SMEs Face Fines Over Online Tax Returns 
It’s feared that SMEs could face a barrage of fines as a result of new rules around the compulsory online submission of all tax returns.

From the start of the 2012 / 2013 tax year in April, HMRC will introduce new rules that mean any VAT-registered business will have to submit its tax returns through the organisations website, rather than through the traditional paper-based form.

However, its been predicted that hundreds of small-and-medium businesses will be hit by significant fines and interest payments for not complying with the new rules.

HMRC carried out a long-running consultation across the accountancy profession about the detail and timing of introducing compulsory online submissions, but some think that HMRC haven’t fully got the message across to the business community about the tax changes.

One expert has said: “HMRC has tried hard to communicate with companies about the forthcoming changes around tax return submission rules. But its doubtful anywhere near as many firms as they’d hoped or expected are fully aware of what’s coming.”

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Push to Cut VAT in Pubs and Restaurants 
Over two dozen of Britain’s top pub and restaurant chains have joined forces to campaign for a cut in VAT, in an effort to boost the country’s ailing leisure industry.

The chains have joined forces to back French hospitality entrepreneur and lobbyist Jacques Borel in his campaign to get VAT reduced from its current level of 20% to 5% on food, drink and accommodation in the UK.

Chairman of Wetherspoon, Tim Martin, said: “In the UK, supermarkets have been able to subsidise their alcohol sales on the back of non-VAT food sales.

"We cannot do that in pubs because we have to pay VAT on food. It is like clean athletes having to take on drug cheats. The supermarkets have been given steroids by the Government for the last two decades."

Jacques Borel has successfully battled for a cut in VAT in France, which led to an increase in jobs within the leisure industry and also saw the government’s tax take from the sector rise, as more people went out.

It is hoped that in the 2014 Budget, the UK will follow Germany, Belgium, Sweden and Ireland who have already dropped their VAT rates – with Ireland dropping their tax from 13.9% to 9% as recently as last summer.

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Tax Office Offers “Come Clean” Deal 
Her Majesty’s Revenue and Customs (HMRC) have warned that tougher procedures to tackle serious fraud are set to be introduced later this month.

Under the new clampdown, HMRC are set to contact taxpayers in writing to tell them they’re suspected of fraud, giving them a chance to enter into a civil contract, which allows them to come clean within sixty-days, without the possibility of facing a criminal investigation.

Instead an investigation will be carried out by HMRC using civil powers, with a view to a civil settlement for tax, interest and a financial penalty. However, anyone who opts not to sign the civil contract or anyone who does sign it but then doesn’t disclose details of wrongdoing will face a full investigation which could include a criminal probe with a view to prosecution.

A spokesperson for HMRC has said the contracts will be a new element to its civil investigations, making it harder for those under scrutiny to say they would go along with an arrangement and then fail to disclose what they know.

The spokesperson added that people would not be able to get off by signing the contracts as they would need to pay the penalties involved and added that sensible decisions would be taken in each case.

Speaking of the new procedures, which are set to come in force on January 31st, Exchequer Secretary to the Treasury, David Gauke, said: “This new facility is a valuable tool which will help HMRC in its fight against fraud.

“HMRC will set out clearly what is expected of taxpayers, and what will happen to fraudsters who choose not to disclose their crimes.”

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UK Inflation Falls 
The rate of Consumer Price Index (CPI) inflation within the UK fell steeply in December 2011, to 4.2% - down from 4.8% in November, according to the Office for National Statistics (ONS).

The drop in the CPI rate is said to be the biggest monthly fall since April 2009 and the lowest since June 2011; whilst the Retail Price Index (RPI) inflation, which includes mortgage interest payments, also fell to 4.8% from its previous 5.2%.

According to the ONS the drop in both the CPI and RPI is due to lower fuel prices and cheaper clothing, with sharper falls expected in the coming months.

One economist has said of the drops: “The increase in VAT from 17.5% to 20% last January should fall out of the year-on-year comparisons, which on its own should shave 1% or more off the annual rate.

“At the same time, food, clothing and energy prices are now all falling, suggesting a broad-based lowering of price pressures, which should have a marked downward effect on the headline rate of inflation in coming months.”

The falling inflation is expected to ease the squeeze on consumers’ spending power, whilst at the same time giving the Bank of England leeway to extend its quantitative easing (QE) programme to stimulate the economy.

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UK Already In Recession 
According to a leading Think-Tank the UK has already double-dipped back into recession, as interest rates look set to stay on hold at their record low until 2016.

It’s believed that the predicted growth of around or under 1pc for years to come will force the Bank of England to keep base rates at 0.5pc.

The Think-Tank, the Centre for Economics and Business Research (CEBR) believes the UK economy shrank in the last three months of 2011 and is still contracting during the current quarter, marking another recession.

Chief Executive of CEBR, Douglas McWilliams, said: “The world is going through a fundamental change where previously poor economies are industrialising fast. This is good news for them, but because of the limits imposed by shortages of energy, minerals and food, some of their growth is at our expense.

“This is not to say that if we break off trading with them we will be better off. On the contrary, a strategy of disengagement with the rest of the world would make matters very much worse.”

The CEBR have already slashed its expectations from the already low 0.7pc it predicted in October 2011, to a 0.4pc fall, advising prospects for the economy in the UK hinge on the fate of the Eurozone.

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