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Tip of the day

New Advisory Fuel Rates

We are all very well aware, that while the fall in the price of oil is overall good, it is a bit of a double-edged sword. The latest downside is that HMRC have reduced the amount it will allow you to pay employees for the business cost of fuel they …

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Useful Tribunal Guidance on Developers Claiming Private Residence Relief

A case has just emerged from Tribunal that tells us quite a bit about our chances of getting favourable tax treatment if we develop a house and live in and around it while doing the work.  Our chances are not good. The First Tier Tribunal agreed with HMRC that our …

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3 Days’ Grace on RTI Late Filing Penalties

HMRC have just issued a press release containing very little detail, but uttering the words "Employers will not incur penalties for delays of up to three days in filing PAYE information." This is excellent news for everyone at the mercy of a system that requires a return to be made …

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Yet Another Reason Not to Fear an Overdrawn Director’s Loan Account

There are tax reasons why you wouldn't in principle want to borrow from your personal company. There is a 25% bond for your company to pay and there is income tax for you to pay personally on the deemed salary you are charged for having an interest-free loan from the …

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HMRC Quote on Importance of Compliance

In a very recent release from HMRC I was interested to read "Our digital services will also give us access to more and better data about our customers, which will enhance further our compliance activities. We will be able to look at a customer record across all our tax regimes …

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Penalty Ruling Puts Responsibility With Provider of Information for Return

A recent Tribunal case saw the taxpayer lose his appeal against a penalty. The case was about a beneficiary of an inheritance which had been under-declared for inheritance tax.  There had been a Swiss bank account that had been withheld from disclosure to the authorities. The beneficiary argued that the …

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HMRC Use of Data to Catch Tax Cheats

This is a regular warning of mine. I always tell people there is no need to cheat, anyway.  Arguing instead that you can win at the tax game by getting a better coach to teach you new skills or to play the game for you. If you are to take …

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HMRC Have a Sense of Humour

'Tis true. On this 31st January, there is very little around to make me laugh.  So, when I got an email alert that HMRC had just published an article entitled "HMRC's top 5 tips for completing your tax return", I just knew it had to be worth a look.  I …

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Self Assessment Payments and Penalties – part 2

Yesterday, we looked at prioritising 28th February for the payment of tax under self assessment. Another priority that is important to have is that the 5% surcharge applies only to the balancing payment and not to your payment on account. So, if you are sat there with £10000 balancing payment …

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Self Assessment Payments and Penalties – part 1

As we get closer to the 31st January, everyone knows the situation with the filing of self assessment tax returns.  It is quite simple, one day late and it costs you £100. What is less straightforward, is the position on paying the tax that your return tells HMRC is due. …

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New Self Assessment online chat service

HMRC have today announced their latest foray into the digital world. They are offering an "online chat service to customers with Self Assessment queries this January" How useful it will be is unclear, particularly as "staff will not have access to your account, so for detailed account queries you should …

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VAT Partial Exemption is the Accounting Student’s Enemy – It Could be Your Friend

It's not very often HMRC get generous, but sometimes they have de minimises that tell us where rules apply in general, they will ignore their application where the amounts involved are not worth their while in worrying about. In principle, you cannot claim input VAT back when it is incurred in …

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Rules on Personalised Car Registrations

This one is just for companies.  The tax rules for sole traders and partnerships are different. The taxes legislation considers that private plates are intangible assets.  It is not the plastic that you are paying for, it's the right to use the number = intangible. Tax relief for companies on …

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One For Anyone Borrowing From Your Own Company or For Everyone Who Needs to Know How Rules Work

Sometimes, tax planning is all about knowing the rules in their finer details. Take loans to directors, for example. The default method of calculation of taxable benefit is to take the balances at the beginning and end of tax year and divide by two to get the average.  The beginning …

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HMRC Take Aim at Solicitors

HMRC have just announced another of their campaigns, this time just for solicitors. They are inviting brethren of the legal profession to come clean and declare taxable income that had previously been locked away in chambers. I have yet to hear what data HMRC hold that would encourage you to come …

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Bridging the Gap Between NI and Income Tax Thresholds – Part 3

Becoming a more interesting sport as each budget appears to be widening the divide.  Income tax is to kick in from £10,600 at April 2015 when national insurance will be payable on all earnings over £8,060.  So, a shareholder-director might want to be able to set his wage at £10,600 but …

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Bridging the Gap Between NI and Income Tax Thresholds – Part 2

Becoming a more interesting sport as each budget appears to be widening the divide.  Income tax is to kick in from £10,600 at April 2015 when national insurance will be payable on all earnings over £8,060.  So, a shareholder-director might want to be able to set his wage at £10,600 but …

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Bridging the Gap Between NI and Income Tax Thresholds – Part 1

Becoming a more interesting sport as each budget appears to be widening the divide.  Income tax is to kick in from £10,600 at April 2015 when national insurance will be payable on all earnings over £8,060.  So, a shareholder-director might want to be able to set his wage at £10,600 but …

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Hey George. What About NI?

So George Osborne is fanfaring another rise in the personal allowance. I'm fairly certain he had already told us it would go to £10,500 in 2015/16.  He now says we can count on £10,600 of income before we pay income tax. If that threshold is going up apace, then I …

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Autumn Statement 2014 – Employers NI Exemption for Apprentices

Effective April 2016, employers will be excused from paying national insurance on apprentices under the age of 25. This is further good news for all of us who fear having lost generations as youth unemployment has been a problem for society for too long now. There isn't actually a lot …

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Autumn Statement 2014 – An Immediate Reaction

Was that it? I must have missed something.  Maybe I fell asleep. I will have to rely on reading up on all the documentary releases by the Treasury which very often contain stuff that failed to make the Chancellor's speech. My first reaction is that there is very little there. George …

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VAT on Giving to Staff

Now, we can't blame our government for anything VAT, unless you are of a UKIP persuasion and blame them for being in the EU in the first place.  All VAT rules come from Brussels. In principle, where you provide a benefit to staff that is a taxable supply made by …

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New Advisory Fuel Rates

These are the rates you can pay employees for using a company car when they pay for fuel and that they should reimburse you for private miles when you pay for fuel. From 1st December, the rates have come down by 1p for petrol cars up to 1.4l and over …

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Damning Audit of Auditors

I am no big fan of audits. Yes, some companies have to have them. Some companies, however, choose to have them done. The 2013 audit monitoring report compiled by the Institute of Chartered Accountants found just 19% of the audit files they inspected to be up to the standard of …

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The Font of All Tips

I loved this one when I read it.  Even if it is just for its quality of being at once bland and genius. If you are doing a large print run, and the cost of ink concerns you, then Which have done some 'ground-breaking' study on the effects of using …

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Don’t Land Yourself Filing Penalty on Paper Return

Self assessment tax returns filed on paper have a penalty filing deadline of 31st October. If you are anywhere near to being late, opt for online filing instead. There are no second chances.  You can't be late on paper and then file online.  You still get a penalty.

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Tax Code Wrong? Don’t Hang on the Phone. Get Online

As part of their strategy of ridding themselves of human beings, HMRC have launched an online service through which you can alert them to problems with your tax code. Tell Google to search on the words "PAYE Coding Notice Query", and you should find your way to the relevant section …

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Another HMRC ‘Campaign’ / Amnesty

This time, it's for businesses that accept card payments. HMRC have just launched another campaign, inviting those with previously un or under-declared tax to come forward and give themselves up. They say "HMRC has details of all credit and debit card payments to UK businesses. This information is used to …

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Beware Tax Breaks on Low Emission Vehicles

From April 2015, HMRC are phasing out the exemption from company van benefits taxed on employees driving zero emission vans. So, if you have one of these, it ain't going to be so good from next April. More relevant is the fact that once again, HMRC encourage you to go …

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HMRC Allow You to Ignore Them

HMRC are fond of their 'amnesties'.  At least, that's what they call them.  They are not actually amnesties at all.  An amnesty would be for them to say that we can ignore their very existence.  Even if only for a day or two.  That there is this accountant's fantasy. Well, …

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National Minimum Wage Increase

1st October is the date that everything nmw goes up. New rates are £6.50 for employees aged 21 and over, £5.13 for 18-20 year olds, £3.79 for under-18's and £2.73 for apprentices (under 19 or over 18's in the first year of apprenticeship).

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New Rules on Pensions Just Get Even Better

Announced yesterday, is the plan to remove the punitive taxation of pension funds passed on in a deceased's estate. It is never a bad thing to spend all you have before you die, and the 55% tax charge on inherited pensions was an incentive to take it all while you're …

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Employer Liable for Wrong Tax Code

If you are an employee, you might think that your tax code is important.  It is not.  It directs how much tax you should pay as you go through the year.  It has no bearing on your final tax bill. If you are an employer, you may think that an …

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Tribunal Restricts HMRC’s Right of Inspection

Any curb on HMRC powers of inspection has got to be worth a close look. The First Tier Tribunal has just ruled that it is unreasonable for HMRC to ask during a 'business records check' what the taxpayer does with her business takings at the end of the working day.  I …

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Penalties Are There to be Overturned

I never just accept a penalty. Whenever I come across one, I always consider the merits of appealing. I have to say, the case I am about to introduce is one I would have said would fail. The Tribunal has just reduced to just £400 a penalty of £3,602 for late …

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Beware VAT on Property Sales

If you are in business, you will know that over a three month period, VAT can add up.  Rarely, however, is it a big issue on individual transactions. It will be a big issue when 20% of a very big number is still a big number. Property transactions can be …

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Don’t Panic! Employ Less Than 50 and You are off the Hook… for Now

HMRC have just announced that they are extending the run-in to rti filing penalties. They are still kicking in from 6th October to employers with 50+ staff, but the smaller of you can now relax until 6th March. Small crumb of comfort if you are small, yourself.  Not a lot …

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The Taxman Sets Out His Stall on Bank Compensation Payments

HMRC have spoken. They have set out how they expect victims of bank misselling of interest rate hedging products to declare the compensation payments as taxable income. They say that the refund of interest should be credited in the business accounts in the opposite way as to how the original …

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Your Chance to Have Your Say in the Next Budget

The date has been set for the Chancellor's autumn statement as Wednesday 3rd December. The date has also been set for the closing deadline for all submissions as to what you'd like to see in that statement.  That date is 17th October. Get writing...  

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HMRC Scare Letters

Someone who works at HMRC (and who programmes the drivel that their computer spews out) has a lot to answer for. They are asking their computer to select people in receipt of child benefit and who have not paid the 'high income child benefit charge' (HICBC) despite having income > £50,000.  …

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Suspend Your Penalties

Not very well publicised is the facility that HMRC have to suspend penalties for careless inaccuracies in returns. There is pleasing logic in this in that HMRC are allowed to let you off if you can get them to agree that you will change your behaviour over the suspension period …

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Appeal Your Tax Penalties

Once the dreaded penalty notice lands on your doormat, you're in trouble. It can be anything.  A lot of penalties are £100.  You can add any number of zeroes onto that.  It is only in VAT that penalties must be proportionate to the offence. You may not want to go …

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Avoid Your Tax Penalties

Yesterday was all about understanding your tax penalty regime. Today, I want to encourage tax compliance as a valuable tool of keeping you on the right side of HMRC. Being behind with your tax can cost you your gross payment status for CIS, your chances of securing bank finance, your …

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Know Your Tax Penalties

Every taxpayer should look at the taxes they are liable for and research the penalties for late filing and late payment. When you have worked out the scale of the penalties that you might face, you can work out the importance of compliance. Many might be surprised that late payment …

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Are You on the List?

Today's tip is to check the list. The list is the one published by HMRC of 'deliberate tax defaulters'. I've already been on it.  No.  Let me rephrase that.  I've already checked it. Happy to say they've not got me, yet. Can't be so sure about you, though. I'd have …

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HMRC Will Sub You Maternity, Paternity and Adoption Pay

Now that you can't reclaim statutory sick pay, it is warming to remember that not only is statutory maternity, paternity and adoption pay repayable by the government, they will offer funding of your payments to employees if you are unable to reclaim until after the tax year-end.

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Sales Psychology

Some are born to sell, others are born to sit behind a computer and crunch numbers. Whatever your natural gifts, there are still some sales rules that are worth trying to remember. Your prospects need to feel wanted before they can become your customer.  Don't be afraid of showing people how …

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HMRC One Step Away From Locking Up 2nd Home(abroad)owners?

The Treasury has just released a document for consultation, outlining its intention to legislate to make tax evasion a strict liability criminal offence where it arises from offshore income and gains. Now, I am no lawyer and you will have to read the thing yourselves, but my understanding is that in order to …

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Landlords Beware The Taxman Has Eyes Everywhere

HMRC have been firing plenty of warning shots across the bow of landlords who may or may not be choosing to be less than complete in their declaration of rental income. It is now thought that they are using sch 23 FA 2011 to serve information notices on letting agents.  …

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The Employment Allowance and IR35

If you are unlucky enough to be caught by IR35, you need all the tax breaks you can get. Before you reach the end of the 2014/15 tax year, you need to be aware that the £2,000 employment allowance does not count for the deemed payment. You should, instead, make …

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