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More Mortgage Application Trouble for Contractors
By Mark Clarke - 22 February 2012
This month a study revealed that the biggest dilemma for UK self-employed contractors was to get a mortgage. The poll by PCG, the leading professional association that represents freelancers and contractors, found that many self-employed Brits’ personal finances are affected but 38% of contractors surveyed confessed that the biggest struggle was the battle to get a mortgage.
According to the findings, a mortgage is the main barrier that contractors have to overcome because it causes trouble when proof of salary by an employer is required.
However, this obstacle is only said to get worse due to the recently launched Mortgage Verification Scheme. Under this scheme, mortgage lenders who suspect that an applicant has provided fake income figures to boost their borrowing power can pass the detail onto HM Revenue & Customs for a cross-check.
Contractors who make income declarations to mortgage lenders that don’t correlate with figures on tax return forms to HMRC can face an investigation.
MVS is intended to help lenders pick out fraudulent mortgage applications and therefore help them lend more responsibly. It also gives the taxman the opportunity to ensure data given by freelancers is accurate.
It is reported that the data exchanged with lenders and HMRC should only be limited however, advice has been issued that it doesn’t necessarily mean going to a second lender if you have been rejected by another because “sophisticated systems” mean that most mortgage lenders share such info.
If you are self-employed and need advice regarding tax paperwork, mortgage applying and legislation such as IR35 and AWR, get in touch with Nixon Williams today.
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HMRC Issuing 850,000 Late Tax Return Penalties
By Mark Clarke - 21 February 2012
Fewer contractors will receive a late tax return penalty over the next two weeks in contrast to the same time last year. HM Revenue & Customs will be issuing 850,000 penalties over the next fortnight which is 550,000 less than in 2011.
Letters are being sent to taxpayers who failed to send in their 2010/11 self-assessment returns on time. They will include an initial £100 fixed late-filing penalty even if there is no tax to pay but for anyone who still hasn’t sent in their return to HMRC, they risk further fines.
All freelancers and contractors who file a return more than three months late will be charged an additional £10 penalty per day that the amount is outstanding, so there is scope for a maximum penalty of £900.
Stephen Banyard, HMRC spokesperson, said: “We want the returns, not the penalties. So anyone who still hasn’t sent theirs should do so as soon as possible.
“People who receive a penalty notice should act now to avoid further penalties.”
If you took advantage of the deadline extension and filed your return online on 1st or 2nd February, HMRC will not be issuing you a penalty.
And if you do get a late-filing penalty but want to plead against it because you have a reasonable excuse for not doing it on-time, you can appeal in writing by 31st March.
HMRC have issued examples of excuses for missing the deadline which include a delay in themselves sending you out an online activation code, or a family bereavement or illness.
If you do receive a penalty but believe that you don’t need to be in self-assessment, you should call the department on 0845 900 0444 to waiver the fee.
Reduce the possibility of filing your tax return in late by employing accountancy services from Nixon Williams. We can prepare it for you and we will file the return with HMRC electronically, providing you with a copy for your records.
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Ed Balls Urges the Chancellor to Cut VAT to Boost the Economy
By Mark Clarke - 20 February 2012
The Labour Shadow Chancellor has called on the Government for VAT to be cut and taxes slashed to give Britons and businesses confidence as well as boost growth in the economy.Ed Balls is urging the Chancellor George Osborne to include tax cuts in next month’s Budget which include; a VAT drop, or a 3p income tax cut for a year, or raising the personal allowance to £10,000, or increasing tax credits for working people.
Mr Ball’s claims that that tax cut options are essential to spark demand and avoid a 1930s-style depression.
He said on the BBC One’s Andrew Marr Show that a temporary tax cut now would help families feeling the squeeze and that “a VAT cut is the fastest and fairest way to do a temporary boost to demand to get confidence moving.”
And he added that he fears Britain is in for a” lost decade of slow growth and high unemployment which will leave a permanent dent in the nation's prosperity.”
In an article for The Sunday Times, Mr Balls warned of lasting damage to the economy if the coalition did not take action in the March 21 Budget to help promote growth.
The proposals are part of Labour's five point plan for jobs, which also includes tax breaks for small businesses taking on extra workers and bringing forward essential infrastructure investment.
If you are a contractor and unsure as to how any tax proposals will affect you, check out our Take Home Pay Calculator today.
Or, speak to one of our friendly accountants for contractors for expert advice.
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