Small firms threatened by PAYE shake-up
Small companies are wrestling with increases in payroll costs and the loss of a cheap form of finance in the run-up to the biggest shake-up in PAYE for almost 70 years next month, say tax experts. Click here to read more.
Tax dodgers named and shamed
Tax dodgers who have deliberately tried to evade paying more than £25,000 are being named and shamed for the first time. Click here to read more.
Tax Update: Navigating employment status March 2013
Several recent cases help to determine if a worker should be treated as self-employed or as an employee when deciding whether to deduct tax or National Insurance contributions (NICs). Click here to read more.
Child Benefit Income Tax Charge
Legislation has been introduced in the 2012 Finance Bill to impose a new income tax liability on a taxpayer (with income greater than £50,000), where they receive child benefit for the year.
Real Time Information
April 2012 sees the introduction of Real Time Information (RTI) by HMRC, which is being launched as a priority Government programme aimed at improving the operation of PAYE. However it is only a pilot scheme from this April.
IR35 - New Tests to Determine Status
IR35 - new tests to determine status- an article from Accountancy Age website. Click here for more info.
A guide for new employers by ACAS
Click here for PDF guide.
National Minimum Wage
The national minimum wage was increased on 1st October 2011
The national minimum wage was increased on 1st October 2010
Accommodation offset - £4.46 per day (£31.22 per week).
The annual leave entitlement is 28 days including bank holidays, as from 1st April 2009
Self Assessment Tax Returns
The penalty system for late submissions of Self Assessment Tax Returns has changed, please click here to go to the HMRC website for more information.
Another HMRC campaign is taking place
This time business who have traded above the VAT registration limit and not yet registered for VAT. Click here to read this article to find out more.
HMRC targets Ebay and other trading sites, see the links below for further details:
Tackling self-assessment form now means fewer chances of mistakes
HMRC accused of tax probes "via back door"
Technology leaves evaders with "no hiding place"
Taxman owed nearly £1bn from Time to Pay
HMRC announces three further tax amnesties
Taxman targets smaller firms in new crackdown
Small businesses are facing a summer of crackdowns over tax, VAT and record-keeping which have been branded as unfair by small business organisations.Click here to read more.
HMRC plans to register tax agents to cut fraud
HM Revenue & Customs plans to enrol the country's tax agents on a register to reduce fraud and allow them to "self-serve" clients. Click here to read more.
When is the best time to buy fixed assets?
If you are about to invest in computers, fixtures, plant and machinery you should work out the most effective purchase date. The rules for capital allowance claims and tax rates are constantly changing. You receive a tax deduction for your qualifying capital expenditure over time, although the annual allowance has now reduced from 25% per annum to 20% per annum. However, you can look at maximising the allowances at 100% by utilising your annual investment allowance. Whether it is before or after your year end is down to funding and knowing what your level of capital expenditure to date is in the accounting period.
The valuable annual investment allowance currently applies to the first £100,000 of a business’s expenditure on plant and equipment (excluding cars) per year. This allowance will qualify for 100% relief against profits, so effectively a general first year allowance is introduced for all plant and equipment up to a value of £100,000. However, following on from the emergency budget, the annual investment allowance will be reduced to £25,000 per annum on 6 April 2012. Clearly if you are considering an expensive plant and machinery purchase in the near future, then the £100,000 per annum allowance is worth having.
New HMRC proposals to check business records
On 17th December 2010, HMRC announced their intention to roll out a programme of Business Record Checks in the second half of 2011. At the current time they are consulting with professional organisations regarding the scope of their enquiries. This consultation will be completed and the results published by 31 March 2011.
HMRC says that, although keeping adequate and accurate business records allows businesses to comply properly with their tax obligations, its random enquiry programme suggests that poor record keeping is a problem in around 40 per cent of all SME cases.
Although HMRC has had the power to inspect a business’s records for many years, until recently, this was normally only enforceable during a formal enquiry raised into a tax return. This is now going to change and visits to businesses could be made with only seven days notice given.
With research indicating that poor business record keeping generally leads to an underassessment of tax, HMRC estimates that it could be losing out on tax payments in up to two million SME cases annually.
If your business is selected, HMRC staff will visit your premises and ask for access to all your business records. If they feel that there is a significant failure to keep proper records, penalties may be charged and additional tax assessments raised. A business could face penalties of up to £3,000 for not keeping its current year tax records up to date and this will, no doubt, trigger visits from a number of their departments. You may get additional PAYE/NIC or VAT audit checks for instance.
HRMC is hoping that businesses will benefit from improved financial management which in turn will boost their chances of survival. Those seen to be fulfilling their obligations will likely have a lower chance of subsequent compliance intervention from the taxman
New Corporation Tax Regime
HM Revenue & Customs (HMRC) have announced a new corporation tax regime with effect from 1 April 2011. All companies and organisations will be required to:
In addition, most companies and organisations will have to file their financial statements electronically using iXBRL.
The biggest change relates to how the accounts and computations are submitted to HMRC. They must be submitted in a computer readable terminology called iXBRL, and although they won’t necessarily look any different there are certain items which must be individually ‘tagged’ and reported in this language.
If you prepare your own accounts they will need to be converted into iXBRL and tagged accordingly.
HMRC has said it will continue with its deadline for corporation tax returns to be filed online despite calls for a delay prompted by concerns that new technology may not be ready. At least one big software provider has said it will not have full iXBRL technology ready in time.
Last week six accountancy institutes wrote to the Exchequer Secretary to the Treasury requesting the Government push back the implementation deadline. However, HMRC spokesman has confirmed that the deadline remains in place.
The institutes believe that accountants face implementation problems as software companies are either not ready for iXBRL or have only recently released the new technology. They believe accountants need more time to familiarise themselves with the new software.
However, HMRC has assured tax advisers any difficulty with filing will be treated sympathetically if they have taken ‘reasonable steps to comply’.
Certain types and size of organisation can continue to file their accounts in a ‘pdf’ format, for example, small charities.
Pre year-end tax planning for individuals
The period leading up to the end of the tax year on 5 April is one of the best times for you to review your personal tax position and to take action to maximise tax saving opportunities and minimise liabilities. As the 5 April 2011 tax year-end approaches, Jacquie Adams, Tax Partner, highlights the questions to ask yourself and some of the opportunities available:
Childcare Vouchers - The Future
From 6th April 2011 entrants to new Childcare Voucher Schemes, or new entrants to an existing scheme, will benefit from the same level of tax relief, so higher earners will lose the additional tax benefit available previously.
What does this mean moving forward?
For employers already operating the scheme now is the perfect opportunity to encourage uptake amongst their employees to allow as many working parents as possible to benefit.
For employers who are considering setting up a scheme, you should take action now to avoid losing the opportunity.
Spoof HMRC Emails
If anyone receives an email that appears to be from HMRC, with the logo and disclaimer etc on it advising you are due a tax refund and if you follow the link and enter your bank details it will be paid directly into your bank account DO NOT DO IT. This is a "spoof" email and someone is trying to fraudulently obtain your bank details, do not allow this to happen!
Below is an example of what the email may look like:
P.A.Y.E. ~ New Penalty Regime
H.M. Revenue & Customs are introducing late payment penalties for P.A.Y.E. due from May 2010.
The penalties are a percentage of the amount you pay late. This percentage will increase during the year dependent on the number of late payments.
Your payment record for 2010-11 tax year will be reviewed after the end of the tax year and the first penalties will be issued from April 2011.
To avoid these penalties the Revenue has to receive the payment by their deadlines which are, for normal cheque payments, the 19th of the month or if this is a bank holiday or weekend them it becomes the last bank working day before the 19th of the month.
Alternatively, you may wish to pay the Revenue electronically which will extend this date to the 22nd of the month. You can pay electronically by Direct Debit, internet, telephone banking, BACS Direct Credit, debit or credit card, or CHAPS. You can find out more information on paying electronically on the Revenue website www.hmrc.gov.uk/payinghmrc
If you are having difficulty in paying or can’t pay you need to contact the Business Payment Support Service on 0845 302 1435 as soon as possible.
Should you have any queries regarding the above please do not hesitate to contact us or for more information on the late payment scheme please visit the Revenue website www.hmrc.gov.uk
Tax Enquiry Fee Protection Service
As you may be aware HM Revenue and Customs have been putting more resources into pursuing more tax enquiries over the past few years.
Enquiries can be complex and therefore responding to HMRC can be time consuming and consequently expensive to you. We now offer an insurance policy which covers our fees should you be unfortunate enough to be subject to a Tax Enquiry by HMRC.
The policy does not cover any tax liability that may arise as a result of a Tax Enquiry!
This service is only available to clients of Geoffrey Beech & Co.
The New Vat System
From 1st April 2010 all businesses with an annual turnover (excluding VAT) of over £100,000 must file their VAT returns online and pay any VAT due electronically.
The first thing you will need to do is enrol for the online filing service. If we currently prepare your VAT returns we will have done this automatically, regardless of turnover. If you calculate your own VAT you will need to go to www.hmrc.gov.uk/vat/start/register/signup-online.htm
The online VAT form will have the same format as the paper returns, and it will check your arithmetic for you before you submit it.
If you need any further information on this matter please do not hesitate to contact us.
Please refer to the electronic payments section for details on how to pay your VAT electronically.
There are a few methods of electronic payment but I have identified the most common, those being by Telephone/Internet banking, and via debit/credit cards (Billpay).
Please note that HMRC do not accept American
Express or Diners club cards.
HM Revenue & Customs have 2 accounts offices, most of our clients will be processed by Cumbernauld, so these are the details you will need. It doesn’t matter if you want to pay Self Assessment, PAYE or Corporation Tax, the bank details are always the same, you must make sure that the reference that you use is correct:
Sort code: 08-32-10
For Self Assessment the reference you should use is your UTR number (the 10 digit reference on your Tax Return) followed by the letter K. Do not leave any spaces in your reference!
For PAYE you should use your Accounts Office reference, this should be on the front of your yellow remittance book. Please note that this is not the same as your PAYE reference. It will look like this 582PH00123456, do not use this reference, it is an example only!
For Corporation Tax you should use the reference given on the tax payslip . But it does incorporate the company 10 digit reference. However the reference you will need for this has 17 digits and will look something like 1234005678A00101A.
To pay your VAT liability using this method you need the following bank details
Sort code: 08-32-00
If you intend on using this service regularly it would be easier for you to register, however you do not need to register to be able to use it.
Click on the link below to access the billpay service.
VAT ~ Fuel Scale Charges
Any businesses which recover input VAT on motoring and has an element of private use must apply the Fuel Scale charges set out below.
The charge for each vehicle is determined by the CO2 emissions, if the emissions of the vehicle are not shown on the table you would need to round down the emissions figure to the next bracket i.e. Emissions of 163 g/km would round down to 160g/km, or 148g/km would be 145g/km and so on.
For a bi-fuel vehicle with two CO2 readings the lower of the two should be applied.
The fuel scale charges listed below are inclusive of VAT, so you would need to apply the VAT fraction applicable at the time i.e. (15% = 3/23) 1st December 2008 to 31st December 2009, or (17.5% 7/47) from 1st January 2010. E.g. If your car had CO2 emissions of 148 g/km and you did quarterly VAT returns you would need to do the following calculation: 255*3/23 = 33.26 is the VAT amount you would need to enter in box 1 (for a quarter ended 31st Oct 2009, vat @ 15%).To calculate the VAT for the new 20% (if we apply it to the same example given above) 255 / 6 =42.50
Please also ensure that you refer to the correct table. There are 3 tables below, the first is for a 12 month VAT period, the second for 3 month return (most businesses), and the last for monthly returns.
From May 2010.
For vehicles that do not have a CO2 emissions figure, you should identify the CO2 band based on engine size, as follows:
Redunancy ~ The Facts
Unfortunately with the state of the economy the way it is at the moment, more and more people need to know the facts about redundancy.
Redundancy is when a job/role no longer exists. If a company closes down or the function of the business changes then the job has gone. If someone is sacked for misconduct etc, this is dismissal and is completely different.
Employers should consult with their staff from the early stages; it is very unlikely that circumstances would change overnight. All consultations should be minuted and copies distributed.
If there is to be only partial redundancies, I.e. the company has too little work for the number of staff, then the process of selection of staff to put forward for redundancy should be clear and fair. If possible the employer could try the employee in a new role (on a trial basis), if this option is available. It may be viable to ask if anyone would be willing to opt for voluntary redundancy, (usually for those close to retirement). When all else fails, specific guidelines must be drawn up and any employee that is made redundant is entitled to be given the reasons for their selection.
Calculating Redundancy Pay
There is a statutory minimum that must be paid to employees that are subject to redundancy if they have worked for the business continuously for more than 2 years. For an employee under the age of 22 this is half a weeks pay for each year of service, rising to one weeks pay for employees between 22 and 40, and then one and a half weeks pay for those 41 and over. However, redundancy pay can be paid at a greater level than that of the statutory entitlement and is drawn up in the employment contract.
There are no exceptions to this rule apart from those who have not been continuously employed for the 2 year entitlement period. Employees are covered if there was any stipulation in their contract with regards to redundancy pay. It is no longer possible for an employer to sign away the rights of redundancy in the employment contract.
Failure to follow the correct procedures in redundancy
could result in an employment tribunal, ultimately costing the company
financially and creating bad publicity.
For each year that an employee has worked for the business they are entitled to one weeks notice up to a maximum of 12 weeks. Even if the employee leaves, or is allowed to leave before the end of their notice entitlement they are still entitled to full pay for the remaining period.
For further information and advice please contact us or refer to ACAS (Advisory, conciliation and Arbitration Service). Who offer free help and advice in employment issues.
Also refer to direct gov http://www.direct.gov.uk
Companies House Accounts Filing Penalties
Companies House have increased the penalties for late submissions of Accounts. The new penalty takes effect on accounting periods beginning on or after 6th April 2008. The new penalties are as follows.
The amounts set out above will be doubled if both the current and previous accounts have been filed late. The penalties will only be doubled if the late accounting periods are successive.
Companies House Filing Deadlines
For accounting periods beginning 6th April 2008 onwards the filing deadlines have been reduced from 10 months after the year end to 9 months i.e. If the company’s accounting period ends 30th April 2008, it is due at Companies House no later than 31st January 2009.
HMRC ~ Extra Time To Pay
If you are struggling in the current economic climate and are having difficulties meeting your VAT and tax liabilities, why not contact the Revenue and organise a “time to pay” scheme.
Ideally you should contact them before the liability is due, this way they are more likely to agree to the scheme and you will not be charged any late payment penalties, unlike previously.
To do this you should contact the HMRC’s Business Payment Support Service on 0845 302 1435. Or have a look at http://www.hmrc.gov.uk/pbr2008/business-payment.htm for more information.
Please ensure that if you do give them a call you have details of all your incomings and outgoings so that you can agree on a timescale that you can afford.
The CIS Scheme
The CIS scheme came into effect 5 April 2007. The key change to the scheme is that there is now a verification process that each subcontractor must undergo in order to assess whether they are in the CIS scheme, and if so, what level of deduction should be made.
Each contractor should have received a list of subcontractors that they paid in the last year. If your subcontractor is not on the list then you still need to verify them, if they are, you are advised whether you should make deductions from them or not.
There are 3 different levels of payment.
If you subcontractor is verified and marked as net payment then you deduct 20% if they are marked for gross payment then no deduction is made and if your subcontractor is not verified then you should make the 30% deduction.
If you need to verify a new or existing subcontractor you should ring the CIS help line on 0845 366 7899 or you can do it online www.hmrc.gov.uk/new-cis.
!!! You must verify your subcontractor BEFORE you make any payments !!!
Please note that when completing the monthly return you will need to sign a declaration stating that all of your subcontractors are subcontractors and should not be employed by you. You must check the status of your subcontractors, please contact us for more information.