Friday, 17 September 2010

Phishers jump on PAYE bandwagon

Posted by John Stokdyk in Tax, Technology.

The media firestorm surrounding the PAYE under- and overpayment letters that went out to 45,000 taxpayers this week has provided an ideal opportunity for scammers, according to Sophos security experts.

In his blog, Sophos security consultant Graham Cluley published an example spam message now circulating, which arrives with the subject line, “You Have An HMRC Refund”.

The email explains: “Following an upgrade of our computer systems and review of our records we have investigated your payments and latest tax returns over the past years, our calculations show you have made over payments of 317.66GBP.”

A file called is attached to the mail containing an HTML form with HMRC branding asking for credit card details, date of birth, and mother's maiden name.

“If you do make the mistake of filling in the form,” Cluley warned, “your confidential data is uploaded to a Chinese server. You're not going to receive a windfall because of this form - you've just been phished.”

HMRC will not be contacting people about rebates or tax owed either by email or telephone. Nor will it ask for bank details. HMRC's security page contains advice about scams like this, and clearly states that they would never inform customers of a tax rebate via email, or invite them to complete an online form to receive a rebate of tax.

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at

Wednesday, 18 August 2010

Coalition government - the first 100 days

By Laura Kuenssberg
Chief political correspondent, BBC News channel

Only one person is ever in charge at 10 Downing Street - but what is decided behind the famous black door is now the responsibility of two men, and two parties.

The two men in question, David Cameron and Nick Clegg, barely knew each other 100 days ago.

Their two parties, the Conservatives and the Liberal Democrats, knew each other only too well.

Apart from a few isolated examples in local government, they had been at each other's throats for years.

So, as this most unlikely of political alliances reaches its symbolic 100-day milestone, should Mr Cameron and Mr Clegg be celebrating the successful birth of a new kind of politics, symbolised by their joint press conference in the Rose Garden at Downing Street on day one?

Or letting out an exhausted sigh of relief that they made it this far?

The chaos and calamity some, including the Conservative Party in a general election broadcast, warned would result from a hung Parliament has not yet come to pass.

But there are still formidable hurdles to clear before this experiment in coalition government - the first at Westminster since World War II - can be judged to have been a success.

'Further and faster'
Top of the coalition's list from day one was getting to grips with the deficit, the gap between what the Treasury takes in tax revenue and how much taxpayers' cash the government spends.

At the general election, the Liberal Democrats continually questioned the Conservatives' commitment to go "further and faster" than Labour was already planning.

But in the days after the election, it became clear to political insiders that the Lib Dem leadership was shifting its position.

Senior Conservative John Redwood, who was concerned about working with the Lib Dems, credits their change of heart with allowing coalition to get off the ground in the first place.

He told the BBC: "I argued the case immediately after the election that we should try for Conservative minority government, with the Liberal Democrats allowing us support in motions of confidence and to get through the main parts of the budget, because I didn't think at that point that the Liberal Democrats would buy into the kind of Budget we were recommending.

"When I discovered that the Liberal Democrats were coming around to the view that we needed a tougher and tighter Budget, then it was was clear you could go further than just having a minority government."

'Peas in a pod'
So, even from day one, in the light-filled Downing Street garden, the message was less sunny.

Like Labour, the coalition believed major reductions in public spending would be necessary to deal with the public finances.

But the pace and scope of cuts would be faster and deeper - the coalition's ambition is to eradicate the deficit completely by the end of this parliament. Coalition ministers presented a united front on the need to act now, and act boldly.

Indeed, when it comes to those seated around the cabinet table or in junior government roles, the two parties have gelled surprisingly well.

One cabinet minister, describing the body language between Clegg and Cameron, told me they were like "peas in a pod".

It probably helps that there are 23 Lib Dem ministers - including nearly half of the parliamentary party - scattered around various government departments, with the deliberate intention of embedding the party in the administration.

But for all that many of the Lib Dems and Tories with government jobs appear to be thriving, in recent weeks there has been a tacit admission that they have not done as well as they might have in selling their core message to the public, many of whom are nervous about the impact of the squeeze on spending.

Lib Dem anxiety

There has been anxiety over the Academies Bill, a flagship Conservative policy, that will reform education in England.

There has been nervousness about the scale of the reforms to the NHS in England - a plan that was not in the coalition deal thrashed out in the aftermath of the election.

It should be noted some of the other tensions in government are traditional disagreements between departments, not coalition clashes - differences between the Treasury and the MoD over who pays for Trident for example.

But, equally, it is true to say that anxiety about the coalition runs deeper among Liberal Democrats than it does among Conservatives.

Many harbour a fear about losing their identity; being swallowed up by the party that outnumbers them at a rate of more than five to one in the Commons.

Their dip in the opinion polls does not do much to bolster Lib Dem confidence either.

Internal discomfort
Former leader Sir Menzies Campbell has warned Nick Clegg about entering into any kind of electoral pact or deal with the Conservatives, as some have suggested could be the answer and which would see the Lib Dem candidates not fielding candidates against Tories in areas where they could not win, and vice versa.

Sir Menzies said it should be a matter for local parties, not the leadership, to decide: "He might issue an exhortation but he could not issue an instruction.

"Every Liberal Democrat leader will tell you that [backbenchers] find the carrot a much more attractive instrument than the stick."

As the two parties move from their first 100 days shackled together in coalition towards the party conference season, there will be an inevitable focus on relationships inside the parties.

Both David Cameron and Nick Clegg are understood to be having to spend more time than ever before cajoling and soothing egos, keeping their MPs and activists on board, using the "carrot" to the best of their ability.

But that internal discomfort could well be dwarfed by the public's reaction when the cuts announced in the Budget and October's spending review begin to bite.
The speed at which Chancellor George Osborne wants to balance the nation's books is just one source of nerves for Lib Dem MPs - particularly among those who remain on the back benches, without a government position.

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at

Wednesday, 28 July 2010

Pension tax relief may be cut further

By Ian Pollock, Business reporter, BBC News

Government plans to restrict pension tax relief for the higher paid may be even more aggressive than those put in place by the previous Labour administration.

The coalition is planning to replace the big tax changes that Labour had put in place, starting next April.

These would have raised an extra £4.6bn by 2014-15.

However a Treasury consultation paper suggests a range of options, one of which might raise even more - £5.3bn.

The alternative proposals being put forward by the Treasury were welcomed by the National Association of Pension Funds (NAPF) which said they would be "less damaging" than Labour's plans.

"It's a simpler approach that that will encourage higher earners to stay in their workplace pensions, so helping protect pensions saving for all staff," said Joanne Segars of the NAPF.

Coalition plans
The Treasury suggests that each taxpayer's annual pension allowance - the amount their pension pot can grow tax free - should be slashed from the current £255,000 a year to between just £30,000 and £45,000 a year.

Under the Treasury plan, a £40,000 limit to the annual allowance - after which an extra tax bill would be generated - might be exceeded by someone whose pension entitlement in a final salary scheme had risen by just over £2,000 in a year.

Chas Roy-Chowdhury of the Association of Chartered Certified Accountants (ACCA) said the coalition's plans might catch more people in the tax net who were considerably lower paid than those targeted by Labour.

"It is still likely that many earning a lot less than the £130,000 could be affected where they are in a defined benefit (final salary) scheme," he said.

"This will depend on the valuation method and length of enrolment in the scheme but could affect even those on half the £130,000 especially if they make additional voluntary contributions (AVCs)," he warned.

Pay rise impact
To work out the increased value of someone's pension pot if they are a member of a defined contribution scheme is easy.

They are given an annual statement each year of the value of their pension investments.

However membership of a traditional final-salary scheme involves using a formula in which the rise in someone's accrued pension is multiplied by 10.

Thus a pay rise, perhaps due to promotion, which had the knock-on effect of increasing someone's pension entitlement by £4,000 in a year would currently fall within a £40,000 limit.

However the Treasury is suggesting that this annual accrual should be multiplied by much more, perhaps by 15 or even 20.

More tax
The Treasury consultation document illustrates the possible effects of the new approach.

Its figures suggest that by 2012-13, a £45,000 annual pension allowance would raise a similar amount to that expected under Labour's plans - in the region of £3.6bn.

But a lower £30,000 annual allowance would raise £4.8bn - £1.2bn more than Labour intended.

By 2014-15, an annual allowance of just £30,000 would raise an extra £5.3bn in tax while a £45,000 annual allowance would raise £3.9bn by that year.

Those estimates take into account the possibility that some taxpayers might tweak their pay arrangements to avoid breaching the new lower allowances.

Raj Mody of the accountancy firm PwC said it was possible that twice as many individuals in final salary pension schemes would breach the new limit.

For example, a 50-year-old employee in a typical final salary scheme earning £80,000 a year who, through promotion, got a 20% pay rise, could find themselves with an additional tax bill of over £10,000, he said.

"An unintended consequence of the new regime is therefore likely to be a continued shift of employers and individuals away from final salary schemes to defined contribution plans," Mr Mody added.

Labour's plans
With the highest rate of tax now at 50%, Labour had planned to restrict the amount of tax relief available to the highest paid.

It had calculated that in 2008-09 a quarter of all pension tax relief, worth £28.4bn that year, was going to the tiny minority of tax payers who earned more than £150,000 - worth an average of £20,000 a year each.

To rein in the new 50% tax relief now available on top earners' pension contributions, Labour put in place two changes due to start next April.

The first was that tax relief would be tapered away from 50% down to 20% as people's incomes rose above the £150,000 level.

The second and more profound change affected those with incomes of more than £130,000.

If the value of their employer's pension contributions, when added to their personal income, took their gross income over £150,000, then they would start to be taxed on the value of those employer contributions at a rate of as much as 30%.

This approach was widely criticised as far too complex.

Many experts suggested that the coalition, if it still wished to rein in tax relief for higher earners, should simply restrict the amount by which anyone's pension pot could grow each year before it started to lose tax relief.

That is the plan on which the Treasury is now consulting.

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at

Tuesday, 27 July 2010

Clegg rejects MPs' call for AV referendum date change

Posted on

Deputy Prime Minister Nick Clegg has rebuffed calls backed by 44 Tory MPs for the date of the referendum on voting reform to be moved.
Elections for the Welsh Assembly, the Scottish Parliament, the Northern Ireland Assembly and some English councils are all also due for 5 May.

The MPs fear differing turnout across the UK and overshadowing of the debate.

Mr Clegg said it was "disrespectful" to suggest voters "could not make two different decisions at the same time".

He said everyone in Scotland, Wales and Northern Ireland, plus 80% of people in England were already due to vote on 5 May 2011, so it would save them having two trips and cut costs by £17m.

But senior Tory backbencher Edward Leigh told Mr Clegg as he took deputy prime minister's questions, that the referendum should be on a different date so there could be a "proper debate" about the issue.

Earlier a Downing Street source had called reports of a revolt against electoral reform "a little exaggerated".

ormer cabinet ministers Peter Lilley, John Redwood and Sir Malcolm Rifkind have signed a Commons motion of complaint about the referendum date.

Also among the signatories to the document, tabled by Tory MP and former defence spokesman Bernard Jenkin, is former shadow home secretary David Davis.

'Odd result'
Mr Jenkin suggested ministers had room to change the date as it was not part of the coalition agreement itself.

"Therefore it is of less status than, for example, a point of principle," he told BBC Radio 4's World at One.

The choice of date, he said, should not be determined by the cost of staging the referendum but on whether it would provide a "true and fair test of public opinion".

Holding it on 5 May could lead to an "odd result" because of wide variations in turnout in different parts of the country, he added.

"One has the suspicion that Nick Clegg wants it on this date to disguise the fact that, out there, there is an awful lot of apathy about changing the voting system."

Under the post-election agreement reached by the Conservatives and Liberal Democrats, the coalition is committed to hold a referendum on adopting the "alternative vote" (AV) system.

This allows voters to rank candidates in their constituency in order of preference.

Anyone getting more than 50% of first-choice votes in the first round is elected, otherwise the candidate with the fewest votes is eliminated and their backers' second choices allocated to those remaining. This process continues until a winner emerges.

Prime Minister David Cameron, who opposes getting rid of the current "first-past-the-post" system, will campaign against such a change. His deputy, the Lib Dem leader Nick Clegg, will push for the reform.

It is feared the issue will cause inter-party strife.

The motion submitted by the 44 Tory MPs argues that referendums on issues of national importance should be held "in isolation", as turnout would be "artificially inflated" in parts of the country where elections are being held.

It urges the Electoral Commission - which has said a referendum is "deliverable" on 5 May but there are some "risks" attached to the date - to make the final ruling.

My personal view is that opponents are worried about a higher vote in favour. Perish the thought!

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at

HMRC uncovers untaxed money in grave

Posted on Accountancy Age Written by Saffron Johnson
businessman planned to leave £140,000 in his aunt’s grave for 20 years to avoid tax.

Tax inspectors were tipped off and obtained permission from the priest to recover their £50,000 share. The unnamed man was going to leave the money in the grave up to the time limit for tax investigations, reported The Sun.
Dave Hartnett, permanent secretary for tax, said: “Tax evasion isn’t a victimless crime. But we’re getting better at catching cheats. It’s not worth the risk.”

It was disclosed in April that the HM Revenue & Customs has paid informers £437,000 in return for tip-offs since 2007, and prosecutes around 200 people a year for tax evasion.

Investigators announced a crackdown on middle-class professionals earlier this year, with doctors already under greater scrutiny.

I know they sat there's nothing more certain than death and taxes but...

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at

Saturday, 24 July 2010

India unveils prototype for $35 touch-screen computer

Posted on BBC News South Asia

The Indian government has unveiled the prototype of an iPad-like touch-screen laptop, with a price tag of $35 (£23), which it hopes to roll out next year.

Aimed at students, the tablet supports web browsing, video conferencing and word processing, say developers.

Human Resource Development Minister Kapil Sibal said a manufacturer was being sought for the gadget, which was developed by India's top IT colleges.

An earlier cheap laptop plan by the same ministry came to nothing.

The device unveiled on Thursday has no hard disk, using a memory card instead, like a mobile phone, and can run on solar power, according to reports.

'Manufacturer interest'

It would cost a fraction of the price of California-based technology giant Apple's hugely popular iPad, which retails from $499.

Mr Sibal said the Indian tablet, said to run the Linux operating system, was expected to be introduced to higher education institutions next year.

The plan was to drop the price eventually to $20 and ultimately to $10, he added.

Unveiling the gadget, the human resource development minister told the Economic Times newspaper it was India's answer to the "$100 laptops" developed by the Massachusetts Institute of Technology in the US.

"The solutions for tomorrow will emerge from India," Mr Sibal said, reports news agency AFP.

Last year, one of the ministry's officials announced it was about to unveil a $10 laptop, triggering worldwide media interest.

But there was disappointment after the "Sakshat" turned out to be a prototype of a handheld device, with an unspecified price tag, that never materialised.

To develop its latest gadget, the ministry said it had turned to the elite Indian Institute of Technology, and the Indian Institute of Science, after a lacklustre response from the private sector.

Mamta Varma, a ministry spokeswoman, said the device was feasible because of falling hardware costs.

Several global manufacturers, including at least one from Taiwan, had expressed interest in making the device, she said, although no deals had been agreed, and she declined to name any of the companies.

The project is part of a government initiative which also aims to extend broadband to all of India's 25,000 colleges and 500 universities.

In 2005, the Massachusetts Institute of Technology (MIT) unveiled the prototype of a $100 laptop for children in the developing world, although it ended up costing about double that price.

In May, Nicholas Negroponte - of the MIT's Media Lab - announced plans to develop a basic tablet computer for $99 through his non-profit association, One Laptop per Child.

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at

Wednesday, 21 July 2010

Tax system 'to be simplified to encourage investment' posts:

The "spaghetti bowl" of UK tax law is to be simplified to cut the burden on business and attract foreign investment, George Osborne has said.

The chancellor is setting up an Office for Tax Simplification to streamline the 11,000-page tax code.

He said Britain had "one of the most complex and opaque tax codes in the world" and it needed to be simplified.

Labour said it backed more simplicity but claimed ministers were bringing in complex new taxes at the same time.

The new body will initially conduct two reviews - the first looking at all 400 tax reliefs, allowances and exemptions in the system to see how they can be streamlined, and the second finding ways to simplify the tax system for small businesses, including finding a simpler alternative to the controversial IR35 code.

Announcing the new body at a press conference, Mr Osborne said his "dream" was "that people might actually understand the tax laws which they were being asked to comply with".

It will advise ministers where the tax system is too complex but it will not look at tax credits, which Mr Osborne said he considered part of the benefits system.

'Economic boost'
The chairman of the body will be former Conservative MP and Treasury minister Michael Jack and its director will be John Whiting, formerly of PricewaterhouseCoopers, who is tax director at the Chartered Institute of Taxation. Neither will be paid.

The government says the tax system became a "hindrance" to business under Labour, and that by simplifying it and making it more competitive for small firms it would stimulate economic growth.

In a speech, Treasury minister David Gauke said: "The tax system created by the previous government was overly complex and has made the tax affairs of millions of families and businesses across the UK extremely complicated.

"We need to reduce the complexities in our tax system and the coalition is committed to delivering that goal."

The OTS's remit covers UK taxes and duties administered by HM Revenue and Customs, but it will not deal with tax credits or taxes administered by other bodies nor will it have any influence on setting tax rates.

Shadow Chief Secretary to the Treasury Liam Byrne said he welcomed the thrust of the government's plans to simplify the tax system, but he said "today's announcement, I'm afraid, sounds rather more like an attempt to grab headlines than real evidence of a push to improve legislation".

He called on the government to scrap plans to "complicate the tax system by introducing a marriage tax allowance, all for the sake of sending an ineffective £3 a week signal of what his party thinks a family should look like" and what he said was a "more complicated stamp duty system when it comes to energy conservation for housing".

And he asked how the new body fitted with Mr Osborne's "push for a bonfire of the quangos" and demanded to know how much it would cost to set up.

Mr Gauke said the OTS would be paid for out of existing budgets.

No 'overnight miracles'
The TUC union body said it was concerned the OTS could become a "softening-up exercise for tax cuts for the rich".

But its launch was welcomed by business chiefs.

Richard Baron, of the Institute of Directors, said it was "a brilliant idea" but that it would be judged by its results.

David Frost, director general of the British Chambers of Commerce, said it was "a necessary and long overdue response to the relentless chop and change of tax law".

Tax lawyer Robert Macro, a partner at Dawsons LLP, said the new system would not provide any "overnight miracles" in terms of cuts as the UK tax system was "fit to bursting".

In his first Budget last month, Mr Osborne set out plans to reduce the headline rate of corporation tax by 28% to 24% over four years in an effort to show Britain was "open for business".

But this will be partly paid for by cuts in capital allowances, which provide tax breaks to firms investing substantially in operational assets such as machinery. Critics say this will penalise small and medium-sized manufacturing firms.

In May the government set up the Office for Budget Responsibility, to provide the government with independent forecasts of UK economic growth and public deficits.

I just ask you don't hold your breath. This may well turn out to be more nightmere not dream!

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at