UK Debt Passes £1 Trillion Mark 
According to the latest figures from the Office of National Statistics, the government’s debt has passed the £1 trillion barrier for the first time; despite a bigger than expected fall in borrowing throughout December.

The latest figures, which are officially released on Wednesday, show public sector borrowing – excluding financial interventions such as bank bailouts – fell £2.2 billion to £13.7 billion last month, a bigger fall than the City’s estimate of £14.9 billion.

The bigger than expected fall in government borrowing during December was partly offset by a £1.3 billion increase in estimates for borrowing between April and November after local government spending was revised upwards.

However, the report shows that the fall still wasn’t enough, with the net debt rising to £1,003.9 billion (64.2% of the GDP) and the highest since records began in 1993.

Despite the figures increasing, the Chancellor, George Osborne, is still on track to hit a target set by the Office for Budget Responsibility to reduce the UK’s borrowing to £127 billion in the financial years – despite fears the UK is on the brink of recession.

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Britain Will Pay Tobin Tax 
Britain will end up paying the European’s financial transaction tax, whether it joins the scheme or not, the bloc’s top tax official has warned.

Algirdas Semeta, the bloc’s tax commissioner has said that London’s continued resistance to agree to an EU-wide Tobin tax would result in the City paying money to continental tax collectors, without Britain benefiting from the proceeds.

Mr Semeta added: “The UK would lose a lot if other members decide to move ahead with a financial transactions tax.

“Because of its design, Britain will be subject to the tax, but at the same time, it will not receive any money from it.”

He also argued that a financial transaction tax agreed by all 27 EU members could help shore up the UK’s public finances by reducing its annual contribution to the EU’s €140bn-a-year operating budget; saying: “If you take into account the size of the financial sector in the UK, the financial transaction tax would collect significant amounts of revenues, part of which would go into the EU budget.

“This would reduce the UK’s contribution to the budget, which would help reduce their public deficit.”

London, which is able to veto EU tax proposals has stood firm against plans to introduce the tax, yet Brussels look set to impose a tax in much of the rest of the EU and it’s thought that such a levy could use the “residence principal” which taxes any trade by a company that is located within the tax area.

This would mean Britain would be indirectly exposed to at least some of the financial transaction tax’s effects; although it could also benefit from an exodus from other European financial centres.

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SMEs Face Fines Over Online Tax Returns 
It’s feared that SMEs could face a barrage of fines as a result of new rules around the compulsory online submission of all tax returns.

From the start of the 2012 / 2013 tax year in April, HMRC will introduce new rules that mean any VAT-registered business will have to submit its tax returns through the organisations website, rather than through the traditional paper-based form.

However, its been predicted that hundreds of small-and-medium businesses will be hit by significant fines and interest payments for not complying with the new rules.

HMRC carried out a long-running consultation across the accountancy profession about the detail and timing of introducing compulsory online submissions, but some think that HMRC haven’t fully got the message across to the business community about the tax changes.

One expert has said: “HMRC has tried hard to communicate with companies about the forthcoming changes around tax return submission rules. But its doubtful anywhere near as many firms as they’d hoped or expected are fully aware of what’s coming.”

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Push to Cut VAT in Pubs and Restaurants 
Over two dozen of Britain’s top pub and restaurant chains have joined forces to campaign for a cut in VAT, in an effort to boost the country’s ailing leisure industry.

The chains have joined forces to back French hospitality entrepreneur and lobbyist Jacques Borel in his campaign to get VAT reduced from its current level of 20% to 5% on food, drink and accommodation in the UK.

Chairman of Wetherspoon, Tim Martin, said: “In the UK, supermarkets have been able to subsidise their alcohol sales on the back of non-VAT food sales.

"We cannot do that in pubs because we have to pay VAT on food. It is like clean athletes having to take on drug cheats. The supermarkets have been given steroids by the Government for the last two decades."

Jacques Borel has successfully battled for a cut in VAT in France, which led to an increase in jobs within the leisure industry and also saw the government’s tax take from the sector rise, as more people went out.

It is hoped that in the 2014 Budget, the UK will follow Germany, Belgium, Sweden and Ireland who have already dropped their VAT rates – with Ireland dropping their tax from 13.9% to 9% as recently as last summer.

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Tax Office Offers “Come Clean” Deal 
Her Majesty’s Revenue and Customs (HMRC) have warned that tougher procedures to tackle serious fraud are set to be introduced later this month.

Under the new clampdown, HMRC are set to contact taxpayers in writing to tell them they’re suspected of fraud, giving them a chance to enter into a civil contract, which allows them to come clean within sixty-days, without the possibility of facing a criminal investigation.

Instead an investigation will be carried out by HMRC using civil powers, with a view to a civil settlement for tax, interest and a financial penalty. However, anyone who opts not to sign the civil contract or anyone who does sign it but then doesn’t disclose details of wrongdoing will face a full investigation which could include a criminal probe with a view to prosecution.

A spokesperson for HMRC has said the contracts will be a new element to its civil investigations, making it harder for those under scrutiny to say they would go along with an arrangement and then fail to disclose what they know.

The spokesperson added that people would not be able to get off by signing the contracts as they would need to pay the penalties involved and added that sensible decisions would be taken in each case.

Speaking of the new procedures, which are set to come in force on January 31st, Exchequer Secretary to the Treasury, David Gauke, said: “This new facility is a valuable tool which will help HMRC in its fight against fraud.

“HMRC will set out clearly what is expected of taxpayers, and what will happen to fraudsters who choose not to disclose their crimes.”

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