The Taxman has set his computer the task of recalculating the PAYE paid by many millions of people for the tax year 2010/11 and for the tax years 2003/04 to 2007/08.
The PAYE system does not cope well when an individual has employment or pension income from a number of different sources at the same time. Sometimes the tax free personal allowance gets double counted, or not counted at all. Taxable benefits may get missed or not updated when the value of the benefit changes part way through the year.
From the computer checking those tax calculations it found about 2.3 million people who paid too much tax for 2010/11. Those taxpayers have been receiving letters about tax refunds since July.
The Taxman also plans to send out another 6 million letters about tax refunds due for the earlier tax years: 2003/04 to 2007/08. If you receive a telephone call or email purporting to be from the tax office about a tax refund, DO NOT respond as this will be a criminal scam. Genuine tax refunds will be sent by letter only.
Around 1.2 million people will receive a tax computation (form P800) telling them they have underpaid tax for the tax year 2010/11. The average amount owing is £600. Where the tax due is less than £3,000 it will be collected through the taxpayer’s PAYE for 2012/13. If you have underpaid tax of less than £3,000, the amount due will be deducted in instalments from your monthly salary or pension in the year starting 6 April 2012. Only where the amount due is £3000 or more will you be sent a tax demand, but you will still be given a reasonable time to pay.
We can help you check the P800 tax calculation, but please send us a copy of all the forms you receive from the Tax Office, as we may not get a copy directly.
Reclaiming VAT
Before you can reclaim VAT on goods and services you have bought you need to check the following:
1. The purchase was for business purposes – not for your personal needs.
2. The purchase is not a type that is ‘blocked’ for VAT reclaims, such as entertaining expenses.
3. You have a valid VAT invoice.
A valid VAT invoice should include all of the following details:
- The supplier’s name, address and VAT registration number.
- Unique invoice number for that supplier.
- The name and address of the person to whom the goods are supplied (this will be your business).
- Date of issue of the invoice and time of supply of the goods or services (this may be the same as the date of issue).
- A description of the goods or services supplied including:
•The unit price
•The rate of VAT charged
•The amount payable excluding VAT
- The total amount payable for the whole invoice excluding VAT.
- Rate of any discount available.
- Total amount of VAT charged.
Retailers can issue less detailed invoices for purchase of up to £250, but that invoice must still show key details such as the name, address and vat number of the supplier, nature of the goods and the rate of VAT applicable.
Be careful not to mistake any of the following documents for a valid VAT invoice:
• Supplier statement;
• Delivery note;
• Request for payment; or
• Pro-forma invoice.
Monthly tax question answered:
Q. The Taxman has hit me with a huge penalty for paying my company’s PAYE late in 2010/11. But I’ve always paid my PAYE on time. What’s going on?
A. PAYE deductions paid late to the Tax Office (HMRC) from 19 May 2010 attract automatic penalties. ‘Late’ means the cheque reached HMRC after the due date of 19th of the month or the electronic payment cleared the HMRC bank account after 22nd of the month or the last banking day before that. The HMRC bank accounts do not accept ‘faster payments’, which clear through most bank accounts in 4 hours. HMRC needs 3 working days to accept an electronic payment. You should have received a warning letter about your first late payment in 2010/11. If you believe you had a reasonable excuse for paying late you should appeal against the late payment penalty.
Tax Information supplied to LandlordZONE by TWDAccountants – http://twdaccounts.co.uk
