Other Matters
Gift Aid: transitional relief
As mentioned in the Personal Tax section, the basic
rate of income tax will be cut from 6 April 2008 to 20%.
Donations to
charity under Gift Aid are made under deduction of basic rate tax which the
charity is then able to reclaim. With a 22% basic rate, a cash donation of
£100 grosses up to £128.20 in the hands of the charity. At a 20%
basic rate, the same donation will only gross up to £125 for the
charity.
UK charities and Community Amateur Sports Clubs (CASCs) that
claim repayments of tax in respect of qualifying Gift Aid donations, and
charitable intermediaries making claims on their behalf, will be entitled to a
transitional relief to mitigate the effect of the change in the basic rate.
A transitional relief payment will be paid by HMRC to the charity, CASC,
etc when a claim for repayment of tax is made relating to qualifying Gift Aid
donations made in the tax years 2008/09 to 2010/11.
The government
also intends to implement a package of measures aimed at reducing the
administrative burden for charities in operating the Gift Aid scheme.
Review of HMRC powers, deterrents and safeguards
In 2007 legislative provisions on a new penalty regime
were introduced. Further provisions will be implemented by HMRC covering:
- the power to obtain information and documents
- the production of documents
- restrictions on powers to obtain information and
documents
- appeals against notices
- offences in relation to documents
- powers to inspect businesses
- penalties.
HMRC also want to extend the new penalty provisions
introduced last year to cover all taxes, not just the five main taxes that they
administer. Most of these new provisions will take effect for 2009/10
onwards.
Comment
One of the
most contentious areas is the power to inspect business premises. Currently
HMRC have the power to inspect records only for the purposes of PAYE and VAT.
The VAT legislation also gives a right of access to premises but no equivalent
power exists in direct tax. HMRC consider it to be a very important part of the
new investigation process. They state that the procedure has advantages for
both taxpayers and HMRC, although the reasons they give for this do seem to be
largely in their own favour! |
Payment, repayment and debts
HMRC intend to introduce new legislation to:
- enable HMRC to introduce a credit card payment
service from autumn 2008
- enable HMRC, later this year, to set the repayments
they must make to individuals and businesses against amounts owed to them
- modernise and align HMRC’s debt enforcement
powers to collect unpaid sums by taking control of goods in England and Wales
or by taking action through the civil courts.
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