Tax Blunder Sees 17,000 Hit With Fines 
A glitch in the tax office’s computer system means letters demanding a penalty fee for late tax returns has been sent out in error to thousands of homes across the UK.

It has been estimated that up to 17,000 people will receive the letter, demanding the penalty fee of £100, in error, which states that if recipients do not pay the fine debt collection agencies will be sent.

The letters also warn that anyone who is three months or more late in filing their tax returns will face a second fine of £10 per day for up to three months, followed by an additional fine of five percent of the full tax bill after a six month period.

A spokesperson for the taxman has said that the letter mix-up has affected anyone who paid online between December 14th and December 16th 2011, adding: “We have cancelled the penalties and apologise to those affected. If these customers check online, they can see their payments have been correctly credited to their account.”

It has been reported that HMRC are already set to make £85 million from the 850,000 taxpayers who missed the February 2nd 2012 deadline.


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Tax Loopholes Closed 
The Treasury has closed two “aggressive” tax loopholes after a leading bank tried to avoid paying more than £500 million.

The move from the Treasury is the first time to Coalition government has clawed back taxes which have been avoided in the past, and the closure of the loopholes will also ensure billions of pounds in tax are paid in future.

One of the schemes which has been closed down involved a bank avoiding corporation tax on profits it made buying back its own IOU-notes; and the Treasury said it will move to block the recent use of the scheme by the bank and by any other company.

The second scheme involved investment funds trying to receive tax credits from the Treasury on non-taxable income; and the government yesterday brought in legislation to block any future use of the scheme.

David Guake, the Exchequer secretary said that the government was clear that “businesses must pay the tax they owe, when they owe it.”

He added: "The Government wants to ensure that the tax system is fair for all and we will not allow those who seek to benefit from this aggressive avoidance to get an unfair advantage.

“We do not take today's action lightly, but the potential tax loss from this scheme and the history of previous abuse in this area mean that this is a circumstance where the decision to change the law with full retrospective effect is justified."

Tax avoidance - unlike tax evasion - is not illegal but the UK's major banks have agreed to a code of practice to pay their fair share with the government.

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Chancellor: UK Has Run Out of Money 
The Chancellor, George Osborne, has admitted that the government has run out of money and cannot afford debt-fuelled tax cuts or extra spending.

Speaking ahead of next months Budget, the Chancellor has issued the stark warning that there was little the Coalition government could do to stimulate the economy and that Britain’s only hope rests with the private sector creating growth.

Mr Osborne told reporters: “The British Government has run out of money because all the money was spent in the good years.

“The money and the investment and the jobs need to come from the private sector.”

Despite coming under increasing pressure to ease his tough austerity measures, amid fears the country is set for another recession, Mr Osborne, has also added that he’d stand firm on his pledge to balance the book’s by refusing to borrow money, saying: “Any tax cut would have to be paid for. In other words there would have to be a tax rise somewhere else or a spending reduction.

“In other words what we are not going to do in this Budget is borrow more money to either increase spending or cut taxes.”

The tough words by George Osborne were also echoed by Liberal Democrat Jeremy Browne, the foreign minister, who has warned that the country faces an “accelerated decline” without measures to tackle its debt and increase competitiveness.


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Banking Sector Needs to Change 
Bank of England official Andy Haldane has said that Britain's banking industry needs sweeping changes so that it can assist small and medium sized businesses better, claiming that the industry requires more middle-sized banks which would be natural lenders to the sector.

Speaking yesterday at a business conference, Mr Haldane argued the lack of lending to smaller businesses was one of the main reasons behind Britain’s weak economy, adding that the banking sectors needs structural reconfiguration to ensure that SMEs have the financing they need to be tomorrow’s growth.

Mr Haldane added that along with the government looking to address the lack of lending to smaller firms with a loan guarantee scheme, which the finance minister George Osborne plans to present with his 2012 budget next month, longer term changes to Britain’s banking industry were needed too.

He added: “We have a small number of very large banks and a quite large number of small banks and a missing middle.

“It is the missing middle of medium-sized banks that would be the natural lenders to small businesses.”

In recent months, the government has set out on sweeping regulatory reforms of the banking sector, requiring banks to ring-fence their retails operations from riskier investment banking.

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HMRC Inspectors Receive £1.4 Million in Bonuses 
It has been revealed that HMRC inspectors have been paid more than £1.4 million in bonuses since 2008.

Currently, there are two different bonus schemes which operate for HMRC officials working in criminal investigations. One is performance related, tied to annual work; whilst the second is recognition related for staff, excluding senior civil service, which reflects exceptional in-year performance.

The official figures show that in 2008 / 09 £379,656 was paid in bonuses; followed by £435,689 and £349,168 in the two years that followed. So far in 2001 / 12, £275,326 has been paid, although the Treasury minister, David Guake, did tell MPs the final figure wouldn’t be available until the end of the current financial year.

He added: The overall value of bonuses paid to those working in criminal investigation will be dependent upon the performance of individuals across the performance year.

“Beyond 2013 we cannot provide any forecasts due to the ongoing wider civil service reward reform work.”

Priti Patel, the Conservative backbench MP whose Parliamentary Question forced the Government to disclose the figures, said of the figures disclosed: “That is an astonishing figure in light of the problems the public face across the country. It is positive that they are falling but they are still too high.

“More needs to be done to get the figures down. Bonuses still need to be justified when they are paid out by HMRC.”

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