Thousands of tax refund claims have been made within the first few weeks of the new tax year, according to research conducted by Rift Tax Refunds.

The tax refunds specialist has analysed their own company data to discover thousands of Brits are claiming back what the tax man owes them.

With the rising cost of food bills, travel costs and other essential expenses, it is becoming more expensive to get to work each year, yet HMRC finds itself sitting on millions of pounds in unpaid tax refunds for expenses year on year.

However, the latest research by Rift Tax Refunds’ shows that Brit’s are becoming tax savvy to ensure they claim back what they are owed.

Despite only a few weeks into the new financial year, Rift Tax Refund’s company data revealed that over 5,000 claims have been filed already, with the value of tax claims totalling over a staggering £3.5 million.

Due to the rise in living and travel costs, Rift Tax Refunds have seen the value of an average 4-year claim rise 20% to £3,023.56 over the past few years. Similarly, the HMRC have noted a 25% increase in expenses claims since the 2014/15 tax year.

Bradley Post, Managing Director at Rift Tax Refunds comments: “‘We’re delighted that thousands of people have already come to RIFT for help with their tax refunds this year.

“While the number of claims made this year is based on Rift Tax Refund data, due to the rise in living and travel expenses we can assume that our statistics are reflected industry-wide.

“As the HMRC sit on millions of pounds in unpaid tax refunds, it is important for those who are eligible to claim to keep their receipts well documented to ensure they are able to claim back everything they are owed.”

(Source: Rift Tax Refunds)

On 6 April 2017, a new set of IR35 rules came into force for public bodies. Essentially, HMRC was no longer going to allow the public sector to take contractors operating through Limited Companies at their word that they were playing fair with employment status law. Bradley Post, Managing Director at Rift Tax Refunds explains for Finance Monthly.

Under the new rules, it's either the public body itself that has to make the IR35 decision, or the agency involved if there is one. If a public body decides that IR35 applies, then the body itself starts taking tax and National Insurance payments out of the contractor's pay, as they would for any employee.

HMRC created a called Check Employment Status for Tax (CEST) to help with making these assessments simple and accurate. However, a year later we’re seeing complaints from contractors that they’ve been wrongly classified and so are being over taxed.

Recent figures obtained under FOI show 54% of CEST results say IR35 doesn't apply, meaning that that under the terms of the working relationship the contractor should be classified as an employee. Hirers, though, simply aren't trusting CEST's judgements. Worse still, a lot of them aren't even trying to use it, instead making blanket decisions to class everyone as an employee, with many public bodies saying they felt they hadn't had enough preparation time or support to take on their new legal responsibilities.

TfL, for instance, reacted by banning off-payroll payments to Personal Service Companies altogether. Worse still, there's plenty of evidence of blanket judgements being made. Essentially, public bodies are simply assuming IR35 applies in all cases, hence the thousands of contractors being overtaxed. Many contractors are raising their rates to cover the extra tax they're paying. Others have simply refused to take on public sector work, leading to project delays or outright cancellations.

Crucially, only about half of assessments have gone through any compliance tests at all. In fact, CEST was a factor in just 24% of assessments made - partly because of blanket decisions and partly because the tool wasn't ready when the assessments took place. In an environment that relies on voluntary compliance, what's developing is a shocking lack of trust.

In reaction to this a number of contractor websites are now sharing information on “how to pass the IR35 check” using the CEST tool, but “contriving a pass” is a dangerous route to go down and won’t protect an individual from a status challenges if HMRC believes an individual deliberately answered questions incorrectly.

Honestly, from HMRC's point of view, the CEST roll-out has been pretty much a success. Of course, the only way they seem to measure that is in how much additional revenue it pulls in. The thing is, the raw numbers don't tell the full story here. Since wrongly overtaxing contractors has the same effect, it's thin evidence at best that actual compliance is being boosted.

While tax revenue has risen, the door's been opened on a whole new kind of non-compliance – this time on the part of hirers. Meanwhile, HMRC's upbeat outlook has a lot of people more worried than ever about a private sector roll-out – perhaps as soon as 2019. If that did happen, it could mean some upheaval for contracts and projects already in progress. Judging from the continuing turmoil in the public sector, it's going to take careful consideration and planning to avoid falling down the same rabbit-hole. At the same time, private organisations will face the same legal threats and consequences as public bodies.

If the new system hits the private sector as many expect, it'll take effective guidance and comprehensive support from advisers to defuse the ticking IR35 timebomb.

While he retains a strong voter base in the conservative heartlands of North America, the Presidency of Donald Trump continues to be defined by an excess of smoke and a seemingly endless hallway of mirrors. Nothing embodies this better than the former real estate mogul's comprehensive tax reform plans, which has been presented as legislation for low and middle-income earners in the US.

While Trump's estimates suggest that the typical American family will receive a tax cut of $1,182, however, it will also offer huge breaks to wealthier citizens and the largest corporations in the US.

In fact, Trump's decision to slash the base corporate tax rate from 35% to just 21% represents the focal point of his proposed reforms, while it has already created considerable opportunities for entrepreneurs and investors alike. Here's how.

How Does Trump's Tax Reform Work and Who are the Initial Winners?

As well as slashing the corporate tax rate in the US by 14%, President Trump has provided sweeping tax reductions for special interests while also lowering the top federal tax rate from 39.6% to 37%.

Interestingly, the commercial tax cuts are permanent and will be sustained for the entire duration of the Trump administration and beyond, until the President's successor proposes his own reforms in the future.

While this will benefit all businesses to some degree or another in the US, those currently paying an inflated level of corporation tax will be the biggest winners. So too will corporations that hold considerable amounts in overseas cash and investments, with both of these tax breaks offering natural advantages to some of the largest and highest earning companies in the world.

Take Apple, for example, who at the time of writing hold an estimated 94% of its $269 billion cash reserves in overseas balances. As a direct result of Trump's tax reform, the CFRA estimates that the technology brand will be ultimately repatriate as much as $200 billion of this capital back into the US, while using the proceeds to buy back stock and boost its bottom line even further.

The same principle can also be applied to companies such as Amazon and Facebook, while JP Morgan analyst Sterling Auty has stated that US-based software stocks will also emerge as the largest beneficiaries of the tax reform. This includes prominent brands such as Intuit and Aspen Technology, who tend to have the majority of their revenue domiciled in the US and boast exceptionally high profit margins.

How will this Influence Investors?

Traders may be looking to take advantage of those companies that have benefited from the reforms, of course, and fortunately Trump's legislation has provided clear and obvious benefits for corporations that meet certain criteria relating to their business model and infrastructure.

More specifically, there should be a clear focus on companies that boast significant cash holding overseas, as well as those that have naturally high profit margins.

This includes a large majority of businesses in the vast and diverse technology sector, with brands such as Apple able to leverage their infrastructure, international reach and inflated margins to benefit significantly from Trump's multi-layered tax reform.

Bitcoin is becoming a pretty normal currency in transactions worldwide, and it hasn’t failed to infiltrate paychecks either. So, if a salary is paid in part or in full in bitcoin, how is the income taxed? And how is tax applied to transactions anyway? Fiona Cincotta, Senior Market Analyst at City Index, clarifies the matter for Finance Monthly.

Bitcoin is a virtual currency, that can be generated by mining or bought using cash, credit card or a paypal account. Bitcoin began in 2009. At the start, one of the advantages of bitcoin was the fact that is wasn’t regulated and could be used in transactions to avoid tax obligations. However, tax authorities caught on and since then tax authorities across the globe have been trying to introduce and advance regulation on the bitcoin.

Whilst the cryptocurrencies exist on a global network, tax regulations in general differ for each country around the world. However, broadly speaking most tax authorities are on the same page when it comes to the treatment of the bitcoin.

As a general rule, buying a bitcoin anywhere in the world is not a taxable operation in itself. However, taxes are likely to occur when you sell that bitcoin, or possibly spend the bitcoin, and make a profit in the process.

How much you would be taxed on the transaction would then depend on several factors:

• The amount of gains;
• How long you were holding the currency for;
• If the country in question has capital gains tax.

Again, generally speaking, most countries do not consider virtual currencies to be “currencies” from a tax point of view. Instead they are treated as a property or capital asset. This means that any gains are taxed as capital gains in the year that they are realised.

As with property, capital gains tax is liable on profits, meanwhile should an investor realise a loss from a bitcoin transaction, the investor would be able to deduct any losses and therefore reduce the tax bill.

Realization happens when the bitcoin is exchanged for any other type of other property. This could be cash, services or products. Essentially almost any transaction which involves the bitcoin is in fact a realisation event and therefore gains are taxable. The following transactions could be taxable events:

• Selling a personally mined bitcoin to a third party;
• Selling bitcoins bought from someone to a third party;
• Using personally mined bitcoins to buy goods or services;
• Using bitcoins bought from someone to buy goods or services.

Scenarios which involve mining of bitcoin followed by either selling or exchanging for goods or services afterwards, will mean that the value received for the bitcoin is taxed as personal or business income, after subtracting any expenses incurred from mining eg cost electricity.

Meanwhile the other two examples, taker the bitcoin as an investment asset. Gain are taxed regardless whether the bitcoin was exchanged for money or goods or services. To cement this point let’s consider the following example. Should you own bitcoins that have increased in value, it is impossible to use them with realising a gain. Using the bitcoin to purchase a service or good, for example, is considered to be two transactions. One, selling out or realising the gain on the bitcoin and the second, being the purchase of the service or product. Few tax authorities would allow such a blatant loophole, as to not tax the transaction and ascension of wealth.

However, the implication of this is that every transaction involving the bitcoin is taxable. This in itself raises questions over the effectiveness of bitcoin as a medium of exchange, if the user has to calculate the tax liability after every transaction. So, the possibility now exists that over taxation of crypto currencies, could lead to their death.

As mentioned at the beginning tax implications can vary from jurisdiction to jurisdiction. The IRS in the US has a fairly standard approach to bitcoin taxation. The UK’s HMRC takes a more personalised approach and has has specifically said that it considers tax on bitcoins on a case by case basis. Whilst such a personalised approach is fine now, should the bitcoin increase in popularity HMRC may find its resources strained.

Bermuda has won world approval of its tax information exchange practices with other jurisdictions.

A global body said this week that those practices comply with international standards.

Premier and Minister of Finance the Hon. David Burt JP MP responded to the announcement by thanking Bermuda government officials who have worked hard to make this a reality.

The Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) said that Bermuda was among the countries screened under a new and enhanced peer review process aimed at assessing compliance with international standards for the exchange of information on request between tax authorities.

Bermuda, Canada, Australia, Cayman Islands, Germany and Qatar were deemed to be “largely compliant”.

The new round of peer reviews – launched in mid-2016 – followed a six-year process during which the Global Forum assessed the legal and regulatory framework for information exchange (Phase 1) as well as the actual practices and procedures (Phase 2) in 119 jurisdictions worldwide.

Today’s result means that Bermuda maintains the rating obtained through Phase 1 as a jurisdiction largely compliant.

Premier Burt said, “This is tremendous news and excellent for Bermuda. My thanks to all involved in securing this important outcome.

“This result is a testament to the hard work of the team in the Ministry of Finance.

“It is good news for local industry, boosting confidence in Bermuda as an international business centre.”

The 144-member Global Forum is a leading international body for ensuring the implementation of the internationally agreed standards of transparency and tax information exchange.

The Global Forum’s new peer review process combines the Phase 1 and Phase 2 elements into a single undertaking, with new focus on an assessment of the availability of, and access by, tax authorities to beneficial ownership information of all legal entities and arrangements, in line with the Financial Action Task Force international standard.

Global Forum members are working together to monitor and review implementation of the international standard for the automatic exchange of financial account information, under the Common Reporting Standard (CRS), which will start in September 2017. The monitoring and review process is intended to ensure the effective and timely delivery of commitments made, the confidentiality of information exchanged and to identify areas where support is needed.

The Global Forum is the continuation of a forum which was created in the early 2000s in the context of the OECD’s work to address the risks to tax compliance posed by non-cooperative jurisdictions. The original members of the Global Forum consisted of OECD countries and jurisdictions that had agreed to implement transparency and exchange of information for tax purposes. The Global Forum was restructured in September 2009 in response to the G20 call to strengthen implementation of these standards.

(Source: The Government of Bermuda)

Another financial year has passed, and as you look back, will you seek to do things differently next time around? Below, Dean Snappey, the President and Co-Founder of DocsCorp discusses with Finance Monthly 5 simple accounting tools that’ll make your life that much easier to navigate at this time of year.

Over the past 12 months we have seen considerable adjustments to taxation, such as changes to dividend taxation and the recent increased tax for landlords. Aim to prevent the end of year mess and avoid the kind of errors that carry implications to your and your company’s reputation.

There are several accounting tools and software solutions available at your fingertips to ease the process, stay organised and plan ahead. Make the most of these accounting tools and follow these five easy steps to make pre-emptive tax planning simple.

1. Bundle Documents. Best practice is to ensure any invoices, statements and paperwork are scanned and saved as a PDF document as paper filing systems and loose documents are at risk of being lost or damaged. Document bundling software gives you the ability to collate PDF content and bind all relevant documents such as tax returns, invoices and financial accounts into a single file for each client. By bundling all important documentation, it will make the process of finalising paperwork much easier as all documentation required will be stored together. Finalised documents can then be sent as a single secure file in one hit rather than multiple attachments, saving you time with each client and avoiding the risk of lost or separated files.
2. Redaction. As part of the process of preparing documents with such complex data, it is essential to redact classified or sensitive information. To redact is to remove, therefore ‘redacted’ is often used to describe documents from which sensitive information has been expunged. By using a redaction tool it is easy to search whole documents to redact multiple instances of a word or string of words in a way that is quick, easy and fail-proof. Redact personal information or bank account details in documents as part of an audit.
3. Make Scanned Documents Searchable. When you scan invoices, receipts and finalised paperwork onto your desktop, the scanned documents are image documents that do not have the text layer that’s needed to make them searchable. You can make the documents text-searchable with an Optical Character Recognition (OCR) tool. This software converts scanned, printed or handwritten files into its machine readable text format.  You can then search whole documents for a word, phrases or a set of numbers which makes finding information or documents for tax audits a breeze.
4. Remove Metadata. Metadata may appear hidden, however, every time you annotate, edit or alter a document, your decision is stored invisibly within the very document you’re working on. Metadata removal software removes metadata from files – eliminating any risk of unintentional information leakage. To put it simply, the metadata cleaner will ensure you only send the part of the document or spreadsheet you intend to – exactly what would be printed out on a piece of paper. Remove hidden cells and other sensitive metadata before uploading or attaching files intended to be sent to clients.
5. Compare Documents for Change. Working with numerous clients means navigating through each client’s financial accounts and complex paperwork. Throughout the year many changes can occur within clients’ businesses, often meaning multiple changes to important documentation. Analysing large volumes of documentation, in which precision is required, can be very time consuming. There is a simpler way to undertake this task, which is by using a Comparison software package. This enables you to compare and analyse the differences between two documents with incredible accuracy and reliability. The software is able to show you the smallest change in documents, spreadsheets, PDFs without needing to convert them first. Save time and never miss an important change again.