HMRC increases late tax payment rate

HMRC increases late tax payment rate

HMRC has increased the late payment rate from 3% to 3.25%, while the repayment rate remains frozen at 0.5%

Tom Selby, a senior analyst at investment platform AJ Bell thought that this was “grossly unfair”, commenting: “It seems grossly unfair for HMRC to increase the late payment rate for those who owe it money without doing the same thing when it owes other people money.” The Association of Chartered Certified Accountants (ACCA) agreed by saying that there should be a level playing field and that the current system has a “huge discrepancy.”

Chas Roy-Chowdury, global head of tax at ACCA says: “There needs to be a mirror image. If HMRC raise their own interest rates then they need to think about raising the repayment rate. There is a huge discrepancy. The repayment rate should have gone up in line with the base rate if not higher.”

The decision to increase the late payment rate is based on the Bank of England’s decision to increase the UK interest rate to 0.75%. More on this can be found in our recent article here.

An HMRC spokesperson said: “The different interest rates provide fairness to taxpayers who pay on time. Most people pay their tax on time and it is only right that those who do not then pay a higher rate of interest on the unpaid tax that would otherwise have gone to our schools, hospitals and other vital public services.”

HMRC also explained that setting a repayment rate higher than the Bank of England rate could lead taxpayers to deliberately overpaying their taxes to achieve a higher interest rate than they might get on a savings account.

However, Roy- Chowdury argues that late payments are not necessarily always the fault of the taxpayers. It can be due to the complexities of the tax system or even disputes over how much tax is actually owed.

It is thought that taxpayers are unlikely to see the repayment rate rise anytime soon as HMRC states it will not increase above the floor of 0.5% until the Bank of England base rate increases above 1.5%.

Bank of England interest rates at highest level since 2009

Bank of England interest rates at highest level since 2009

The Bank of England has raised interest rates for only the second time in a decade. The increase was from 0.5% to 0.75%. The quarter of a percentage point rise sets the rate at its highest level since March 2009.

The rise in the interest rate will no doubt increase the interest costs of residential mortgages that have variable or tracker rates. It will be interesting to see if the rise in the rate is passed on to savers.

In response to the increase in the rate Alpesh Paleja, CBI Principal Economist said:

‘This decision was in line with our expectations. The case for another rate rise has been building, with inflationary pressures being stoked by a tight labour market and many indicators now suggesting that weak activity in the first quarter of 2018 was a blip.’

‘The Monetary Policy Committee has signaled further rate rises over the next few years if the economy evolves as they expect. These are likely to be very slow and limited, particularly over the next year as uncertainty around Brexit takes its toll on business investment.’

Some economists and business groups have criticized the Bank of England for pushing ahead with rate rises while the UK economy is still hampered by uncertainty over the outcome of the Brexit negotiations.

Suren Thiru, head of economics at the British Chambers of Commerce, said:The decision to raise interest rates, while expected, looks ill-judged against a backdrop of a sluggish economy.”


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Cryptocurrency fraud: £2 million lost in two months

Cryptocurrency fraud: £2 million lost in two months

Data that has been published by Action Fraud revealed that £2 million was lost due to cryptocurrency scams between June and July this year.

Action Fraud stated that criminals are continuing to use social media platforms and even cold calling people in order to advertise investment schemes that promise to help people ‘get rich quick’. The criminals carrying out such scams convince their victims to sign up to cryptocurrency websites and give out personal information, such as their credit card information. When they have succeeded in getting their victim to sign up, they ask them to make an initial minimum deposit. The scam continues with the fraudster calling the victim and persuading them to invest more money to ‘achieve a greater profit.’

203 reports of this type of cryptocurrency fraud were reported to Action Fraud between 1st June 2018 and 31st July 2018. The total lost to this scam totaled £2,059501.29. However, even with the 203 reports filed, many of the victims were not aware that they were involved in the scam until the cryptocurrency website they were using was deactivated.

Pauline Smith, Director of Action Fraud, said: “It is vital for anyone who invests or is thinking of investing in cryptocurrencies to thoroughly research the company they are choosing to invest with. The statistics show that the opportunistic fraudsters are taking advantage of this market, offering investments in cryptocurrencies and using every trick in the book to defraud unsuspecting victims.”

Action Fraud urges anyone who believes they may have been subjected to any type of cryptocurrency fraud to contact them and report it.

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SRA: stop offering banking facilities to clients

SRA: stop offering banking facilities to clients

The Solicitor’s Accounts Rules set out that only money that is linked to an underlying legal service should go through a client account. There must also be a proper connection with those receiving those funds and the legal service the firm has provided.

It has been reminded by regulators that law firms cannot act as an effective bank account for any clients that want to have a safe place to hold funds. The solicitor’s regulation authority (SRA) is worried that there are many practitioners that are still continuing to do this despite repeat reminders and therefore they are risking misconduct proceedings and damage to the reputation of the profession

The restrictions are there to protect law firms from the risk of assisting money laundering, helping someone improperly hiding assets in a commercial or matrimonial dispute or helping someone avoid their obligations in insolvency proceedings. The SRA has also warned law firms about the risk of allowing firms’ client accounts to be used to add credibility to investment schemes that are questionable at best.

Law firms cannot justify processing money through the client account due to having a retainer with a client. The SRA also cautions against firms holding any funds to enable them to pay a client’s routine outgoings, for example, when based abroad. This is no longer justifiable with technological advances.

In the past year, the SRA has prosecuted 20 solicitors and three firms at the Solicitors Disciplinary Tribunal (SDT) for breaches in this area. Three solicitors lost their jobs with an additional two being suspended. The SDT also imposed £763,000 worth of fines which included the highest ever individual fine of £500,000.

Paul Phillip, the SRA Chief Executive, explained that “Law firms are not regulated to operate their client accounts as a banking facility for clients. They should not trade on their reputation to priced banking facilities, which can result in significant risks for the firm, as well as their clients and the wider public. Our rules are not intended to prevent usual practice in traditional work undertaken by solicitors such as conveyancing, company acquisitions, the administration of estates or dealing with formal trusts. Money passing through the client account can be entirely legitimate where there is a clear legal service being provided, but we will continue to take action against those who cannot justify their actions, put their clients at risk and undermine public trust in the profession”


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SMEs ‘confident in regard to growth prospects’, survey finds

SMEs ‘confident in regard to growth prospects’, survey finds

Wesleyan Bank carried out a survey that showed that UK SMEs are confident about their future growth prospects with almost two-thirds anticipating a growth of up to 40% over the next few years.

The ‘SME Heroes or Zeros’ report explained that the survey was carried out by 500 SMEs and the results were that 54% of these are now more confident in regard to their business prospects than what they were a year ago. The report revealed that 65% of SMEs said that they are sure they will experience a growth of up to 40% over the next two years. The report also highlighted that out of the 500 SME surveyed, only 11% were ‘concerned’ about the potential impact of Brexit.

Paul Slapa, head of direct sales at Wesleyan Bank, said: “The UK’s economic outlook is often clouded by negativity, but this research highlights that SMEs are performing strongly and have built solid foundations to prosper, both pre and post Brexit. Unless there is a material impact of their business today, there is no reason SMEs should put on hold their investment plans to sustain and maximise growth.”

Slapa continues to say that SMEs can gain external support from lenders to help spread the cost of equipment purchases and technology to help speed up return on investment. Businesses are increasingly discovering alternative finance options rather than relying on traditional borrowing methods such as overdrafts, savings and credit cards to help growth.

59% of UK SMEs have been reported by Wesleyan Bank to have used external funding on at least one occasion against only 30% in the same survey in 2016. 27% of these also state that they now ‘regularly’ turn to external finance; a figure which is up from 20% two years ago.

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