October 24, 2007


We have become aware of an email purporting to be from HMRC which advises that the recipient is due a tax refund (normally of a few hundred pounds) and requests the usual details so that a refund can be made.

The email is very convincing in appearance with the correct logo etc. but uses phrases not normally used by UK HMRC.

Recipients are advised not to reply to the email.

Elysian Associates

October 2007

October 19, 2007

VAT and Housing

New VAT rates have been announced which will affect construction contractors and property owners.

VAT is currently chargeable at the rate of 5% where renovation works or alterations to residential properties that have been empty for at least 3 years.

With effect from the 1 January 2008 the 3 years criteria will be reduced to 2 years.

Elysian Associates

October 2007

October 12, 2007

Unannounced Customs visits

We have learned that HMRC are carrying out unannounced visits to the home addresses of small businesses in the construction industry.

Using figures collated from the Construction Industry Scheme (CIS) Registrations they are checking which contractors are not VAT registered and visiting those where the figures declared suggest this to be incorrect.

As one united Revenue Department they now have the ability to quickly check figures declared for one tax purpose against figures used for another tax purpose. Worryingly they express the view that as one Department they can now rely on the stronger powers given to VAT Officers – this latter point is very dubious.

Elysian Associates

October 2007

October 2, 2007

New addresses for VAT Registration forms

As you are probably aware HMRC are currently experiencing difficulty in processing its backlog of VAT registration applications, currently estimated at 3 months. As a result of this there has been some reorganisation of the offices dealing with the various applications as follows.

With affect from 01 October 2007 all paper registration, de registration forms and change of details notifications should be sent to HMRC in Wolverhampton.

All requests to transfer VAT numbers, VAT Grouping, Flat Rate and Annual Accounting Scheme applications are to be dealt with by Grimsby.

Agricultural Flat Rate Scheme applications will be dealt with by Carmarthen.

Evidence of import and export

Please remind your clients that only original documentation will be accepted by Customs as evidence of import or export. Shipping documentation can be falsified and Customs are becoming paranoid about it, particularly where there are goods involved that could be used in carousel fraud i.e. large quantities of small and expensive items.

Elysian Associates

October 2007

October 1, 2007

Changes to Tax Penalties II

Further to the announcement that new Penalties are to be introduced by HMRC for the financial year commencing April 2008 the following are the proposed changes. These are still however, the subject of consultation.


  • Careless error – 30% of potential lost revenue
  • Deliberate error but not concealed – 70% of potential lost revenue
  • Deliberate error and concealed – 100% of potential lost revenue
  • Under Assessment by HMRC – where the taxpayer should have recognised the mistake – 30% of potential lost revenue

Presumably if we are innocent unless proved guilty HMRC will be looking for some sort of evidence of deliberate error and concealment or will they be looking for evidence to prove that we the taxpayer did not make a deliberate error or conceal their mistake as seems to be the case where Customs are looking at large potential revenue gains particularly of VAT.

It has also come to mind that when accountants and consultants such as ourselves review a client’s records we leave ourselves open to criticism or worse if we miss a potential error. This could have the effect of making one more reluctant than ever to certify tax matters without some sort of caveat.

In addition as yet there is no definition of what is meant by ‘concealed’ or ‘deliberate’ error.

We wait to hear – if you want to submit comments to the consultation there is a document of the HMRC website.

Elysian Associates

October 2007

September 17, 2007

Changes to Tax Penalties

A new penalty regime enacted by the Finance Act 2007 will come into force for Returns covering periods on or after 1 April 2008 and filed after 1 April 2009. The new regime applies to ALL taxes.

Particularly of note from a VAT perspective are the facts that higher penalties will be imposed for deliberate actions.

All the following will disappear

  • The current thresholds for misdeclaration penalties,
  • the concept of a Voluntary Disclosure removing liability for a penalty, and
  • ‘reasonable excuse’.

Once details of the penalties are known we will circulate these.

Elysian Associates

September 2007

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