THIS TRANSCRIPT IS ISSUED ON THE UNDERSTANDING THAT IT IS TAKEN FROM A LIVE PROGRAMME AS IT WAS BROADCAST. THE NATURE OF LIVE BROADCASTING MEANS THAT NEITHER THE BBC NOR THE PARTICIPANTS IN THE PROGRAMME CAN GUARANTEE THE ACCURACY OF THE INFORMATION HERE. MONEY BOX LIVE Presenter: VINCENT DUGGLEBY TRANSMISSION: 16th JANUARY 2006 3.00-3.30pm RADIO 4 DUGGLEBY: With just over two weeks left for sending in your self-assessment tax return, there’s another chance to discuss any particular tax problems with the Money Box Live team. The number to ring is 08700 100 444. And I must say I find it extraordinary that 1.7 million penalties were issued to taxpayers last year because they failed to get their returns in before 31st January. That costs you £100, although HM Customs & Revenue have admitted that some 30,000 penalties were wrongly imposed. Even if you have filed your return and got the assessment back, don’t forget to pay the tax, which may include the first instalment of this year’s estimated bill, which you can challenge if your income has gone down. We’re only 3 months away from the end of the 2005-06 tax year, so it’s also worth thinking how you might save some tax before 6th April while there’s still time: pension contributions, ISA subscriptions, checking capital gains, gifts to avoid inheritance tax; and, if you’re running a small business, perhaps buying some new office equipment. And on the subject of husband and wife companies, you may have heard about the Arctic Systems case where a husband and wife were challenged on the way they shared salaries and dividends. The Revenue lost in the Court of Appeal, but late on Friday they announced they would pursue the case in the House of Lords – part and parcel maybe of the government’s determination to crack down on tax avoidance, changing the rules without warning, and more ominously making them retrospective if they can get away with it. Joining me to answer your questions, John Whiting, partner with PricewaterhouseCoopers; and Anne Redston, who chairs the Personal Taxes Committee at the Chartered Institute of Taxation, and she’s also on the Low Income Tax Reform Group. Our first call comes from Diana in Plymouth. Your call, Diana. DIANA: Oh hello. DUGGLEBY: Hello. DIANA: I’m just wondering because we keep seeing all these advertisements and hearing these advertisements about get your self-assessment tax form back in by a certain date or you’ll have to pay £100. I pay my income tax via the company that pays my pension. Now does that mean that I should be filling in one of these personal income tax forms or not, or do you have to apply for one ? DUGGLEBY: I sympathise with you. I mean this television advertising campaign is well meaning, but it scares some pensioners witless. So what’s the situation? REDSTON: Do you have any other income, Diana, apart from your pension? DIANA: I have state pension and private pension. REDSTON: I mean it’s very unlikely that you’ve got any tax liability because probably the code you’ve got will take into account your state pension, which the government know about. DIANA: Right. REDSTON: And they know about your … you’ll have your code deducting tax from your company pension. DIANA: Yes. REDSTON: So what they’re really looking for are people who’ve got untaxed income – perhaps you know they let a property and they get rent from the property or they have lent some money to somebody, not a bank but somebody who pays them interest without deducting tax from it. Those are the sorts of people that they’re really reminding to get a tax form in. It sounds to me from what you say that you should be alright. DUGGLEBY: So it doesn’t sound as though it’s aimed at you. And another category, John, I suspect, is people who might pay higher rate tax because of course they can’t see that unless they’ve got a return? WHITING: Yes, to a degree, although, again, PAYE often copes. I mean Diana’s situation, she probably doesn’t have to fill in a return and there’s a sort of trite element of if you’re sent a return, you know it’s for you and you’ve got to send it back. If you haven’t got one, the first step is okay you don’t have to send it back. But you’re right to just give it a bit of thought. And actually curiously there’s a number of pensioners for whom it’s actually worthwhile filling in a return – not necessarily the full return, maybe the R40 simple tax back type form where you’ve got two or three pensions and quite often the PAYE doesn’t quite cope adequately and you get a bit of a mismatch with not getting your entire allowance. But I think, Diana, we can put your mind at rest. I don’t think you have to. But, as Anne and I have said, there are situations where it’s worthwhile just doing that reality check – should I be telling the Revenue? DUGGLEBY: And possibly where you’ve got some interest or dividends or something which has got some tax deducted, you might get back the difference between basic rate and the 10% starting rate. WHITING: Indeed. Yes, you’ve had 20% taken off your interest but actually you’re just creeping into the tax bracket. You’re due to pay at 10% and, conceivably, you know you’ve got a state pension, a little bit of private pension with a little bit of interest. There’ll be a good few people in that situation and it’s worth just filling a form in to get that 10% … DUGGLEBY: It’s not a difficult form to fill in, I have to say. WHITING: Not at that level of detail. DUGGLEBY: Right, Diana. Your call is hopefully satisfactorily answered, so we’ll move onto Helen in Hampshire. HELEN: Hello, good afternoon. DUGGLEBY: Yes, your question. HELEN: Basically I run a small business selling fair trade crafts and foods to customers and I’m reaching the VAT threshold limit of £60,000. I just wondered whether I should go for the flat rate scheme or reclaim the VAT? DUGGLEBY: Right, so this is going to come as a bit of a shock to you, I suspect, grappling with the VAT? HELEN: Absolutely. (Laughs) DUGGLEBY: Well let’s just start with the basics, John. What do you do? Do you ring up HM Customs and say look, I think I’m going to breach the limits? WHITING: The first thing, as obviously Helen is doing, you have a think about what your turnover is because although once you’re in business you can register voluntarily providing you are making (in the jargon) taxable supplies – in other words supplies that’ll have VAT on them at a particular rate … DUGGLEBY: Above the limit of … WHITING: Well almost anything. DUGGLEBY: Oh right. WHITING: Once you’re in business. Where you have to register is when you’re above the £60,000 a year limit, as it now is, or approaching it, as I think Helen you’re saying you think you are going to be above the £60,000 limit for the year, presumably? HELEN: I think we may be in March, yes. WHITING: Yes. So you’re approaching where you have to register and what you have to do is contact Her Majesty’s Revenue & Customs and apply to well obviously the old Customs & Excise end, but nowadays it’s all hopefully better coordinated. DUGGLEBY: And they’ll send you a pack of information and forms to fill in. WHITING: Forms to fill in. And I’m afraid you are then letting yourself into the wonderful routine of record keeping and charging VAT on your sales where appropriate. DUGGLEBY: Now let Anne pick this up. Now there’s some choices here. REDSTON: Yes, there are a number of differences - as you said, you’ve already found out, Helen. There is a flat rate scheme, which is administratively simpler. It’s simpler to operate. And what you do then is there’s a list of different categories of business and you look at your category of business and it says you can claim - you basically multiply your turnover by that percentage. So it’s a very simple sum. You don’t have to worry too much about all the detailed rules of VAT. What you really need to do is you need to look at the percentage applicable that applies to your business and then have a think about whether you think that’s reasonable because in the percentage, the way the percentage works out, it assumes that you have a certain level of purchases compared to your sales. So you need to look at the flat rate scheme and just make sure you think it’s fair because for some types of business … DUGGLEBY: Have you got relatively high costs of input, Helen, or what? HELEN: No, we buy from charities and we just sell on, but we don’t actually invoice anybody. So we claim a lot of VAT but we don’t actually charge VAT to anyone. WHITING: It is worth doing a little, even if only on a sort of back of the envelope basis, when, as Anne’s suggested, you’ve seen what your flat rate percentage is - and they go from 4½% up to 15%, 16%. So you’ve got to find the category and sort of just on the back of the envelope write that would mean I would have to pay a VAT of X whereas if I actually work out my ins and outs it would mean I get Y. Is it worth it? Because a lot of the percentages aren’t that generous. HELEN: Right. REDSTON: It’s worth saying too, Helen, that the Customs & Excise, HM Revenue & Customs now, they do have a very effective advice service for small businesses that start up because they really do want people to get on the right road to start with, and they will know about all the different schemes and how they would apply to you. And in my experience, they are helpful. You know it’s rare that people look at HM Revenue & Customs and think that they’ll be helpful, but actually they are very keen to help your business do it right. So in a very non-threatening way, they will simply explain to you what they are - so I would suggest that you ring them up, tell them that this is your position and you should find that they will help you to make the decisions. WHITING: Well they’ll help you to sign on. I’m not always sure that they do that little sum that we talked about. I don’t think I’ll back that. DUGGLEBY: The other thing though, John, is that the VAT people are generally more locally based than sort of finding them in Scotland or something. WHITING: Yes. REDSTON: They are. DUGGLEBY: You actually can generally go and see someone. WHITING: Although gone are the days when your local VAT man would come out as soon as you’d registered on an education visit. (Laughter) You’ve still got to do a certain amount of homework, I’m afraid, Helen. But I hope that’s helped. HELEN: Yuh. That’s lovely. Thank you. DUGGLEBY: And let’s just take a quick e-mail for another business that’s just started up, back in August. That’s 5 or 6 months ago. And Rebecca’s asked us whether - she says she thinks she was supposed to register within 3 months. This is just register with the Inland Revenue or tell the Inland Revenue about it. She hasn’t done so and she wonders whether she’s going to get into some trouble? REDSTON: The short answer is yes, I’m afraid. WHITING: Yes, I’m afraid. And this is presumably somebody who’s self-employed or whatever? DUGGLEBY: Well it just says ‘started the business back in August 2005 and she hasn’t registered and she thinks … WHITING: It’s one of these ironies we’ve been talking about. DUGGLEBY: ‘Will they be lenient?’ she says? WHITING: We’ve been talking about self-assessment and of course in principle you’re supposed to tell them in due course by October 5th of the tax year following for income tax purposes, but the 3 month one is for national insurance. You’re supposed to put your hand up and sign up for national insurance contributions within 3 months of starting business as self-employed. REDSTON: And if you don’t, I’m afraid there’s an automatic £100 penalty. WHITING: Where have we heard that before? DUGGLEBY: Is it always £100? Is it flat for everything? REDSTON: It is £100. WHITING: And I mean they are quite keen on policing this one because of course they view it as how they get to hear about new businesses. And a bit like the VAT one we’ve been talking about, they’re quite good if you do tell them but if you’re late then they may well wield a penalty. DUGGLEBY: Okay John in Edinburgh, you’ve been waiting patiently, so it’s your call. JOHN: Yes indeed, thank you. I was wondering if the exemption from Class 4 national insurance contributions for men over 65 and women over 60 had been withdrawn by the Chancellor. My wife, who is 63 and receives her state pension, was not charged Class 4 national insurance contributions on her self-employed income in 2003- 2004, but for the last tax year when she had comparable earnings the tax inspector is demanding £1,000 for Class 4 contributions. DUGGLEBY: Yes, misconception there. Who’s going to pick that? John? WHITING: There’s a mix of rules here because of course the 60-65 that you talk about, John, really only applies to Class 1, which is - you know national insurance is not all one thing; there’s a variety of these wonderful classes. Class 1 is the earned national insurance contributions. Once you hit the normal retirement age, and of course the wife’s will start to go up, then you stop having to pay national insurance contributions yourself. Your employer still has to pay, but unfortunately there’s this curiosity, isn’t there, for Class 4 self- employed? DUGGLEBY: Class 2’s okay. That still works. That isn’t payable from 60 onwards. WHITING: But unfortunately Class 4 reasons I don’t understand … DUGGLEBY: Well because it’s a profit-related tax. REDSTON: It’s really a profits tax, yes. WHITING: … but if I have a look at the logistics here, then unfortunately it doesn’t work quite this way for Class 4. DUGGLEBY: Yuh. There is a box on the form though, isn’t there? REDSTON: Yes, there is a box on the form. And I suppose - I guess I’m surprised that you didn’t get charged last year because normally the computer will calculate it automatically once it knows what your profit is. And this year that’s obviously what’s happened – the form has gone in, it’s calculated the Class 4 on the basis of the profit. For some reason last year it didn’t do that. It doesn’t, I’m afraid, mean that it wasn’t payable. DUGGLEBY: And regrettably, John, I’m afraid that you will probably have to pay because the Revenue, John, are able to discover a mistake that they made and say, “Sorry, but you’ve got to pay”. JOHN: Can I just ask? There’s a publication by Age Concern on tax of pensioners and it says there are no circumstances in which Class 4 national contributions are to be paid by people, by men over 65 and women over 60 in receipt of state pension. DUGGLEBY: Well if it really says that, I think we can say with some confidence that that is wrong because women are not exempt below 65, are they, for Class 4? REDSTON: I think it’s wrong. WHITING: Well we’ll check back, but I think it’s one of those glitches. DUGGLEBY: We’ll double check. WHITING: It’s one of those glitches. JOHN: In fact there is also a tax booklet, which says the same thing. DUGGLEBY: Okay, well we’re obviously … we may be on shaky ground here. JOHN: I’m not trying to be superior and say I know more about it than you. DUGGLEBY: No. I mean the distinction I think here is on drawing the state pension. Certainly it applies with the basic contribution. I just wonder whether there’s a misreading here somewhere because the Class 1 and Class 2 … WHITING: I mean national insurance unfortunately has all these idiosyncrasies because you will often find an employer fooled that they have hired somebody in receipt of a pension and correctly not charged them national insurance, but then the employer is surprised to find that at age 70 they’re still having to pay national insurance in respect of this employee. DUGGLEBY: Well I’m sure somebody will correct us if we have got that wrong. If there is a distinction between men and women for Class 4, then maybe we’re wrong. WHITING: We’ll check. REDSTON: We’ll certainly check. (****Editor’s Note As our panel promised we did check these rules and they are as follows: Class 1 contributions – paid by employees – stop once you reach pension age – currently 60 for a woman and 65 for a man. You do not have to pay the contribution in the week of your birthday. Tell your employer, who may ask for proof or a certificate from the Inland Revenue. Overpaid contributions can be claimed back either from your employer or, after the end of the tax year, from HMRC. Class 2 contributions – paid by self-employed people who have profits of more than £4345 in 2005/06 – also stop in the week you reach pension age. Your last payment is the week before your birthday. If you are paying by direct debit make sure your payments stop. Overpaid contributions can be claimed back from HMRC. Class 4 contributions – paid by self-employed people on their profits between £4,895 and £32,760 in 2005/06 – have to be paid in full for the tax year you reach pension age. But they are not due in any year after that. Write a note on your self-assessment form – especially if your income is too high to get the age tax allowance. Pension age for women will start rising from 60 from April 2010. Money Box apologises for the inaccuracies made during the live broadcast on the subject of national insurance contributions) DUGGLEBY: Okay. Now then, we’ve got Matthew in Aldershot. MATTHEW: Hi there, good afternoon. DUGGLEBY: Good afternoon. MATTHEW: Yes, my question is I recently set up my own fire safety company and I’ve been putting quite a lot of hours into building the website, designing the logo and writing all the documentation that goes into carrying out the fire safety side of the business. Now I wondered am I eligible to claim for the hours put in to establishing all of this work effectively – i.e. building the website? DUGGLEBY: Presumably this is what you would regard as a business start up cost in terms of your time? MATTHEW: Yes, exactly. REDSTON: Matthew, have you set up a company or are you doing it as a self-employed person? MATTHEW: Yes, I’m registered as self-employed. I registered in February 05, but I went into it full-time. I realised I needed a website effectively, so I started doing that from June onwards, so I had to leave the fire service. But because so many hours have been put into it, I haven’t had all of the work that I would have expected but I’m hoping to get that through the website and further marketing. But, like I say, it’s been hours every day for weeks on end obviously that have been put into it, so … REDSTON: I appreciate that. I think it’s something that when people start up in their business, they do have an expectation that they will get rewarded as it were for the effort they put in, but unfortunately you can’t do it by working out what your rate per hour is. The only thing the tax authorities will look at is what income you’ve got, less your costs, and your costs unfortunately can’t include your own time. They can only include things that you’ve had to pay for. If you did have a company and you paid yourself a salary out of the company, then you could deduct your salary from the income that you’ve got, but you would of course also have to pay tax on your salary so it isn’t quite as simple as that. The short answer is you can’t claim an hourly rate for the work you’ve done in your own business. DUGGLEBY: Otherwise we’d all be charging lots of money for filling in our tax returns, wouldn’t we? WHITING: Nice thought, isn’t it? But it is unfortunate because I’m sure Matthew is looking at it and thinking this is all my set up costs. DUGGLEBY: And the irony is if he’d employed somebody else to do it, he wouldn’t be liable. REDSTON: Indeed, he could have deducted it. DUGGLEBY: But there we are. It’s one of the unfortunate things at the start. You’ve got to get some income before you can be taxed … WHITING: And as soon as he gets the income flow coming in, that will be subject to costs liable to tax. DUGGLEBY: Okay Mark in Leeds, your call now. MARK: Yeah, hi. I was just wondering if you could give me some advice. I purchased a property about a year and a half ago now, which came with a long garden and potential for a building plot at the back. I’m just wondering what sort of tax implications there are if a) I’ve got the choice of selling the building plot if I can get planning or it; or b) if I build something and say turn it into two flats and sell the flats off? With regards to the profit, what would be the tax implications? I’m a 40% taxpayer from my salary. I’m just a salaried person. DUGGLEBY: Okay, so it’s part of your garden? MARK: Yes. DUGGLEBY: Is your concern the Chancellor’s remarks in the pre-budget statement about the land improvement supplement or whatever it is he said? REDSTON: Planning gains supplement. DUGGLEBY: Planning gains supplement. Is that at the back of your mind? MARK: It is. I’ve not actually read that. I’m not aware of that. DUGGLEBY: You haven’t heard about that. Well since you haven’t heard about it … REDSTON: There’s two taxes to think about. DUGGLEBY: There’s two taxes I think they’re talking about. Who’s going to start with this one? REDSTON: We could start with the capital gains perhaps as it’s the one you probably know about, Mark. MARK: Yeah. REDSTON: If you sell the land or the flats, you will make what’s known as a capital gain, so the total amount you receive for selling the flats is taxable less various costs. And you probably should talk to an accountant or a tax adviser about what costs you can deduct … MARK: Yeah. REDSTON: … because there are things you might not think about. When you’ve deducted all the costs that you legitimately can, you have an annual allowance, which is £8,500 this year; so that if you’re left with a profit, you deduct your £8,500 and then you’re taxed on what’s left. MARK: Right. REDSTON: But of course if you jointly own it with your spouse or with somebody else, then you both have a personal allowance and that perhaps will help to reduce it further. MARK: Would that be the same? Would that be two lots of £8,500? REDSTON: Yes it would, yes. DUGGLEBY: If on the other hand you just sell the garden off for development, then I think, John, it’s the appropriateness of the size of the plot that governs whether you pay - whether it’s part of your main residence or not. JOHN: Yes, well you can end up with quite a lot of interesting arguments here. But for a normal house and garden and you sell off a bit of the garden and stay in the house, then that, because you know for the well known rule that you can sell your own house, no capital gains, selling off a chunk of the garden is covered in that way, so there would be no capital gains tax to pay. MARK: That would be the situation. It’s sort of the main dwelling. It’s about 150 foot long garden … WHITING: And you’ve lived in this … how long did you say you’ve had it, Mark? MARK: A year and a half now. WHITING: I guess my only slight concern is if you have definitely bought it with a view to selling off, then the Revenue do have some anti-avoidance legislation which they could argue that you’d bought this purely to realise a gain, so I could see them wielding that. MARK: There was actually planning permission on the plot for a two- storey structure and we replaced that with a single storey garage, which would sort of be proof that our intentions were not to develop it. WHITING: I think that is helpful. REDSTON: That’s very helpful. WHITING: That’s helpful in your cause as it were because fundamentally what you’re trying to show is that this was my property and after using it for a while genuinely as my house, I’ve got rid of a bit. And in that situation, there’s no capital gains to pay. DUGGLEBY: That’s clearly the best course of action for you on tax grounds. MARK: That’s what we’re looking to do, yeah. DUGGLEBY: But just briefly because I don’t want to spend too much time on something we don’t know about in detail, but the main supplement - should he be worried about that sort of thing? WHITING: Not at the moment. I mean if it’s coming in, I think we’re talking 2008, so I think Mark’s … DUGGLEBY: We’re also talking about presumably rather bigger sites? REDSTON: Well maybe, maybe not. WHITING: Possibly, possibly not. The answer is we don’t know. But I think Mark has got a good chance of escaping capital gains, but it could just be a few questions given the situation of planning permission around when he bought it. DUGGLEBY: Now there’s a couple of questions about housing and letting housing when you have owned it and you’ve got the income coming in. One partner is a higher rate taxpayer; the other is a non-taxpayer. Can the income from this letting of this house be diverted into the hands of the non-tax partner – i.e. the wife – or would the Revenue simply say no, you can’t do that? And I wonder whether again the Arctic Systems thing is sort of lying behind that e-mail. Anne? REDSTON: I think that the first question here would be who is actually looking after this let property? If the person who is the lower rate taxpayer or non-taxpayer is managing the letting business, so dealing with all the tenants - you know when the bath floods or when the neighbours complain it’s the lower rate taxpayer, the non-taxpayer that’s looking after it - then the Revenue will accept, will probably accept that that’s the person who’s running the business and therefore the income from it can legitimately be her income or his income. If however that isn’t the case and either an agent is dealing with all of it or you’re both dealing with it, then it’s very much more difficult to as it were funnel the income towards the person with the lowest tax liability. So you do need to be able to justify that you’re really being paid for the work that you’ve done. DUGGLEBY: A very similar question, a similar question, only in this case the house has been sold. Pending buying another house, this money’s on deposit, joint savings account. The husband’s saying can I again divert the income into my wife’s name even though it’s temporary, short-term, but we’re going to buy another house in joint names? Can we claim that she’s entitled to all the income? WHITING: The difficulty is the fact it’s presumably in a joint account, so absent anything else. I mean it is the sort of situation we often talk about - try and get the non-earning or lower earning spouse to have the investment income, but it is fact, if for example, the amount was actually put in a bank account in her name … REDSTON: Absolutely. WHITING: … she’s got the income; and if we’re talking husband and wife, then there’s no inheritance tax implications. DUGGLEBY: So the mistake is putting it in the joint name. You’ve got to bite the bullet and give it to one person or the other. REDSTON: Yes. WHITING: Well it’s just easier, cleaner and it will preclude the argument. REDSTON: And if there is an argument, the Revenue will look to see that the person has really got the use of the money. DUGGLEBY: Okay, we’ve got to move on because we’re getting calls in by the dozen and it’s Elizabeth in Buckinghamshire next. Elizabeth? ELIZABETH: Hello. It wasn’t really a question. I was 60 in October 04 and went from employed to self-employed and I’ve had a lot of …. (call breaks up) DUGGLEBY: I’m sorry, Elizabeth, you’re breaking up and we can’t hear that question, so we’ll have to move onto Lucy. Lucy, you’re in Stamford. LUCY: Hello. Yes, good afternoon. I work for a university in Japan, so although I’m now living in the UK, I’m working remotely and earning my salary in Japan and that’s then paid to me in pounds into my UK bank account. I was told that I’m paying tax in Japan and that Japan and the UK have a reciprocal tax agreement, but I was wondering whether I need to do anything regarding self-assessment in this case. WHITING: I mean Japan and the UK do certainly have reciprocal tax arrangements. Like most countries, we’ve got double tax treaties with them and broadly what that means, Lucy, is that you won’t end up paying tax twice; you would get relief in one country for tax paid somewhere else. The starting point is you, I presume, are living here in the UK, you’re resident here? LUCY: I’ve just returned from spending quite a long time living in Japan, so I returned in October and have now started working remotely for the same university that I’ve been working for. WHITING: But up to October you’ve been in Japan for a good period? LUCY: I have yes, I have. WHITING: Well certainly going forward, the UK would no doubt say from October you came back and you started being resident, ordinarily resident again, and they would feel that we have the right to tax this income because it is being received by you here in the UK. And the fact that it’s taxed across in Japan, you would get relief for tax against tax. LUCY: Right, I see. WHITING: Now in terms of what you have to do, this is definitely a situation for potentially filling in a tax return, I think. LUCY: Okay. DUGGLEBY: Just on that same question, a slightly, perhaps an odd question here. It’s one from Patrick who says, ‘I spend about 190 days outside the UK, mostly business. Can I claim to be living abroad?’ REDSTON: Well the answer is probably not. There is a rule, as you no doubt know, that if you are away for more than half a year you may not be resident in the UK. The Revenue, the HMRC have got very much stricter on that, particularly after a lot of lorry drivers claimed that they were non-resident because they were out of the country for more than 6 months in total, and what they ask now is that they want you to show that you actually are … you have your base somewhere else - so you would need to show you had a house, that maybe your family were there, and that was the place where you considered your home, that that was somewhere other than the UK. And that doesn’t sound like it’s the case here and, therefore, I suspect that the British tax authorities wouldn’t accept that you’ve become resident somewhere else and that you weren’t taxable here. WHITING: Yes. I mean to get out for one single year is actually quite difficult. You really have to be out. And also if it’s periodic, then the Revenue will often say you’re resident here because you’ve got regular and substantial periods here. DUGGLEBY: Okay. We’ve got a lot of listeners champing at the bit, telling us about the women who are over 60 and the Inland Revenue guide apparently (paragraph 3, 94) says, ‘you are exempt from paying Class 4 contributions for 2004-5 if on 6th April 2004 you are a man aged 65 or a woman aged 60 or over’. So I think the answer is there is discrimination between the two: one gets away at 60 and the other at 65. REDSTON: Which they are equalising now. They are bringing them both to 63. WHITING: They are equalising them. REDSTON: Slowly, yes. DUGGLEBY: But this is as of 6th April. But incidentally you’ve got to be over that age on 6th April at the beginning of the tax year, so there is a … REDSTON: Yes, it’s in terms of planning as to when you’re born actually. DUGGLEBY: When you’re born, yeah. (**** Please see previous Editor’s Note contained within this transcript on this subject) DUGGLEBY: Okay, now we’ve got one question directed at John, who was on Money Box on Saturday, about the Revenue not issuing tax receipts. He says, ‘Would it be okay if I take a date stamp along and would they then apply the date stamp to the tax return?’ WHITING: This is if you take your tax return in and expect them to say yes I’ve received it on January 31st? DUGGLEBY: Because they said they won’t do it any more. WHITING: I think that’s a good way of trying. I mean I can’t guarantee success. But you know take your date stamp along and see if you can get somebody’s autograph? Well why not give a go? On the other hand, you may care to just take a friend with you or a picture … DUGGLEBY: Or, as you suggested, a mobile camera or something like that? WHITING: Or a mobile camera or something like that. It’s reasonable evidence, I think. DUGGLEBY: Okay. And just time for this one - which I’m sure will amuse both of you - from Maureen. She says, ‘We have a small business, a limited company. Me and my husband are the only employees, but we understand that companies are allowed to have an annual party, so can we spend the £150 a head on ourselves or what?’ REDSTON: Surprising as it might seem, the answer is yes. It doesn’t matter how small your company is. Even if you’re a one- person company, you’re still entitled to get the benefit of this concession, which says you can spend £150 a year. It used to be on a Christmas party, but in these perhaps more … WHITING: In generic terms. REDSTON: … nowadays it doesn’t have to be at Christmas, it can be at any time of the year, and it can be a number of parties as long as it … the first £150 is fine. DUGGLEBY: I think the issue here … I suspect this is all down to this business of the Arctic Systems case kind of spilling over into people’s thinking. They’re the only employees. I mean can they go and have a nice party in a restaurant spending £150 each? REDSTON: Yes, it is one of the few things that is left to you. WHITING: And get a deduction within the company, not taxable on an individual basis, because it’s the “Christmas party”. REDSTON: Yes. DUGGLEBY: Okay and one final point that’s again come up, which I’m afraid is one of these nitpicking points, is exactly when is the deadline? Is it midnight on the 31st? WHITING: Strictly, yes. If you get it in on the 1st, you’re late but you won’t get a penalty. And indeed if it’s posted and in the box when they open up on the 2nd, you probably will escape the penalty. DUGGLEBY: Okay. Many thanks, John Whiting from PricewaterhouseCoopers and Anne Redston from the Chartered Institute of Taxation and other bodies. If you’d like to follow up this afternoon’s programme, you can call the information line on 0800 044 044 or log onto our website, bbc.co.uk/moneybox. Paul Lewis will be here with the next Money Box at noon on Saturday and I’ll be back same time next Monday afternoon to take more of your calls on Money Box Live when the subject will be holidays. 24