Questions & Answers - Tax, Business Bank Accounts, Tutors.

I can’t pay my tax
Q: Most of my tax is collected via PAYE, but I have a rental property which I make a small profit on. I have recently drafted my tax return for 2010/11 and my tax liability is £1,500, which I just can’t afford, especially with Christmas coming up. What can I do?
A: You could ask HM Revenue & Customs (HMRC) to collect your tax liability gradually from your employment income by adjusting your tax code. In order to do this, make sure that box 2 on page 5 of the tax return is blank before you file your return and the return is filed by 30 December 2011.
Please note, anyone can request to have their 2010/11 tax liability settled like this, provided their tax liability is under £2,000 and they submit their return by 30 December 2011 (from next year, the limit will be increased to £3,000).
Alternatively, there may be scope to negotiate a Time to Pay Arrangement with HMRC, which is effectively a payment plan.

Category: Income Tax

Separate bank account
Q: I have just started my own business- can you tell me if I should open a business bank account please?
A: Assuming you are not operating a company, you are not legally obliged to open a separate business bank account. However, if you use a personal bank account to put the business transactions through, HM Revenue & Customs will have access to your personal accounts if they were to launch an enquiry into your affairs.
If you operate a company, you must open a separate business bank account for it- in the name of the company.

Category: General Business

Tutors and coaches
Q: I do some private tuition in addition to my job and I have read that the Revenue have launched a campaign aimed at tutors and coaches. Is it likely that I will be affected by their campaign?
A: The Tax Catch Up Plan for Tutors and Coaches is an opportunity for tutors and coaches to come forward and declare any unreported income and pay the tax they owe. The Plan is open until 6 January 2012 and those coming forward are likely to face lower penalties than if HM Revenue & Customs were to find out first that they were not paying enough tax.
If you have any income to report and don’t come forward, HM Revenue & Customs have a variety of legal powers and access to information to identify you, such as information from academic, sport and leisure sectors, and a ‘web robot’.