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‘Hidden pitfalls’ warning over new tax system PDF Print E-mail

Businessmen and women were warned of hidden pitfalls in a new tax system, at a meeting of Worcestershire Group of Chartered Accountants.

Andrew Gotch of TaxFellowship, gave the warning to accountants during a lecture on the new tax regime at the Graeme Hick Pavilion, Worcester Cricket Club on Tuesday (29 September).

Gotch outlined the new tax tribunal system that came into effect from 1 April 2009.  Her Majesty’s Revenue and Customs’ ‘Litigation and Settlement Strategy’ increased the likelihood of cases moving towards Tribunal hearings - and so all chartered accountants had to be ready to deal with the new régime.

He described pitfalls for the unwary, including ‘enormous’ penalty costs, and suggested ways to approach and prepare for the new Review process and hearings.

He said developments in the field of employment status meant that the costs to clients of failing to prepare and defend their position could be enormous, particularly with the advent of the new penalty system.  Clients needed to be able to show they had taken reasonable care to address status issues when engaging a worker, if they were to avoid penalties.

He advised on Revenue compliance checks into businesses using sub-contractors, pointing out that there was no obligation on the sub-contractors to participate in an informal interview, which could be problematic for the client, because few if any sub-contractors understood the true implications of the questions.  Keeping a tight control on the flow of information was essential.

He said that HMRC had published a Consultation Document, likely to lead to legislation next year, to force contractors to operate PAYE and NIC on payments to most if not all labour-only sub-contractors – and possibly to others too – despite the fact that they were clearly not employees under the law.  He urged accountants to make comments on the Document without delay.

Celia Adams, chair of the Worcestershire Institute of Chartered Accountants, said:  “This was a first class lecture. Members of the Institute undertake continuing professional development and these courses offer an affordable forum to keep up to date with top tips from experts.  The courses are held in the wonderful surroundings of the Graeme Hick Pavilion at Worcester Cricket Club.”

He can be contacted at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , tel  01869 232778.

The next course, from 6.30 – 8pm on Wednesday 14 October, covers auditing in a recession; and the annual accounting update is on 4 November 2009.  A single course is £29.50 plus VAT or a block booking for all eight courses is £108 plus VAT. For further information, please contact Celia Adams on 07815 833892, This e-mail address is being protected from spambots. You need JavaScript enabled to view it .