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1. Info For Payroll Clients
Real Time Information - Major changes ahead for payroll
As
you are aware, we currently process your payroll and there are
significant changes to the way payroll information will need to be
submitted to HM Revenue and Customs (HMRC). The new system of Real Time
Information (RTI) is mandatory for all employers and is to be
implemented from April 2013. It is likely that HMRC will have written to
you recently about these changes.
The software we use to process
your payroll is RTI-compliant. So rest assured we will take care of the
transition from the current PAYE system to RTI.
However, there are
some preparations we will need to make ahead of its introduction- which
we will need an element of input from you on.
In the meantime, if you
should receive any correspondence from HMRC regarding RTI- in
particularly, your RTI start date- please could you ensure you provide
us with a copy.
Needless to say, should you have any queries regarding the above or any other matter, please do not hesitate to contact us.
2.Check out our latest daily paper "The Leicester Accountant" at
http://paper.li/f-1328806194
3. Q & A - Tax & Accounts
Accounting for factored debts
Q: I recently engaged a factor to collect some debts from my customers. How do I go about accounting for this? I’ve already received some cash from the factor.
I’ve had problems with customers paying in the past, so I am now on the Cash Accounting Scheme for VAT.
A: Technically speaking, the cash you received from the factor is in fact a loan and is therefore exempt for VAT purposes. So you do not need to account for the VAT on the debts at the point you receive payments from the factor.
Instead, you account for the VAT in the VAT period the customers pay the factor. The factor should issue you with statements, so that you can identify when and how much the customers pay.
You should account for the VAT on the amount the factors manage to recover; not the original invoiced amount. Please also note that if the factor deducts any commission or charges before remitting you the balance, you should continue to base the VAT on the amount the factor received from your customers; not the lower amount they eventually paid you.
Category: General Business
Business Records Check Phone Call
Q: I have received a letter saying that HMRC are going to call me about my record keeping under their Business Records Checks programme. How should I handle it?
A: Try not to panic at this stage. HM Revenue & Customs (HMRC) will be calling to ask you a few simple questions about your records. They estimate these calls will only last about 10 to 15 minutes.
There are three possible outcomes from the call:
- They might be satisfied that you are operating your records effectively and that’s the end of it;
- They might think you need some additional support so they may refer you to their appropriate department for record keeping training and education; or
- Worst case scenario, they think your records sound inadequate and they will arrange to come and visit you.
Category: General Business
Tax Credits – Actual figures
Q: When I submitted my Tax Credits renewal forms, I had to estimate my self-employment income because I had not drawn my accounts up. I have now completed my accounts and I am about to file my tax return. Will the Tax Credits office be informed of the actual figures on my tax return?
A: Sadly not I am afraid. You will have to give the Tax Credits Office a call to inform them of your actual figures and you must do so by 31st January.
If you fail to meet the January deadline, your tax credits won’t stop but the tax credits you receive from 6th April may not be accurate. And if you’re overpaid, you may have to pay it back later- and you may even be charged a penalty.
HM Revenue & Customs telephone numbers change fairly frequently, so it's always best to check their website (www.hmrc.gov.uk) for the present Tax Credits Office number.
Category: Tax credits
High Income Child Benefit Charge – Avoiding a tax return
Q: My tax affairs are fairly straight forward, as my only source of income is my salary which is taxed at source by my employer. However, my partner receives Tax Credits and Benefits for our two young children and it looks like I may be affected by this High Income Child Benefit Charge. Is there any way I can avoid the completion of a tax return? I have never had to do one before.
A: To make things a little simpler, HM Revenue & Customs (HMRC) allow you to have the Charge collected via your tax code. This means the deductions of tax that your employer makes from you each pay period will be larger, but avoids the need for having to pay it to HMRC in one lump via the Self Assessment system. However, this does not negate the requirement for a tax return. It is merely an easier way to pay the Charge.
The only way you can avoid the requirement for a tax return if the High Income Child Benefit Charge applies to you, is to forfeit your Child Benefit and opt to no longer receive it. As it is your partner that receives it, they will have to do this- it cannot be done by you.
Category: Tax credits
Staff Christmas presents - Vouchers
Q: I would like to buy some vouchers in bulk for my employees. They will be worth £50 in store; but I am only paying £40. Do they get taxed, and if so, on which value?
A: If you provide your employees with vouchers that can only be exchanged for goods or services, the value for tax and National Insurance purposes is generally the cost to you as the employer, but it can include other associated costs such as costs of selecting the store or other “after sales” expenses.
But in your case, £40 will be the value to use. You will need to include this as earnings for Class 1 National Insurance purposes in the pay period in which the employees receive the vouchers- not when you pay for them. If they earn in excess of £8,500 per annum or they are a director (regardless of their salary), you will then also need to include the cost of the vouchers on forms P9D or P11D for tax purposes.
Needless to say, you should really warn your employees of the tax and National Insurance liability arising on these gifts. HMRC are likely to look to collect it via their tax code, so they may see their monthly deductions from their pay packet increase.
Alternatively, you can pay for their tax liabilities using a PAYE Settlement Agreement (PSA). This would also avoid the need to declare the vouchers on forms P9D or P11D.
Category: PAYE, NIC & Benefits In Kind
Business gifts
Q: What are the tax implications of sending my customers and suppliers Christmas presents? Do you have any ideas what I can buy them without losing out on the VAT and the expenses being disallowed for tax purposes?
A: A business gift is made in the course of your business. You do not need to account for the VAT on business gifts, provided that gifts to the same period in any twelve month period do not exceed £50.
For tax purposes, ‘small gifts’ may not be disallowed, provided they meet the following conditions:
- They carry a conspicuous advert for the trader (and the advert is on the gift itself- not just the wrapping)
- The gift is not food, drink, tobacco or a token/ voucher exchangeable for goods
- The cost of the gift (together with any other such gifts to the same person in the relevant tax period) does not exceed £50.
Category: General Business
