Business and Tax Round-up

HMRC introduces new system to tackle scam phone calls

HMRC has introduced a new system designed to prevent criminals from spoofing government helpline phone numbers.

According to HMRC, criminals often use ‘official’ helpline numbers to convince taxpayers to part with large sums of money. In 2018, HMRC received 104,774 reports of so-called ‘phone scams’ – a significant rise when compared to 2017’s figure of 7,778.

The new system, which was developed in partnership with the telecommunications industry and regulator Ofcom, will help to prevent fraudsters from using official-looking phone numbers, and will thereby assist taxpayers in recognising genuine HMRC helpline numbers.

Commenting on the issue, Jesse Norman, Financial Secretary to the Treasury, said: ‘This is a huge step forward in the fight against phone fraud.

‘Vigilance will always be important, but this is a significant blow to the phone cheats.’

The implementation of the new system is just one part of HMRC’s plan to safeguard taxpayers from fraud. From June, individuals seeking to pay taxes over the phone will be required to enter their payment details using their phone’s keypad, as opposed to giving them verbally.

 

OTS calls for review of PAYE system

In a new report, the Office of Tax Simplification (OTS) has called for the Pay as You Earn (PAYE) system to be reviewed, to ensure tax agents can ‘see relevant client information’ and ‘access a number of key services’.

The report suggested that tax agents ‘don’t always have full access to their clients’ PAYE records’. In addition, the current PAYE system ‘does not handle the fluidity of the modern workplace very well’, according to the OTS, especially in relation to changes of job mid-month, multiple jobs, concurrent employment and self-employment.

Commenting on the report, Bill Dodwell, Tax Director at the OTS, said: ‘It is time for a new review of PAYE, to look at areas where the inputs from employers do not work well and how they are processed by HMRC to update tax codes and the new personal tax accounts. The review needs to update PAYE for modern working patterns.’

The report also proposes creating a ‘PAYE-like experience’ for the self-employed, in order to allow them to set money aside to pay future tax liabilities.

 

Investment Association calls for ‘greater transparency’ on dividends

The Investment Association (IA) is urging listed companies to ‘improve the transparency of their approach to paying dividends’.

According to the IA, companies not seeking a shareholder vote on dividend payments ‘risk depriving shareholders of the opportunity to have a say on a matter that is pivotal to the organisation’s attractiveness to investors’.

The IA has called for firms to publish a ‘distribution policy’, outlining their approach to paying shareholders dividends. Such a policy will ‘provide shareholders with an opportunity to engage on companies’ approaches to paying dividends’, the Association stated.

Commenting on the matter, Business Minister Kelly Tolhurst said: ‘I thank the IA for this report, which shines a light on companies who are not giving their shareholders a say on dividends.

‘The government welcomes the further work being undertaken to encourage companies, as a minimum, to set out a distribution policy for shareholders. This type of policy makes sure shareholders have a clear basis for engaging with companies on their approach to dividends, investment and other uses of cash.

‘We are committed to ensuring the UK’s largest companies become even more transparent and accountable, which is why we have implemented reforms to upgrade our corporate governance and continue to seek further ways to ensure the UK remains the best place in the world to work, invest and do business.’

 

IFS states high earners ‘increasingly hit by lack of indexation’

The Institute for Fiscal Studies (IFS) recently published a report which revealed that more people are being ‘dragged into higher rates of tax’ as a result of tax thresholds failing to rise in line with the rate of inflation.

The report states that, in 2007, the year before the top income tax threshold of £150,000 was announced, there were 319,000 individuals with income above this level. The IFS suggested that, as a consequence of the threshold not having moved since it was first announced, there are now 428,000 taxpayers with income above this level.

The report also stated that other tax thresholds being frozen in nominal terms include: the inheritance tax (IHT) threshold, at £325,000; the VAT registration threshold at £85,000, which is set to remain at this level until 2022; and the £110,000 and £150,000 thresholds at which the annual limit on tax-privileged pension saving begins to be reduced. Additionally, the £100,000 threshold at which eligibility for Tax-Free Childcare is removed is not adjusted for inflation.

Paul Johnson, Director of the IFS, commented: ‘Recent governments have, rather stealthily, increased the tax rates on high earners. If the government thinks there is a case for more high-income people to pay more tax, it should be upfront about that view.’