade and professional bodies over the additional burden being imposed on compliant businesses.

While HMRC will carry out any visits or follow-ups which have already been booked, all new checks will now by postponed until the new approach is launched, early in 2012/13.

When the programme restarts, those businesses considered to be at ‘high risk’ of keeping inadequate records will initially be contacted by telephone or letter, and asked about their record-keeping systems. HMRC will then determine which of those businesses require a visit. If the records are found to be seriously inadequate following a visit, a business will be given reasonable time to get their records in order before a follow-up visit.

The taxman has the ability to levy penalties of up to £3,000 for inadequate record-keeping, although HMRC will be consulting with business and trade organisations to identify a ‘reasonable tariff’ for those occasions when penalties are issued.

The Government has launched its regional mediation pilot scheme for small and medium-sized businesses, as part of a major overhaul of the employment tribunals system.

Cambridge and Manchester have been named as the first regions to try the new mediation training for employees, which is aimed at helping to resolve workplace disputes before they reach the tribunal stage.

Launching the scheme, employment relations minister Edward Davey commented, ‘We have always said that employment tribunals should be a last resort for resolving workplace disputes. Mediation offers an informal method of dispute resolution and can be used at the point when problems first arise in the workplace’.

The Government believes that the new scheme will help to avoid the need for formal disciplinary procedures, and reduce the number of employment tribunal claims.

However, the TUC has criticised the Government’s plans to double the qualification period for making an unfair dismissal claim, from one to two years, and its proposals to introduce new fees for individuals who wish to raise a tribunal claim, arguing that the most vulnerable workers will be hit the hardest by the new regime.

The pilot scheme will initially run for 12 months, and if successful the Government will consider rolling it out to other areas of the UK.

 The value of the web economy in G20 member countries is set to almost double by 2016, a new report has suggested.

According to the study, nearly 50% of the world’s population will be using the internet in four years’ time, leading to a surge in the current £1.5 trillion value, to £2.7 trillion.

Rising levels of mobile internet access are expected to account for much of the increase, with around 80% of internet users expected to access services via a mobile phone by 2016.

The research also suggests that the UK currently has one of the most advanced e-commerce economies, although over the coming years the majority of internet users are expected to be living in emerging markets.

Business owners are being urged to embrace the digital economy, with the study predicting that the internet will increasingly change the nature of relationships between businesses and customers.