r
_

Tip of the day

Pay PAYE Quarterly

If your monthly PAYE bill is under £1500, you are allowed to pay quarterly rather than monthly. Now, some will enjoy the cash flow advantage this affords.  Others would rather pay up while they've got it to pay.  Each to their own. One factor that should tip the balance in …

Read more

Form 17 and the Unequal Allocation of Rental Income Between Spouses

It is a noble art to stage shares in income generating assets in a tax-efficient manner. First, you need to make sure that beneficial ownership is evidenced in the split you are looking to achieve. That is not the end of it, though. HMRC will automatically enforce a 50:50 split …

Read more

Tax Penalties Double!

Something that I had always suspected, has now ben confirmed from within HMRC's own accounts. The tax penalty regime has become vicious, vindictive and a vital source of funds for the Treasury. In the year to 31st March 2013 the total penalties paid by UK taxpayer doubled from the same period …

Read more

2013-14 is not the Year to Delay Tax Credit Applications

As tax credits can only be backdated by one month, mid-tax-year decisions to claim are often put off until the following April when a full year can be claimed. If you are inclined to delay, you need to be aware that from April 2014 all claims will be for the …

Read more

Disincorporation Relief

It is now safe to move from a company to a sole trader, provided that value of company does not exceed £100k. I am a big fan of companies because of limited liability status. I also quite like the lower tax rate. Each trade is different, however, and some will …

Read more

Calling All With Pension Pots Worth More Than £1.25m

Wow.  That caught your attention, didn't it?  Not that you have a pension worth more than £1.25m, but that you had to read on to find out if anyone does. Well, if anyone does, you need to be aware that from 6th April 2014, there is a 'punishment' tax on …

Read more

When The Tax Collector Knocks on Your Door

HMRC have just announced a helpline to verify the identity of the Collector when he or she knocks on your door. You will be able to call 0300 2003682 and be assured that your visitor is who they say they are. It remains to be seen how quickly they answer …

Read more

Never Go On Holiday

I am away now for a fortnight, so no more tips, I'm afraid. I will, however leave you with this last one: Never go on holiday! You only need one as a result of the stress you go through trying to prepare for going away!

Read more

Buyers of Goodwill Might Want to Read the New FRSSE

We have a new FRSSE! This is the framework of accounting standards that dictate how the accounts of all small companies are prepared. It is effective for accounting periods beginning on or after 1st January 2015, but early adoption is both allowed and encouraged. HMRC accept claims for tax deductions that are …

Read more

Use a Company When Buying Goodwill

If you are buying a business and paying consideration for its goodwill, you will get better tax relief if you buy it in a company than in your own name(s). Only companies can get a tax deduction on amortisation of goodwill.

Read more

Whether to Buy Shares in a Company or the Assets Out Of It

A very general rule is that the vendor would rather sell the shares in the company while the buyer would sooner purchase the assets out of the business. For the vendor, there is a  10% capital gains tax rate on the sale of certain shares in a company you are …

Read more

Valuing a Business

Many business sales are valued at a multiple of profits. Technically, any business is worth what the buyer will make out of it. The market has decided that he will make maintainable profits x 3. A major factor that many overlook is deducting the market value of management time as …

Read more

Buying and Selling Businesses

A warning to anyone considering buying a business. The smaller the business, the more likely it is to be reliant on (and therefore only capable of being run by) its owners. Before buying any business, you must look carefully at the ties its customers have to the owners.

Read more

Time Running Out for CGT Amnesty

9th August is the last day that you can take advantage of HMRC's 'amnesty' on undeclared property sales. Under the amnesty, penalties are reduced to either 10 or 20%. So, if you regret not declaring the CGT at the time, you don't have long to put it right for a …

Read more

Relief for ‘Trading’ Losses?

A recent case taken to Tribunal by the taxpayer and won by HMRC, disallowed relief on losses made in a business that was seen to not have a valid profit motive. It is commonly known that you can't have a hobby that you say is a business and claim relief …

Read more

Get Your Paperwork Right

It matters not what you think the reality is.  In disputes with the taxman, it matters what it looks like to the outside world. A recent case before the Tribunal found against the taxpayer in their appeal that a property sale should be treated as a trading rather than a …

Read more

HMRC Launch Email Reminder System

HM's 'finest' have just announced a new service that promises to keep you updated with what you might need to know about the taxes you pay and to remind you when payments and returns are due. Not only could this be good news if missing a deadline would result in …

Read more

Appearances Are Everything

In the event of a dispute with HMRC, it will stand you in good stead if you appear to be compliant with your tax responsibilities. Many appeals against penalties are influenced by previous good record and by the systems that the taxpayer can demonstrate that they put in place to …

Read more

What Constitutes A Reasonable Excuse That Would Get You Off a Tax Penalty

Now HMRC issue tax penalties in vast numbers.  Their computers just churn the things out with little design or intelligence. This random and casual approach to issuing penalties means that it is often worth trying to appeal. One ground for appeal is that you have a reasonable excuse for being late with …

Read more

Oh, Joint and Several Liability

When they go wrong, partnerships are truly horrible. Everyone in one knows about joint and several liability, although I hope you only get to know about it by anecdote and not experience. To those of you who wake up one morning with a cold realisation of joint and several liability …

Read more

Caveat Director

This week, Vince Cable has signalled the Coalition's intention to get tougher on directors of failed companies. This is a warning to anyone who is asked to become a director. You are accountable for the actions of the company, even if they were the result of a decision that was …

Read more

Principal Private Residence Relief from Capital Gains Tax – Burden of Proof

Everyone knows and accepts that if you have one house that you live in and then sell it for a gain, CGT does not apply. There are a number of grey areas where you have more than one house or you lived in one for a time before renting it out and then selling …

Read more

Beware Part Surrender of Life Insurance Policies

You can cash these things in. The tax system covers 3 ways of surrender as follows: 1 Surrender up to 5% and the taxman doesn't want to know. 2 Cash in the entire policy and the taxman says you are simply having returned to you what you put in to …

Read more

Late Tax Return Amnesty

HMRC have just announced their next amnesty, being that anyone with a tax return up to and including the 2011-12 tax year can file those returns with a reduced penalty, provided the tax is paid by the 15th October. You have to make  a formal election that you are using …

Read more

Fight HMRC All The Way

Yesterday's stunning piece of news is the HMRC are not always right. Having given you time to absorb this, I now want you to remember to stand up and fight them when you believe you are right and they are wrong. You are entitled to appeal their decisions and the …

Read more

HMRC Are Not Always Right

Hopefully, many of you are already aware of this 'news'. Even if it is not news to you, I would like you all to spend the rest of today focusing on this point so that it becomes etched onto your consciousness. Tomorrow, I shall give some context.

Read more

P11D Filing Deadline is Upon Us

6th July is the filing deadline for forms P11D. And as I only tip on working days (not on days of football worship or on the Sabbath), this is your last chance. No need to panic too much, though.  It's important to get them in but there are no penalties …

Read more

A Company Car is Provided by Reason of Employment

Tax is enforced by legislation.  Law is all down to the wording. Company car tax is worded to capture any car provided to the employee by "reason of employment". The same wording is used to police the benefits of low or zero interest loans from employers to employees.  There is …

Read more

You Can’t Mitigate Company Car Tax by Paying for the Cost of the Car

I issue this as a tip, because I know it happens a lot. Yesterday's tip was not to assume that the tax system is logical. Today's is an important warning. Many would and many have assume(d) that if a company leases a car and gives it  to the employee to …

Read more

Don’t DIY

This could be a general tip about life. It isn't. It is an appeal to all of you not to take it upon yourselves to know how tax works unless you have worked in and studied the subject for a very long time. Tax is not necessarily logical.  There is …

Read more

HMRC Targetting Sham LLP Memberships

HMRC have launched a consultation period, announcing their intention to remove the presumption of self-employment from membership of a limited liability partnership as from 6th April 2014. If you run your business through a llp and have elevated staff to membership to enjoy the tax benefits of self-employment, you should …

Read more

Croatia – the 28th Member of the EU

On Monday, Croatia will become a member of the EU. So all who import and export and have to deal with the complex nature of international VAT rules will have to remember that trade with Croatia now has EU VAT treatment.

Read more

A Way Out of Daily Penalties

If you have been late with your 2012 self assessment tax return, you may have experienced daily penalties. A recent Tribunal case saw a victim of these daily penalties win his argument and have them revoked. The revocation appears to hinge on the wording of the legislation that provides for …

Read more

Previous Good Behaviour Backing Up a Reasonable Excuse

A Tribunal has just upheld an appeal by a taxpayer against HMRC's removal of his CIS gross payment status. Our hero had a previous good record. He then suffered a series of major events in both his personal and business life that created cash flow difficulties, leading directly to the …

Read more

Beware Friends and Enemies

Published figures suggest that 300 people are making anonymous tip-off calls to HMRC's tax evasion hotline every day. Now take out the crank calls, the PPI salesmen and the calls from people who've just watched Panorama, and you still have a large number of people 'telling' on normal businesses. So, …

Read more

Tax Case – Reminder that HMRC Not Always Right + Tip on Incorporating a Property Letting

A taxpayer has just won on appeal their right to capital gains tax relief on the incorporation of their property letting business. There are many factors to consider when deciding whether to own investment property in a company.  The most valuable of these tend to be between the rate of tax …

Read more

HMRC Pubilcly State That They Are Not Seeking to Attack Husband + Wife LLPs

In a consultation document aimed at addressing elements of the taxation of limited liability partnerships (llp's), the Revenue have explicitly stated that they are not including husband + wife arrangements within their sights. This is great news for anyone looking to use their spouse's tax allowances to reduce their overall tax …

Read more

Revenue To Scupper Corporate Membership of LLPs

HMRC have just launched a consultation, stating their intention to see through company involvement in llps and other partnerships that had been designed to divert profits from anything up to 52% personal tax into the company rate of, say, 20%. This is not yet law - it is just a …

Read more

HMRC Announce Plans to See Through LLP Memberships for Employees

Consultation has just been made on a proposal by the Revenue to remove the presumption of self-employment for members of a limited liability partnership (llp).  It has long been difficult to make an employee a salaried partner with no benefits of equity without the Revenue imposing PAYE on the situation. …

Read more

Company CIS Repayments ‘Should’ be Due

HMRC's stated policy is that CIS repayments to companies due through the P35 should be processed within a couple of weeks of the P35 filing deadline, ie around about now. As stated in an earlier tip, you will need to make sure you have 'double-claimed'. Even then, I wouldn't expect …

Read more

New Advisory Fuel Rates

As of tomorrow, there are new advisory fuel rates for paying employees for business miles in company cars and for their reimbursement of private miles driven.  These are also the rates you use for claiming back the VAT on business mileage claims. For petrol cars: 15 p for up to 1.4l, …

Read more

Hidden Cost of Opting Out of Child Benefit

Since the government 'stopped' child benefit for those earning over £50k, many have been choosing to opt out of the benefit rather than having to complete a tax return and pay it back. On the face of it, this opt-out makes a lot of sense. However, there are hidden costs. …

Read more

HMRC Confirm That Dividends Are a Valid Repayment of Overdrawn Directors Loan Accounts

Long-practised by those of us in the know, it has now been enshrined in statute that an undrawn dividend is a valid loan repayment. HMRC have moved to legislate on areas within loans to participators, which term includes shareholder-directors. One of the things that they are looking to stamp out …

Read more

Don’t Forget HMRC Can’t See the Bleedin Obvious

Now that all your P35s are in (ahem), anyone with a repayment due will be well-advised to put a separate claim in for it. Now, you'd have thought that HMRC would be able to guess that if a repayment is due, then you would like to receive it.  Not so. …

Read more

P35s Are Due on Sunday

Don't forgot to get them in. And rejoice; for this is the last time you will ever have to do one. Instead, you will have to do 12 - 24 reports for 2013-14!!

Read more

Don’t Forget to Tell HMRC When You Cease Self-Employment

Not only is it good form to notify tell the taxman when you are no longer within his clutches, you will also save yourself from being chased for your weekly Class 2 national insurance stamp if you tell HMRC as soon as you stop being self-employed.  We are not just …

Read more

Tax Consequences of Termination Agreements

A recent tax case reminds us that we all need to have regard to tax when drawing up compromise agreements. Johnson vs HMRC is a tale of a £75700 pay-off at termination of employment contract.  The intention was for this to include the repayment of a £30000 share option that …

Read more

New limit on disputing tax credits overpayment notices

Tax credit overpayments have blighted the tax credits system. It can be very painful to receive weekly amounts that you then have to pay back in one go because the Tax Credits Office decide you shouldn't have had them in the first place. It is always worth looking at disputing …

Read more

Don’t Be Lazy With Tax

2013-14 sees the 'introduction' of fixed rate expenses as part of the government's tax simplification agenda. Now, I am all for tax simplification.  But in this aspect, HMRC have imposed arbitrary rates that are in my opinion simply not generous enough. One of the fixed rate expenses is nothing new.  It …

Read more

EMI Schemes – Now With 10% CGT

Enterprise Management Incentive (EMI) schemes have been with us for quite a while now. They are a vehicle for giving employees shares in your company without triggering income tax charges for their value being deemed remuneration. The scrapping of business asset taper relief  stopped capital gains tax advantages from the …

Read more