The 10 worst excuses for not paying Minimum Wage

the dog ate my homework

On the 3rd April, to coincide with the 15th anniversary of the introduction of National Minimum Wage, HMRC issued a list of the worst and most elborate excuses given to their officers in the last 12 months.

  1. An employer said a woman on the premises was not entitled to NMW as she was his wife. When asked what his wife’s name was the employer said “err.. her name, err what’s your name love?..”
  2. An employer told HMRC: “I don’t think my workers know anything about the NMW because they don’t speak English.”
  3. Another employer told HMRC: “When the NMW goes up I do increase the amount I pay a little, even if the total pay is still below the NMW. I don’t think its right to ignore the rises in NMW.”
  4. A number of employers were paying rates below NMW, suggesting that accommodation they provided workers made up for their shortfall in wages.
  5. Upon inspection an employer told HMRC: “I know I am paying them too little, but they are happy to work for this amount because they are getting experience.”
  6. An employee claimed to be just working for a few days with a view to buying the business. When HMRC checked food safety records, the employee’s name was found on historic food temperature records.
  7. An employer claimed they realised they were not paying employees NMW and had just this week increased their wages… to an hourly rate which was still below the minimum wage.
  8. An employer told HMRC: “It wasn’t a conscious decision to say ‘I’m not going to pay this’, but I’ve never really considered doing it because I’ve not had people come to me and say, ‘I’m not getting paid enough’ or ‘Is this the minimum wage?’”
  9. An employee ran out of the premises when HMRC officers arrived to check for NMW infringements. The same employee then returned – minus the work pinafore – pretending to be a customer.
  10. Another employee claimed to be a friend of the owner and only in the restaurant as they were in the area. HMRC officers returned another day to find the person in the kitchen preparing food.

Jennie Granger, Director General of Enforcement and Compliance, HMRC, said:

Most employers are honest and pay their staff the correct rate. But this research shows that some still view the National Minimum Wage as a choice and will even try these crazy excuses to avoid paying workers what they are due.

Last year, HMRC’s investigations resulted in over 26,000 people getting a share of £4 million in back pay. HMRC investigate all complaints of employers failing to pay minimum wage. We will take action to recover back pay for employees and fine employers who are not playing by the rules.

HMRC officers work hard across the UK to ensure that everyone is paid at least the National Minimum Wage, and anyone who isn’t should call us.

steve@bicknells.net

Self Employed Claimable Motor Expenses

mann im auto

If you are self employed, you probably use your car for your business and that means you will incurr costs to keep the car running.

So what is a car….

A car for tax purposes is any motor vehicle of a kind normally used on public roads which has three or more wheels and either:

  • is constructed or adapted mainly for carrying passengers or
  • has to the rear of driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows

If you had a commercial vehicle instead of a car its likely that all the costs would be business costs because there would only be minimal incidental private use.

HMRC have just released a video to explain how you can claim motor expenses….

Bascially you can claim either a % of the total running costs (Actual Cost Method) or a mileage allowance payment.

The mileage allowance is 45p for the first 10,000 miles and then 25p per mile after that.

Using the Actual Cost Method you can claim a % (relating to business use) of :

  • Capital Allowances (these help you recover tax on the purchase price of the vehicle)
  • Fuel
  • Road Tax
  • Maintenance
  • Insurance
  • MOT
  • Repairs

You may have other costs which are ‘wholly and exclusively’ for business such as:

  • A Sat Nav to find customers and make deliveries
  • Signage on the vehicle
  • Modifications

Basically if a cost is ‘wholly and exclusively’ for business then you can claim 100% against tax.

steve@bicknells.net

Do you get tax free parking?

Pool Cars

If you work in town or city  parking costs can be high.

So if your employer gives you a parking space its a big help.

There is a tax exemption (tax and NI) for parking facilities that are within a reasonable distance of where you work and its not restricted to on-site parking.

The parking space can also be used in the evenings and weekends and isn’t restricted to the nearest car park.

You can also use Salary Sacrifice.

See EIM 21685 for further details

So yes its tax free, so why is there any confusion?

Well a few years ago (2009), we had stories like….

Commuters who drive to work face a new ‘parking tax’ of up to £350 a year.

Ministers are backing a ‘workforce parking levy’ which will come into force in Nottingham in 2012 – and is likely to be adopted across the country.

The pilot scheme will see firms with more than ten parking places for staff charged £250 a year for each, rising to £350 in two years.

Employers would be free to pass on the charge to their staff – meaning it would effectively be a tax on driving to work.

This meant that there was some confusion, but its all clear now and free parking is an excellent tax free employee benefit.
steve@bicknells.net

Do you have a Second Income? own up now!

sholder bags

On the 9th April 2014 HMRC launched the Second Income Campaign….

A second income could come from:

  • consultancy fees, eg for providing training
  • organising parties and events
  • providing services like taxi driving, hairdressing or fitness training
  • making and selling craft items
  • buying and selling goods, eg at market stalls or car boot sales

You need to tell HM Revenue and Customs (HMRC) if your additional income hasn’t been taxed through either:

  • your main job
  • another Pay As You Earn (PAYE) scheme
  • Self Assessment

This is called a ‘voluntary disclosure’. To get the best possible terms you need to tell HMRC that you want to take part in the campaign.

You’ll have 4 months to calculate and pay what you owe.

You can find out about the campaign and how to make a disclosure here

The criteria used to assess if an activity is a hobby or a business are:

  • The size and commerciality of the activity.
  • The frequency of the activity and transactions
  • The application of business principles.
  • Whether there is a genuine profit motive.
  • The amount of time devoted to the activities.
  • The existence of arm’s-length customers (as opposed to just selling your wares to family and friends).

If you have a Second Income its better to disclose it now rather than wait till HMRC find you.

steve@bicknells.net

A Trillion Euro’s lost to tax evasion in the EU

 

A Trillion is a huge amount, its almost too large to imagine.

Here is the latest campaign video

http://ec.europa.eu/avservices/video/player.cfm?ref=I080915

As part of the intensified battle against tax fraud, the Commission launched on 6th February 2014 the process to start negotiations with Russia and Norway on administrative cooperation agreements in the area of Value Added Tax (VAT). The broad goal of these agreements would be to establish a framework of mutual assistance in combatting cross-border VAT fraud and in helping each country recover the VAT it is due. VAT fraud involving third-country operators is particularly a risk in the telecoms and e-services sectors. Given the growth of these sectors, more effective tools to fight such fraud are essential to protect public budgets. Cooperation agreements with the EU’s neighbours and trading partners would improve Member States’ chances of identifying and clamping down on VAT fraud, and would stem the financial losses this causes. The Commission is therefore asking Member States for a mandate to start such negotiations with Russia and Norway, while continuing exploratory talks with a number of other important international partners.

http://ec.europa.eu/taxation_customs/taxation/tax_fraud_evasion/missing-part_en.htm

steve@bicknells.net

3 ways to recover the tax from a trading loss

Button "Cashback" green/silver

Many companies will make a trading loss at some point, its part of being in business. When it happens how can you claim tax relief and get a corporation tax refund? the three main ways are as follows:

1. Carry the Trading Loss Forward

The most common way is for Trading losses to be offset against profits from the same trade in future accounting periods. You don’t have to make any claim for this to happen. It’s done automatically when you complete your Corporation Tax Return.

This method means you get your refund in the future by paying less tax in future years.

2. Carry the Trading Loss Back

Instead of carrying a loss forward, you can claim for the loss to be offset against profits for the preceding 12-month period (not accounting period). But you can only do this if your company or organisation was carrying on the same trade at some point in the accounting period or periods that fall in the preceding 12-month period.

You can make a claim to carry back a trading loss when you submit your Company Tax Return for the period when you made the loss.

Your claim should normally be made in your return or in an amendment to a return.

If you’re too late to make your claim in your return or return amendment for an accounting period, you can make your claim in a letter. A claim should be made within two years of the end of the accounting period when you made the loss. Your claim should include:

  • the name of your company or organisation
  • the period when the loss is made
  • the amount of the loss
  • how the loss is to be used

When you amend a return previously submitted and paid and it results in an overpayment you should be able to claim a cash refund.

3. Terminal Loss

If your company or organisation stops trading, you may be able to claim Terminal Loss Relief. This allows you to carry back any trading losses that occur in the final accounting period to be set off against profits made in any or all of the previous three years. But for each year, you can only offset the loss against the profits in that year if your company or organisation was carrying on the same trade at some point in the accounting period or periods that fall in that year.

This gives you three years rather than one to offset the loss against.

Click here for more details from HMRC

steve@bicknells.net

 

 

The most tax efficient way for a contractor to close their business

Balance sheet business diagram

Consultants who work as contractors often build up funds their limited companies, they do this as a safe guard because being a contractor, there can be gaps between contracts and they will need cash to carry themselves through to the next contract.

But what if they decide to retire or they get offered their dream job as an employee, they may have lots of assets and cash in their company, perhaps more that £25,000.

They might even find that their main client insists they become employees for example

Some of the BBC’s biggest freelance stars could be asked to join the payroll or leave the corporation, as a new test aims to clear up tax issues.

It is part of a clampdown on the use of personal service companies (PSCs) and a move to tax more freelancers at source.

BBC News 7th November 2013

How could they close the company and use Entrepreneurs Tax Relief to pay 10% tax?

They could use a Members Voluntary Liquidation (MVL).
  1. The Insolvency Practitioner will ask the Contractor’s Accountant to confirm that the clients tax affairs are inorder and that appropriate advice has been given
  2. Final Accounts will need to be prepared and creditors paid
  3. A Declaration of Insolvency will be signed – The declaration of insolvency demonstrates that the company will be able to settle or secure liabilities and the costs of liquidation within 12 months
  4. A meeting of Shareholders will appoint the Insolvency Practitioner
  5. Notices will be posted at Companies House and in the London Gazzette
  6. Then the MVL can be a carried out and funds distributed
  7. Arrangements can be put in place to allow the directors access to funds during the process
Using an MVL should mean you can claim Entrepreneurs Tax Relief and pay 10% tax.
Before doing an MVL you should consider whether alternative options such as paying dividends might be more appropriate or whether the cost of the MVL exceeds the potential tax saved or whether Strike Off and ESC C16 could be used.
steve@bicknells.net

Are you ready for your first RTI year end?

Close up of payslip

Basically you will need to:

  • Prepare P60’s (but no P14 and P35) by 31st May
  • Submit your final FPS or EPS
  • Update your Payroll Software for the New Tax Year

You can order your P60’s for free from HMRC http://www.hmrc.gov.uk/payerti/forms-updates/forms-publications/onlineorder.htm

Here is a great video from HMRC

HM Revenue & Customs (HMRC) plans to make its Basic PAYE Tools product for the 2014-15 tax year available on 3 April 2014.

The 2014-15 version of Basic PAYE Tools will be provided as an update to the existing version rather than a separate download, so existing users do not need to go to the HMRC website to get the update.

steve@bicknells.net

Will HMRC help you get over the Floods?

Flood defences

Will it ever stop raining!

But help is at hand, HMRC launched their helpline today (12/2/14)

The helpline will enable anyone affected to get fast, practical help and advice on a wide range of tax problems they may be facing.

HM Revenue and Customs (HMRC) will also:

  • agree instalment arrangements where taxpayers are unable to pay as a result of the floods;
  • agree a practical approach when individuals and businesses have lost vital records to the floods;
  • suspend debt collection proceedings for those affected by the floods;
  • cancel penalties when the taxpayer has missed statutory deadlines.

The helpline is in addition to other HMRC telephone contact numbers.

The helpline is 0800 904 7900. Opening hours are Monday to Friday, 8.00 am to 8.00 pm; Saturday and Sunday, 8.00 am to 4.00 pm, excluding bank holidays.

I hope the weather improves soon and your business can keep going and survive the storms.

steve@bicknells.net

 

HMRC’s Start-up Saturday event

Revenue and Customs

Business start-ups can take part in four free live tax webinars run by HM Revenue and Customs (HMRC) on 15 February

HMRC Start-up Saturday webinar programme, between 10am and 5pm, is aimed at new and prospective businesses. Each live webinar lasts an hour and gives the opportunity for questions.

The HMRC webinars are:

Self-Employment and HMRC – What You Need to Know

10am to 11am Saturday 15 February

This session concentrates on the information sole traders or partnerships need when they start. It covers registration, National Insurance, Self Assessment and record keeping.

Register for Self-Employment webinar external link

Company Directors – Your Responsibilities to HMRC

12pm to 1pm Saturday 15 February

This webinar is aimed at businesses considering setting up as limited companies. It provides the basics on incorporation and registration with Companies House and HMRC. It also looks at when companies become an employer, and the timetable for paying Corporation Tax online.

Register for Company Directors webinar   external link

Business Expenses for the Self-Employed

2pm to 4pm Saturday 15 February

Sole traders or partnerships need to know which day-to-day expenses they are able to claim for tax relief. They also need to start keeping records of these as soon as the business starts. This webinar provides an overview of the most common expenses, including motoring costs.

Register for Business Expenses webinar external link

What is VAT?

4pm to 5pm Saturday 15 February

New businesses are often worried about VAT, what it is and when they need to register. This webinar answers these questions and explains in simple terms how VAT works.

Register for ‘What is VAT’ webinar external link

re-blogged from https://business.wales.gov.uk/news-events/news/hmrc%E2%80%99s-start-saturday-event

steve@bicknells.net