New figures show that HM Revenue and Customs (HMRC) requested a record 20,750 malicious sites to be taken down in the past 12 months, an increase of 29% on the previous year.

Despite a record number of malicious sites being removed, HMRC is warning the public to stay alert as millions of taxpayers remain at risk of losing substantial amounts of money to online crooks. The warning comes as Scam Awareness month, run by Citizens Advice, draws to a close.

HMRC has brought in cutting edge technology to tackle cyber-crime and target fraudsters. However, the public needs to be aware and report phishing attempts to truly defeat the criminals.

Genuine organisations like banks and HMRC will never contact people out of the blue to ask for their PIN, password or bank details.

Accordingly, people should never give out private information, download attachments, or click on links in emails and messages they weren’t expecting.

The most common type of scam is the ‘tax refund’ email and SMS. HMRC has confirmed that it does not offer tax refunds by text message or by email.

HMRC has also been trialling new technology which identifies phishing texts with ‘tags’ that suggest they are from HMRC and stops them from being delivered. Since the pilot began in April 2017, there has been a 90% reduction in people reporting spoof HMRC-related texts. This innovative approach netted the cyber security team with the Cyber Resilience Innovation of the Year Award in the Digital Leaders (DL100) Awards.

In November 2016, the department implemented a verification system, called DMARC, which allows emails to be verified to ensure they come from a genuine source. The system has successfully stopped half a billion phishing emails reaching customers. This initiative has saved the public more than £2.4 million by tackling fraudsters that trick the public into using premium rate phone numbers for services that HMRC provide for free. Scammers create websites that look similar to HMRC’s official site and then direct the public to call numbers with extortionate costs.

HMRC has successfully challenged the ownership of these websites, masquerading as official websites, and taken them out of the hands of cheats. HMRC is working with the National Cyber Security Centre to further this work and extend the benefits beyond HMRC customers.

Readers of this post who are concerned by any emails or text they have received should contact HMRC by phone to check and see that they are genuine. Clients in receipt of similar communications should contact us before responding.

Last week the Treasury issued draft clauses for the forthcoming Finance Bill (to be published after the Autumn Budget later this year). These will set the scene for tax matters 2019-20 and beyond.

The aim of the advance notice is to give interested parties a chance to comment on the contents before government starts the formal process of processing the legislation through Parliament.

The draft clauses include numerous technical changes to legislation that are outside the scope of this article, but a cross-section of the more “interesting” disclosures are set out below:

• Technical changes to various benefit arrangements for cars and vans.
• Exemption from benefit charges if employees provide free vehicle-battery charging facilities for employees at work.
• HMRC are to remove requirement for employers to check receipts for subsistence claims by employees using approved HMRC rates.
• Employees will be able to nominate beneficiaries outside their close family members to receive their death in service benefits.
• Non-UK resident property businesses will be subject to UK corporation tax and not income tax as at present.
• The rent-a-room relief is to be amended to include a non-exclusive residence clause. This will mean that to continue to qualify for the £7,500 tax-free allowance, persons letting a room in their home will have to be in residence when they let.

Bear in mind that these are suggested clauses and are subject to change before the formal Finance Bill is published later this year.

1 July 2018 – Due date for corporation tax due for the year ended 30 September 2017.

6 July 2018 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2018 – Pay Class 1A NICs (by the 22 July 2018 if paid electronically).

19 July 2018 – PAYE and NIC deductions due for month ended 5 July 2018. (If you pay your tax electronically the due date is 22 July 2018)

19 July 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2018.

19 July 2018 – CIS tax deducted for the month ended 5 July 2018 is payable by today.

31 July 2018 – Deadline for payment of second instalment self-assessment for 2017-18.

1 August 2018 – Due date for corporation tax due for the year ended 31 October 2017.

19 August 2018 – PAYE and NIC deductions due for month ended 5 August 2018. (If you pay your tax electronically the due date is 22 August 2018)

19 August 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2018.

19 August 2018 – CIS tax deducted for the month ended 5 August 2018 is payable by today.

Many director shareholders take a minimum salary and any balance of remuneration as dividends. This tends to reduce National Insurance Contributions (NIC), and in some cases income tax.

The planning strategy is to pay a salary at a level that qualifies the director for state benefits, including the state pension, but does not involve payment of any NIC contributions.

For 2018/19 the NIC rate is set at 0% for annual earnings in the range of £6,032 to £8,424 inclusive. Earnings in this band range qualify for NIC credit for state benefit purposes. At up to £116 per week (£6,032 p.a.) no NIC credit is obtained for state benefit purposes. At over £162.01 per week (£8,424 p.a.) employees’ NIC starts to be paid at the rate of 12%.

Directors, who are first appointed during a tax year, are only entitled to a pro rata annual earnings band that depends on the actual date appointed. Care needs to be taken in these circumstances not to incur an unexpected liability to pay NIC.

Directors resigning during the year still have the full annual earnings band quoted above, and so care is needed to ensure that earnings for the whole tax year are within the range of £6,032 to £8,424.

Careful planning is also required to ensure that any impact of the National Living Wage regulations is considered, this may be particularly important for women who would like to claim statutory maternity benefit at some future date.

Directors considering their planning options for the first time are advised to take professional advice when setting the most tax/NIC efficient salary. We, of course, would be delighted to help.

Whether you pay income tax or National Insurance, the effect on your cash flow is the same. The payments are a necessary part of our obligation to fund the activities of State, but the self-employed are often surprised that their bi-annual tax payments cover both “taxes” – NIC and income tax.

The weekly NIC Class 2 contribution is included, presently £2.95 per week, also Class 4 contributions: these amount to 9% of taxable income in excess of £8,424 and up to £46,350, and 2% on earnings above £46,350.

Accordingly, the combined rate of State dues on self-employed earnings in excess of £8,424 is potentially 29% – 20% basic income plus 9% Class 4 NIC – and over £46,350 a combined rate of 42%. Although in practice some of the income over £8,424 may be covered by other personal tax allowances, these combined rates illustrate the true impact of income tax and National Insurance to be paid.

Self-employed traders with significant taxable earnings should therefore expect to pay more than the usual rates of income tax when they contemplate settlement of their annual self-assessment bill and have funds in reserve to meet these combined liabilities.