As many people had feared, the announcement that 1.4 million people in the UK will be expected to repay average tax underpayments totalling £1450, through no fault of their own, there appear to be more problems behind-the-scenes. HM Revenue and Customs have already admitted that a further 17.8 million outstanding tax discrepancies have yet to be addressed and we could see more letters falling through the letterboxes of people in the UK.
Ongoing problems with the UK taxation system have become something of a massive issue for the UK population who are now unsure as to whether they have underpaid, overpaid or potentially paid the correct tax over the last few years. Let alone the issue of taxation payments in the past there is a potential problem awaiting many this year as the revenue has already flagged the fact that many people are likely to have received the incorrect tax code for the current tax year for their specific situation. As a consequence, we could well be in a similar situation next year!
An internal review by HM Revenue and Customs has highlighted the fact that up to one in five tax records of the 45 million employment files in the UK could contain incorrect tax information. This is a telling indictment of the tax authorities in the UK after billions upon billions of pounds of taxpayer's money had been spent on various computer systems which were supposed to make the system safer and more reliable.
While retail sales in the UK have certainly slowed in the short term we are still currently in positive territory with recent figures for August showing a like for like increase of around 1%. However, as we approach the end of 2010 retailers in the UK are faced with an increase in VAT to 20% in January 2011, something which will impact on every area of the UK business arena and every member of the UK population. So could the VAT rise in January kill the UK retail sector?
The first 45,000 letters from HM Revenue and Customs will be dropping through the letterboxes of many in the UK today with 30,000 likely to receive a rebate from the government and 15,000 likely to receive a bill for extra tax. In total the government is chasing around £3.8 billion in underpaid tax which was purely and simply a result of a computer error within Whitehall. However, experts are advising not to rush to pay your overdue taxes.
Chancellor of the Exchequer George Osborne is today set to fight EU plans to introduce a bank insurance tax which would be charged against all banks operating in Europe and used to set up a fund to cover EU bank failures in the future. There is concern from within the UK government that the creation of a bank insurance tax administered by the European Union could encourage excessive risk-taking in the knowledge that there is funding available to bail out any failing banks.
HM Revenue and Customs will today be ready for a flood of complaints as the first batch of tax correction correspondence drops on the mats of many people across the UK. It is believed upwards of 6 million people may well have paid the wrong tax in the past with some due a rebate and others facing an average repayment to the revenue of £1428.
A £5.2 billion business tax support scheme set up by the previous government has flopped after the criteria to access the scheme were tightened by the previous Labour government. Since December last year companies looking to defer over £1 million of VAT, PAYE or corporation tax have undergone challenging interviews with the Revenue and been forced to pay £30,000 for an independent review of their specific needs. As a consequence, the number of companies applying to the scheme has fallen dramatically and it is effectively worthless to the UK business arena.
HM Revenue and Customs have today announced a surprise national insurance holiday for new companies in the UK in areas of the country likely to be hardest hit by the reduction in public-sector investment. Those who are eligible for the national insurance holiday will be able to claim relief for the first 10 employees they hire in their first year of operation. HM Revenue and Customs believes that the scheme, which runs until September 2013, has the potential to save up to £50,000 per employee.
The recent revelation of problems within HM Revenue and Customs and the fact that 6 million people in the UK have either underpaid or overpaid their taxes of late has highlighted the complicated UK taxation system. This is a system which has been added to and added to over the years to create a monster which is complicated and can in some cases be nigh on impossible to understand. So why is the UK taxation system so complicated?
