London Celebrates The Queen’s Diamond Jubilee

The Queens’s Diamond Jubilee took place over an extended 4 day weekend from 2 – 5 June 2012 to mark 60 years of the Queen’s reign. The spectacular Diamond Jubilee River Pageant took place on Sunday 3 June 2012 with a fleet of over 1,000 boats sailing across the Thames in patronage to the Queen.  An estimated 1 million people turned up to celebrate along the Thames despite heavy rain throughout the day. The once in a lifetime event was truly spectacular and promoted a feel good factor throughout London. We look forward to the Service of Thanksgiving at St Paul’s Cathedral on Tuesday and the formal carriage Procession in the afternoon. The weather is forecast to improve and we can expect greater crowds around Buckingham Palace on Tuesday. 

Small businesses in London are likely to benefit from the 4 day weekend. Retailers are predicting that over £820 million will be spent over the Jubilee weekend.

Chancellor in Shock U-Turn over 2012 Budget

The Chancellor George Osborne has made 5 Budget U-turns to date, the most significant being the reversal of the pasty tax, VAT on static caravans, Vat on refurbishments to listed buildings and most recently the decision to revoke the cap on charitable donations. 

The cap on tax reliefs is a new scheme that was introduced in the 2012 budget whereby tax relief is limited to the greater of £50,000 or 25% of income. I attended a tax update meeting at the time the budget was announced and there were several eyebrows raised once it became clear that the cap would include charitable contributions.  Surely the chancellor must have expected fierce opposition when introducing a cap that could penalise people for making charitable donations. I would have expected the Chancellor to have planned for this and to have laid out strong arguments as to why he is enforcing this policy. Unfortunately, this does not appear to have happened and the subsequent reversal of this policy is extremely damaging to the Chancellor and the Conservatives.

During a time of economic crisis in Europe, the Budget has failed to address the fact that we are in recession. The only real positive highlights from the Budget are the Lib Dem’s proposal to increase the personal allowance up op £10,000 by 2015 and the decision to reduce the corporation tax rate. In a Budget plagued by a record number of leaks, it is disappointing to note that the few surprises announced by George Osborne appear to have been ill thought out and have been subsequently reversed. 

We have been hoping for some time now that the government would have some clever plan to tackle the recession, such as cutting taxes or promoting growth nearer the election. However, on this evidence we are beginning to have second thoughts.

HMRC Likely to Target IR35 Status of Single Director Companies

The recent scandal over the 2,000 public sector officials who were being paid through personal service companies to avoid paying tax is likely to instigate a response by the HMRC. This is not the first scandal involving public sector officials. Back in January 2012, Ken Livingston was accused of tax evasion by channelling funds through a personal company to pay corporation tax rather than income tax and hence reduce his tax bill. Ken states that the funds were used to pay members of staff. Whether this was true or not the damage has already been done in the form of reduced voter confidence which affected his campaign for the mayoral election. 

There are concerns in the accountancy industry over a possible reactionary response by the HMRC to target single director companies and challenge their IR35 status. Readers would be advised to confirm that they have their contracts of service in order and have reviewed their IR35 status. For any specific IR35 queries, please feel free to contact one of our accountants at IR35@Belsizeaccountancy.co.uk.