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BOGUS DATA PROTECTION AGENCIES
Businesses continue to be plagued by bogus data protection notification agencies. The Information Commissioner (IC) is the only statutory authority for administering and maintaining the public register of Data Controllers. Genuine correspondence from this source will always bear the Wycliffe House, Water Lane, Wilmslow, Cheshire address.
The IC's website is at pains to stress that there is no connection between the IC and these bogus agencies. Anyone unsure as to the validity of any correspondence is advised to write to the IC or contact their helpline on 01625 545740.
COLD CALLING: CHANGES IN THE LAW
New regulations effective from 25 June affect businesses using the phone to make 'cold calls'.
Individuals have been able for some time to register their telephone numbers with the Telephone Preference Service (TPS) to prevent unsolicited direct marketing calls being made to them. The new regulations allow businesses to register their numbers in the same way. Once registered it will then be an offence to make an unsolicited call to that number.
Businesses using cold calling as part of their marketing initiative will now need to check before calling that the business in question has not registered with the TPS. The new rules potentially affect all businesses and a recent survey has revealed that over 70% of small businesses are unaware of the new rules.
Guidance has been produced to help businesses and further information can be found using the internet link below.
FEES AND SUBSCRIPTIONS
The Inland Revenue has published an updated version of List 3 - Deductions for Fees and Subscriptions Paid to Professional Bodies or Learned Societies. The latest list includes all bodies approved by the Revenue up to 29 February 2004
TACKLING STRESS IN THE WORKPLACE
Stress is now the biggest cause of lost working days in the UK. The Health and Safety Commission has launched a consultation campaign on proposals to reduce workplace stress.
In the words of the Commission the consultation 'gives you a real opportunity to make sure the solutions are practicable and effective in your workplace. It is a great opportunity for managers and employees to provide views on the standards and tell us how we might improve them before their launch at the end of the year'.
HEALTH AND SAFETY FRAUDSTERS TARGET SMALL BUSINESSES
The Federation of Small Businesses (FSB) has warned that small businesses are being targeted by fraudsters posing as government enforcement agencies. There are a number of fictitious agencies involved including the Health and Safety Enforcement Agency and the Safety Compliance Agency. They have been sending out letters demanding registration payments of up to £250 and threatening businesses with fines and even imprisonment for non-payment.
The FSB advises businesses not to answer any such letters and to report them to the Health and Safety Executive (HSE). The HSE confirms that it never writes indiscriminately to businesses and that it is carrying out an investigation in conjunction with the trading standards office and the police.
- Internet Link:
The Federation of Small Businesses Press Release can
be found at: Press
Release
VAT ON MOTOR CARS
Generally, VAT input tax cannot be recovered when a business purchases a motor car. The rationale for the block is to prevent recovery of input tax on vehicles whose physical attributes make them suitable for private motoring. It is important, therefore, for businesses to know the status of their vehicles under the terms of the legislation, as this will affect the deductibility of VAT on their purchase.
The clarification is necessary in the light of recent developments in the car-derived van market, which have resulted in the manufacture of vehicles that have blurred the distinction between cars and vans. This means that these vehicles are difficult to categorise in relation to the definition of motor cars in VAT legislation. In response, Customs have issued new guidance, produced in consultation with manufacturers.
Car-derived vans
Many car-derived vans pose no problem with regard to the current definition of a motor car, in that they are clearly vans or non-motor cars for VAT purposes e.g. they have no rear seats, metal side panels to the rear of the front seats, a load area which is highly unsuitable for carrying passengers etc. However a number of models, where the vehicle starts off life as a car and is subsequently altered, cannot be so clearly defined. At present, Customs, in partnership with the manufacturers, are developing a list of car-derived vans on which VAT can be deducted, subject to the normal rules. This list will be available shortly on the Customs website.
Combination vans
While these vehicles have the appearance of vans, they are designed to be fitted with or include additional seats behind the front row of seats to enable the carriage of passengers.
Such vehicles are motorcars for VAT purposes except in the case of:
- larger vehicles which have a payload of more than one tonne (these vehicles are automatically excluded from becoming motor cars by the one tonne payload test contained in legislation); and
- those vehicles where the dedicated load area (i.e. that load area which is completely unaffected by the additional seating) is of a sufficient size compared to the passenger area to make the carriage of goods the predominant use of the vehicle.
- Internet Links:
Further details can be found on Customs website
at: Business
Brief 16/2004
VAT: CASH ACCOUNTING, ANNUAL ACCOUNTING AND THE FLAT RATE SCHEME
Changes
were made to the cash accounting, annual accounting and
flat rate schemes earlier this year and Customs have
updated the leaflets outlining the different schemes to
reflect the changes made.
NEW RULES FOR LENDERS IN CONSUMER CREDIT SHAKE-UP
The DTI has announced that for the first time all consumers will get clear and detailed information about their credit agreements from lenders before they
sign up enabling them to compare and shop around for the best deal.
Excessive charges for settling an agreement early will be replaced with a new fairer system.
The move is the first set of regulations in the government's shake-up
of the consumer credit market aimed at increasing transparency and
improving consumer protection while minimising the impact on
business. The changes will apply to credit advertisements from 31 October 2004.
HUSBAND AND WIFE COMPANIES
In March 2003 newspaper articles highlighted the Inland Revenue 'attacks' on husband and wife companies. Put simply, the Revenue were seeking to charge additional tax on dividends paid to a basic rate taxpaying spouse in certain situations. The Revenue's argument centred on the income tax settlement provisions to be found in S660A ICTA 1988.
The case of Geoff and Diana Jones from West Sussex is the first such case the Revenue has taken. The couple were faced with a £42,000 tax bill as a result of a Revenue attack under the settlements legislation. Although the Revenue agreed to drop its claim for tax going back six years the case went ahead and the judgment is unlikely for another month or so. The decision will be eagerly awaited by advisers and those
running family businesses alike. Watch this space.
INCREASE IN RATE OF TAX FOR TRUSTEES
Special tax rates apply to the income of discretionary and accumulation trusts. On 6 April 2004, the 'rate applicable to trusts' which applies to the income of such trusts apart from dividend type income was increased from 34% to 40%. The dividend trust rate went up from 25% to 32.5%.
The new 40% rate also applies to the capital gains of most trusts from 6 April 2004.
The Revenue's latest Tax Bulletin contains further information on the impact of the increased rates. A trust that makes discretionary income payments to beneficiaries should take the increased rates into account when making net payments to beneficiaries after 5 April 2004. Trustees' tax at the end of the year will be higher and consequently there will be less net income available to pay to beneficiaries.
The new rate applicable to trusts also means that discretionary income payments to beneficiaries should carry a tax credit at the rate of 40% instead of 34% after 5 April 2004, even if the income out of which the payment is made was taxed only at 34% or 25% in the hands of the trustees. This tax credit has to be covered by the amount in the trustees' tax pool. If there is a shortfall, the trustees have to pay additional tax. The bulletin includes a number of examples showing the impact of the changes.
- Internet
link: Further information can be found in the
Revenue’s Tax Bulletin 71: Tax
bulletin 71
SPECIAL ARRANGEMENTS FOR THE INTRODUCTION OF STAMP DUTY LAND TAX
In November 2003, the Inland Revenue announced that they would put in place special administrative arrangements to help ease the transition to Stamp Duty Land Tax (SDLT).
Under the arrangements the Revenue has:
- been looking to process and issue SDLT certificates even if the land transaction return contains some omissions and errors; and
- been foregoing late filing penalties for returns that have been submitted more than 30 days but no more than 40 days after the effective date of the transaction.
The Revenue has now advised that the special
arrangements will come to an end with effect from 19 July.
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