May 2013
Late tax returnQ: I still haven’t filed my tax return for the 2011/12 tax year. What penalties could I face when I file it?
A: You should have already received an automatic £100 initial filing penalty. This is payable; regardless of whether you had no tax outstanding or you were due a refund.
However, from the 1st May 2013, the daily penalties of £10 per day will begin, but these will be capped at £900.
I would encourage you to file your return as soon as possible and ideally, no later than the 1st August 2013- when a further penalty of £300 or 5% of the tax due (whichever is higher) will be added to your existing penalties. Further penalties will be triggered if the return is over 12 months late.
Please note, the dates referred to are based on the online filing of the return. If, when you file the return, you use a paper version you will face more significant penalties as paper tax returns should have been filed by 31st October 2012.
Category: Tax Returns
RTI- Annual PAYE Schemes
Q: I am the director-shareholder of my own small company and I don’t have any employees. As a result, I want to register my PAYE scheme as an annual scheme with HMRC for RTI purposes but I can’t get through to anyone. Am I doing something wrong?
A: Annual schemes can be a useful option for many- but particularly one-man limited companies like yours. An annual scheme must meet all of the following requirements:
- all the employees are paid annually
- all the employees are paid at the same time/same date
- the employer is only required to pay HMRC annually
It states on HMRC’s website that they are working to rectify this position and will publish a further message to announce when the matter is resolved.
Category: Payroll
Closing a business
Q: I have just stopped trading as self-employed as I have been offered a really good job. What do I need to do and do I need to tell HMRC?
A: You should tell HMRC that your trade has finished as soon as possible, so that HM Revenue & Customs (HMRC) can get your tax affairs in order. This should also bring your Class 2 National Insurance bills/ Direct Debits to an end as well. The easiest way to do this is to use HMRC’s online form called ‘Stopping self-employment’. You'll need to provide your contact details, date of birth and (depending on your circumstances) you'll also need your Ten-digit Unique Taxpayer Reference number or National Insurance number.
Please note, the online form only covers self assessment and National Insurance, so if your business was say, VAT-registered, you will need to separately notify HMRC of the cessation of the VAT registration.
You will also need to complete a tax return for the tax year in which the trade stopped. Once HMRC have processed this, they may send you a letter stating that they no longer require a return from you if your only source of income is from employment.
Computing the profits or losses from a trade in its final year can be tricky, particularly with regards to Capital Allowances and the use of losses. But your local TaxAssist Accountant would be happy to complete your final return for you and deal with notifying HMRC of the cessation of the trade.
Category: General Business
Tax relief on buildings
Q: I have just had a storage unit built for my business. Can I offset the cost of the building against my profits?
A: In short and as a general rule, the answer is no. Tax relief on assets, usually comes in the form of Capital Allowances. However, Capital Allowances are generally not available for expenditure on land or buildings. Tax relief on the cost of land and buildings is instead obtained via the Capital Gains Tax regime when the asset is sold.
However, you may be able to claim some Capital Allowances on certain expenditure on certain buildings, such as:
- Fixtures and equipment in the building such as some kitchen equipment,
- Features “integral” to the building such as lighting systems; and
- Thermal insulation
Category: General Business
What does a liquidator do?
Q: Can you give me an overview of what a liquidator does please?
A: A liquidator is an authorised licensed insolvency practitioner. Their primary function is to collect the firms’ assets, realise them and then distribute the net realisation proceeds according to a statutory priority order. The liquidator also has to investigate why the firm failed, and take the required action to bring those directors who have acted improperly to justice.
They can require the attendance of anyone who might have or is known to have, company assets in their possession, as well as those who owe the company money. In order to assist with the investigation, the liquidator can ask the court to summon anyone who might have information concerning the company’s affairs, its property and business dealings. The court can also compel the production of company records or relevant documents.
But the liquidator's role can vary slightly depending on which liquidation process they are assigned to.
There are three main types of liquidation processes which Licensed Liquidators deal with:
- Creditors’ Voluntary Liquidation
- Members’ Voluntary Liquidation
- Compulsory Liquidations
Category: General Business
P11Ds- how can I reduce the burden?
Q: I’ve just submitted forms P11D and P11D(b). My P11Ds mostly cover reimbursed expenses, so as you can imagine, they’re very fiddly and time-consuming. Is there any way I can reduce the paperwork and preparation time?
A: You could apply for a dispensation (or form P11DX) from HMRC. If you are successful, this form completely removed the requirement to report reimbursed expenses on form P9D or P11D.
There is a list of expenses that can be covered by dispensations, but examples of expenses typically covered are:
- Travel, including subsistence costs associated with business travel
- Fuel for company cars
- Hire car costs
- Telephones
- Business entertainment expenses
- Credit cards used for business
- Fees and subscription
A dispensation covers these items indefinitely, however, HMRC reviews them regularly (usually at intervals of five years or less) to make sure the conditions under which it was granted still apply. Please note, a dispensation may not completely negate the requirement for P11Ds though. So if benefits in kind are provided, such as a company car, you will still need to complete forms P11D and P11D(b).
Category: PAYE, NIC & Benefits In Kind
Disclaimer – advice shared in this column is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this column, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
