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Tip of the day

CIS and Paying Your VAT

A recent First-tier Tribunal case found in favour of the taxpayer who was appealing VAT late-payment penalties on the grounds that HMRC had got their money in wrongly collected CIS deductions. The particulars of the case were that the taxpayer should not have had CIS deducted by his contractors and …

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Appeal. You Never Know Your Luck.

A recent appeal against a VAT late filing surcharge gives us all hope. You can appeal on grounds of having a reasonable excuse. HMRC's culture is such that they are less likely to find your excuse reasonable than are an independent tribunal. This particular case was of a family business …

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A Silly Waive

This country has a lot of husband-wife companies. At present, the shareholdings in such companies can be structured so that both basic rate bands can be used to get double the tax-free dividends out. It is important, however, that you know what you are doing. A recent case before the …

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New Advisory Fuel Rates

From 1st December 2013, the amounts that you can pay employees who pay for their own fuel in a company car has gone up to 14p per mile for cars up to 1.4l, 16p for 1.4-2l and 24p per mile for cars with engine sizes over 2 litres. Sadly, one …

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National Minimum Wage Penalties Just Got Scarier

All employers need to be aware of areas within their business where non-compliance could be very expensive. Not many will wilfully ignore the national minimum wage, but the penalty regime was always one that would not make it a critical issue. Basically, you are liable for a penalty of 50% of …

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Steam Cook Your Turkey

Merry Christmas to all my readers.  Yes, that's you, Mum! Now, there is no need to have got up at 6 this morning to put your turkey in the oven. We always follow Phil Vickery's technique of steaming the bird at 200c for 2 hours and 20 minutes on a bed of …

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VAT Repayment Supplement Only Paid When Repayment on a Return

A recent VAT tribunal case has agreed with HMRC who refused to pay repayment supplement on a VAT repayment because it was claimed by the taxpayer in a letter and not a return. The very strict wording of the VAT Act is being applied here.  The legislation provides for repayment …

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VAT and Splitting Your Supply

A recent VAT tribunal case has found against the taxpayer who wanted to split his supply of a central heating system into different parts, some of which were eligible for the 5% reduced rate. The tribunal ruled that the manner in which the supply mas made meant that it was …

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HMRC Attack Intermediary Agencies

Part of a general move against the practice, the Revenue have issued a consultation document 6 days after George Osborne's Autumn Statement 2013.  It is entitled 'Onshore Employment Intermediaries: False Self Employment'. This is a niche area and many will be unaffected, but it will impact on the construction and …

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Quote from HMRC on Investigation Triggers

"We do use Google Street View but our investigations have a greater focus in looking at an individual’s bank account, employment history and the value of their property. No tax inquiry would commence purely on the basis of information from Street View — identifying cases for possible inquiry is a …

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High Dividends Brings IR35 Risk

In one of those Public Accounts Committee circus events, it has emerged that HMRC monitor dividend levels as part of their IR35 policing. The inference is that if you have a company and you take a large proportion of your company's turnover by way of dividend, you may be working for …

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RTI Concession Announced for the Smallest Employers

Categorised by HMRC as micro employers, any with less than 10 employees are going to have 'soft' Real Time Information (RTI) reporting until the beginning of the 2016/17 tax year. Don't get too excited, you are not let off. Instead of sending a return in every time you pay someone, …

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Autumn Statement 2013 – Politics Suggest 2014 Should be Better

There was so little in what George Osborne introduced last week.  The conclusion has to be that more will come next year, which is his last chance to impress us before the next general election.

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Autumn Statement 2013 – Corporate Members of LLPs

Back in June, I tipped about HMRC's plans to scupper the artificial transfer of profits and losses within LLP's into and out of the hands of corporate members. Unsurprisingly, what started as consultation had now reached finance bill status, as announced last Thursday by our George. The transfer of 'excessive' …

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Autumn Statement – Some Relief for Rates

He had to do something, and that's just what George Osborne has done to give a bit of relief to those crippled by non-domestic rates. Properly targeted at small businesses and at retail, the following come in from April 2014: A cap on how rates are going to go up …

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Autumn Statement 2013 – Start ‘Planning’ Now For 2015 – Part 2

In keeping with his fiscally neutral stance, George Osborne gives very little away. There has been so much media coverage about bringing back some form of married couples allowance.  Now that we know what it is, it was hardly worth the wait for the announcement and we can definitely wait …

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Autumn Statement 2013 – Start ‘Planning’ Now For 2015 – Part 1

The measure introduced by George Osborne on Thursday that 'interested' (and I use that term quite ironically) me most was the relief from employers national insurance on employees under 21. As this does not come in until April 2015, there is no point in going out and recruiting the young just yet.  …

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Autumn Statement 2013 – The Knee Jerk

Quick reaction before I have had chance to go through all the documents released today is that there ain't a lot there. A tad disappointing when we really need to get businesses investing, George Osborne has given us an 'as you were' 'pre-budget report' with no new announcements that are …

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Autumn Statement 2013 – PPR Changes to Watch Out For

Kind of came out of nowhere this, but it could have an impact on any capital gains on second property disposals from April 2014. This only applies when you have lived in the property at some point. Current rules, infamously exploited by MPs, allow for principal private residence relief (PPR) on …

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Personal Representatives Should Notify HMRC of Date of Death

A sombre one for today, but any tip to avoid penalties is well worth stating. HMRC admin is not always great. Upon death, a self assessment tax return should be re-issued in the name of the personal representative. If the Revenue do not get this bit right, they can't impose the …

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Get Your Tax Return in This Month If You Want to ‘Code Out’

Coding out is the expression used to refer to where an amount under £3000 is not paid on 31st January, but is instead collected in a future year's PAYE coding notice. If you owe HMRC up to £3000 and you really don't want to have to pay it this 31st …

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Watch the Timing of Setting Up a Direct Debit to Pay VAT

HMRC penalties make them the world's second worst set of robbing bastards, sandwiched between solicitors and the banks. The worst penalties of all are levied on the late payment of VAT returns. In order to minimise your chances of being late, setting up a direct debit can be a prudent …

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VAT and a Scary Retrospective Registration Case

A recent VAT tribunal case has found against the taxpayer and turned her into a VATpayer, as well. Our hero argued that she was merely acting as a broker or agent in introducing cleaners and tradesmen to owners of holiday lets.  If she was properly an agent, then she would not have …

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Get Your Tax Codes Right

This is one for anyone operating a PAYE scheme. It is your responsibility to apply the correct tax code. If you do not and you do not stop enough income tax from an employee, the Revenue will come after you in the first instance to collect the underpayment of tax.  …

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Are You on the List?

HMRC have finally gone and done it. One of their flagship measures to combat tax avoidance is to publicly humiliate 'deliberate tax defaulters' by publishing details of them and their offences on the world-wide web. I have checked and I am not on it.  Neither is anyone I know.  But …

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Court Confirms The Employer Pays Evaded Tax, Not Employee

A recent case saw a FTSE100 company being ordered to compensate HMRC for lost tax revenues when it had to accept that a tax scheme had failed. The employer had hoped that as it was the employees who had benefitted most from the arrangement, that it would be them that …

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Terms and Conditions

If you don't know your customers, you can't trust them.  If you can't trust them, you need to have terms and conditions that they subscribe to.  You may need to rely on your t's and c's in the case of a dispute. If you do know your customers and you …

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Post-Cessation Receipts

Yesterday introduced the notion of making a late tax claim for expenses after you have stopped trading. Sadly, the other side of the coin applies in that HMRC want you to pay tax on income that comes your way even after you have packed in and gone home for good. The …

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You’ve Got to be Able to Laugh

It really does help, you know. Business is hard.  It can be intennse.  A little bit of laughter along the way can make the difference that keeps you sane. It has just worked for me.  I spend a fair bit of time reading articles on tax.  Keeps my eye in.  …

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It’s All In The Wording

We see this so many times in tax law.  It's not so much about what you meant to say.  It matters what you actually did say. A simple warranty in a simple purchase and sale agreement went to court with the taxpayer appealing HMRC's decision to refuse capital gains tax …

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Want to Write Off Goodwill Over a Shorter Term? Embrace the New FRSSE

Life and business is all about winners and losers. Yesterday, we saw how the new Financial Reporting Standard for Smaller Entities (FRSSE) is going to make losers out of those who want their goodwill to last and last. Today, we look at those lucky companies who are buying goodwill from a …

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Want to Write Goodwill Off Over a Longer Term? Beware the New FRSSE

It used to be that accounting standards allowed you to a maximum of 20 years to write goodwill off over. If you acquired goodwill from a connected person and therefore cannot claim tax relief on its write-down then your priority turns to not allowing the write-down to make a mess of …

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Paying Out a Departing Shareholder

If you first instinct is that this needs to come from the pocket of the continuing shareholder(s), you need to be aware that Companies Act 2006 made it a lot easier for the pay-out to come from the company, itself. It used to be that you needed a court order …

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Recycle Your Mortgage Through Selling Shares to Your Spouse

This is one for owners of close companies who have a mortgage but as yet have not involved your spouse in the company's shareholding structure. As you can get tax relief on a loan taken out to buy shares in a close company, then you can swap loans about to …

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Recycle Your Mortgage Through A Loan to Your Personal Company

No tax relief on a loan to buy your main home. Tax relief on a loan taken out to lend monies to your personal company. If you have a mortgage and your company owes you money and you are thinking about remortgageing, then have the company pay your loan back, …

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Get Tax Relief on Your Mortgage via a Buy-to-Let

Very simple tax planning, this. No tax relief on a loan to buy your main home. Tax relief on a loan to buy a rental property. Therefore, borrow on the rental property and use the advance to invest in your main home. So long as the loan is secured on …

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Tax Relief on Your Mortgage

Now that mortgages are once more becoming easier to obtain, there are a number of angles to consider if you are in business. Ordinarily, no tax relief is available on interest paid on a mortgage on your home. Over the next three days, I want to show that under some …

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Annual Limits on Pension Contributions

HMRC have been publicising the threat of imposing tax charges on excessive pension contributions, so I thought this was a good time to revisit just how much you can put in in any one year. The limit for 2013/14 is £50,000. From 2014/15 it will be £40,000. These are subject …

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Health Professionals the Next in HMRC’s Sights

The latest in a series of 'amnesties' offered by the Revenue was announced today as health and wellbeing professionals (not doctors and dentists) are the new flavour of the month. This 'amnesty' is a campaign to collect tax in that particular trade sector. If you don't come forward before 31st December, …

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Go In Prepared

In a recent tax case, HMRC defeated a claim for loss relief by a football club on the grounds that there was no expectation of profit. This is a fair enough principle.  If you are not going for profit, then you can't profit from the resulting loss. Motive and intention …

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New National Minimum Wage Rates

As of today, national minimum wage rates have increased as follows: Aged 21 + £6.31 an hour Aged 18 - 20 £5.03 an hour Aged 16 - 17 £3.72 an hour  

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Never send an example of your tax return to the Revenue

A recent First Tier Tribunal case highlights the dangers of writing to HMRC. The taxpayer was intending to submit an electronic tax return before the 31st January. Unsure that they had done it right, the taxpayer printed their intended submission and sent it to HMRC for them to cast their eye …

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Always Worth Arguing With HMRC

In a recent case that went before the First Tier Tribunal, we heard the story of a taxpayer who had wanted to conduct her trade through a limited company but had forgotten to set the company up before her first sale. As the company did not exist, HMRC said that it could …

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4th September 2013 – The Day That Proving Trading Status Just Got Easier

A recent First Tier Tribunal ruled that "commerciality was not necessary to constitute a trade". Trading status is a big thing in tax.  It can get you to lots of nice reliefs and avoid you lots of nasty taxes. In this particular case, the taxpayer was after industrial buildings allowances …

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16th September 2013, The Day it Became Easier to Switch Banks?

From today, there is a new system to smooth the transition from one bank to another. The Payments Council has developed a framework through which the two banks will talk to each other and transfer standing orders, direct debits etc. So, if logistical difficulties have put you off switching in the …

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Annual Investment Allowance – Prioritise Assets When Spend Exceeds £250k

Hopefully by now, you've all got the message that (until the end of 2014) you have full tax relief on the first £250k of capital expenditure. But what if you spend more than £250k? If that happens, then make sure you have considered the rates of capital allowances that your …

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Under One month to Go for Higher Earning Child Benefit Recipients Register for Self Assessment

If you earn > £50000, you are the higher earner in your household and someone in your household receives child benefit, you need to pay back some or all of that benefit through a self assessment tax return. If you are not already in the self assessment regime, you will …

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Last Call for NICs Holiday

Any business (outside the South-East) created between 22nd June 2010 and 5th September 2012 has been let off the first £5k of employers national insurance on the first 10 employees for the first year of employing people. So, if you started a business between those dates and you started employing people after the 5th September 2012, today …

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New HMRC Powers to Access Your Card Processors’ Data

From 1st September, HMRC will have for the very first time legal access to the card receipts for any UK trader. They will sort data by trader and then be able to compare what they can see has actually happened with what you say has happened when you report on your …

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Employee Shareholder Contracts

As of 1st September 2013, there is an intriguing new employment status, that of the employee shareholder. Simplified down to its basics, the employer gives the employee £2000 worth of shares and the employee signs a contract that gives up rights to unfair dismissal and statutory redundancy pay. There are …

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