In a report released today, the Parliament’s public accounts committee says HMRC must clarify how RTI, which is being developed by HMRC to support the introduction of the new universal credit, will affect small businesses and the self-employed who may not use electronic payroll systems.
Chair of the Public Accounts Committee, Margaret Hodge, said: “The sheer complexity of the benefits system places a heavy burden on claimants.
"People claiming multiple benefits, such as housing benefit and child tax credit, deal with different public bodies.
“This can be confusing and potentially discourage legitimate applications. Departments responsible for means testing must work together to get a better understanding of the burdens placed on claimants."
The report also states that HMRC need to develop an effective approach for those claimants and businesses that are likely to be outside RTI in order to try to prevent previous problems which have affected tax credits.
For more information, please visit www.milsted-langdon.co.uk
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Yesterday the Treasury sold gifts which will pay returns below the level of inflation for only the second time ever, when the Debt Management Office sold £700 million of inflation-linked bonds which will mature in 2047.
The 35-year gifts were adjusted to exclude inflation and therefore sold with a rate of 0.116pc; meaning investors were accepting a small real-terms loss in exchange for lending their cash to the UK.
Bond yields are partly a sign of the markets’ confidence in a governments ability to repay their debits in future; and the greater the demand for bonds, the lower the interest rate a borrowing government has to pay buyers.
Treasury sources have highlighted that amid fears for the weaker European economies, the UK gift sale is a sign of the markets’ confidence in the Coalition government.
For more information, please visit www.milsted-langdon.co.uk
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The British Chamber of Commerce (BCC) has predicted that UK growth will be flat this year, with one quarter of contraction expected. But it says a recession isn’t inevitable if the government acts.
The BCC surveyed nearly 8,000 members and their findings suggest that the economy has significantly weakened; but stopped short of forecasting an outright recession. They believe that whilst one quarter of negative growth was likely over the next six-months, a recession hinged on the government’s action to help businesses.
John Longworth, the BCC’s director general, said: “Britain's economy is at a critical stage – and now is not the time to shy away from the radical decisions needed to inspire confidence and increased investment for years to come.
“The results of our latest survey are a cause for concern and point towards stagnation in the first quarter of this year. Many of the balances are now at levels last seen in the third quarter of 2009, meaning improvements seen in the last two years have largely been cancelled out.
“Ministers need to move faster on promises made in the Chancellor's Autumn Statement. Measures to improve the flow of credit to businesses, reforms of our complex planning system, and investment in infrastructure projects are all needed now."
The British Chamber of Commerce’s forecast is almost identical to the view of the Bank of England and other economists, with the latest data from the retail, property and manufacturing sectors doing little to dispel this view.
For more information, please visit www.milsted-langdon.co.uk
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Prime Minister, David Cameron, is set to abandon plans to scrap the 50p rate of income tax, amid increasing pressure from business leaders and backbench Tories.
Mr Cameron has come under increasing pressure from business leaders and backbench Tories to scrap the tax, which they feel is unfair on businesses, to help stimulate the economy.
Although David Cameron is sceptical that the tax raises money and believes it should only be temporary; he and Chancellor George Osborne have concluded that it would be politically impossible to abolish the tax, introduced in 2010 by the then Prime Minister, Gordon Brown, as they fear they would be accused of pandering to the wealthy.
Despite the scepticism from the Prime Minister, over the tax, HMRC are currently preparing a report, for the Chancellor, on the proceeds raised from the 50p rate and it is thought the report will show a surge in revenues – totalling hundreds of millions of pounds from the first year – undermining the economic case for scraping the levy.
A senior Government source, has said on the tax: “This is not now something we are moving on any time soon.”
Whilst a second source added: “We are repeatedly emphasising the need for those with the broadest shoulders to do more.
“So we can hardly turn around and start cutting taxes for them first. George Osborne said last year, that it was not the time to scrap the 50p rate and that is even more the case now as the economic situation has deteriorated.”
For more information, please visit www.milsted-langdon.co.uk
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Her Majesty’s Revenue and Customs have announced that despite reviewing a controversial scheme, the Taxman will continue with its target to carry out 12,000 business checks by April.
Following criticism that the scheme unfairly targets small businesses, the HMRC announced that they would review the procedure, saying: “HMRC recognize that the launch of the BRC pilots has caused considerable concern to the tax profession and that the project would have benefited from more detailed consultation with tax professionals at an earlier stage.
“In the light of these concerns, HMRC will undertake a strategic review of the project in consultation with the professional and representative bodies.
“The purpose of the review is to consider the overall aims of BRCs, examine whether the current approach is the best way of achieving the policy objectives and identify what changes are needed to ensure that the objectives are achieved."
But, despite carrying out a review, the HMRC added: “In the meantime HMRC will continue with a limited number of BRC pilots and the results of them will be evaluated as part of the review.”
The Business Records Checks (BRCs) scheme was launched last year, and targets small businesses, as it is felt by the Government that this is a high risk sector in terms of non-compliance. As such, the scheme allows tax inspectors to visit business premises to ensure that adequate records have been kept to support income declarations and expenses claims.
For more information, please visit www.milsted-langdon.co.uk
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