HMRC has launched a pilot scheme called Alternative Dispute Resolution (ADR) aimed at small and medium-sized enterprises (SMEs) which will allow them to resolve any tax issues resulting from an HMRC compliance check before a decision or assessment has been made.

Jim Stevenson, HMRC assistant director, local compliance, said: ‘ADR will help SMEs resolve disputes without having to go to a tribunal, saving them both time and money. It is a good opportunity for HMRC to work together with our customers to potentially resolve disputes much earlier than at present.

‘We have found that often there are communication problems. So the HMRC facilitator will help all parties reach a shared and full understanding of the disputed facts and arguments. The aim is to resolve the dispute or, if not, as many issues as possible.’

The pilot is taking place in North Wales and the North West following an earlier trial where 60% of disputes were either fully or partially resolved.

Andrew Gotch, chairman of the Chartered Institute of Taxation’s owner managed business sub-committee welcomed the move.

‘ADR has the potential to be a valuable Gordian knot-cutter in investigations and technical disputes that have run into the sand. Anything which can help resolve disputes between HMRC and taxpayers to mutual satisfaction without the need to resort to expensive and time-consuming litigation has to be good news for all sides.’

It also introduces some changes to the new workplace pension reforms, which require most employers to automatically enrol some or all of their workers into a qualifying pension scheme that meets minimum standards, and pay contributions on their behalf. The new employer duties are being introduced from October 2012 through to September 2016.  The largest employers will have to comply first, starting in October 2012. 

The Act introduces an optional three month waiting period, enabling employers to wait for three months before enrolling staff.  The Act also changes the level of earnings at which workers must be automatically enrolled to £7,475 and introduces new ways of certifying whether a pension scheme meets the minimum standards

The goal posts have moved!

The 2010-11 tax returns have to be filed by 31 October 2011 if you are filing a paper return, or 31 January 2012 if you are filing electronically. If you fail to meet these deadlines you face the following penalty regime, even if your tax payments are up-to-date.

Penalties incurred

• One day late an initial penalty of £100.
  Three months late a daily penalty of £10 per day up to a maximum of £900.
  Six months late an additional £300 or 5% of any tax outstanding, whichever is the higher amount.
  One year late a further £300 or 5% of any tax outstanding, whichever is the higher amount.

As you can see the minimum penalty for filing 6 months late is £1,300 even if all your tax due is paid on time or you are due a tax repayment
If you have had a relaxed attitude to meeting the filing deadline in the past; you may like to reconsider your priorities for the filing of the 2011 return!

The committee is focused on heading off a double-dip recession, believing inflation will fall next year, and therefore opted at the October meeting to restart its quantitative easing programme – an electronic form of money printing.  The October MPC minutes revealed members talked about £100billion of QE before agreeing on £75billion.

The vote was 9-0 in in favour of holding rates – the same as in September and August. The vote had been locked at 7-2 for two months before that and it was 6-3 earlier this year when a rate rise looked a possibility.

- In March/April, a rise was seen as imminent;
- In June, the forecast was for a hike in July/August 2012;
- By early August, futures markets earmarked early 2013 for the first increase;
- By October, the market priced early 2014 for a rate rise.

The counter argument to low rates is that inflation – at 5.2 per cent in September (18 October), up from 4.5 per cent and way above its 2 per cent target – is a problem and should be tackled.

There was a warning from the OECD that rate rises must happen in 2011 (25 May) to avoid inflation becoming ‘embedded’ in the economy.

But the over-arching mood is that the economic recovery remains weak, making it difficult to hike the cost of borrowing.

It’s also worth noting that in the US, the Fed Reserve has said (9 August) it expects its key rate to remain at rock bottom (it’s in a 0-0.25 per cent range) until 2013.

So when will the MPC make the first move?

 Interest rate futures have seen a big shift in recent months. At the extremes, they pointed to an immediate rise in spring, but by early October indicated spring 2015 for the first increase.

Today (1 November) they indicate the first rise to be in September or October 2014. Last month’s plans for more QE had briefly combined with hopes for a euro rescue deal to marginally bring forward the chances of a rate rise – to early 2014 – but this soon reversed.

These market predictions are wildly volatile – as we’ve constantly warned – and should be treated with caution.

However, for now rate rises look like a distant prospect, despite raised concerns about inflation in the wake of QE2.

Now Pensions is a low-cost, cautious, multi-employer and trust-based pensions scheme launched by Danish pension provider ATP to compete with government-backed Nest. Nest and NOW will go head-to-head competing for the lowest earners when auto-enrolment begins next November.

Under NOW’s scheme, members will be entered into a default fund combing three other funds: a managed diversified growth fund, a retirement protection fund and a cash protection fund. Charges will be £1.50 per month for administration and a 0.3% annual investment management charge

Morten Nilsson, chief executive of NOW: Pensions, said: ‘We believe auto-enrolment is a wake-up call to the UK pensions industry, and ATP’s experience in servicing virtually the entire Danish working population, 4.7 million members, and proven track record shows there are alternatives

‘We have been providing Denmark’s working population with stable, consistent returns over the past 45 years, no matter how volatile the economic climate, and we are confident we can do it here.’

Nest will charge 1.8% on each contribution and a 0.3% annual management charge.

On the face of it £1:50 per month may look like a low cost - but only if you are contributing more than £83.33 gross per month. What happens when contributions stop which is the best fund Nest or Now Pension. Who will advise employers and employees on the implications of their choices.

Business owners need to start forming relationships with IFAs to get help on the comi8ng epnsions decisions.

Really? Well I suppose there is tax-free interest – though children do have their own tax-free allowance and I doubt few but the richest breach it.

I suppose this will get around the byzantine tax rule that only allows children to earn £100 a year interest on money given to them by parents. Breaching this can trigger a tax bill at mum or dad’s highest marginal rate.

But I somehow doubt this has ever been tested – and any child who earns £100 a year is probably doing better than most adults.

Perhaps all the excitement is because children will be able to have stock market investments in their own name for all the good it is likely to do them.

Fidelity also tells us (and take a deep breath before reading this) that “assuming the maximum Junior Isa allowance is invested from birth (Apr 2011) to 17 (using 2011 amount adjusted for 2 per cent inflation each year with annual growth rate 5 per cent, no adjustment for inflation or charges on savings) the child would have £226,909.88 by the time they were 30 or £1,013,775.30 by the age of 60”.

Wow – if I understand that correctly, by putting in £3600 a year, they might in 30 years’ time have enough for a house deposit. Of course that does rely on low inflation and rather better investment growth than most funds have managed over the past 10 years.

Of course this is pie in the sky. Very few parents can afford to put away £3600 a year for their children.

And how many would want to risk their children blowing the money when they are 18? Many will feel it is far better to keep the money under their own control so they can decide how it is spent.

I can see that Junior Isas offer a great opportunity to fund managers and banks to pull at the emotional strings of parents and grandparents.

But whether a decision to invest in a Junior Isa in preference to one’s own Isa or pension would, for the vast majority, be rooted in any logic is highly debatable.

The good news if you do go ahead -

Parents opening the new Junior Isa can earn 0.9 per cent more interest in the cash version than those stuck with a Child Trust Fund (CTF).

Junior Isa savers also have a far wider choice of funds and shares to invest their money in until they are 18

My feelings are that generally parents are better off using their own ISA allowances fully and only then deciding if they want to use a junior ISA. Using grandparents allownace s could aslo be a good idea but take care of any inheritance tax issues first.

The regulator has revealed it worried the growing number of structured products is placing a strain on firms’ systems and controls.

The City watchdog made its comments after assessing seven major providers of structured products and uncovering weaknesses in the way firms design and approve their products, thereby increasing the risk to consumers.

As a result of its assessments, the FSA today (2 November) introduced further guidance for firms when developing new structured products which they want to market to consumers.

Nausicaa Delfas, head of conduct supervision for the FSA, said: “Structured products are rising in popularity in today’s low interest rate environment, and we are concerned that the growing number of structured products, as well as increasing product complexity, is placing a strain on firms’ systems and controls.”

“Many of the problems we found with the product design process were rooted in the fact that the firms are focusing too much on their own commercial interests rather than the outcomes they are delivering to consumers.”

This is the second piece of guidance the FSA has published focusing on product design. Yesterday, the FSA and OFT jointly published guidance for consultation aimed at firms that are developing, or planning to develop, protection products similar to payment protection insurance.

The main problem with structured products is understanding exactly what you are buying and a proper assesment of the financial strength of the institution who provides the guarantees. With so many of the banks in trouble right now, it is a brave person who buys a structured product

Robert Gardner, chief economist at Nationwide, highlighted that given the “challenging economic backdrop”, the latest data is “encouraging”.

However, he warned that the data does not fundamentally change the picture of a housing market “that is treading water”.

He claimed that property transaction levels remain subdued and prices essentially flat compared to last year.

Mr Gardner said: “The outlook remains uncertain, but with the UK economic recovery expected to remain sluggish, house price growth is likely to remain soft in the period ahead, with prices moving sideways or drifting modestly lower over the next twelve months.

“Overall the pattern of transactions has been fairly stable, but the data indicates that there had been an increase in the proportion of sales occurring in more affluent areas and a similar reduction in less affluent areas.”

Mr Gardner emphasised that there was a correlation between trends in activity and employment.

He said: “For example, there has been a six per cent rise in employment in professional occupations since 2008, which is likely to have helped support housing market activity in ‘wealthy achiever’ neighbourhoods.

“Over the same period, employment amongst process, plant and machine operatives has fallen 13 per cent. Coupled with negative real wage growth, this is likely to have dampened activity amongst ‘moderate means’ and ‘hard pressed’.”

Nicholas Ayre, director of the property buying agency Home Fusion, claimed that average prices have “finally recovered” to where they were at this time last year.

He said: “But that can’t mask the fact that the number of sales is still paltry and the market is essentially stagnant.

“Demand is weak and, in many areas, so too is supply, as sellers hold off trying to sell in such an obviously lousy climate.

“If unemployment continues to rise, then we could see more properties come onto the market as people are forced to sell. This could provide further downward pressure on prices.

“The property market feels a little surreal at present, but while no one will be popping champagne corks today, these latest figures hint that there is still life in the old dog yet.”

There are fears the International Monetary Fund’s (IMF) £250billion war chest are horribly insufficient to save countries.

A fund of around £2.6trillion is the new target according to sources in Washington.

Christine Lagarde, IMF managing director, said £250billion ‘pales in comparison with the potential financing needs of vulnerable countries’ and needs to be expanded to deal with ‘worst-case scenarios’.

Her warning came as U.S. President Barack Obama said the debt crisis in Europe is  ‘scaring the world’ and that eurozone leaders were not dealing with the issue quickly enough.

And a top Bank of England economist urged leaders around the world to stop the world plunging back into recession.

‘It’s doing something rather than just saying something that counts,’ said Ben Broadbent, a member of the Bank of England’s Monetary Policy Committee charged with setting UK interest rates.

Britainis liable for 4.5 per cent of IMF funding – meaning it would have to contribute around £115 billion to an enlarged bailout fund, or £4,600 per household.

It is conceivable that figure may turn out to be slightly lower because Britain’s share is falling as rapidly growing economies such as China contribute more.

Britain has already handed over £12.5billion in emergency loans to Greece,Ireland and Portugal to help prop up the euro.

Chancellor George Osborne has refused to make more British money available to rescue the single currency but would find it difficult to resist a call from the IMF.

The IMF raises money from its members and steps in to support debt-ridden countries such as Greece and Ireland with emergency loans.

Following crisis talks in Washington at the weekend, Mrs Lagarde said: ‘The Fund’s credibility, and hence effectiveness, rests on its perceived capacity to cope with worst-case scenarios. Our lending capacity looks comfortable today but pales in comparison with the potential financing needs of vulnerable countries and crisis bystanders. It will be useful to discuss, soon, the needs and contingency options.’

Plans are already in place to increase the size of the rescue pot to nearly £650billion.

Her predecessor Dominique Strauss-Kahn, who was forced to quit after he was arrested on rape charges which were later dropped, hoped to increase the war chest to as much as double that amount.

It is understood that Mrs Lagarde wants to go further.

A source in Washington said: ‘This is for the long term. There needs to be a serious discussion about the scale of the fund.’

The eurozone crisis has shown it is no longer just small developing countries at risk of drowning under a sea of debt.

Jennifer McKeown, a senior European economist at Capital Economics, said an enlarged war chest of between £1.3trillion and £2.6trillion ‘looks sensible because there are a lot of other countries around the world that might need help’.

It is feared that a Greek default will wreak havoc across the eurozone, with banks suffering punishing losses and larger countries such as Italy and Spain being dragged down.

The crisis threatens to eclipse the collapse of U.S.investment bank Lehman Brothers three years ago when banks dragged the world into recession. Edward Meir, a senior analyst at brokers MF Global, said: ‘These are very critical days, reminiscent of the touch-and-go situation we were in back in 2008.

‘The key difference this time around is that it is countries and not companies that are in danger of going bust.’

Mr Obama told a public meeting in San Francisco that the debt crisis in Europe was one of the principal reasons why the U.S.economy was faltering.

‘European nations are going through a financial crisis that is scaring the world and they are trying to take responsible actions but those actions haven’t been quite as quick as they need to be,’ he told supporters at a town meeting. Mr Obama has seen his approval ratings hit by rising unemployment and fears the U.S.could slide into  another recession.

Between 2001 and 2011, the average terrace has shot up by 68 per cent in value, overshadowing the performance of bungalows and flats.

In 2001, the average terraced home cost £89,843. Today the same property would be worth £151,332, an increase of nearly £62,000.

All other types of properties have rocketed in value over the same period, but none has kept pace with the rise of the terraced house.

Flats and maisonettes are at the bottom of the property price rise league, up 49 per cent over the last decade. A flat which cost £109,936 in 2001 would cost £163,825 today, according to the Halifax, which is now part of the Lloyds Banking Group.

The figures highlight the long-term property boom, with prices reaching record highs in many areas despite the recent recession and the economic crisis.

For many families, who bought a terraced home many years ago before the boom, it has proved to be like winning the lottery.

Their home has shot up in value to such an extent that many could not afford to buy the same property if they were starting out again.

Halifax said the price of a terraced house has shot up so much because it is the most ‘affordable’ type of home in Britain. The average price of a terraced home is cheaper than the average price of any other type of property.

A typical bungalow costs £187,167. A semi-detached home costs an average of £164,970. A detached home costs £273,173 and a flat or maisonette costs £163,825.

Suren Thiru, housing economist at the Halifax, says: ‘Demand for terraced homes is likely to have been supported by their relatively favourable levels of affordability over the period.

‘The rapid house price rises have priced many potential home movers out of the upper end of the UK housing market.’

A separate report, from the property firm Hometrack, warns that only the rich can afford to buy in the countryside.

This is because the average price of a home on the first rung of the property ladder in rural areas, at £187,715, is far higher than in urban areas, at £133,005.