Category: HMRC

7 excuses for late Self Assessment Returns and Late Payment

the dog ate my homework

Every year thousands of tax payers miss the deadline of 31st January, here are some excuses that HRMC accepted!

  1. a failure in the HMRC computer system (HMRC)
  2. your computer breaks down just before or during the preparation of your online return (HMRC)
  3. a serious illness, disability or serious mental health condition has made you incapable of filing your tax return (HMRC)
  4. you registered for HMRC Online Services but didn’t get your Activation Code in time (HMRC)
  5. it was lost in the post HMD Response International v’s HMRC 2011 The accountant produced a contemporaneous note in his office diary for 16 May showing that he had filed the return.
  6. “Impecuniosity”Maxine Barron v’s HMRC
  7. Cashflow difficulties caused by a change in CIS Status Kincaid v’s HMRC 2011

Around one in nine (11%) of the 560,000 people in Inner London who had to send in a tax return last year didn’t do so by the relevant deadline – 31 October for paper returns and 31 January for online submissions.

The one million taxpayers in Outer London were more punctual, with one in 11 (9%) failing to meet the deadline, but they were still the second worst offenders. The tardiest taxpayers outside of London were in the North West of England, with 8% of their 890,000 returns failing to meet the deadline.

Taxpayers in the rest of the English regions fared better. The most punctual were in the South West, with only 6% of their one million tax returns arriving late. The other English regions, as well as Wales, Scotland and Northern Ireland, all registered 7% of late tax returns, which was the UK national average.

Don’t be late, get it done!!!

 

steve@bicknells.net

Will property prices go up because of changes to stamp duty?

4880157508_dd2f144a45_m

The big news in the Autum Statement was the change to Stamp Duty.

• No stamp duty will be paid on the first £125,000 of a property
• 2% will be paid on the portion up to £250,000
• 5% is paid for the portion up to £925,000
• 10% is paid on the portion up to £1.5m
• 12% is paid on anything above that

HMRC have a handy new calculator, here is link

http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm

There are also more details at https://www.gov.uk/government/publications/rates-and-allowances-stamp-duty-land-tax/rates-and-allowances-stamp-duty-land-tax

98% of all buyers will pay less tax under the new system

Will this lead to big increases in property values?

steve@bicknells.net

Will you be exporting in Export Week?

Export - Red Hanging Cargo Container.

Its the UK Trade and Investment’s 6th annual Export Week (10 to 14 November).

Previous Export Weeks have seen over 17,000 companies in the UK attend exporting focussed events. This week we will again have over 70 events across the UK; there will be at least one event per day in every part of the UK.

According to a recent survey by Barclays Corporate Banking, in new emerging markets 64% of consumers are more likely to buy a product which displays the Union Jack.

A survey by Exact back in June 2014 showed…

The survey of 453 SME leaders found that 54% of SMEs now sell products or services abroad. It found that exporting is the biggest growth area for 19% of the UK’s SMEs, and 68% of those who currently export saw export sales increase in 2013 over the previous year. For 18%, exports now account for over half their sales.

HMRC have a helpsheet TH/FS15 which has some helpful advice on importing and exporting.

So will your business be exporting this week?

steve@bicknells.net

Is your act theatrical enough to have tax deductible agents fees?

Las Vegas Elvis impersonator

Actors, singers, musicians, dancers and theatrical artists are permitted to make a deduction for agents fees under ITEPA 2003 S352.

But its more complicated than you might think based on recent cases…

Richard Madeley and Judy Finnegan (2006) SpC 547 it was only on appeal that the Special Commissioner agreed that their chat show was considered theatrical.

The Special Commissioners also thought that Bruce Forsyth and Ant and Dec qualified.

But that Quiz shows were borderline, for example they felt Jeremy Paxman (University Challenge) and John Humphry (Mastermind) didn’t qualify, but Anne Robinson (The Weakest Link) did qualify and Chris Tarrant (Who wants to be a Millionaire) was borderline.

So do you think the special commissioners would see your act as Theatrical?

steve@bicknells.net

Are you losing out by having ‘Triangular Travel’?

businessman dream

Your normal commute to work isn’t business travel, but if you have to travel to visit a customer or visit somewhere on business then that is business travel.

Triangulation happens when you leave home on a valid business journey, but then return to your normal place of work, then travel home.

The travel between home and your normal place of work isn’t business travel.

You could avoid triangulation by not returning to your normal place of work, then the whole journey would be business travel.

If you are required to do training, that travel will count as business travel.

This can get even more complicate if you work from home.

On the 16th December 2013 Dr Samad Samadian v HMRC had his appeal on Travel heard by The honourable Mr Justice Sales and it was decided to uphold the previous decision of the First Tier Tribunal.

After an enquiry lasting more than seven years and three tribunal hearings, the First-tier Tribunal led by Judge Kevin Poole acknowledged Dr Samad Samadian had a dedicated office in his home which was necessary for his professional activity.

However, the panel did not accept that the home office could be treated as the starting point for calculating private practice business mileage involving habitual journeys.

So in summary:

  • Home to Hospitals – Disallowed
  • Hospital to Hospital – Disallowed as Business Expenses (but could be allowed against Employment)
  • Visits to Patients – Allowed

Are your mileage claims correct?

steve@bicknells.net

 

 

Share Buy Back Multiple Completion Checklist

Young woman with checklist over shoulder shot

Exit planning is critical if you want to save tax.

Typically when a shareholder wants to leave a business, the company will buy back the shares, but often the company wants to pay in stages to ease the cashflow.

The problem is that buy back in stages generally means that Entrepreneurs Tax Relief can’t be used and to make things worse the buybacks will be tax as a distribution.

The Companies Act prohibits buy back by instalment, however HMRC Tax Bulletin 21 says…

The Board can only consider a request relating to a transaction which appears to be a valid PoS. The Companies Act 1985 lays down certain procedural rules which must be followed. Also, the consideration for the shares must be paid immediately and must be paid in money. The first of these requirements means that payment by instalments is not possible. It is, however, possible to make a contract under which successive tranches of shares are to be purchased on specified dates.

So here is checklist of things to consider to create a multiple completion:

  1. Ask HMRC for advance clearance – the buy back will be treated as a single event and subject to Entrepreneurs Tax Relief on the whole amount on day one
  2. Make sure your solicitor draws up an agreement that transfers beneficial interest on day one whilst retaining a legal interest
  3. Whilst the shares still exist beneficial interest has been disposed of
  4. Voting rights can no longer be exercised
  5. The creditor for deferred completion must not be loan capital

Clearly you will need professional advice from your solicitor and accountant to create a multiple completion contract.

steve@bicknells.net

Will your Share Buy Back pass the ‘trade benefit’ test?

Successful Businessman With A Contract In Hand

Often as part of an exit strategy or succession planning companies will buy back shares.

Setting aside the mechanics, nicely explained in the ACCA Technical Factsheet 177 and the need for S1044 CTA 2010 clearance, the Buy Back has to be in the benefit of the trade not just the shareholder.

For example….

If the purpose is to ensure that an unwilling shareholder who wishes to end his association with the company does not sell his shares to someone who might not be acceptable to the other shareholders, the purchase will normally be regarded as benefiting the company’s trade.

Examples of unwilling shareholders are:

  • an outside shareholder who has provided equity finance (whether or not with the expectation of redemption or sale to the company) and who now wishes to withdraw that finance
  • a controlling shareholder who is retiring as a director and wishes to make way for new management
  • personal representatives of a deceased shareholder, where they wish to realise the value of the shares
  • a legatee of a deceased shareholder, where he does not wish to hold shares in the company

Assuming that the shares aren’t being bought back at Par Value, basic rate taxpayers will probably prefer dividends for any surplus where as higher rate taxpayer will want capital treatment.

Share Buy Back is complex, make sure you seek professional advice.

 

steve@bicknells.net

 

 

Have you had your annual tax statement?

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Back in 2010 the Government promised every taxpayer an annual statement of their tax position – not just the income tax and National Insurance paid, but also where the money was spent.

During October these statement will start to be sent out, see the example above.

If you’re registered for online self-assessment you’ll be able to access your statement digitally by logging on to the HMRC website in the usual format, selecting the tax summary option.

Initially the statements will only cover your tax position for 2012/2013 and at first only selected taxpayers will receive one.

Is this a positive step forward or a waste of time?

 

steve@bicknells.net

TOGC issues on Business Acquisitions

Businessman hand touching M & A - merger & acquisition concept

Normally the sale of the assets of a VAT registered or VAT registerable business will be subject to VAT at the appropriate rate. A transfer of a business as a going concern for VAT purposes (TOGC) however is the sale of a business including assets which must be treated as a matter of law, as ‘neither a supply of goods nor a supply of services’ by virtue of meeting certain conditions. Where the sale meets the conditions then the supply is outside the scope of VAT and therefore VAT is not chargeable.

It is important to be aware that the TOGC rules are mandatory and not optional. So it is important to establish from the outset whether the sale is or is not a TOGC.

The main conditions are:

  • the assets must be sold as part of the transfer of a ‘business’ as a ‘going concern’
  • the assets are to be used by the purchaser with the intention of carrying on the same kind of ‘business’ as the seller (but not necessarily identical)
  • where the seller is a taxable person, the purchaser must be a taxable person already or become one as the result of the transfer
  • in respect of land which would be standard rated if it were supplied, the purchaser must notify HMRC that he has opted to tax the land by the relevant date, and must notify the seller that their option has not been disapplied by the same date
  • where only part of the ‘business’ is sold it must be capable of operating separately
  • there must not be a series of immediately consecutive transfers of ‘business’

The TOGC rules are compulsory. You cannot choose to ‘opt out’. So, it is very important that you establish from the outset whether the business is being sold as a TOGC. Incorrect treatment could result in corrective action by HMRC which may attract a penalty and or interest.

Problem areas:

  1. Gap in trading – for TOGC to apply there must be no significant gap in trading between the sale and purchase
  2. VAT registration – If the vendor is VAT registered, there can only be a VAT-free TOGC if the purchaser is registered at or before the transfer
  3. Buying part of a business – the part being bought must be capable of separate operation
  4. A series of sales – it may not be possible for one of the parties to carry on the trade
  5. Staged Sales – As long as the overall result is that of business transfer these should qualify for TOGC

steve@bicknells.net

How can you avoid charging VAT on Inter-Company Charges?

TAX FREE and VAT FREE grunge rubber stamps

There are situations where one company is VAT registered and other related companies are either partially exempt or not registered for VAT, so in these circumstances not charging VAT is an advantage.

The following are not Taxable supplies for VAT:

Common Directors – Notice 700/34 (May 2012)

An individual may act as a director of a number of companies. For convenience one company may pay all the director’s fees and then recover appropriate proportions from the others.

The individual’s services, such as attending meetings or approving expenditure, are supplied by the individual to the companies of which they are a director. The services are supplied directly to the relevant businesses by the individual and not from one company to another. Therefore there is no supply between the companies and so no VAT is due on the share of money recovered from each company.

Joint Employment – Notice 700/34 (May 2012)

Where staff are jointly employed there is no supply for VAT purposes between the joint employers. Staff are jointly employed if their contracts of employment or letters of appointment make it clear that they have more than one employer. The contract must expressly specify who the employers are for example ‘Company A, Company B and Company C’, or ‘Company A and its subsidiaries’.

Paying a Bill on behalf of an associated business

This is basically an inter company loan which will be repayable in full, its not a taxable supply.

Insurance

If insurance is being recharged and both businesses names are on the policy it can be treated as a disbursement of an exempt insurance so that its not vatable.

steve@bicknells.net