Welcome to the February 2008 Newsletter from Connolly Accountants Ltd

Chancellor Alistair Darling has been accused of ‘backing down’ over plans to tax wealthy foreigners residing in the UK. The allegations follow the publication of a Treasury statement earlier this month, in which a number of concessions relating to the rules on foreign income disclosure were outlined. The Government has however confirmed that a £30,000 levy will be still be charged on offshore accounts held by long-standing non-domiciles.

Meanwhile, the Department of Business, Enterprise and Regulatory Reform (BERR) has announced its intention to plough £37 million into employment mediatory body ACAS, as part of its shake-up of the workplace dispute resolution system. The Government hopes the additional funding will encourage more grievances to be resolved at an early stage, thereby reducing the backlog of cases currently awaiting a tribunal hearing.


Darling ‘dilutes’ tax proposals for non-domiciles

The Treasury has been accused of ‘backing down’ over its plans to tighten the rules governing the taxation of affluent foreigners residing in the UK.

In draft legislation published earlier this year, HM Revenue and Customs (HMRC) announced plans to impose a £30,000 levy on wealth acquired by non-domiciles who have lived in Britain for more than seven years.

So called ‘non-doms’ are not currently obliged to pay tax on their overseas earnings.

Despite union leaders calling on Darling to stand firm in the face of mounting criticism, HMRC has confirmed that many of the non-dom tax changes will now be watered down.

In a letter confirming the proposed changes to the tax regime, the Treasury stated that it will no longer require detailed information about offshore accounts and does not intend to tax money brought into the country to pay the £30,000 charge.

Shadow Chancellor, George Osborne, claimed the Treasury’s clarifications amounted to a ‘climb-down’ by Darling, while the Trades Union Congress (TUC) has urged the Government to ‘remain firm in the face of business lobbying.’

‘Ministers should not swallow the line that this move will hit business or the nation’s prosperity,’ said TUC general secretary Brendan Barber.

Chief secretary to the Treasury, Yvette Cooper, admitted that there had been ‘misunderstandings’ as a result of the wording in the draft legislation and insisted there was never any intention to ‘snoop’ on the global earnings of non-doms.

However, John Cridland, deputy general of the Confederation of British Industry (CBI), has welcomed the non-dom tax clarifications, describing the reforms as a ‘victory for common sense.’

‘We need the Government to be more careful in future about sending out a message that Britain is no longer interested in attracting talent and ideas to our shores, or that those people already here, who contribute over £23bn to the UK economy each year, are no longer welcome. It should be saying the reverse,’ he warned.

Despite Darling’s claim that the £30,000 levy would bring in additional revenue, the Society of Trust and Estate Practitioners expect the charge will actually cost the Treasury £2.1bn every year, as many residents may opt to leave the UK altogether.

The rules on the taxation of overseas income are currently under review and may be subject to further changes. For all the latest developments make sure you visit our website regularly.


Businesses to ‘save £175 million’ in tribunal costs

New measures aimed at simplifying the procedure for resolving workplace disputes could save UK businesses millions of pounds every year, according to Government estimations.

Earlier this month, employment relations minister, Pat McFadden, announced a £37m cash boost for conciliatory organisation ACAS, in a bid to improve its advisory services and enable more disputes to be resolved at an early stage.

By preventing the unnecessary referral of workplace disputes to a tribunal, the Government predicts that businesses and employees will collectively save an annual sum in excess of £175m.

Commenting on the proposed revisions, McFadden said: ‘We want to move from the current overly rigid and legalistic process to one where there is more conciliation between employers and employees.

‘This new system will strike a balance between ensuring workers can protect their rights through employment tribunals while helping them to resolve disputes as early as possible.’

A total of 132,577 employment tribunal claims were recorded last year – a 15% leap from 2006. Equal pay claims increased by the most significant margin, rising by almost 155% to take the figure to 44,013. The volume of sex discrimination cases nearly doubled, whilst allegations of unfair dismissal also climbed.

Ed Sweeney, chair of ACAS, has welcomed the latest cash injection from the Government. ‘This new investment will enable us to increase our effectiveness and spread the benefits of good employment relations more widely,’ he said.

‘I am delighted by this news and BERR’s recognition of the unique and valuable role that we play.’

ACAS is set to launch pilot programmes designed to conciliate prospective tribunal disputes over the next year, with a view to nationalising the service in 2009.

For more information on advisory services supplied by ACAS, please visit their website at www.acas.org.uk.


ESSENTIAL TAX DATES AND DEADLINES

Click here for key tax deadlines for the coming month.


QUOTE OF THE MONTH

‘[The] wilting relationship between small businesses and the Government needs to be reinvigorated and 12 March will announce whether Spring is in the air or whether frosty relations continue.’
John Wright, national chairman of Federation of the Small Businesses, on the significance of this year’s Budget


WEBSITE OF THE MONTH

www.workwiseuk.org
Contains useful information on working patterns and legislation for UK businesses and their employees.


ON OUR WEBSITE

Tax advice at the touch of a button
For information on a range of personal taxation and investment issues, including advice on inheritance tax, please visit the 'your money' section of our site.

A host of useful interactive tools
To take advantage of our handy resources, which include financial calculators and downloadable forms, visit our interactive tools.

FSB in final plea ahead of 2008 Budget
The Federation of Small Businesses is urging the Chancellor to give special consideration to the interests of smaller firms ahead of the Budget on 12 March.
Click here for the full story

Managers work 'extra 40 days' every year
A recent survey has revealed that the average manager works the equivalent of an extra 40 days every year to cope with their workload.
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British businesses feel the pinch of 'bureaucratic burden'
The cumulative cost of new regulations for UK businesses has increased by £10 billion in the last year, according to a new study by the British Chambers of Commerce.
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Britons 'baffled' by inheritance tax
Many people do not understand what inheritance tax is and are unsure of the rules governing the charge, a new report suggests.
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Businesses failing to protect consumer data
Many businesses are not taking adequate security measures to protect the personal details of their consumers, according to new research.
Click here for the full story