Permitted Development VAT Zero Rating – new rules

VAT and Construction are never simple!

But on the 3rd May 2016 HMRC have tried to simplify Permitted Developments with Revenue & Customs Brief 9/2016

Under the PDR scheme, persons seeking to obtain planning permission to convert certain types of non-residential property (such as agricultural buildings or office accommodation) to residential dwelling(s) can make a PDR application, rather than a full planning application. This acts to hasten the application process for claimants and is being increasingly adopted by planning authorities in England.

Here is an extract from Revenue & Customs Brief 9/2016…

To zero-rate the sale of all newly converted dwellings (from non-residential buildings) or to make a valid claim under the DIY House Builder Scheme, the newly converted building must meet the requirements of a building ‘designed as a dwelling’. Further information can be found in Section 14 of Notice 708: buildings and construction (14 August 2014).

One of the conditions is that the developer, builder or DIY House Builder Scheme claimant must be able to demonstrate that statutory planning consent (SPC) has been granted in respect of that dwelling and that its construction has been carried out in accordance with that consent.

In addition, part of the conditions for some supplies of construction services to be eligible for the reduced rate of VAT of 5% for the conversion of a non-residential building into a dwelling requires individual SPC. Further information can be found in Section 7 of Notice 708: buildings and construction (14 August 2014).

Following the introduction of PDRs, individual SPCs will no longer be required for some developments making the meeting of this condition difficult.

HMRC is clarifying its policy concerning the VAT treatment of works where an individual planning application is not necessary because statutory planning consent has been granted though PDRs.

HMRC will continue to require evidence to be produced that the work is lawful in order for the zero or reduced rate of VAT to apply or for a claim to be eligible under the DIY House Builder Scheme. Where the builder, developer or DIY House Builder Scheme claimant establishes that the conversion is covered by a PDR and individual SPC is not required, they must be able to evidence it by at least 1 of the following:

a) Written notification from the LPA advising of the grant of prior approval. or
b) Written notification from the LPA advising that prior approval is not required. or
c) Evidence of deemed consent (ie evidence that you have written to the LPA and your confirmation that you have not received a response from them within 56 days) and evidence that the development is a permitted development. This will include all of the following (where the documents have been created), plans of the development, evidence of the prior use of the property (eg evidenced by its classification for business rates purposes etc.), confirmation of which part of the planning legislation is relied upon for the development and a lawful development certificate where one is already held.

Developments carried out under a PDR must still meet the appropriate building standards. Should any circumstances arise where building control is not required, evidence from the local authority confirming this should be provided.

steve@bicknells.net

Photos can be bad for Business!

Do you think photos are important? would you use a photo like this on Linked In?

https://d28wbuch0jlv7v.cloudfront.net/images/infografik/normal/chartoftheday_3509_b2b_marketers_choose_linkedin_over_facebook_n.jpg

What does your head shot say about you? Using a photo taken at a wedding or on holiday with a glass of wine in your hand, or one taken 20 years ago, maybe sending out the wrong message and costing you thousands in lost opportunties.

Headshot mistakes from John Cassidy

How you present yourself matters, with social media you are your own brand.

For example lets say you are an accountant.

Accountants love Blue, 66% of accountants will choose blue and 55% of the top accounting practices use Blue in logos
Accountants need to seen as experts
They are reliable, organised, trustworthy and accurate

So would you choose this accountant? is being funny a skill you want in an accountant?

Or this accountant? Much more professional possibly a little too serious?

Your image really matters in battle to win clients!

Here are some tips for headshots from Louise Jolley..

Having your photograph taken against a white or grey background, gives a nice clean image but how about in your work environment, telling the story about what you do? Make sure that the photograph is a high resolution (300 dpi), which will be suitable for print as well as web and if it shows your whole body, make sure that is looks great as a head and shoulders crop too.

If your business is selling products on the web, taking them yourself is not advisable. You might think you are saving money but a properly lit shot is worth it’s weight in gold. If you were opening a physical shop, then you would want the best fixtures and fittings, to show off your products, using stock photos and camera phones snaps looks cheap and doesn’t encourage prospective customers to part with their hard earned cash.

Using stock photos on your website, doesn’t tell the story of your business and makes it too generic. Having bespoke images of your business and photographs of you and your team at work, makes it more personable and people buy from people that they can relate to.

Louise takes some fantastic photos take a look at this one (more at http://www.louisejolleyphotography.com/ info@louisejolleyphotography.com)

Good photography will make a huge difference to your business.

Don’t let bad photography cost you opportunities!

steve@bicknells.net

Who should get your tips? or should we stop tipping?

Tip jar

Over 150,000 business are in the Hospitality Sector and they employ over £2m staff, tipping is common place, so the government launched a consultation on 2nd May 2016 which will run till 27th June 2016 to seek opinions on tipping, gratuities, cover and services charges.

The Government wants everyone to be paid fairly so the proposals focus on:

Option 1:

Ensure transparency to consumers that discretionary payment for service is just that – ‘discretionary’.

Option 2:

Ensure workers receive a fair share from discretionary payments for service.

Option 3:

Increase transparency for consumers and workers regarding the treatment of discretionary payments for service.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/521946/bis-16-172-tipping-consultation.pdf

Troncs can save you Tax

If your employees receive tips directly from your customers and are allowed to keep them, then you do not need to do anything for PAYE tax or NICs. There are no NICs due on the money, and the tax due is the employee’s responsibility. Your employees should declare the money to HMRC, who will usually adjust their tax code to collect any tax due.

A tronc is an arrangement for pooling and distributing tips and service charges and the person who operates the tronc is known as a troncmaster. If your employees use a tronc you must tell HMRC who the troncmaster is so that they can set up a PAYE scheme for the tronc.

http://www.hmrc.gov.uk/helpsheets/e24.pdf

Tips are outside the scope of VAT when genuinely freely given. This is so regardless of whether:

• the customer requires the amount to be included on the bill
• payment is made by cheque or credit/debit card
• or not the amount is passed to employees.

Restaurant service charges are part of the consideration for the underlying supply of the meals if customers are required to pay them and are therefore standard rated.
If customers have a genuine option as to whether to pay the service charges, it is accepted that they are not consideration (even if the amounts appear on the invoice) and therefore fall outside the scope of VAT.
Further information is available from: Notices 700 The VAT guide and 709/1 Catering and takeaway food

steve@bicknells.net

Hooray! we have now paid our tax – Tax Freedom Day was 2nd June 2016

According to the Adam Smith Institute

Taxpayers worked 154 days this year to pay their taxes, four days longer than 2015

Tax Freedom day falls four days later than it did in 2015
Brits work 154 days of the year solely to pay taxes; every day from 1st January to 2nd June
Tax receipts projected to be 42.27% of net national income this year
Government needs to cut spending and keep tax reform a priority
Adam Smith Institute calling on government to raise National Insurance Threshold to help lowest paid in society

This is first time in 15 years that Tax Freedom Day has moved into June!

Whilst net national income has increased by £34.6bn from 2015, government has actually gobbled up £35.4bn more in taxes, meaning the government has actually left Britons £1bn worse off than last year, a reminder that tax reform must remain a priority.

Director of the Adam Smith Institute, Dr Eamonn Butler, said:

“The Treasury hates Tax Freedom Day because they don’t want us to know how much tax we really pay. They conceal the tax burden with stealth taxes that we don’t even realise we’re paying.

“But it’s shocking that the government takes over two-fifths of the country’s earnings – and then borrows more. We work longer for the government than mediaeval serfs had to work for their Lords!

“It is absurd that people on the minimum wage are liable for National Insurance Contributions, which raise their cost to employers and make it harder to move from benefits into work. The poor are also worst hit by regressive taxes like excise duties on what they buy.”

Tax Freedom Day is designed to reveal to the public how much they really pay out in taxes, which Britain’s lengthy tax code can often obscure. ASI calculations include direct taxes like income tax and national insurance, as well as indirect taxes like VAT and corporation tax.

steve@bicknells.net

Is your tax code correct? millions are wrong!

Money Saving Expert reported last week

Revealed: 3.2m tax codes WRONG – check if you’re owed £1,000s

The National Audit Office found a huge number of tax code errors – our unique calc can check if you’re a victim

You’ll find your tax code on:

your pay slip
your PAYE Coding Notice – you usually get this a couple of months before the start of the tax year and you may also get one if something has changed but not everyone needs to get one
form P60 – you get this at the end of each tax year
form P45 – you get this when you leave a job

You can check your tax using this HMRC link

https://www.gov.uk/check-income-tax

If you think you code is wrong you can inform HMRC using this online form

https://online.hmrc.gov.uk/shortforms/form/P2

Check the following carefully:

P60 – you get this at the end of each tax year
P45 – you get this when you leave a job
PAYE Coding Notice
P11D Expenses and benefits
P9D Expenses payments and income from which tax cannot be deducted
Bank and Building society statements
Pension Tax Deductions

Is your National Insurance correct?

Unlike Income Tax which is cumulative and assessed across all earnings, National Insurance starts from zero on each individual employment and you also pay National Insurance on Self Employed earnings.

So if you are a Director of multiple businesses paid as an employee its easy to see how you could over pay and you might not even realise because National Insurance is not shown on your Self Assessment Return.

You can also over pay National Insurance if you are a part time employee with multiple employers and irratic earnings, this because National Insurance is calculated on a weekly/monthly basis, not a cumulative basis and its by employer.

What you need to do

Write to HM Revenue and Customs confirming:

your National Insurance number
why you’ve overpaid
the tax year(s) you’ve overpaid

You should include your P60 or a statement from your employer showing the tax and National Insurance for each year you’re claiming for.

You should apply within 6 years of the tax year you’re claiming for.

HM Revenue and Customs
Payment Reconciliation
National Insurance Contributions Office
Benton Park View
Newcastle upon Tyne
NE98 1ZZ

steve@bicknells.net

HMRC have raised over £500m in unpaid tax and penalties!

Taskforces are specialist teams that undertake intensive bursts of activity in specific high risk trade sectors and locations in the UK. The teams will visit traders to examine their records and carry out other investigations.

HM Revenue and Customs (HMRC) taskforces have recovered more than £500 million since they were launched five years ago.

The targeted bursts of enforcement activity have brought in progressively higher amounts every year, and the total now stands at more than £540 million. This includes nearly £250 million raised in 2015-16 alone, almost double the previous year’s yield.

Since 2011, HMRC has launched more than 140 taskforces targeting sectors that are at the highest risk of tax fraud including the retail sector, the tobacco industry and the adult entertainment industry.

Jennie Granger, Director-General for Enforcement and Compliance at HMRC, said:

The message is clear: if you try to cheat on your tax, we are going to catch you. A small number of people still think they can cheat the tax system; these figures prove we can track them down and take back what they owe.

We have increasing levels of intelligence, and use state-of-the-art digital tools to help us to identify and target high-risk areas.

Taskforces are just one strand of HMRC’s compliance strategy, which brought in a record £26.6 billion in 2014-15, up 43% from 2011-12.

Nearly 50 new taskforces were launched last financial year, including ones targeted at property, partnerships and hidden wealth. In 2015, a single taskforce focused on Income Tax led to 45 arrests for tax evasion and fraud.

Money brought in through taskforces in previous years:

Year	Taskforces yield
2011-12	£24.3 million
2012-13	£47 million
2013-14	£85 million
2014-15	£138.1 million
2015-16	£248 million

Here are 6 tips should you be get an enquiry:

1. Establish Enquiry Type

It is important that the type of enquiry is established. If it is an Aspect Enquiry make sure it is fully dealt with. Remember HMRC needs a reason to extend an enquiry from aspect to full – challenge any extension where necessary.

2. Choose the Best Adviser

Does your accountant have experience of dealing with enquiries and investigations? do you need a specialist to help? do you have tax insurance or FSB membership?

3. Revenue Manuals

These manuals are a good source of information – particularly if the HMRC asks for something and you are wondering whether this should be allowed. We have seen the enquiry manual being quoted successfully to HMRC a number of times.

4. Reduce your risk by filing and paying on time

Events such as late returns or a poor compliance record can increase the likelihood of an investigation.

Once the investigation has started the standard of record keeping becomes important.

5. Own up to your mistakes

I you know of mistakes and errors its much better to declare them at the start of the enquiry.

6. Be Accurate

Or “tell the truth”. Be sensible in what the Inspector is told. Do not be tempted to say the first thing that comes to mind just to satisfy HMRC.

steve@bicknells.net

Don’t ignore work place pensions – the regulator will fine you!

The fine for small employers with 1 to 4 staff who fail to comply with an EPN is £50 per day and for those with 5 to 49 it is £500 per day.

The Pension Regulator statistics for the first quarter of 2016 show that the number of fixed penalties were 806 compared to the penalties for the whole year of 2015 which were 1,250, so penalties are increasing, partly due to increasing numbers of small businesses being required to enrol.

Charles Counsell, Executive Director for automatic enrolment, said: “Most employers comply on time and we continue to see compliance rates in the high nineties. Others need a nudge and are prompted to meet their duties when one of our notices comes through their letterbox.

“It’s simply not fair for staff not to receive the pension contributions they are legally due. But failing to act also means an employer risks clocking up a significant penalty until they put things right.

“Our message remains that if things aren’t going well, then talk to us; don’t ignore us.”

steve@bicknells.net

Why we are going Green

Yaris

As most people know, generally, my advice is not to have a company car. That’s because the benefit in kind tax makes most cars expensive and the capital allowances aren’t great.

But not all company cars are bad!

So Bicknell Business Advisers have decided to go green, tomorrow, we are collecting our first company car from Westover Toyota, a Toyota Yaris Hybrid and the option we have chosen is less than 75 CO2 g/km which means it will qualify for 100% capital allowance in the first year.

The benefit in kind is only 11%.

It does 85 miles to the gallon and uses the petrol engine to charge the batteries (so no need to plug it in).

Would you ever consider getting a Green Car?