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!

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

Buying a holiday home abroad – the tax issues

06MarApril 26, 2018 By Adrian Huston

Here's a video Felicity and I filmed in Umbria, with the help of a friendly black cat with very sharp claws.

The video looks into your responsibilites around tax if you buy a property abroad, and the extra things you have to do if you let it out, even a little.

http://youtu.be/6j2G7MPu17w

The video touches on UK income tax, Capital Gains Tax (CGT) and Inheritance Tax, as well as claiming foreign tax credit against your UK bill.

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.

Close Protection abroad – UK HMRC tax-free status – rules change April 2013

28FebApril 26, 2018 By Adrian Huston

I am a former Tax Inspector, also ex RMP (TA) and Police Authority Northern Ireland. I now sort out non-residency for hundreds of guys from the UK deployed abroad. Check me out on Linkedin at http://uk.linkedin.com/in/adrianhuston

New rules from April 2013. There is intended to be new legislation for 2013/14 bringing in a new Statutory Residence Test. In the past residency has been assessed using some HMRC booklets and was not actually enshrined in law. This changes things and in my view for the better.

For most of the people for whom I work this is a genuine improvement because if working abroad full-time there will be no more lingering concerns about whether the person has substantial ties to the UK. It ceases to be a concern if you have been deemed ‘automatically non-resident.‘

The law will not be passed until after the March 2013 budget, but just last month HMRC published its ‘Guidance Note: Statutory Residence Test (SRT)’ on how it plans for the law to work , unless Parliament interferes before Royal Assent, which is unlikely. It is at
http://www.hmrc.gov.uk/budget-updates/11dec12/stat-res-test-note.pdf

For most UK guys in CP around the World they qualify as non-resident (automatically overseas) under the third test on page 5 as follows:

“Third automatic overseas test
11. You work full-time overseas for the tax year without any significant breaks from that overseas work, and:
• you spend fewer than 91 days, excluding deemed days, in the UK in the tax year, and

• the number of days in the tax year on which you work for more than three hours in the UK is fewer than 31.

The full-time overseas part of the test does not apply to you if you are an international transportation worker.“

I claim credit for changing HMRC’s policy by one day – to the advantage of members of this Group! See the ‘fewer than 91’ above. That’s how the old rules talked.

When HMRC launched its consultation
(http://www.hm-treasury.gov.uk/consult_statutory_residence_test.htm see page 12)
they said non-residence if fewer than 90. In my formal consultation response I pointed out that this was a pointless loss of one day. It moved away from the long-held understanding of the importance of 90 UK days being allowed to make it 89. I am therefore delighted to see that the HMRC December 2012 draft has corrected the matter. It is expected to be mentioned in the UK Budget March 2013 and then go into law for 2013/14.

Note the old averaging rules are gone – so from 6 April 2013 make sure your UK days are always fewer than 91.

So, in summary, if you work full-time abroad on CP work (or non-CP work indeed), your work extends over 2 x 6 Aprils, and your UK days are 90 or fewer per full tax year, then the April 2013 rules are not scary for you.

You will still have to complete the necessary paperwork or have someone help you, record your UK days and – very important – keep records and proof of leave spent outside the UK.

Stay safe, and keep your tax affairs safe too.

Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or +44 (0)28 9080 6080 Skype Adrianhuston

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