HMRC to Hire 5,000 New Investigators: Are You Prepared?

HMRC is stepping up its efforts to tackle unpaid taxes with significant new measures. The tax authority is reportedly recruiting 5,000 additional investigators and rolling out advanced data analysis tools powered by artificial intelligence to identify tax discrepancies.

What’s Changing in HMRC Investigations?

HMRC has enhanced its strategies to ensure tax compliance by expanding its data sources and increasing scrutiny. Here’s what they’re focusing on:

• Browsing the internet and social media platforms to identify unreported income.
• Collecting data from the DVLA, Land Registry, Companies House, online selling platforms, banks, and credit card records.
• Using their expanded powers to request more detailed information from individuals and businesses.

These efforts aim to crack down on areas of unpaid taxes, including rental income, online sales, and even breeding animals. HMRC has already sent out waves of voluntary disclosure letters targeting these activities. For example, if you’ve sold a litter of puppies or rented out property—even occasionally—you may need to report this income on your tax return.

What Should You Do Next?

If you’re unsure about your tax reporting obligations or whether your activities require disclosure, now is the time to seek expert advice. Failing to report could lead to penalties or an HMRC investigation.

Don’t wait until HMRC contacts you—reach out to us today to ensure your tax affairs are in order.

Why Choose Us?

• Expert guidance on HMRC tax compliance.
• Assistance with voluntary disclosures to avoid penalties.
• Peace of mind knowing your tax returns are accurate and complete.

Contact us now to protect yourself from unexpected investigations and penalties.
📧 Email: hello@businessworksuk.co.uk
🌐 Website: www.businessworksuk.co.uk
📞 Phone: 0113 286 4486
📍 Location: Garforth, Leeds, LS25 1EQ

You’ve probably heard us say, “We help businesses like yours grow.” But what does that actually mean?

Recent research shows that accountants play a vital role in helping SME businesses thrive. By improving financial management practices and helping businesses understand their numbers, we enable substantial time savings, smarter decision-making, and sustainable growth.

Our clients rely on us when making critical business decisions, such as:

• Hiring employees
• Relocating to new premises
• Investing significantly in their business
• Applying for loans or government support

But it’s not just about the big decisions. We’re also here for the day-to-day guidance that keeps your business running smoothly. With an accountant on your team, you’ll never face tough decisions alone.

Beyond the numbers, we empower our clients with financial confidence. By ensuring your financials and regulatory obligations are in order, we help eliminate the risks of penalties and errors. This not only supports your business but also alleviates the mental burden of financial stress.

Let us help your business thrive. Check out our upcoming events and resources to learn more about how we can support your success. https://www.businessworksuk.co.uk/training-events/

With this budget dominating the news and social media, you’ve likely heard about the significant changes that were announced. But what do these changes mean for your business, and how can we assist you in navigating them?

We’ve summarised the key tax changes below, but if you’d like a more in-depth understanding, Jo is available to guide you through it all in an upcoming workshop or webinar. Secure your free spot, and if you’re already an existing client, please use code BWClient using this link.

Workshop & Webinar Dates:

• Tuesday, 12th November at 4 pm – Webinar
• Friday, 15th November at 12 pm – ‘Lunch and Learn’ in our office

Supporting Employers with Payroll Adjustments

If you employ staff, you may wonder how the changes to the National Minimum Wage (NMW) and Employer’s National Insurance (NI) will impact your payroll. We’re here to help! Contact us, and we’ll recalculate your October figures using the new rules, helping you anticipate any impact on your expenses.

In December, we’ll also offer focused Workshops and Webinars on employment obligations to clarify your responsibilities and make planning easier. You can book using the same link above.

Key Budget Changes to Note

National Insurance Contributions (NIC)

• Threshold Adjustment: The earnings threshold for employers’ Class 1 contributions drops from £9,100 to £5,000.
• Rate Increase: Employers’ NIC rate rises from 13.8% to 15% starting 6th April 2025.
• Employment Allowance Increase: Eligible employers will see an increase from £5,000 to £10,500.

Capital Gains Tax (CGT)

• Rate Changes: Effective immediately:
  • Basic Rate: Increased from 10% to 18%
  • Higher Rate: Increased from 20% to 24%
• Timing for Lower Rates: Disposals made before 30th October 2024 will still be taxed at the previous, lower rate.
• Annual Exempt Amount: This remains at £3,000 for 2025/2026.

Inheritance Tax (IHT)

• Frozen Bands: No changes in rates or allowances; bands are now frozen until 5th April 2030.

Pension Death Benefits

• New Inclusion: From 6th April 2027, unused pension funds and death benefits will be included in a person’s estate for IHT.
• Reporting Obligation: Pension scheme administrators will be responsible for reporting and paying any inheritance tax on these benefits.

VAT

• Thresholds Remain Unchanged: As of 1st April 2025:
  • Registration threshold: £90,000
  • Deregistration threshold: £88,000
• Private School Fees: From 1st January 2025, VAT will apply to private school fees at the standard rate.

Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA)

• Expansion for Landlords & Sole Traders: MTD will extend to those with incomes over £20,000 by the end of this parliament.
  • April 2026: Applies to incomes over £50,000
  • April 2027: Applies to incomes over £30,000

Furnished Holiday Lettings (FHL)

• Tax Treatment Changes: Legislation will end the specific tax treatment for FHL properties.
• Effective Dates: These changes begin on or after:
  • 6th April 2025 for Income Tax and CGT
  • 1st April 2025 for Corporation Tax

Van vs. Car Classification

• Updated Classification: From 6th April 2025, most double cab pick-ups will no longer qualify as vans for benefit charges.
• Transitional Provisions: Employers with existing vehicles can retain van classification until disposal or until 5th April 2029, whichever comes first.

If this all sounds too complicated, then we’re committed to helping you understand and adapt to these changes seamlessly. Our workshops and webinars are designed to provide clarity and actionable insights, so don’t hesitate to join us.

HMRC Targets Puppy Breeders: Letters sent to millions

HMRC is sending out letters to millions of people who they believe have not declared income from breeding and selling puppies. These could come as quite a shock when you receive one out of the blue, and some of the language used in the letters is meant to worry you.

HMRC has changed legislation so that selling platforms must provide them with information about who is selling on their platforms. However, this is only one source of information they have used. This information is in the public domain, so even before the change in legislation, the evidence is out there.

Registrations with the Kennel Club and social media are good sources of public information. There are even rumours that information could also be coming from pet insurers and the RSPCA.

If you have received a letter, HMRC is suggesting you file a voluntary disclosure. They won’t give a time scale of how far to go back. In the UK, the tax system is self-assessment, so they expect you to provide all the information for as long as you have been receiving income, in this case from breeding puppies.

If you regularly breed puppies, you should file a self-assessment tax return, as this is likely to be classed as a trade.

What information do you need to supply to HMRC?

• All the money you received for the pups/kittens
• All the costs you incurred, including vet bills, mating fees, microchipping, injections, etc.

However, if you had a one-off litter, you could argue that this isn’t a trade at all. If you didn’t receive more than £1,000 in total for the pups in that tax year, you wouldn’t need to declare the income.

What if you’ve missed previous declarations?

Unfortunately, the bad news doesn’t end there either. If you receive a letter and make a voluntary disclosure, the likelihood is that the taxable income you then declare is from a previous tax year, meaning you should have already declared this income. As a result, you are likely to incur penalties (fines for not declaring the income) and interest on any tax not paid. If you have been breeding for several years, this could add up.

These rules are not just for the sale of puppies but cover any kind of income—from breeding to rental properties, to selling on eBay, to name a few.

Some big changes in information for Limited Companies held by Companies House came in this year (2024). These include the address you can have as your registered office, and the new requirement for a valid email address to facilitate communications

Information directly from HMRC :

New rules for registered office addresses

From 4 March 2024, there will be new rules for registered office addresses which mean companies must have an ‘appropriate address’ as their registered office at all times. An appropriate address is one where:

• Any documents sent to the registered office should be expected to come to the attention of a person acting on behalf of the company

• Any documents sent to that address can be recorded by an acknowledgment of delivery

These changes mean you will not be able to use a PO Box as your registered office address from 4 March 2024. You can still use a third-party agent’s address if they meet the conditions for an appropriate address.

If you’re currently using a PO Box as your registered office address, you’ll need to change it by 4 March 2024. You can change your company’s registered office address online, using your company’s authentication code.

Companies that do not have an appropriate registered office address could be struck off the register. When we identify an inappropriate registered office address, we’ll change it to a default address held at Companies House. The company must then provide an appropriate address, with evidence of a link to that address, within 28 days. If we do not receive this evidence, we’ll start the process to strike the company off the register.

Registered email address

From 4 March 2024, there’ll be a new requirement for all companies to give a registered email address to Companies House. This email address will not be published on the public register.

From 4 March 2024, new companies will need to give a registered email address when they incorporate. Existing companies will need to give a registered email address when they file their next confirmation statement with a statement date from 5 March 2024. Our online services will prompt you to supply a registered email address when you file your next eligible confirmation statement.

We’ll use this email address to communicate with you about your company, so you must choose an appropriate email address. You can register the same email address for more than one company.

You’ll be able to change your registered email address through our new ‘update a registered email address’ service. You’ll need to be signed in and authenticated to do this.

Companies will have a duty to maintain an appropriate registered email address, in the same way as their registered office address. Any company that does not do this will be committing an offense.

We’ve had reports of suspicious letters claiming to be from Companies House. The letter claims you need to make payment for Enhanced Web Filing Access.

Please do not follow any instructions in this letter. It’s a scam.

Read how to report a suspected scam to Companies House.

Companies House are running stronger checks on Company names which give a false of misleading impression to the public. 

They can now reject an application to register a name where they have reason to believe. 

• The name is intended to facilitate fraud. 
• The name is comprised of or contains a computer code. 
• The name is likely to give the false impression the company is connected to a foreign government or an international organisation whose members include two or more countries or territories (or their governments) 

Companies House can also direct companies to change their name. If a company fails to change its name within 28 days, they can now determine a new name for the company, for example, changing the company name to its registered company number. 

We can suppress a name from the register while a company responds to a direction to change its name. 

These changes have been introduced under the Economic Crime and Corporate Transparency Act. For more information click the link https://bit.ly/3wumWRe 

From April 2023, businesses will pay 25% corporation tax on profits above £250,000. Smaller entities with profits of up to £50,000 will remain at the previous 19%. Those with profits between £50,001 and £249,999 will pay a marginal rate of between 19% to 25%, depending on the level of profits.  

The short answer for business owners who are basic rate taxpayers is that paying dividends is nearly always the better option, regardless of changes in the Corporation Tax rate the company pays. This is because dividends do not attract NICs and offer tax advantages for lower rate taxpayers. 

However, unlike paying salaries, the business must be making a profit (after tax) to pay dividends. 

If you would like more information, please contact your accountant on 0113 2864486. 

HMRC takes its responsibility seriously to make sure that individuals and businesses who can pay, do so on time. They provide extra, bespoke support to those facing financial hardship or who have personal difficulties. 

If you’re finding it difficult to make a tax payment you should ask HMRC about affordable monthly payment options, called a Time to Pay arrangement. They will always try to work with you to negotiate a time to pay arrangement for tax you owe based, on your income and expenditure. 

Time to Pay arrangements are based on the specific financial circumstances of whoever owes a debt, so there is no ‘standard’ Time to Pay arrangement. They will look at what you can afford to pay and then use that to work out how much time you need to pay. 

A Time to Pay arrangement can cover all outstanding amounts overdue, including penalties and interest.  

The arrangement is designed to be flexible and is not a fixed, formal contract and can be amended over time, should your circumstances change. 

Please take note.  

• HMRC are now back fully chasing businesses and individuals for arrears of VAT, PAYE, Corp Tax and Self Assessment 
• HMRC Field Force Agents are back calling on businesses and individuals unannounced. 

Individuals 

HMRC will decide your ability to pay using an ‘income and expenditure assessment’ form. This looks at your income, disposable assets and expenditure to help them work out your disposable income.  

HMRC typically expects you to pay no more than 50% of your disposable income. This may be higher if you have a very high disposable income. There’s no upper limit on the amount of time that someone can have to pay. 

Businesses 

Business finances are often complex, so they’ll ask you to tell them what you think the business can afford to pay. 

After they have looked at your proposal, they’ll ask you questions about it to make sure it’s affordable and pays off the debt as quickly as possible. 

The length of the arrangement will depend on: 

• How much your business owes 

• The business’ financial circumstances 

The arrangement will be reviewed regularly and can be adjusted over time. 

For more information click https://bit.ly/44rZgta