Football Administration Costs HMRC 
Leaked documents have shown that football clubs who have gone into administration have failed to pay virtually any of the £40 million they owe the taxman.

The documents show that HMRC have had to write-off much of the debt, as the result of a rule which puts the taxman at the bottom of the pile of creditors; whilst the same documents also show that football clubs and footballers are given priority when it comes to repaying debts.

According to the papers, which have been submitted to the High Court by lawyers acting on behalf of HMRC in a landmark case it has brought against the Football League; football clubs in financial trouble have cost the taxpayer nearly £40 million since 2000.

Within its written submission to the High Court, the HMRC lawyers said: “The Football league have constructed a device under which, on insolvency, football creditors are paid in full whilst ordinary unsecured creditors of the same class receive a very modest dividend.”

A judge is now considering whether to declare the so-called “Golden Rule” – which gives the preferential treatment to football-related debts during administration – unlawful; with the ruling expected shortly.

A spokesperson for HMRC has said: “The rule is unfair. If the HMRC action is successful there will be benefits to all non-football creditors.”

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Chancellor to Review Tax Loophole 
During his budget speech earlier this week, the Chancellor, George Osborne unveiled plans for a crackdown on a tax loophole used by a string of civil servants to avoid paying income tax on their salaries.

In recent weeks there have been a number of high profile cases involving civil servants using a tax loophole, which sees them taking payment through a company, to cut their tax bill. Now, the Chancellor is set to hold a review of the so-called IR35 rules.

The IR35 rules dictate whether freelancers or contract workers can receive payment for their work as a company and thereby qualifying for corporation tax rather than the much higher rates of income tax and national insurance.

The Treasury believe over 100 civil servants may have used this loophole to reduce their tax bills, and has unveiled recommendations within this week’s budget, which suggest changing the loophole to ensure any office holder or “controlling persons who are integral to the running of an organisation” is taxed at source by the body for which they work, rather than taking payment as a company.

Under the new proposals, any executive or key employee of an organisation is likely to have to pay income tax on their earnings, even if employed on a contract basis; with the Treasury saying: “This is about putting beyond doubt what the intention of IR35 is.”

Despite announcing the plans this week, a final decision isn’t expected until next year’s financial bill.

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Bank Levy Offset by Corporation Tax 
Following the Chancellor’s budget yesterday afternoon, the British Bankers Association has said the UK’s banks will not end up paying higher taxes; due to the government’s planned bank levy hike being offset by the drop in corporation tax.

During the budget speech, George Osborne announced that he was planning to increase the rate of the bank levy from 0.088 percent to 0.105 percent from the start of next year; however he also announced that corporation tax will be cut.

The government is looking to raise £2.5 billion a year from the bank levy, which was introduced last year in a bid to encourage banks to reduce short-term funding in an effort to avoid a repeat of the 2008 / 2009 financial crisis.

Chief Executive of the British Bankers Association, Angela Knight, said following the announcement by the Chancellor: “The government has previously said that it both wants the bank levy to raise a specific amount – two point five billion pounds - and that any reduction in corporation tax will be offset by an increase in the levy.

“The corporation tax cut would reduce the amount raised, so as before the percentage has been raised to correct this. The end result is that the banks pay the same.”

It is the fourth time since the controversial tax was announced that Britain’s banks have had the levy on their balance sheets increased.


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Tax Allowances to Rise 
It is expected that later today during his budget speech, the Chancellor, George Osborne will announce that there will be an increase in the amount people can earn before they start paying income tax.

The Chancellor is set to unveil his budget this afternoon, in the House of Commons, and during his speech he is expected to announce that the threshold in which anyone pays income tax will increase to over £9,000 during the next year, in a move which would leave the average taxpayer £305 better off.

Last April, ministers lifted the tax threshold by £1,000 to £7,475; meaning the first £7,475 of a person’s income was not tax deductible; and a further increase of £630 was expected next month, with the Coalition Government pledging to increase the threshold to £10,000 by 2015.

It is unclear how the tax increase will be paid for when it comes into force, however it is expected that the change to the higher rate threshold will mean higher earners will not gain from the change; as the Chancellor looks to make this, his third budget, a budget for the working people.


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UK Borrowing to Fall Below £100 Billion 
It has been estimated that the governments borrowing could fall below £100 billion for the first time since 2008 / 2009.

Economists have said that they expect this weeks budget, underpinned by forecasts from the Independent Office for Budget Responsibility, to reveal a broadly unchanged fiscal and economic picture; leaving the Chancellor, George Osborne, little room to manoeuvre giveaways.

Ahead of the budget tomorrow, George Osborne has pledged that budget will be fiscally neutral, choosing to bank any improvement in the books to reassure markets and protect Britain's triple-A credit rating.

This, along with the government's recent decision to take on the state-owned Royal Mail pension scheme is set to have a significantly beneficial impact on borrowing over the next year; although improvement is not expected to follow through to forthcoming years, meaning the budget deficit could run higher again in 2013 / 2014.

As a result, it is widely believed the OBR's underlying 2012/ 2013 public sector net borrowing estimate could hold in line with November's forecast for £120 billion, given the little change in the economic outlook.

Taking into account the Royal Mail transfer, the government’s borrowing forecast is down to around 92 billion pounds in 2012/ 2013. It is the first time the budget deficit has dropped below £100 billion since the global financial crisis of 2008/ 2009.


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