The Fizz! Blog

"Tax refund" scams

Although I've often read warnings about emails purporting to be from the taxman offering a tax refund in return for your bank details, this morning is the first time I've actually received one:

ATTN: Dear Applicant,
2009 - Recalculation Tax Refund

After the last annual calculation of your fiscal activity we have determined that you are eligible to receive a tax refund of 284.23 GBP Your TRN (TAX REFUND NUMBER): 2 7 9 0 2 1 6 8 1 5, please fill the payment form attached in the email.
Please submit the tax refund and allow us 3-9 business days in order to process it.

Note: For security reasons, we recommend that you close your browser after you have finished accessing your refund status.
- For security reasons, we will record your ip-address and date.
- Deliberate wrong inputs are criminally pursued and indicted.

Best Regards,
Greg Stephen
Tax Credit Office Agent
Preston
PR1 0SB
Telephone: 0845 300 3900
Opening hours:
8.00 am to 8.00 pm, seven days a week

Two things betray this as a scam.  Firstly, the Americanisms that clearly indicate that the email has been written by someone not from the UK - "fiscal", "indicted" (and GBP, for that matter).  But more importantly - the Revenue open seven days a week, until 8pm?  Whoever has written the email clearly doesn't have any first-hand knowledge of the tax system here.  If they put Monday to Friday, 10am until 3pm, they would have a much better chance of fooling people!

The Revenue will never contact taxpayers in this way - if you get an email like this, just delete it.

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Fuel-only mileage rates change

As of 1 July, the Revenue have updated their fuel-only mileage rates. These can be used a) for reclaiming VAT on that part of the 40p a mile mileage allowance that represents fuel and b) reimbursing employees for business fuel costs where the employee buys all the fuel but it's a company car. To be honest, I'm not sure why they've bothered, because the rates aren't very different from the old ones - in fact some of them, including the rates for petrol cars up to 2 litres - which I'm guessing is the most common category - have stayed the same.  In any case, the new rates are here:

http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

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Are you giving your staff enough time off?

From 1 April 2009, the minimum paid annual leave that employers must to give their employees increased.  For a full time worker, the old minimum was 24 days.  Now it's 28 days.

For part-timers, and people joining part-way through a holiday year, Business Link has provided a calculator for working out their holiday entitlement.

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BlackBerry tax planning

I've just got a BlackBerry.  It's a pretty amazing little thing, although the emphasis is very much on the "little" at the moment - but I'm sure my fingers will get used to the tiny keyboard eventually.

An employer is allowed to provide an employee with a mobile phone, tax-free.  In other words, the employee doesn't pay any tax in return for the benefit of having access to the phone, regardless of how much personal use he or she makes of it.  Unlike with, say, a company car, where the employee does pay tax in return for the benefit of using it.  It used to be the case that the employee could be given multiple phones on that basis, until the Revenue realised that many business owners were providing phones to their spouse and children and putting the whole lot through the company books.  So at that point the law was changed to limit an employee to just one phone.

Apparently, though, a BlackBerry isn't classed as a phone for tax purposes.  It's classed as a computer.  And providing an employee with the use of a computer (as long as there is at least occasional business use) is another tax-free benefit - but without that "one per employee" limitd.  So, as long as the cost isn't prohibitive, some business owners will no doubt be considering dishing out BlackBerrys to their families, all paid through their company.  Worth thinking about, as long as you trust the kids not to run up bills that dwarf the tax savings!

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MP sacked for normal, mainstream tax planning

I have as much contempt for MPs as anyone else, and firmly believe that they should be first against the wall come the revolution.

At the same time, the witch hunt over expenses is becoming, in some aspects, ridiculous.  Kitty Ussher MP has been sacked as a minister for changing the home she nominated as her "principal private residence" for tax purposes for a month in order to escape paying Capital Gains Tax on its sale.  That's just standard tax planning.  You learn about it when you're studying for your tax exams when you're training as a chartered accountant.  People do it all the time.  If you look at any online tax forum (OK, it's maybe just me who looks at those) then you'll find tons of queries on the mechanics of how to do it, and how long you need to change the nomination for.

On top of that, it's somehow being held as further evidence against her that she sought and received the advice of an accountant on doing it.  Surely seeking and paying for professional advice on the subject legitimises her actions?  If she'd taken no advice and just hadn't told the taxman about the sale and hoped to get away with it (as other MPs have probably done) then I could see that as dishonest.  But getting written professional advice in advance?

It's one thing to be angry when MPs exploit the rules in ways that we civilians can't or won't.  But sacking them for doing things that "normal" taxpayers do all the time, on the basis of written professional advice, is frankly bizarre.

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Holiday pay for the long-term sick

There was some publicity over the weekend (pretty neutral in the case of The Telegraph, doom and gloom in The Mail) about the decision of the House of Lords in the case of Keith Ainsworth.  He was a tax inspector who was off work sick for two years, after which he left.  When he left, he wasn't paid for the holiday that he hadn't taken over those two years.  His employer (HM Revenue & Customs, obviously) considered that a) he hadn't worked for two years, so wasn't entitled to any holiday in that time and b) even if he was entitled to it, he'd left work without taking it, and that was his loss - he had no right to be paid for it.

Mr Ainsworth thought they were wrong on both counts, and that's what I thought on the face of it as well.  In the case of the first point, I'd have been absolutely certain that HMRC was wrong, and that he was entitled to holidays (and holiday pay) even if off sick.  On the second point, I'd have thought that HMRC was probably wrong, and in the absence of any contractual agreement they couldn't just not pay him for the holidays he'd been unable to take while sick.

Which, although it's taken years of wrangling to finally establish it, is correct.  However, I would have to concede that, reading the detail of the story, the reasons for the verdict were completely different from my reasons and the accuracy of my view was entirely coincidental.  So I'm not going into a career in employment law any time soon.

In any case, if you're an employer, be aware that the rules on holiday pay for those off sick is something that you need to give some thought to if you find yourself with a long-term absentee.

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Networking with Fizz #2 - Turn up!

A short networking tip this week - by and large, networking only works when you're committed to turning up to a group or event month in and month out (or week in and week out) regardless of whether you see instant results or not.  People need to get to know, like and trust you, and that won't happen if you meet them once every six months.

Clearly, this means that it's going to help if you actually enjoy the process.  If you're not actually interested in the people you're talking to and you're just there because you think it may be financially rewarding then you're probably not going to keep going for long.  If, on the other hand, you like going, and you like the people, and you're really interested in what they do and their experiences, and in fact you'd carry on going even if there was no prospect of getting any business from it, then you'll probably do well.  In other words, if you're genuinely not too worried whether or not you'll get any business from the process, you'll probably do fine, but if you're desperate to get some business out of it then you probably won't.

The idea that consistent attendance is a good idea might seem obvious, but I know quite a few people who attend the events I go to, but very irregularly. I imagine that they know they're "supposed" to do some networking, but they're not really that enthusiastic and committed, so they just do enough that they feel they can tick it off their list.  Unfortunately - though it's always possible they meet someone by chance who's perfect for them and wants to do business right away - I suspect that they're probably going to get very little out of it.

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Networking with Fizz #1 - Do you know why you're there?

I go to quite a few networking events, and they work very well for me.  Although I wouldn't have the hubris to claim to be a networking guru, I've developed some theories over the years of what works and what doesn't.  So, here is the first in what will be an infrequent series of tips on how to make the most of your networking efforts.

The first thing you need to consider with any networking event is - why are you going?  This might seem really obvious, but I'm not sure how many people consider it.  I don't go to every event for the same reason; I get different things from different events, and I adjust my approach accordingly.

With some events (for example, my BNI group), proceedings are very structured and there's a strong push towards finding new business for your fellow members.  So, for those events, it's really important to get to a) make sure you meet everyone in the group, and check in with them on a regular basis, b) ask questions so that you find out exactly what your fellow members do and c) work hard to make sure that everyone knows exactly what you do.  Events like that are good for a couple of reasons.  Firstly, the obvious one - they're great for generating business.  But, secondly, the fact that you'll probably have to regularly stand up and explain to people just what you do, within a defined time slot, means that you're forced to become very clear about exactly what your business is, and you should very quickly become good at explaining that with clarity and efficiency.

With others (for example, some regular lunches I organise for professionals in and around Thame) it's a more relaxed, social event, with no pressure to seek or give referrals.  The aim, if there's any beyond just enjoying yourself, is to build long-term relationships and friendships, much more slowly.  That type of event can be great as well.  But it means that there's less of a need to "circulate" or to talk business.    It's very noticeable when someone comes along to one of these groups for the first time and adopts the approach you'd expect at the first type of event - the "harder sell" that they're trying to do isn't really appropriate out of its usual context and can make people feel uncomfortable. 

There's a place for both types of events.  In fact, they can feed off one another - when you do come across someone at a more relaxed event who could be a great business connection for you, the practice you've had at the formal events at explaining yourself and your business will come in really useful.  But make sure you're clear in your own mind why you're there before deciding who to talk to and what to talk to them about.

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Are Pringles crisps?

This is a question of vital importance to HM Revenue & Customs, and it has been rumbling through the courts for some years.  But it's now all over, and the verdict is...

Yes, Pringles are crisps.  This is bad news for Mr Pringle, but good news for the VATman, because it means that Mr Pringle needs to hand over some VAT every time he sells a tube of his delicious snack.

The central question in the dispute has been whether Pringles (which are around 42% potato, 33% fat and 25% other stuff) are "made of" potato.  For obscure reasons I won't go into, VAT rules mean that if they're "made of" potato then VAT is due on their sale but if they're not "made of" potato then it isn't.  Ironically, given that he's probably generally reluctant to boast about the small quantity of potato in his potato-based snack, Mr Pringle had taken the position that there is so little potato in his products that you couldn't really say they're made of potato.  On the other side, the VATman has been saying that the man on the Clapham omnibus would consider Pringles to be made of potato, regardless of the precise quantity of potato contained within.

To cut a very, very long story short the judges agreed with the VATman - that common sense says that Pringles are made of potato.  Their position can be summarised in this excellent passage from the judgement:

VAT legislation uses everyday English words, which ought to be interpreted in a sensible way according to their ordinary and natural meaning. The "made from" question would probably be answered in a more relevant and sensible way by a child consumer of crisps than by a food scientist or a culinary pedant. On another aspect of party food I think that most children, if asked whether jellies with raspberries in them were "made from" jelly, would have the good sense to say "Yes", despite the raspberries.

Although I'm not sure what the child would say if presented with a pudding that was 42% jelly, 33% fat and 25% other stuff.  I guess that's trifle, thinking about it, so they'd probably be quite happy.

Incidentally, while this case might seem trivial, the amounts of VAT that were at stake were certainly not trivial at all - in the first instance the cost to Mr Pringle of this verdict is £100m, with a further £20m a year cost from now on!

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'Tips as wages' loophole to close

This is a business news story from a week or two ago that didn't receive as much coverage as I thought it would.  Ever since the minimum wage legislation was introduced, many restaurants (including some major chains) have avoided complying with it by considering tips to be part of their employees' earnings.  Unions have been arguing against this, saying that tips are supposed to be a gesture from the customer over and above the minimum wage.  It looks like the unions have won - the government has announced that from October restaurants must pay the minimum wage regardless of any additional tips that employees make.  I imagine this will significantly impact the profit of quite a few restaurants, and perhaps hospitality businesses will find a new way of escaping the rules, but I think most people will agree that in principle it's fair enough.

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