Are the various changes that HMRC is proposing an admission that they have bitten off more than they can chew over the past few years?
HMRC have continued to baffle us all with a multiplicity of changes and we thought you may be interested in what may in some cases affect hardworking business people in the future.
Consultation on abolishing 36 tax exemptions
HMRC is consulting on cutting down the number of tax exemptions available. Some are truly exotic (removal of duty exemption on black beer for instance) but some are closer to home.
Whatever we think about these changes, they will happen in some form and I predict that we will see even more changes as HMRC is charged with collecting increasing levels of tax with shrinking resources
One specific exemption may affect small employers when their staff work late. Currently, if an employee is working unusually late (ie, late working is not part of their work pattern) and the company pays for a taxi home, there are no tax complications. Under the new proposal such fares would be treated as a 'benefit in kind'.
The employee would have to pay tax on the fare (or the company could pay it for them) and the employer will also have to pay NIC. On top of this, your employer will have to administer the taxation! Might this affect you?
350 tax penalties currently in existence
HMRC has decided to simplify the penalties regime and make it more consistent. It remains to be seen whether this rationalisation will deliver any benefits to the taxpayer or whether it is yet another attempt to cut costs. Any system that has introduced 350 penalties - we bet they won’t be able to reduce them to less than 300.
Whatever we may think about these changes, they will happen in some form and I am prepared to predict that we will see even more changes as HMRC is charged with collecting increasing levels of tax with shrinking resources.
