Self Assessment worries dog the new year 2017

03JanJanuary 3, 2017 By Adrian Huston

January tax help.

Firstly I hope all our readers and clients have a Prosperous 2017, not held back by Self Assessment worries.

As is so common after Christmas, we are getting loads of calls from new clients. People are keen to sort out their taxes. I think Christmas focuses the minds. People have time off at home. They have chats with spouses and family. They realise all is not well.

Self Assessment Tax Returns having been around for 20 years now. Despite this the 31 January date still creeps up and bites people every year – though the penalties are now nastier.

VIDEO – on similar content to this – see here

Why might you call Huston & Co?

You have income to declare and have not yet registered with HMRC
You are registered and realise there is not long left until the 31 January filing deadline, and want help with the Self-Assessment form.
There is a confession to be made to HMRC covering a number of years, and you want us in your corner against HMRC
You just want a chat or a review and can get that for an hourly consultation, by phone or in person.
You live or work overseas and want our specialist help with UK rents or overseas earnings.

Some people phone having seen my free tax videos on YouTube ( www.YouTube.com/HustonTV ). I am delighted that these have been viewed well over 80,000 times.

Self Assessment

We can get your Self Assessment return filed before the deadline even late in January. Also, in the early part of the month we can still get you registered with HMRC in time too!

Call Adrian Huston or Felicity Huston on 028 9080 6080 for a chat and a price to help you out. View the video for this post here

We are both quite approachable, despite both having been Tax Inspectors before we crossed the floor!

Rent out property in UK-rules for non-resident landlords – NRL1

19JulApril 26, 2018 By Adrian Huston

Are you non-resident for tax purposes, either because you live abroad or live in UK but work abroad, and rent out a place in the UK?

Do you own a property in the UK which you rent out?

Answer YES to both of these and this video ,which I filmed in Umbria, is for you – see below.

If you have a UK rental property and are non-resident for tax purposes then you face two stark choices:

You can declare the rents and expenses to HMRC each year, or
You can have basic rate tax (20% in 2015/16) deducted from the rents before you get them.

This latter point is quite painful and often means you will pay more UK tax. This is because you cannot claim any expenses. Also you do not get any Personal Allowance. (The amount of UK income a UK person can earn before tax, £10,600 in 2015/16.)

The law requires your letting agent to deduct this tax and pay it to HMRC. If you do not have a letting agent then this onerous law means the TENANT must deduct the tax and pay it to HMRC!

If you prefer to declare your rents each year, then you can complete a tax return each year. But first you must send HMRC form NRL1.

Huston & Co are specialists in tax for non-residents and have hundreds of British clients living or working abroad, many getting rent in the UK. We can help you with all this. We can complete the NRL1 form and also the annual tax returns, leaving you to enjoy life with a clear conscience. Directors Adrian Huston & Felicity Huston are both former Tax Inspectors. This is a family firm with no outside staff.

Tax on rent – call us on +44 28 9080 6080, email IRAQ@huston.co.uk (or desk for overseas work) or check out www.Huston.co.uk

Contact HMRC – 10 tips to do it right

14JunApril 26, 2018 By Adrian Huston

22 years in our tax practice has taught me a few things about effective communication with my former colleagues in HMRC. It has also left me almost bald, from tearing my hair out when contact goes wrong. So let me make things easier for you.

Recently I had an unsatisfactory call to an HMRC officer, and what happened when I asked for the supervisor beggared belief! I was so shocked that I obtained the recording of the exchange (for how, see later) and posted it on YouTube. Suggest you listen from 5:05 on the following link http://tinyurl.com/HMRC-hangsup

So from years of experience here are 10 tips to having an effective contact with HMRC.

1. NERVOUS ON PHONE? THEN WRITE. If you are nervous on the phone to the government, or might get flustered, then writing might be easier. Then you have time to digest their written response. Or show it to a friend. Put your National Insurance number on the letter and write to the office which contacted you recently, otherwise to:

HM Revenue & Customs
Pay As You Earn
PO Box 1970
Liverpool
L75 1WX

I still write to HMRC to sort a lot of things out. My copy is a record of what was said, when and where I sent it.

2. PHONING HMRC. They are open 8 to 8 weekdays and 8 to 4pm on Saturdays. Call them on 0300 200 0300. If you can avoid the lunch hour and just after 9am you will find the waiting time on the phone shorter. Try calling at 815am, in the evening, or Saturday. ALWAYS, but always, write down the time and date of the call. Then the name of the person you spoke to, then what was agreed would happen.

3. EMAIL? HMRC is still very nervous about email and they don't publish email addresses for contacting them. Having said that they do have an email service for telling them a change of name or address. It is at http://www.hmrc.gov.uk/individuals/change-of-circs.htm

If your tax code for the present year may be wrong then you can contact them by email on http://www.hmrc.gov.uk/incometax/email-taxcode-wrong.htm

Take a screenprint BEFORE you hit submit, because after that you just get a message saying we have your message. No reference number, no proof of what you said.

4. ACCOUNTANTS – AGENT PRIORITY NUMBER – accountants and tax consultants can use a special number to contact HMRC which means they will rarely sit in a queue. I won't publish it here, because if a member of the public uses it they will not get helped.

5. GET A RECORDING OF YOUR CALL? If you think HMRC didn't do what they promised, or an officer behaved badly, then you may be able to get an audio recording of the whole call. This is free and is done under Freedom of Information. You will need to know the number you phoned and the date and time. The application is easy and is at http://tinyurl.com/HMRC-FOI When I applied this way the reply and CD was back inside two weeks – impressive.

6. WHEN NOTHING IS DONE? If you ring HMRC and nothing is done within say 3 weeks of the call, then consider a complaint. If you wrote a letter then best allow 5 weeks before complaining. Sometimes phoning to ask what's happening can work, but I tend to favour a written complaint. Mark the top of the letter COMPLAINT. Details on complaints at http://www.hmrc.gov.uk/complaints-appeals/how-to-complain/make-complaint.htm If you still have problems then complain to your MP at:

House of Commons
London
SW1A 0AA

MPs get a priority service which often helps resolve things.

7. CAN AN ACCOUNTANT COMPLAIN FOR ME? Yes, and, once a second attempt to get HMRC to sort something has failed, they have a special service to use. It is called the Agents' Issue Resolution Service. I have had mixed results using this service, but your accountant should give it a go. They may not know about it.

8. COMPLAINING ON SOCIAL MEDIA. Increasingly people make complaints about companies and organisations via social media. Twitter can be good as someone in the PR department often monitors tweets which paint the organisation in a bad light. I have seen no sign of this causing HMRC to spring into life, but if you want a go then mention in your tweet @HMRCgovUK If you have a juicy case of incompetence, or hardship caused, you could always contact the national press, like the Daily Mail or BBC Radio 4's Money Box.

9. CAN I JUST CALL IN AT THE TAX OFFICE? No. In its drive to 'improve' customer service, HMRC has closed all its public enquiry offices! Yes, it's hard to believe. HMRC says that in some (probably extreme) cases they may do house calls. I reckon you would need to be very elderly or very infirm, but if you would like a home visit then ask them.

10. HOW DOES HMRC WANT ME TO CONTACT THEM? Really they want everyone to get their tax information from the website www.hrmc.go.uk And where that's not enough they want you to phone. They would prefer not to receive letters – but don't let that put you off sending one!

Don't be scared of contacting HMRC. They genuinely do want to help, and most things can be sorted first time around. My tips above also show what to do if things go wrong.

Adrian Huston, a former Tax Inspector, is a director of tax consultancy Huston & Co, www.Huston.co.uk or 028 9080 6080. Twitter @HustonTax

Holiday homes abroad – tax and letting issues

13AugApril 26, 2018 By Adrian Huston

Many people go on holiday and then think “Wouldn’t it be lovely to own a place here?”

Some of those people will go the next step and purchase somewhere as a holiday home. Since it will be vacant much of the year it can make sense to let it out as a holiday home. What people sometimes ignore is that this has tax consequences both in the UK and often in the country the property is.

Tax myths

First I will dispel a few myths about overseas holiday homes. The right way of it is:

You must declare any overseas rents to the UK HMRC.
The tax authorities in the host country ARE interested in tax on rents there.
The property remains part of your Inheritance Tax estate.
You have to pay UK CGT if you sell.
You cannot reinvest in another property and avoid CGT.

That may have left a few of you somewhat shell-shocked and depressed. Better that you learn it from me than in a letter from the tax-man – whether the tax-man is in the UK or overseas.

UK tax

If you are a UK resident for tax purposes then your worldwide income is to be declared to HMRC. That includes rents from overseas property – even though you may feel you make no money at it. The rents must be declared but relief can be claimed for expenses appropriate to the rent – like a sensible proportion of mortgage interest, maintenance fees, heat and utility charges. Note I said a PROPORTION of the running costs. If you also use the property for family and friends you cannot claim a year’s expenses against the rent you receive from part of a year’s rent.

Also you can claim any managing agent fees and indeed the accountant’s fee back home for showing the rents on your Tax Return.

Tax abroad

If you rent out a property in a foreign land then almost certainly the tax authorities in that country will want to know. You should check this out. Internet research can be helpful – though not guaranteed accurate – or you can check out the many books on buying homes abroad. If you have a local letting agent they can help too. Bear in mind that tax authorities share information across the borders more and more these days.

If you do make a declaration to the local tax people be sure to show the paperwork to your UK accountant. If you pay some tax overseas on the rents then you will probably get some tax relief in the UK as a result.

Inheritance tax

Just because the property is outside the UK it still counts as yours for Inheritance Tax purposes. It can be quite difficult to escape UK Inheritance Tax even by moving overseas, often requiring severing your ownership of links to the UK such as property here etc. If you live here then you are almost always caught for IHT on your assets anywhere in the World.

Capital Gains Tax

As a UK tax resident you will have to account for Capital Gains Tax (CGT) if you sell a holiday home. There may or may not be any tax payable after the calculation is done. So long as the proceeds exceed £43,600 (2013/14 year) then you will have to complete Capital Gains pages on a Self Assessment Return – even if you normally are not sent a Return. This applies even if in the end there is no tax due to be paid.

To the extent that your gains exceed £10,900 (2013/14 rates) then there will be CGT to pay. If the property is held by two people then gains for the year could be £21,800 before tax is payable.

Reinvesting in property

Contrary to popular belief you cannot reinvest the proceeds from selling a house into buying another and so avoid a Tax Return or bill. (That type of relief applies to certain business assets only). If you sell your Spanish home for a £30,000 profit then you have to pay tax on it – even if the entire proceeds were spent on another overseas property.

Huston’s Hints

Having the overseas property in joint names will often reduce the CGT on its eventual sale.

Keep records and receipts for capital expenditure on the property – such as putting in a pool, building a garage, installing aircon etc. These will reduce the eventual CGT bill.

Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or 028 9080 6080. Huston & Co specialises in UK clients with income overseas.

HMRC names and shames tax fiddlers for first time – who and why?

21FebApril 26, 2018 By Adrian Huston

History was made today 21 February 2013. HMRC published its first ever list of people who have fiddled their taxes but not been prosecuted. Up to now if you were caught fiddling then in over 99% of cases HMRC just took a lot of money off you – and your secret was safe. Only HMRC, your accountant and you would know. Only a tiny number of people are taken to court each year.

The gloves are off now and HMRC today used its new law for the first time. They held back on spoiling Valentines Day last week!

HMRC hopes that by naming and shaming tax-fiddling businesses, some of which might be in your town, people will be encouraged to be more careful to declare all that they earn. By the way when I say fiddling I am also referring to people who have failed in their tax obligations, and as a result HMRC did not get its tax when it should, and as a result HMRC charged penalties.

I will give a link to the list shortly, but firstly I want to set out the ground rules, and explain why the list will get much longer each quarter that it is published. The ground rules:

The tax has to be paid late as a result of failing to declare it, or understating one’s income
The inaccuracy or failure must be for a period after 31 March 2010. (For individuals this mainly means the 2010/11 or 2011/12 tax years).
The offence can relate to income tax, Capital Gains Tax, corporation tax or VAT.
This one’s important – even when coming clean to HMRC the person still did not make a FULL disclosure. In other words they were silly enough to continue to play cat-and-mouse with the tax-man.
If HMRC had not found out about the problem, the loss of tax would have been at least £25,000. Note this must all be after 31 March 2010.
The law states that once the name and shame details have been published for 12 months the publication must cease.

The inaugural list 21 Feb 2013 of significant tax defaulters can be read at http://www.hmrc.gov.uk/defaulters/defaulters-list.pdf

What should you be aware of when reading this list?

Firstly the list shows the name and address, at the time of the offences, plus the tax which wasn’t declared on time, plus the penalty levied. It shows the period after 31 March 2010 for which the penalties applied.
Secondly when you add up the tax and the penalty you will know some of what HMRC needed paid, but you may not have the whole picture. For example there may be interest added as the tax is paid late.

Much more significantly – the traders may owe an awful lot more. This is because HMRC can only tell us about the tax owed after 31 March 2010. Most tax investigations go back a number of years – even up to 20 years. Just because HMRC says they owed £30,000 and paid a £15,000 penalty doesn’t mean that’s the lot. The trader might owe tax from 1992 to 2012 of £500,000, of which only £30,000 relates to the last year or two.

Why do I say the list is going to get longer every quarter a new one is published?

Even though names only stay on the list for 12 months, I know the list will get longer as the years go by.

At the moment HMRC can only publish where £25,000 of tax would have been lost since 1 April 2010 – less than three years. Think forward two years to May 2015. By then HMRC can name and shame you if you owe £25,000 in tax over a 5 year period. So the bar is getting lower every year.

£25,000 in 5 years – is that a lot? Well if you pay tax at 40% and you failed to declare £20,000pa of your income then the tax and National Insurance would be at least £5,000 per year. So if caught in May 2015 you could find your name address and tax amounts published.

Do you think the local papers might run a wee story about the tax defaulters in their area? You bet they will!

What lessons can we draw from HMRC naming and shaming tax defaulters?

If you yourself are fiddling – then if you stop now then chances are your tax after March 2010 will never exceed £25,000. So even if you are caught, or come clean, your name will not be published.

If you go forward to HMRC to admit something – or HMRC catches you – then tell them the whole story. Don’t hold back or fail to admit to some assets or bank accounts. If you do the local press may come sniffing!

If you have something to confess to HMRC, or if they are onto you, seek tax specialist help NOW. We often take on cases from the regular accountant, settle the tax investigation, then hand the case back to the accountant for ongoing normal accounts work.

I have already had to advise some of our tax investigation cases about the naming and shaming rules, and consider whether our client stands to have their name publicised.

Contacting Adrian Huston:

As a potential client – call 028 9080 6080 – outside office hours 9-1 and 2-5 there is a voicemail.

Media and interview requests – in office hours call 028 9080 6080, outside office hours media can contact Adrian here:

http://www.huston.co.uk/media-contact.html?sTask=message&r_id=1439957649&task=display&pf=4

HSBC whistleblower names UK accounts in Jersey – is your tax paid?

09NovApril 26, 2018 By Adrian Huston

The Daily Telegraph reported on 9 November 2012 that that same week a bank whistleblower had grassed up 4,388 UK people with accounts at HSBC in Jersey.

HMRC has, unusually, confirmed that they have received this information and will be using it to check the tax rules ‘are being respected’. What a lovely phrase!

What have HMRC been given?

Details of over 4,000 people in the UK who had money in HSBC in Jersey, sometimes known as HSBC Expat. This means their name, UK address and the amount in the HSBC account.

The average balance in the accounts disclosed is £337,000.

Whose accounts are these?

The accounts are held by a wide range of people from people who are now retired to senior figures in the City, to criminals of various sizes. They will doubtless be from all parts of the UK.

My own experience as a Tax Inspector, and more recently as a tax consultant, tells me that people in Northern Ireland have a particular attraction to putting their money in Jersey, Guernsey or the Isle of Man.

Should everyone named be scared?

Absolutely not. There is nothing illegal in having money in Jersey or anywhere else offshore. Wat is illegal is not paying the right UK tax. The tradition of banking secrecy surrounding the Channel Islands, Switzerland, Leichtenstein and the Isle of Man has encouraged certain behaviour. This behaviour may, in itself, be illegal.

So who has something to fear?

You should worry if the existence of your money offshore points to some form of illegal activity, including tax evasion. This could mean:

The source of the money invested was not properly declared and taxed, or
The means of obtaining the money invested was itself criminal (drugs, guns, bribery etc), or
The interest earned on the accounts was not declared.

This last point is interesting. We help a lot of people to declare offshore savings and income, sometimes going back many years. In some cases the original source of the money is completely legit. For example the life insurance when your spouse died, or a transfer from a UK savings account. Where people have come unstuck is that once the legal money was offshore they failed to declare the interest it earned. That then becomes illegal tax evasion.

If you have an undeclared offshore account…

Now is the time to confess to HMRC – that is before they come to you. In general you will be given an easier time if you come forward to HMRC to tell them something was wrong with your tax affairs. You will also generally pay a lower penalty – that is what is added to the bill as a percentage of the tax you owe.

Who will help me with this?

I would say a person who declares offshore income without professional help has a fool for a client. This is a case where expert help may save you thousands, and will get the matter closed more quickly. (These are stressful experiences.) You may feel that your regular accountant does not have the practice and expertise in handling such tax investigations. It is for this reason that we are often brought in. When the case is closed we then hand the client back to the regular accountant to continue with routine tax returns and preparing of business accounts.

And if I am on HMRC’s list and do nothing?

Then you simply check the post every morning wondering when HMRC will write to you. Of course they might call in person or phone your accountant.

What HMRC will NOT do is email you about your offshore account. If you get an email from HMRC with an allegation (or good news about a refund) then the email is false and should be reported by forwarding it to phishing@hmrc.gsi.gov.uk

This is just the latest of a range of banking disclosures HMRC has received from whistleblowers – some of whom were paid substantial rewards. (See video here). It seems this is likely to continue and whoever still has offshore money hidden should be afraid.

Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or 028 9080 6080. He and his former Tax Inspector wife Felicity Huston specialise in handling tax investigations and disclosures to HMRC.

Adrian also appears on TV radio and in the press commenting on tax matters. See www.YouTube.com/HustonTV