Company director imprisoned
A director of a company that manufactured security systems has been found guilty of two counts of fraudulent trading and one count of fraudulently removing property in anticipation of winding up. He was sentenced to two years in prison after defrauding his creditors to the tune of £600,000. The man has also been banned from directly or indirectly becoming involved, without the permission of the court, in the promotion, formation or management of a company under an eight year directorship ... read more
The end of late payments by large organisations?
The government has been trying to combat the widespread issue of large businesses abusing their position by making late payments to small businesses. This initiative has included the launch of the voluntary Prompt Payment Code (PPC) in April 2017 where over 2,000 signatories have committed to the fair and equal treatment of payments to suppliers including to smaller businesses. The PPC and other measures have helped reduce the amount owed to smaller businesses in late payments.
However, this ... read more
Importing from non-EU countries
There are special rules for businesses that import goods from non-EU countries. Whilst most smaller businesses importing goods will use a courier or freight forwarder it is still important to be aware of the duties and VAT implications. Businesses importing goods must be able to distinguish between importing goods from outside the EU or within the EU. Intra-EU movements of goods that are imported are referred to as 'acquisitions' and goods that are exported to the EU are known as 'dispatches'. ... read more
Self-assessment filing deadline
The 2017-18 tax return deadline for taxpayers using a paper self-assessment return is 31 October 2018. Late submission of a self-assessment return will become liable to a £100 late filing penalty. The penalty usually applies even if there is no liability or if any tax due is paid in full by 31 January 2019.
There are many advantages to filing online that include an extra three months (until 31 January 2019) in which to submit a return and pay any taxes due. Taxpayers also receive instant ... read more
VAT - option to tax
There are special VAT rules that allow businesses to standard rate the supply of most non-residential and commercial land and buildings (known as the option to tax). This means that subsequent supplies by the person making the option to tax will be subject to VAT at the standard rate.
The ability to convert the treatment of VAT exempt land and buildings to taxable can have many benefits. The main benefit is that the person making the option to tax will be able to recover VAT on costs (subject ... read more
Companies and trading losses
Corporation Tax relief may be available when a company or organisation makes a trading loss. The loss may be used to claim relief from Corporation Tax by offset against other gains or profits of the business in the same or previous accounting period.
The loss can also be set against future qualifying trading income. Any claim for trading losses forms part of the company tax return. The trading profit or loss for Corporation Tax purposes is worked out by making the usual tax adjustments to the ... read more
The Digital Disclosure Service
HMRC has used targeted campaigns to recover underpaid taxes and penalties from specific sectors and industries where significant underpayment of tax has been identified. The use of these campaigns is part of the government’s continued moves to tackle tax evasion, avoidance and fraud.
Current campaigns include the Card Transaction Programme, a disclosure opportunity for businesses that accept card payments and have not paid the right amount of tax due and the Let Property Campaign for ... read more
Genuine messages from HMRC
HMRC has issued an updated version of their online guidance on Genuine HMRC contact and recognising phishing emails and texts. The guidance provides a current list of genuine messages from HMRC. This includes email messages, text messages and telephone contacts from HMRC.
HMRC is currently carrying out compliance checks for midsized businesses, charities and public bodies by way of a compliance check interview over the phone. If you are unsure if a request is genuine you can ask the HMRC staff ... read more
Charity filing deadline approaching
The Charity Commission has warned charities that the deadline for submitting the 2017 annual return is fast approaching. The deadline for charities with a standard 12-month accounting period is 31 October 2018. According to the Charity Commission, there are many charities that have yet to file their annual return. Not filing on time means that the charity will be in default, and this information may be displayed to the public on the charity register.
The annual return is separate from the ... read more
When do you pay Income Tax?
Income Tax, unsurprisingly, is a tax on income. To be more specific, it is a tax on the income of individuals and non-incorporated businesses. However, there are some types of income where no Income Tax is payable. We have summarised below some of the main income type that are and are not liable to Income Tax.
In most circumstances, taxpayers will not be required to pay tax on all their income, even if it is all taxable because they receive a tax free Personal Allowance (2018-19: £11,850). ... read more
What are National Insurance credits?
National Insurance credits can help qualifying applicants to fill gaps in their National Insurance record. This can assist taxpayers to build up the amount of qualifying years of National Insurance contributions which can increase the amount of benefits a person is entitled to, such as the State Pension.
For example, National Insurance credits may be available to:
those looking for work,
who are ill, disabled or on sick pay,
on maternity or paternity leave,
caring for someone or
on ... read more
Gift Aid donations for food and drink
The Gift Aid scheme is available to all UK taxpayers. The charity or Community Amateur Sports Clubs (CASC) concerned can take a taxpayer’s donation and provided all the qualifying conditions are met, can reclaim the basic rate tax allowing an extra 25p on every £1 donated to charity.
HMRC has published a press release to remind fundraisers that they can boost donations by an extra 25%, if they ask for donations rather than charging for food and drink at events such as Macmillan Cancer ... read more
Class 3 NICs
Class 3 National Insurance Contributions (NICs) are a voluntary contribution paid by those wishing to fill gaps in their NICs contribution record and can be used by taxpayers who have not made sufficient compulsory contributions or are not liable to pay any other class of National Insurance contributions.
Essentially, Class 3 contributions can be used to secure certain state benefits, and more importantly, entitlement to a full State Pension. The form (CA5603) to pay voluntary Class 3 NICs has ... read more
Limitations of trivial benefit claims
Under HMRC’s rules, there is no tax to pay on trivial benefits in kind (BiK) provided to employees where all of the following apply:
the benefit is not cash or a cash-voucher; and
costs £50 or less; and
is not provided as part of a salary sacrifice or other contractual arrangement; and
is not provided in recognition of services performed by the employee as part of their employment, or in anticipation of such services.
The tax-free exemption applies to small non-cash benefits like a ... read more
Eligibility to claim Entrepreneurs’ Relief
Entrepreneurs' relief applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. Where this relief is available Capital Gains Tax (CGT) of 10% is payable in place of the standard rate. CGT on the disposal of chargeable assets is usually chargeable at 20%. There are a number of qualifying conditions that must be met in order to qualify for Entrepreneurs' Relief.
When the relief was first introduced there was a lifetime limit of £1 ... read more
Ways to liquidate a limited company
There are a number of reasons why a limited company may be no longer required and can be shut down. This may be because the limited company structure:
no longer suits the needs of its owners,
the business is no longer active, or
the company is insolvent.
The agreement of all the company’s directors and shareholders to close down the company will be required.
The method for winding up or liquidating a limited company depends on whether it is solvent or insolvent. If the company is ... read more
High penalties for offshore tax evasion
There are higher penalties for taxpayers evading Income Tax and Capital Gains Tax relating to offshore matters. HMRC’s compliance check notice entitled Higher penalties for offshore matters, has recently been updated to include details about penalties under the Requirement to Correct (RTC) legislation.
The RTC rules apply to any person with undeclared UK Income Tax, Capital Gains Tax and/or Inheritance Tax liability concerning offshore matters or transfers relating to offshore tax ... read more
Alert for VAT registered traders
The deadline for businesses with a turnover above the VAT threshold to keep digital records and provide regular digital updates to HMRC for VAT purposes using Making Tax Digital (MTD) is fast approaching. From 1 April 2019, businesses with a turnover above the VAT threshold (currently £85,000) will be required to keep their records digitally (initially for VAT purposes only).
For VAT accounting periods starting on or after 1 April 2019, businesses will need to provide their VAT return ... read more