Taxing Times – March 2018

Welcome to our March edition of Taxing Times for 2018.  Thank goodness tax return season is over for another year – it has been a tough one this time round and below we set out some interesting statistics and take a look at:

  • Why tax returns cause us so much trouble (psychologically speaking);
  • The surprisingly difficult question of when something is taxed as a van (continuing the theme of company car/van tax issues);
  • Our PAYE update;
  • The usual insights and updates.


BACK AGAIN by popular demand, we are holding two further cloud accounting seminars on Tuesday 20 March 2018 at Sunbeams Music Centre, Redhills, Penrith and then again on Thursday 22 March 2018 at The Shepherds Inn, Rosehill, Carlisle. Everything is going online and accounts, tax and payroll are no different – cloud accounting is here to stay and is the digital way forward. Get a head start before digital reporting becomes a legal requirement. There are lots of different cloud packages available, but which one works best for YOU and YOUR business? Click here for further information and details of how to book. This seminar is free to attend and is open to both existing clients and non clients of Dodd & Co.

Tax Return season is over – let’s think about tax returns!

This article may have a slight feel of “shutting the stable door after the horse has bolted” given that 31 January is now past us – but the next tax deadline is just around the corner and will be here sooner than you think – after all, three hundred and something days to go is not that many!

So with that in mind, read on to find out a little more about why people put off doing their personal tax returns, some scary statistics and some info that might persuade you to bite the bullet early to deal with the 2017/18 deadline!

Although people generally have 9 months to file their tax return (i.e. a return for the 2017/18 tax year ended 5 April 2018 will be due by 31 Jan 2019), it is very common that lots and lots of us put it off. This of course increases the chances of making mistakes and possibly overpaying because of those mistakes, such as the expenses you have forgotten to claim etc.

There are many benefits to filing early, not least that it would get the whole thing over with so you can relax and enjoy your summer. Also, many people will be entitled to a tax refund and I’m sure they would prefer to have it in their pocket as soon as possible rather than leave it lingering with the Treasury.

So why put it off?  Because it is very human behaviour to do so, and this applies not just to your tax return but to lots of other tasks, and there are a number of reasons for that:

1 – No penalties

Many people put things off for the simple reason that they have done it in the past and there have been no obvious repercussions.  After all the point of a deadline is that you can file something at any point up to the deadline.  However, sorting out your tax information at the last minute can lead to mistakes and mistakes can lead to penalties, incorrect calculations and perhaps an HMRC compliance review.

2 – Wanting to get it “just so”

People with a strong need to get everything perfect may have all the work on their taxes done months ahead of the deadline, but put off filing because they want to make sure they haven’t made any errors. This works against them as they don’t file the return in good time, feel bad about not having done so, and in the meantime don’t get certainty on the amount they are due to pay – or perhaps, the amount which is due back to them.

3 – The need for speed

Some people need adrenaline to get a task done. For certain individuals, putting something off until time gets tight produces the “kick-start” needed to help them get on with it. This may seem strange to some people but I’m sure some readers will identify with it! So then it is a case of adjusting your psychological approach so you focus on getting the adrenaline rush you need from doing it as early as possible rather than leaving it to the last possible minute.

4 – Mindset

Often people who procrastinate do so because they convince themselves that they aren’t up to the challenge so don’t even try.  This leads to a self fulfilling prophecy  – someone has trouble getting their information together and completing tasks because they believe they cannot do it well or properly or on time.  So they don’t. As with reason number 3 there is a need for a change in outlook – the mantra to live by needs to be “I can do” rather than “ I won’t do in case I can’t”.

Scary statistics:

  • At 24 Jan 2018 A third of tax returns nationwide were currently outstanding, with just a week to go to the self assessment filing deadline according to HMRC
  • An additional three million returns were filed between 24 Jan and 31 January
  • 746,000 people missed the deadline altogether
  • The most popular hour for people to submit their return was from 4pm to 5pm on 31st January, with 60,596 returns received

Reasons to “grasp the nettle” (i.e. get on with an unpleasant task!) early for 2017/18:

  • A tax liability calculated late in the day adds the extra stress of worrying how you can pay it with just a couple of weeks or even a couple of days notice – especially now HMRC will not accept credit card payments.  I am not at all sure HMRC will be sympathetic to requests to delay payment when someone has only gathered their paperwork and calculated their tax liability at a late stage.  Best to avoid that headache and give yourself plenty of time to come up with a  payment plan before 31 January 2019;
  • It is a wonder that the online filing system can cope with the onslaught of tax returns in January.  And the number of calls HMRC receives (and so the amount of time to get through to talk to someone if you need to) increases dramatically in January.  Much better to beat the rush and avoid unnecessary delays/being at the mercy of the dreaded computer ”wheel of death” while it thinks about whether to accept what you have spent ages typing in;
  • With the best will in the world, sheer volume of work in December and January means that your personal tax adviser will not able to look at planning opportunities and offer advice in the same way for their clients who provide information late in the day as they can for early filers.  Another reason to collate your information early – so you can have a sensible chat with your adviser;
  • If you get organised by July 2018, your adviser will be able to calculate if you can claim to reduce your 31 July payment on account for 2017/18 – so well worth making a late New Year resolution to beat the tax deadlines and reduce your stress levels this tax return period.

Hopefully these facts will give you the spur you need to get on with 2017/18 filing early.  To borrow the words of the famous trainer brand – “just do it” –   come 6th April (the start of the new tax year), grasp that nettle and deal with 2017/18 straight away!

Is it a bird?  It is a plane?  No, it’s a van! (or is it…?)

Perhaps rather oddly, the benefit in kind tax rules relating to company vans provided to employees are completely different to the company car tax rules.  As we have explored in a previous issue, company cars are taxed on a formula which is based on Co2 emissions and list price of the car (not market value).  This can make company cars potentially very expensive.  On the other hand, company vans are taxed on a fixed value. This is currently £3,230, which makes them a lot cheaper than cars, but gives rise to the very relevant question “what is a van”?

According to HMRC, a van means a mechanically propelled road vehicle that:

  • is a goods vehicle (a vehicle of a construction primarily suited for the conveyance of goods or burden of any description) (note that people are not goods so mini-buses don’t count, for example!)
  • has a design weight not exceeding 3,500kg
  • is not a motorcycle.

Double-cab pick ups are usually counted as vans but this is not on a statutory basis; so it is important to consider if they meet HMRC’s definition of a van – they must be designed primarily for carrying goods or burden, so that they are not treated as a car.

Note that HMRC have a requirement that the predominant purpose of the vehicle must be to carry goods not people – if it is equally suitable for carrying both, then it will not meet HMRC’s van criteria.

A recent case, N Payne, C Garbett, Coca-Cola European Partners GB Ltd, looked specifically at whether vehicles provided by a company to its employees were cars instead of vans.

The taxpayer won on one type of van – it was a van in HMRC’s eyes, but lost on the other, so it was taxed as a company car instead (much more expensive).  The First-tier Tribunal decided that Volkswagen Transporter Kombis provided to employees were cars but that Vauxhall Vivaros were vans. The decision revolved around cargo space – although both vehicles had two rows of seats (so it could be argued that they could arguable equally carry people as well as goods), the Vivaros had more cargo space available and that was what tipped it for the Vivaro but not the Kombi.

The Judge said that the burden of proof is on the taxpayer to show that the construction of the vehicles was primarily suitable for the conveyance of goods or burdens.

However, although this case provides some useful pointers, the overall picture is unclear and the question of what is or is not a van continues to be surprisingly difficult to answer.  The purpose of a vehicle at construction is a very important factor, as is kerb weight.

The upshot therefore is, don’t just assume that what you are buying to provide to your employees is a van from a benefit in kind tax perspective – think about it carefully, consider HMRC’s requirements first, and take a moment to consider if you can argue that it is primarily to carry goods.

Oh, and another little word of warning, be very wary of buying vehicles which are cars and then having them modified into commercial vehicles later – some employers have found to their cost that it is extremely difficult to get HMRC to accept that the modification makes them into a van in HMRC’s sense of the word…

PAYE update

National Minimum Wage Increases

From 1 April 2018, the National Living Wage and National Minimum Wage rates will increase.

The rates for the tax year 2017/18, and the rates announced for the tax year 2018/19, are shown below:

25 & Over 21-24 18-20 Under 18 Apprentice
2017/18 £7.50 £7.05 £5.60 £4.05 £3.50
2018/19 £7.83 £7.38 £5.90 £4.20 £3.70


A worker must be paid at the new minimum rates for the first full pay reference period that starts on or after 01 April 2018.  In addition, both the Minimum and Living Wage rates payable are dependent on the worker’s age at the start of the pay reference period. The rate in force at the start of the pay reference period can be paid for that entire period.

Automatic Enrolment Threshold Increases

The minimum contributions that employers and employees pay into their automatic enrolment workplace pension scheme are increasing.  Minimum contributions are increasing in two phases. The first increase must be in place from 6 April 2018 and the second from 6 April 2019.

By law a total minimum amount of contributions must be paid into the scheme.  The employer must make a minimum contribution towards this amount and employees must make up the difference.

This table shows the minimum contributions (based on qualifying earnings) and the date when they must increase:

Total minimum contribution Employer minimum contribution

Staff contribution

Until 5 April 2018




6 April 2018 to 5 April 2019




6 April 2019 onwards

8% 3%



Auto Enrolment Review

Proposals have been announced as part of the recent government review of automatic enrolment.  These include the intention to reduce the minimum age that employers must enroll eligible staff into a workplace pension scheme from 22 years to 18 years.

The government review – entitled “Maintaining the Momentum” has produced a number of recommendations to continue to build on the success of automatic enrolment with an incredible 9 million people now saving for their retirement.

The key points of the review are:

  • Young people from 18 will benefit from auto enrolment. However, this not expected to happen until 2020.
  • The review recommends changing the auto enrolment framework so that pension contributions are calculated from the first pound earned, rather than from a lower earnings limit of £5,876 (in 2017/18). It also suggests removing the ‘entitled workers’ category.
  • The earnings trigger will remain at £10,000 a year in 2018/19, subject to annual review.  While there will be no changes now, the report states that factors such as affordability for employers and individuals should be taken into consideration.
  • The review recognised the need to look at those who are self-employed and are at risk of not saving enough for their retirement.  Currently it is thought around two million people come under this heading.  It will also consider using the Making Tax Digital initiative to encourage more saving.
  • The government will also explore whether there is a need for greater clarity to ensure those currently working in the so-called gig economy do not miss out and could involve producing new legislation.
  • The Pensions Dashboard project is to continue. This will be a vital tool in helping individuals keep track of their pension savings as they move employment as well as helping them track down lost pension pots likely to be worth billions in total.  State Pension data will also be available alongside the private pension information.

 What needs to be included on a payslip

From April 2019 employers will be required to include on an employee’s payslip, the number of hours worked for which they are being paid.  This will be for any worker where the amount of wages or salary varies by reference to the total number of hours worked.

An amendment to The Employment Rights Act 1996 was laid before parliament on 8 February 2018 and comes into force on 6 April 2019.  It adds to the list of particulars which an employee has a right to be given.

Currently an employee has the right to a payslip showing gross earnings before deductions and net pay after any deductions.  The payslip should also itemise the amounts of any deductions such as the tax; National Insurance; student loan repayment; Attachment of Earnings; and pension contributions if applicable.  Other contractual deductions would be included e.g. a Trade Union Subscriptions. Payslips should show the employees name and may include their address if the employer decides to include this. An employee should be able to use their payslip as proof of earnings and they must be provided with the information on or before each payday. Employers can choose whether they provide printed or electronic (online) payslips.

A P60 should be issued to each employee who is working for you at the end of the tax year.  The form P60 will show the total pay and deductions for each employee in that tax year.  Employers are legally obliged to give P60s by the 31st of May.  Employees who left employment before the end of the tax year will not receive a P60 from that employer.

Thought of the month:

Not such a good excuse! HMRC brushes off claims for aliens and rabbits

Every year, following the 31 January self assessment deadline, HMRC provides a list of some of the imaginative and intriguing reasons provided for failing to get returns in.

Recent examples include the man who said he could not file his return on time ‘as my wife has been seeing aliens and won’t let me enter the house’.

Another claimed his ex-wife had left his tax return upstairs, but as he suffered from vertigo he could not go up to retrieve it.

As well as the excuses, HMRC also receives some questionable items which taxpayers have tried to expense.  They included ‘a three-piece suite for my partner to sit on when I’m doing my accounts’ and vet fees for a rabbit.

HMRC says all these excuses and expenses were rejected.

On a serious note – scam warning

HMRC have updated online guidance Phishing emails and bogus contact: HM Revenue and Customs examples to reflect information on recent bogus phone calls targeting elderly and vulnerable people. The latest bogus calls encourage people to provide financial and personal information in exchange for a bogus tax refund or state that HMRC is filing a lawsuit against them and they must make immediate payment. HMRC are advising that anyone receiving calls who cannot verify the identity of the caller should not liaise with them.  HMRC are also requesting that details such as date, time of call and the telephone number used are forwarded to to assist HMRC investigations.

What’s new in the world of tax?

Becker NIL Memory NIL

Boris Becker has issued an appeal to find some of his tennis trophies as he seeks out assets he can sell to pay debts. “A number of the trophies are unaccounted for as Mr Becker is unable to recollect where they are located.”

You charge how much an hour?

An 80-year-old driver is seeking compensation after claiming that a poorly signposted diversion around the M4 motorway closure turned his journey into a 12-hour ordeal. Accountant Charles Stenner said the delay cost him £320 in lost earnings.

Bosses told to send staff to sleep

New guidance has instructed employers to provide quiet spaces at work that will help staff to switch off so they can sleep better at night. Workers should have areas for mindfulness or rest, according to the advice from Business in the Community and Public Health England.

We reported on the benefits of a good night’s sleep in the June 2017 edition of Taxing Times always ahead of the curve!

They think it’s all over – it’s not now! Fans pay off Hartlepool tax bill

A winding-up order against Hartlepool United is being withdrawn after their outstanding tax bill was paid off by a fan who set up a Just Giving page to raise the funds. The National League club, which is for sale, had been issued with a prospective court date as HMRC looked to recover £48,000.

The name is NOT Bond…

The annual Fraudtrack survey reveals a businessman stole more than £1.6m of tax whilst pretending to his family and friends that he was a spy, one of 577 cases of fraud last year totalling £2.11bn.

You’d think they would have noticed his covert activities!

Nice overtime if you can get it!

A British accountant is accused of stealing £1.3m from the Bermuda Government to fund a luxurious lifestyle. The father-of-two claimed the payments were for overtime.

Do you have a low-stress career?

According to a survey by CV-Library, three-quarters of UK professionals would start a new career in 2018 if they had the chance.  Assumptions made include: working in design means a better work-life balance; education brings training opportunities; accountancy provides for a low-stress work environment; recruitment is well-known for fitness perks; hospitality for better bosses; and IT offers great flexibility.

I’m not sure our tax team would agree that accountancy is a low stress profession in January when they are dealing with the self assessment deadline! Still, all over now!

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