Am I good enough? Reply

Bournemouth Chamber of Trade & Commerce

Its often ‘not what you know but who you know’ but networking is scary for most people and speaking is even worse.

When you start a business, you normally have a skill but new business owners often lack confidence in telling potential clients about their abilities.

It often doesn’t feel comfortable to explain the brilliant skills you have.

So here are somethings you can do to make it less scary:

  • Introduce yourself – it’s one of the best possible and most obvious ice breakers – just go up to people and say ‘Hi, I am …. and I am a …..’ and ask them what they do
  • Give examples in a mini story format – how do your skills or products benefit people, why do they need your services? You don’t have to name names, just explain in general terms how you help businesses and clients
  • Why do you love…

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If it looks like a loan, it is a loan! Reply

Contractors and Business Owners have been using Loans as disguised remuneration for decades.

Basically, a loan isn’t income so schemes have been created to lend money through various means. HMRC view these as tax avoidance.

How contractor loans work

In a contractor loans scheme you’re paid in the form of a loan from a trust or company, sometimes referred to as a remuneration trust.

You don’t get your payment (or ‘loan’) directly from the company you’re providing work for because it’s diverted through a chain of companies, trusts or partnerships.

The companies that promote these schemes will tell you this will save you tax.

Why these schemes could cost you more

Scheme promoters will tell you that the payment is non-taxable because it’s a loan, and doesn’t count as income.

In reality, you don’t pay the loan back, so it’s no different to normal income and is taxable.

So if you’re using one of these schemes and being paid this way you’re highly likely to be avoiding tax. You could end up paying additional taxes, penalties and interest as well as a fee to the promoter.

https://www.gov.uk/guidance/contractor-tax-loan-schemes-can-cost-you-more

What if its not called a loan?

Contractor Weekly reported this week that Contractors are now being advised to say that they holding funds in ‘fiduciary capacity’ on behalf of the company.

According to their article calling a loan by a different name doesn’t impress HMRC, it looks like a loan so it is a loan!

It is recommended that you tell HMRC about these schemes by e mailing exitstream.counteravoidance@hmrc.gsi.gov.uk

If you are using one of these schemes HMRC will be looking for you!

steve@bicknells.net

SA302 Madness Reply

In order to get a mortgage, brokers and lenders ask employees for payslips and P60’s and for business owners they ask for SA302’s and Tax Overviews (often lenders also want an accountants certificate to certify the clients trading results).

The SA302 shows:

  • Pay from all employments
  • Profits from self employments
  • Property Profits
  • Dividends
  • Tax and National Insurance due

You can get copies of SA302’s from HMRC https://www.gov.uk/sa302-tax-calculation

The Tax Overview shows:

  • Tax Due
  • Tax Paid

You can only get Tax Overviews from your online HMRC account.

Lenders and Brokers are often insisting on HMRC SA302’s (which can take several day or even a couple of weeks to obtain).

On the 25th August HMRC wrote

Agents have told us that not all their client’s lenders will accept the self-serve copy printed from their HMRC online account or the commercial software used to file the SA return, or their commercial software does not print.

We have been working with the Council of Mortgage Lenders to understand their requirements and the changes necessary to accept self-served copies of the tax calculation from the HMRC online account or the commercial software used to file the SA return. We have also liaised with commercial software companies to ensure their software offers a print facility.

A list of lenders who will accept self-serve copies can be found in the HMRC’s guidance, Mortgage providers and lenders who accept a SA302 tax calculation and a tax year overview.

It is always worth checking with the lender or mortgage provider what they require as evidence of income. And should another third party require a copy of the tax calculation, you may wish to ask if they accept a self-serve copy.

Now that we have made all the changes required to allow agents to self-serve online, we will no longer be issuing paper copies of the tax calculations directly to agents from the 5 September 2017.

So basically, clients will have to call HMRC if they need an SA302 with the HMRC logo and the lender won’t accept a self serve or agents copy.

Why are lenders and brokers being so picky! surely if an accountant provides the information that will be sufficient?

steve@bicknells.net

DIY Corporation Tax Filing – are you excluded? Reply

There are a lot of companies that can’t file using the HMRC online service…

Who can’t use the service

You won’t be able to use the HMRC free service if any of the following apply:

  • your accounts require an audit or have been audited
  • your company turnover is above £632,000 per year
  • your charity turnover is above £6.5 million per year
  • your company must pay its Corporation Tax in instalments
  • your company is part of a group
  • your company is not registered in the UK
  • your company is in liquidation or receivership
  • your company is an insurance company – not including independent insurance brokers
  • your company is an investment company
  • your company is a credit union
  • your company is a commercial property management company
  • the Corporation Tax accounting period for the return is covered by more than one set of statutory accounts
  • you need to claim a repayment of a loan to a participator (for example, a director’s loan), more than 9 months after the end of the accounting period

If you can’t use HMRC’s free online service, you can use commercial software to submit your online return.

As we are moving towards Making Tax Digital, how is this going to enable businesses to file online?

Clearly they could buy third party software, such as BTC https://www.btcsoftware.co.uk/

I use BTC and this its brilliant, there are of course many other products available.

But as Tax is complicated, despite a constant effort to simplify it (which so far hasn’t really worked), surely HMRC are encouraging companies to turn to tax agents for help?

I thought the strategy was to reduce taxpayer reliance on Tax Agents?

steve@bicknells.net

 

The Seminar Tour starts this week! Reply

The government may have postponed Making Tax Digital but the Seminars continue.

The first one is this Friday (1st September) in Bristol, its an epic production.

6 Hours of CPD

110 PowerPoint Slides

229 pages of handouts

The seminar has 7 sections

  • HMRC MTD route map
  • The Requirements of MTD
  • Client transition planning and client communications
  • How will MTD change the way clients work with accountants
  • Case Studies
  • Software
  • Sanctions & Penalties

With contributions from Xero, Sage, MyFirmsApp, Free Agent, BTC, Practice Track and Clear Books

This is probably one of the most comprehensive seminars ever given on Making Tax Digital

Click here to find out about the seminars in Cambridge, Manchester and London.

I look forward to seeing you there

steve@bicknells.net

Shocking Social Media! 1

Bournemouth Chamber of Trade & Commerce

Is this what your clients think when they see your picture on social media!

It might seem like harmless fun to post a profile photo from your holiday snaps but what impression does it give? 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 cost you thousands in lost opportunities.

Linked In is particularly important for business

So what makes a good profile picture?

Business Image

The photo should show you ready for business. Dressed as you would to meet client.

Depending on what you do that might mean a business suit or it could be a uniform, often in the creative industries people wear casual clothes.

So wear what you would wear to work.

Up to date

It might be tempting to use an old favourite photo…

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Making Tax Digital – HMRC Case Studies 1

HMRC have 4 fictional case studies, they are on the are on the Overview of Making Tax Digital page of the HMRC website and this was last updated on 13th July 2017

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/485372/Making_tax_digital_-_case_studies.pdf

  • Geeta – the teacher who also does some tuition
  • Richard – the landscape gardener who has just become VAT registered
  • Helen – retired
  • Dave and his Wife – who are directors of a small plumbing company

Basically

Geeta uses a App on her smartphone for record keeping

Richard was using an agent but then moves to a digital tax account

Helen uses a Personal Tax Account

Dave uses an App to provide information to his accountant

So Apps are very popular!

HMRC seem to assume that most people want to do their own record keeping and that small businesses like Geeta and Richard will no longer use accountants or book keepers.

We have an extremely complicated tax system, so how realistic is that, even HMRC struggle to calculate your tax correctly!

The way that allowances are applied for dividends, allowances, savings and other items all impact on each other.

Many tax payers will be working on their 2016/17 returns (to 5th April 2017 due by 31st January 2018) over the coming months and find that they can’t use the HMRC software because it doesn’t work properly.

As reported by Accounting Web

Rob Ellis, CEO of BTCSoftware, can’t remember a year when there have been so many exclusions from filing SA tax returns online. For the 2016/17 tax returns 16 new examples have been added to the online filing exclusions list, which is now in version 4;  there is a version 5 of this list under construction.

You can read the full list of exclusion on this link https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/622426/2017-exc-indi.pdf

There were 62 exclusions! HMRC have fixed some but aren’t intending to fix them all

 

steve@bicknells.net

If my company pays me interest will it be taxed? Reply

Companies often borrow from their directors, especially property companies as 100% loan to value loans may not be available from lenders.

If the company pays interest on the loan it will have to register with HMRC and prepare CT61 returns

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/383833/ct61-notes-2010.pdf

The CT61 requires the company to deduct 20% tax on the interest.

The Director may be entitled to the interest tax free

Personal Savings Allowance

You may also get up to £1,000 of interest tax-free depending on which Income Tax band you’re in. This is your Personal Savings Allowance.

Income Tax band Tax-free savings income
Basic rate £1,000
Higher rate £500
Additional rate £0

Savings covered by your allowance

Your allowance applies to interest from:

  • bank and building society accounts
  • savings and credit union accounts
  • unit trusts, investment trusts and open-ended investment companies
  • peer-to-peer lending

So the Personal Savings Allowance should cover Directors Loans as explained in accountingweb

https://www.accountingweb.co.uk/tax/business-tax/paying-interest-to-the-director

If you are lending to your company you should make sure that its at a market rate and you may want to consider your security for the loan.

You could opt for a charge at Companies House but at the very least you should have a loan agreement.

steve@bicknells.net

How much SDLT do you pay on Overage? Reply

What is Overage

http://www.propertylawuk.net/propertytransactionsoverage.html

When land is sold, the vendor will normally do his best to sell at the best possible price – indeed, if the vendor is a public sector authority or a charity, he may be obliged to sell at the best possible price. Sometimes, however, the best possible price may only be available at some time in the future, or not at all. The most common example of this is where planning permission may be granted for a more valuable use of the land, but it is by no means certain that the permission will be forthcoming and, in any event, this is unlikely to happen for some time. Similarly, if land is sold for a particular purpose, such as for the development of 50 houses, and the developer in fact manages to build 60, then the land will obviously be more valuable with 60 houses on it rather than the original 50.

HMRC Rules

https://www.gov.uk/guidance/stamp-duty-land-tax-the-amount-used-to-calculate-whats-payable#cc

Payment depending on the outcome of future events

A transaction could include an amount that the buyer will only pay if some future event happens. This is known as the ‘contingent consideration’.

For example, a developer might agree to pay an extra sum, on condition that they get planning permission for redevelopment.

In these cases you pay SDLT on the assumption that the contingency will happen. The buyer can apply to defer payment of SDLT on the contingent amount. But HMRC still charge the tax at the appropriate rate for the total chargeable consideration.

For example, a builder buys a plot for £400,000 and agrees to pay a further £200,000 if he gets planning permission for a new building. He can apply for deferment on SDLT on the conditional £200,000 but will pay SDLT on the initial payment now. The SDLT due on the initial payment will be at 4%, because the total potential payment is above the £500,000 threshold.

Payment depending on uncertain future events

Some transactions may include a later payment which depends on an unknown variable. This is known as the ‘uncertain or unascertained consideration’.

For example, future payments based on the turnover of a business.

In these cases, calculate the SDLT on the basis of a ‘just and reasonable estimate’ of the amount involved. The buyer can apply to defer payment of the uncertain or unascertainable part. Otherwise, make an appropriate adjustment when the amount of consideration is certain.

steve@bicknells.net