Grow your business – Part 10 – APPLY THE LATEST TECHNOLOGY

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Technology is a major driver of business profits. Here is a list of innovations you may want to implement in your business: 1. Document management systems (going paperless) 2. Electronic workflow 3. Multiple monitors 4. Portals 5. “Cloud” computing 6. Customer relationship management (CRM) software There are significant benefits to going paperless: Increase in productivity […]

PAYE tax codes

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From 6 April 2017 HMRC will be updating tax codes on a much more regular basis.  For some employees this could mean a new tax code every month.  The aim of this change is to ensure employees pay the correct tax, or benefit from tax relief and refunds, during the tax year. If we prepare […]

Working in the “GIG” economy

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The House of Commons Work and Pensions Committee has recently published a report calling on the Government to close the loopholes that allow “bogus” self-employment practices, which burden the welfare state but reduce the tax contributions needed to sustain it. This follows the Matthew Taylor inquiry which took evidence during February and March 2017 from […]

Thinking of winding up your company?

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Up until 6 April last year, the distribution of cash to shareholders on the winding up of a trading company by a liquidator, was usually taxed as a capital gain, potentially taxed at just 10% with the benefit of entrepreneurs’ relief. However, last year’s Finance Act introduced a targeted anti-avoidance rule that may tax such […]

Reporting expenses and benefits provided to employees

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HMRC have recently updated their toolkit dealing with the reporting of expenses and benefits provided to employees and directors in the light of significant recent changes in this area. HMRC toolkits are designed to help minimise the risk of errors in returns and computations and their use, although voluntary, will be taken into consideration in […]

HMRC beats Glasgow Rangers in Supreme Court

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A scheme using Employee Benefit Trusts (EBTs) as a means of remunerating directors and staff whilst avoiding tax has been defeated by HMRC in a recent Supreme Court case. Such schemes had been used by many employers to avoid PAYE and national insurance contributions (NICs) and involved complicated trust structures and “loans” to the employees. […]

The Apprenticeship Levy

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From 5 April 2017 HMRC has introduced an apprenticeship levy. The levy is charged at 0.5% of the businesses total payroll cost and applies to all businesses operating payroll.   Each business receives a £15,000 allowance each tax year which means that they do not have to pay the levy until 0.5% of their payroll […]

Auto Enrolment Rates Increase

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The current minimum pension contributions for employees inside Auto Enrolment are 2%, with the employer being required to contribute at least 1%.   From 6 April 2018 the minimum contributions will increase to 5%, with the employer required to contribute at least 2%.   This will increase further to 8% from 6 April 2019 onwards, […]

Staying under the VAT threshold with multiple businesses

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A business is either registered for VAT or not registered for VAT.  A business cannot have some activities registered and some not. Similarly, the VAT threshold (2017-18 £85,000) cannot be avoided by artificially splitting a business into separate parts and arguing each part is under the threshold. However it can be possible for two people […]

Gone phishing

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HMRC are warning that a large scale scam email is at large: “Customers are strongly advised to lookout for a new phishing scam. If you get an email with the subject, “Your 2016 Tax Report”, with an attachment, do not open it. Please forward it to phishing@hmrc.gsi.gov.uk and then delete it. For more advice, please […]

Charities Commission shows its teeth

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The Charities Commission have publicised an inquiry they are holding into a charity that has repeatedly missed accounts filing deadlines.  The failure to file accounts on time is cited as evidence of mismanagement and misconduct; and reason to examine all financial and governance aspects of the charity.  Whether “naming and shaming” is really the most […]

VAT on e-books likely to be reduced

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Currently in the UK most physical books are sold with 0% VAT and most e-books are sold with 20% VAT.   Until Brexit has actually completed, the UK remains part of the EU wide VAT system.  It is therefore of interest that MEPs are to vote on a EU Commission proposal to reduce the rate of […]

HMRC lose case on daily penalties

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HMRC have lost a recent tax penalties case heard by the First Tier Tribunal (FTT) on 24 April 2017.  HMRC had applied daily penalties of £10 per day for late filing of a personal tax return.  HMRC could not provide evidence that the tax payer had been properly warned of such penalties. As with all […]

Workers – IR35 and Employment Intermediaries

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If any of your company’s income is caught by the Intermediaries Legislation (known as IR35) you will need to make a “deemed salary” calculation. Also if any of your company’s workers regularly work under the control of one of your customers then this has to be reported to HMRC under the Employment Intermediaries legislation.  There […]

Pensions – personal or company?

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For owner managers of dividend paying companies there is a marginal tax saving of 1% by making a company (employer) pension contribution compared to a personal pension contribution. For example if your company could pay £12500 into a pension scheme there is no tax charge on you.  There is simply £12500 going into your pension […]

National Minimum Wage update

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All National Minimum Wage / National Living Wage rates revised from 1 April 2017.  This is in addition to the rise on 1 October 2016. The new rates from 1 April 2017 will be: Year 25 and over £7.50 0 21 to 24 £7.05 18 to 20 £5.60 Under 18 £4.05 Apprentice £3.50 Some tips […]

Public Sector IR35

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Public sector bodies paying limited companies for workers now have to assess whether IR35 rules apply to that company.  If so then payments made on or after 6 April 2017 (regardless of invoice date) will have PAYE and NI deducted by the public sector body (or by the agency if they use one).  The payment […]

No national insurance rise for the self-employed after all

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Philip Hammond has announced that the planned national insurance rise for the self employed has been scrapped at least for the current parliament.  He has said he will announce how extra funds will be raised in the autumn statement. Meanwhile Theresa May has said the government await the Taylor report on the future of employment.  […]

Budget Update: Corporation Tax Rates

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The Chancellor announced that the Government is committed to continue to have the lowest corporate tax rate of the G20 major trading nations.  As already announced the corporation tax rate reduces to 19% from 1 April 2017 and then to 17% from 1 April 2020.   The Government is also keen to continue to encourage […]

Budget Update: Start of Digital Reporting Delayed for Smaller Businesses

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The Government is committed to the “Making Tax Digital” (MTD) project which is scheduled to start in April 2018 with the first quarterly updates being submitted by the self-employed and property landlords in July 2018. However, the Chancellor has now announced that there will be a one year deferral in the start date to 2019 […]

Budget Update: Tax Free Dividend Allowance to be Reduced to £2,000

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The Chancellor has announced measures to limit the rise in tax-driven incorporation. The £5,000 tax free dividend allowance will be reduced to just £2,000 from 6 April 2018. Mr Currently, once the dividend allowance has been used the remaining dividends are taxed at 7.5%, 32.5% and then 38.1% depending upon whether the dividends fall into […]

A note on national insurance and the dividend tax

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The main national insurance rates for small business for the current tax year (up to 5 April 2017) are summarised as follows: A sole trader pays 9% national insurance on profits above £8,060 (reducing to 2% on profits above £43,000) Partners in any partnership, including limited liability partnerships (LLP) also 9% national insurance on profits […]

Salary sacrifice – changes ahead

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Salary sacrifice arrangements are where employees give up some part of their salary in return for an employer provided benefit.  These are often tax efficient as the benefit chosen is often a no or low tax benefit in kind. We posted more details on salary sacrifice as a FAQ here. Changes announced in 2016 Budget […]

Tax Free Childcare Accounts To Start 6 April 2017

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New tax-free childcare accounts were announced in 2014 to replace the employer-provided childcare voucher scheme. Introduction has been delayed by legal disputes with organisations involved in administering the existing scheme, but the new accounts will at last be introduced on a trial basis in early 2017. The new scheme will then be rolled out across […]

Don’t Forget “Rent A Room” Relief

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From 6 April 2016 Rent A Relief has increased from £4,250 to £7,500. This is an annual allowance which can be deducted from rent received from lodgers where you rent out part of your main residence. Where income from lodgers exceeds £7,500 a year only the excess is taxable or this can to calculated on […]

Should you charge VAT when supplying a charity?

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Generally speaking VAT registered business have to charge 20% VAT on all supplies (sales) that they make.  For certain categories of supplies (e.g. energy saving for residential property) the reduced rate of 5% applies.  For yet other goods (e.g. most uncooked food) the zero rate applies. When supplying another VAT registered business, the VAT charged […]

New 16.5% VAT Flat Rate for service-based businesses

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It was announced in the Autumn Statement that from 1st April 2017, “businesses with limited costs, such as many labour-only businesses” will have their VAT flat rate percentage increased to 16.5%. HMRC refers to such businesses as “a limited cost traders”. For such businesses this will remove the benefit of being on the Flat Rate […]

How to ensure your office party is tax free

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Paying for directors and staff entertainment generally creates a taxable benefit on the individual.  However annual parties can be paid for tax free.  The criteria includes there being a cap on costs of £150 per head.  This can include food, drink, travel and accommodation.  The total cost of the party including VAT, is divided by […]

We can often reduce HMRC penalties

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Where additional tax is payable as the result of an HMRC enquiry and it is shown that the additional tax is due to poor accounting records, the maximum penalty that can be imposed is 30% of the additional tax for failure to take reasonable care. Where the error is deliberate, the penalty will be between […]

Artificial or Contrived? Not us!

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New rules are soon to come in to effect for all registered qualified accountants and tax advisers to reduce aggressive tax avoidance.  The rules are summarised as: “Members must not create, encourage or promote tax planning arrangements or structures that i) set out to achieve results that are contrary to the clear intention of Parliament […]

Living wage update

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The current UK Living Wage is £8.45 an hour The current London Living Wage is £9.75 an hour These are voluntary rates – more information at http://www.livingwage.org.uk/ The current National Living Wage (legal minimum for most workers) is £7.20 per hour.  All current legal minimum wage rates are here.

Charities Against Fraud – new website and how to report an serious incident

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The Charity Commission and others have established the Charity Sector Counter Fraud Group (CSCFG) to help improve the charity sector’s resilience to fraud.  As part of this project they have set up a new website http://charitiesagainstfraud.org.uk/ Trustees should report any fraud in their charity to the police immediately, and also to the Charity Commission, under […]

Uber case – does this affect you?

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The crux of the recently highly publicised Uber case is the question of who is supplying the end client. Uber argued it was the drivers supplying the end client:  Client buys service (transport) from driver; driver buys service from Uber (logistics).  (Uber just an agent) The Employment Tribunal found that it was Uber supplying the […]

Low and ultra low emmision cars

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Tax relief for businesses on cars is restricted.  Cars purchased are generally excluded from the 100% annual investment allowance enjoyed on most equipment purchases.  Cars leased often have an element of the lease cost disallowed for tax purposes restricting the tax relief. Rules for special relief for less polluting cars have been revised and extended.  […]

Do you need to register for VAT outside of the UK?

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If you supply goods or services to businesses outside of the UK you need to consider carefully your UK VAT position.  We have a factsheet VAT on International Transactions and would be happy to have a further discussion on this (contact us here). But having sorted out the UK situation, that is not the end […]

Quarterly reporting by employment intermediaries

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Ever since 6 April 2015 employment agencies and other intermediaries have been required to make quarterly reports of payments made directly to workers or via partnerships, LLPs and companies where no tax has been deducted from the payments. These requirements apply if you supply a person rather than supply a service.  If your client needs […]

VAT reclaim on cars

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There is a general rule barring VAT claims for input tax relating to cars.  However two recent cases have highlighted that a company can in certain circumstances claim back VAT input tax on cars bought and used solely in the business.  This will be unusual and will be very much the exception to the rule. […]

Splitting the income of married couples

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Where a married couple hold savings accounts and other investments in joint names, the income from those investments is split 50:50 for tax purposes, unless there is an election to allocate the income in accordance with their beneficial interests. This is particularly important where the couples’ marginal tax rates are different now that there are […]

Is it time to tame your tax return? (ignore if already completed your 2016 tax return)

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A story about clients that who wait until the last minute to provide tax records: “Most tax practices have clients who delay supplying tax compliance information until a few days before the deadline. There are several reasons for this, including reluctance to engage with taxpayer responsibilities, lack of organisational skills, unavailability of ready funds, fear […]

TaxAid – helping vulnerable people sort out tax problems

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TaxAid is a charity that helps people who perhaps can’t afford accountants, to sort out their tax affairs.  A recent article in Taxation magazine highlighted some stories of people TaxAid has helped, here is one of the stories: “Take Greg, who one morning found a bankruptcy notice on his doormat. His mental capacity had been […]

Appeal those surcharges – better than 50:50 chance of winning!

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Default surcharges are penalties raised by HMRC mainly in relation to late VAT returns and payments.  These are raised by computer automatically based on facts.  When a real life HMRC officer gets involved and hears a traders case, more than half surcharges reviewed are cancelled.  If you receive any penalty, or indeed any letters from […]

Fuel Duties – could you support an increase?

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Despite fuel duty increases, the real cost of motoring fell by 14% from 1980 to 2010.  During the same period rail and bus travel increased in price by 60%! Private car use is a major source of carbon pollution, causing climate change and health problems. An increase in fuel duty by 20p per litre would […]

Checking income to the bank statements

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Here at Green Accountancy we always want to check income against actual bank statements.  This applies to companies, sole traders, landlords letting income, personal tax, VAT returns, pretty much all work we do.  A recent tax case highlighted the benefit of checking income to bank statements.  HMRC found there was income on bank statements not […]

Submitting documents to HMRC online is safer than post

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A recent tax case highlighted one of the benefits of online submissions.  The taxpayer submitted two forms to HMRC by post, but HMRC never received them.  HMRC imposed penalties of £1280 for late filing of the forms (which incidentally had no tax due on them).  The taxpayer appealed on the grounds that the forms had […]

VAT Implications of Employee Mileage Claims

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Where employers reimburse their employees 45p per mile for using their own cars they are able to reclaim input VAT based on the advisory fuel rates. In the case of a 1600cc diesel car that would be 1.5 pence per mile.  (9p x 20/120). Such a claim needs to be supported by a receipt from […]

National Insurance record and top ups to increase State Pension

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The level of State Pension can depend on how many years you have made contributions.  This can be checked here: https://www.gov.uk/check-national-insurance-record   If you have gaps in your national insurance record you can make additional voluntary contributions.  Details are here: https://www.gov.uk/voluntary-national-insurance-contributions   You can make additional contributions to increase your state pension further.  Details are […]

Lifetime ISA

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You may have seen the new Lifetime ISAs when they were announced in the March 2016 budget.  We commented on this back on 17 March 2016. For every £40 you put in, the government will put in another £10.  The account then attracts tax free interest on top of the £50.  There is also no […]

Personal Savings Allowance – tax free interest

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Since 6 April 2016 every individual has a new “personal savings allowance”.  This allows interest to be received tax free up to set amounts.  The allowance is £1,000 for basic rate tax payers and £500 for higher and zero for additional rate tax payers.  Also since 6 April 2016 interest has been paid by banks […]

Carbon Credits – remember those?

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Carbon Credits are part of the transferable permits system aimed at reducing greenhouse gas emissions.  These add to the cost of polluters, along with environmental taxes.  Unfortunately the prices are so low as to be ineffective.  The OECD (Organisation for Economic Co-operation and Development) report that the cost of polluting with 1 Tonne of CO2 […]

Register of members – reminder of importance

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A recent tax case reminds us of the need to keep good company records.  In this case the taxpayer had not got good documentation regarding a share issue.  The lack of evidence of new shares being issued proved very costly for the taxpayer in terms of later tax relief being denied by HMRC. The most […]

Grow your business – Part 3 – Your Priorities

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The most profitable small businesses all have one thing in common:  The owners’ personal objectives are congruent with their business strategies. Our third tip in our Grow Your Business series is to look at what really matters to you.  You can then keep these priorities in mind as you plan your business. As a prompt […]

Taxpayers lose tax avoidance cases to HMRC – again

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Some more high profile tax avoidance cases (including “Icebreaker 2”) have been won by HMRC.  For many years aggressive tax avoidance split opinion in of tax advisers.  Some, including myself, viewed such schemes highly risky and at times frankly ludicrous; others saw “avoid tax at all costs” as a necessity of being an accountant. Those […]

Final chance to declare hidden overseas income

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HMRC are publicising the worldwide disclosure facility asking UK taxpayers to take this final chance to declare previously hidden overseas income, assets and gains.  Making such a declaration could reduce the level of penalties charged on any associated tax bill.  Taxpayers have until 30 September 2018 to make use of the facility.  More details on […]

HMRC issue warnings about fake emails

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HMRC never email tax payers about refunds, penalties or to ask for bank details.  Always be on guard against email scams.  It is wise to hover on links to see the website the link points to before clicking. Please spend a few minutes having a look through the following web pages from HMRC. Published 30.8.16:  […]

New tax free childcare scheme from April 2017

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HMRC are opening a new childcare scheme from April 2017. For many people it will be better to stay on the existing childcare scheme.  However self employed (sole traders and partners) are ineligible for the exiting scheme but will be able to join the new childcare scheme. Families with the youngest children will be able […]

Grow your business – Part 2 – SWOT

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If Part 1 of this new series was the all time most obvious business growth tips, part 2 is one of the oldest.  A worthwhile thought process nonetheless. DO A SWOT ANALYSIS As part of your business planning process, conduct a SWOT analysis to help you identify your company’s: Strengths Weaknesses Opportunities Threats Use this […]

Gift Aid Small Donations Scheme – HMRC Update

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Charities can use the Gift Aid Small Donations Scheme to claim back tax on donations up to £8,000 (was £5,000 up to 5 April 2016).  See HMRC updated spreadsheets used for making such claims.   As with all of our tax tips and web pages this information is necessarily summarised and of a general nature.  […]

HMRC Digital Personal Tax Account

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HMRC have implemented an online personal account that is available to everyone with a National Insurance Number even if you do not submit a personal tax return. This account enables you to check details on the following areas: Check your Income Tax estimate and tax code Fill in, send and view a personal tax return […]

HMRC Making Tax Digital (MTD) Summary and Timeline

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Making Tax Digital (MTD) is HMRC’s strategy to modernise tax administration for taxpayers.  Some highlights from their latest published MTD time-line include: 2016 test digital reporting of accounts by some small businesses testing using the RTI (payroll real time information) system to report back to tax payers how their personal allowances are used 2017 test […]

Cash basis accounting for sole traders and partnerships

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Sole trader and partnerships with turnover up the the VAT threshold are allowed to prepare their income and expenditure account for tax purposes on the cash basis.  Cash basis excludes from accounts events and transactions that haven’t yet resulted in a money being received or paid. Cash accounting is anathema to accountants.  Accountants have built […]

NEW SERIES – Many ways to grow your business – part 1

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This being the first in the series of “grow your business” ideas – we’ll start with the most obvious business development tip of all time: To increase your sales figure you can: Increase the number of customers Increase the number of times each one does business with you Increase the average value of each transaction […]

Life assurance paid by your company with no tax charge

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Pension contributions made by an employer are tax free (within limits).  Contrast that with medical insurance paid by the employer which is almost certainly taxable on the employee or director as a benefit in kind. Historically most life assurance that pays out to an employees family (not the employer) has been seen as a taxable […]

HMRC really useful factsheet about penalties

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HMRC have updated their really good factsheet on penalties.  This six page PDF gives a good overview and useful amount of detail relating to penalties for all taxes.  The factsheet is available here.   If you would like detailed specific advice on penalties please contact us.  

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