Common Accountancy & Tax Q & A' s - Jan 2012 Part 1

Can I get some tax back now?
Q: I am a subcontractor and I get 20% tax taken from my receipts by contractors. But I haven’t done any work for the last couple of months. Is there any way I can get some of my tax back now?
A: No. The only way for you to get your tax back is to wait until the tax year has passed, and then submit your tax return. You should enter all of your income- gross of the tax deducted. Your income tax liability will then be calculated. But all of the tax deducted during the tax year under the CIS scheme, will be offset against your liability.
If there are gaps in your income or it is low, you may be due a refund.
In the long term, you may be eligible to receive your payments gross from contractors. But there are criteria to meet, for example regarding the size, history and make-up of the business.

Q: I have just received my Unique Taxpayer Reference as I need to file a tax return this year. What is the next step to filing my tax return?
A: 2010/11 tax returns may be submitted on paper, but the deadline of 31 October has already passed for paper returns. Subsequent 2010/11 tax returns must be filed online in order to avoid an automatic filing penalty of £100.
Therefore, you will now need to register for HM Revenue & Customs’ Online Services and obtain an Activation Code. Please note, it can take seven working days to receive your Activation Code, which means you must register by 21 January 2012 in order to obtain your Code in time for the filing deadline of 31 January 2012.
Alternatively, an accountant can file your tax return for you provided they use specific software- even if you haven’t completed the official form to authorise them to deal with your affairs.

Q: I have only just prepared my accounts and I now realise that my business exceeded the VAT registration threshold. What happens now?
A: You have to register for VAT if your sales in any twelve month period exceed the VAT registration threshold- currently £73,000. Please note the reference to any twelve month period; not necessarily your business’ year end.
So your first task is to work out the date when your turnover went over the threshold. Using this date, register for VAT with HM Revenue & Customs (HMRC) as soon as possible- which you can do online at www.hmrc.gov.uk or using form VAT1 which is available on the same website.
HMRC will then send you details of your VAT registration. But in the meantime, you should calculate the VAT due on your sales from the date you established above- even though you weren’t VAT registered at the time. However, you will be able to reclaim VAT on some of your business expenses. The net of these figures will need to be paid over to HMRC.
Please note, HMRC may also charge you a penalty for notifying them late.

Bookkeeping Tips - Part 2 - Petty Cash Expenditure

Alot of clients dont seem to have any method of recording petty cash expenditure. The business owner sends out their employee to buy milk, stationery, etc and the receipts end up in their pocket, or in a desk drawer, or in the bin!
So what you need is a process, and system.

1. Get yourself a cashbox.
2. Put your initial float (cash) into the box, this could be £5,£10, etc-all depends on how quickly your float gets depleted.
3. Petty cash vouchers - you can buy pre-printed ones, which have spaces for:

For Example:
Date:                    01.01.12
Item:                    Printer paper
Cost:                    £5.50
Requested by:    A.N. Employee
Authorised by:    A.N. Manager

(The italic script is what is filled in,  for each voucher)

The receipt for the above item is then attached to the above voucher.

4. When the float starts to run low, it will need replenishing. So the proprietor/director/manager will top the float up by the standard amount, and record this on a voucher as above.

5. At the end of the month, the cashbox will need to be checked, to see if the cash balance reconciles with the vocuher activity. For example:

Opening Balance Float:     £50
Total Expenditure:             (£48)
Float Top Up:                       £50
Closing Balance Float:       £52

So at the end of the month, there should be £52 in the cashbox. If there isn't then something has gone wrong somewhere, so investigate!
The vouchers can now be coded to the types of expenditure for your accounts, i.e stationery, catering, etc

The key is to maintain the system, so all employees are aware of how it all works, and of course to maintain the physical security of the cashbox.