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September Questions and Answers

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Newsletter issue - September 2016.

Q. I have recently changed jobs and need to use my car to make business journeys. Will I have to pay tax on the mileage expenses my employer reimburses me for these trips?

A. Employers can pay employees a tax-free and national insurance-free amount for every mile they drive on business duties, currently:

  • 45p per mile for the first 10,000 miles
  • 25p per mile for each subsequent mile
  • 24p per mile for motorcycles
  • 20p per mile for bicycles
  • 5p per mile extra for each passenger carried on work-related journeys

If your employer reimburses your mileage at less than these rates, you can claim the balance (but not the 5p per mile passenger extra) against your taxable income. For instance, if your employer gives you 30p per mile for 1,000 miles, you have a 15p per mile shortfall and can claim £150 against your taxable income. The big exception to business mileage is the daily commute from home to work and back again.

Q. When do I need to register for VAT?

A. Changes have been made to the April 2010 edition of VAT Notice 700/1: Should I be registered for VAT? to reflect:

  • the introduction of a new online system for registering for VAT; and
  • the removal of the VAT registration threshold for non-established taxable persons

Very broadly, you need to register for VAT if your annual turnover reaches the current annual registration threshold limit (£83,000 for 2016/17). This threshold operates on a month-by-month basis, so you need to check at the end of each month to make sure that you haven't gone over the limit in the previous 12 months. You also need to think about whether you're going to go over that limit in the following 12 months. If you think you may, you probably need to register.

You can register for VAT even if your turnover is below the threshold and you may actually save tax by doing so, particularly if your main clients or customers are organisations that can reclaim VAT themselves.

You must register with HMRC within 30 days of being aware that you're going to exceed the threshold. See the gov.uk website at https://www.gov.uk/vat-registration for further information on registration.

Q. How can I make a complaint about a recent HMRC PAYE compliance check at my business premises?

A. Most PAYE compliance reviews are settled by agreement. However, if an amount cannot be agreed upon, HMRC may make a formal determination for the tax underpaid, student loan deductions, and penalties. A notice of decision will be issued for outstanding NICs and statutory payments.

An employer can appeal to the tribunal against any determination or notice of decision within 30 days of issue.

There is a set procedure for dealing with complaints concerning the way an investigation has been conducted. Full details are set out in the HMRC Factsheet entitled Putting things right: how to complain. Broadly, the steps are as follows:

(1) The HMRC officer dealing with the investigation should be contacted in the first instance, or their line manager or the person in charge of the HMRC office.

(2) If the matter cannot be settled, contact the Director with overall responsibility for the office dealing with the investigation. The Director will review the complaint objectively.

(3) Where matters are still not resolved, contact the Adjudicator (www.adjudicatorsoffice.gov.uk). The Adjudicator acts as an unbiased and independent referee. The Adjudicator can be contacted at: The Adjudicator's Office PO Box 10280 Nottingham NG2 9PF. Telephone: 0300 057 1111/Fax: 0300 059 4513

(4) If at any time a person is not satisfied with the service they are receiving from HMRC or the Adjudicator, they should contact their MP and ask for the case to be referred to the Parliamentary Ombudsman. The Ombudsman accepts referrals from any MP, but the local MP should be contacted in the first instance.

(5) Allegations of very serious misconduct by HMRC staff, such as assault or corruption, are dealt with by the Independent Police Complaints Commission (IPCC).