The government has revealed ten of the most bizarre excuses used by unscrupulous business owners who have been found to have underpaid workers the NMW.

These employers used excuses such as ‘only wanting to pay staff when there are customers to serve and believing it was acceptable to underpay workers until they had ‘proved’ themselves’.

The government has launched an awareness campaign to encourage workers to check their pay to ensure they are receiving at least the statutory minimum ahead of the NMW and NLW increases on 1 April 2017.

Employers need to ensure they are paying their employees at least the NMW and NLW.

This will be the second increase in six months for the NMW rates. Going forward the NMW and NLW rates will both be reviewed annually in April.

In a recent article in the Employer Bulletin, HMRC cite common errors:s

• not paying the right rate, perhaps missing an employee’s birthday,
• making deductions from wages which reduce the employee’s pay below the NMW/NLW rate,
• including top ups to pay that do not qualify for NMW/NLW,
• failure to classify workers correctly, so treating them as interns volunteers or self employed and
• failure to include all the time a worker is working, for example time spent shutting up shop or waiting to clear security.

What are the penalties for non-compliance?

The penalties imposed on employers that are in breach of the minimum wage legislation are 200% of arrears owed to workers. The maximum penalty is £20,000 per worker. The penalty is reduced by 50% if the unpaid wages and the penalty are paid within 14 days. HMRC also name and shame employers who are penalised.

If you would like help with payroll issues please contact us.

Internet link: GOV.UK NMW news

In a change that will impact residential landlords, the amount of income tax relief available on residential property finance costs will be restricted to the basic rate of income tax. This change will mean that landlords will no longer be able to deduct all of their finance costs from their property income. They will instead receive a basic rate reduction from their income tax liability for their finance costs.

The restriction in the relief will be phased in over a four year period as follows:

• in 2017/18, the deduction from property income will be restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction;
• in 2018/19, 50% finance costs deduction and 50% given as a basic rate tax reduction;
• in 2019/20, 25% finance costs deduction and 75% given as a basic rate tax reduction;
• from 2020/21, all financing costs incurred by a landlord will be given as a basic rate tax reduction.

These rules do not apply to residential properties held in companies

In addition rules may further restrict the relief which is due where the individual’s property income or total income is less than the amount on which basic rate relief is due. The computation is complex so please do get in touch if you would like us to review your position.

Internet link: GOV.UK guidance

HMRC have released more unusual excuses from taxpayers who failed to complete their self assessment tax return on time. These include:

1. ‘My tax return was on my yacht…which caught fire’
2. ‘A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed’
3. ‘My wife helps me with my tax return, but she had a headache for ten days’
4. ‘My dog ate my tax return…and all of the reminders’
5. ‘I couldn’t complete my tax return, because my husband left me and took our accountant with him. I am currently trying to find a new accountant’
6. ‘My child scribbled all over the tax return, so I wasn’t able to send it back’
7. ‘I work for myself, but a colleague borrowed my tax return to photocopy it and lost it’
8. ‘My husband told me the deadline was the 31 March’
9. ‘My internet connection failed’
10. ‘The postman doesn’t deliver to my house’

With the self assessment submission deadline of 31 January now past and an automatic penalty of £100 for failing to submit your return on time, please contact us if you need help bringing your affairs up to date.

Internet link: GOV.UK news

HMRC have revealed their top ten most significant fraud and organised crime cases of the last year.

Simon York, Director of HMRC’s Fraud Investigation Service, said:

‘Day in, day out, HMRC is coming down hard on tax cheats. As these cases show, we’ll tackle anyone committing tax fraud, regardless of how well resourced, well advised, or well organised. These ten prosecutions are among the most significant cases we’ve handled this year, and they reflect the wide range of work carried out by HMRC.’

Internet link: GOV.UK news

HMRC have made available a telephone helpline (0800 904 7900) for anyone affected by severe weather or floods. The helpline allows anyone affected to get practical help and advice on a wide range of tax problems they may be facing. These could be financial issues regarding making payment, issues regarding lost or damaged records and may include cancelling penalties where deadlines are missed due to severe weather and flooding.

Internet link: GOV.UK helpline