Green Accountancy is now hiring!

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Green Accountancy has three new vacancies.  These are for a new trainee accountant; a part qualified accountant; and a payroll and bookkeeping administrator. Full role descriptions and details on how to apply can be found here.

Are state benefits taxable?

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Note that the following benefits are taxable State Pension Jobseeker’s Allowance Carer’s Allowance Employment and Support Allowance (contribution based) Incapacity Benefit (from the 29th week you get it) Bereavement Allowance Pensions paid by the Industrial Death Benefit scheme Widowed Parent’s Allowance Widow’s pension   The following benefits are tax free: Housing Benefit Employment and Support […]

What income is exempt from tax?

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The following income is exempt from UK tax: Income from National Savings (NS & I) Certificates (but interest on a National Savings Account is taxable) Winnings on Premium Bonds. ITTOIA 2005, s.692 Any income from betting, gaming or lotteries Scholarship awards Income from ISAs (individual savings accounts). ITTOIA 2005, s.776; SI 1998/1870 Dividends paid on […]

Good Governance Is Good For Business

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Good governance is not about making the right decisions but about ensuring there is a good decision-making process used in the business. In a large enterprise, the management board will have a team who are charged with ensuring the firm adheres to the principles of good corporate governance as is expected of a large organisation. […]

Reclaiming Foreign VAT On Expenses

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If your business has suffered VAT on expenses incurred in another EU country, for example overseas hotel and restaurant bills, then it is possible to reclaim the foreign VAT. The foreign VAT must not however be reclaimed on the UK VAT return but by using HMRC ‘s VAT online services system. You must claim by […]

Are Spouses Wages Fully Deductible?

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HMRC have recently won a tax tribunal case where they were seeking to challenge the deduction for a wife’s wages in arriving at the profits of her husband’s business. The judge agreed with HMRC that the amount allowed as a deduction should be limited based on the hours spent and appropriate rate for the work […]

Business vs Non Business for VAT input tax claim

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When an entity has both business and non-business activities input tax claims may need to be apportioned to allow for this split. A case has highlighted that other objectives or long timescales do not necessarily have any impact of how such claims should be apportioned. In this case a charity acquired land which was used […]

More penalties cancelled

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We have reported many cases where taxpayers have had penalties overturned by the tribunals.  The latest one involved an arithmetical error of £4 resulting HMRC trying to apply a penalty of £600.  In another recent case “marriage difficulties and ill health” were found to be reasonable excuses for a late return and penalties were cancelled […]

Simple Assessment

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Some taxpayers that have previously needed to complete a self assessment tax return will now longer have to.  HMRC will be able to calculate the tax of some employees and pensioners by use of data they already hold from third parties.  HMRC have named this system “simple assessment”. Full details published by HMRC. If you […]

What is a tax code?

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For anyone in employment, you might have noticed a tax code on your payslip, most commonly 1150L. But what does this actually mean? Your tax code determines the allocation of your personal allowance against your income from that job. If you only have one job you will likely have 1150L tax code which means the […]

Making Tax Digital

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Making Tax Digital will be mandatory for VAT purposes from April 2019. From then, businesses with a turnover above the VAT threshold (currently £85,000) will have to:    Keep their records digitally – for VAT purposes only    Provide their VAT return information to HMRC through MTD-compatible software. Other businesses will be able to adopt […]

Off-payroll working

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HMRC has updated its guidance the intermediaries legislation (IR35) to clarify that the IR35 rules may apply if an agency, umbrella company or similar third-party supplies a worker by engaging their company rather than the individual directly. The new guidance can be found here. As with all of our tax tips and web pages this […]

Business Property Relief

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Broadly, there is favourable inheritance tax treatment to business property. A question that has been tested in various recent cases is whether a let property is business property for this purpose.  A hotel is likely to be a business property, whereas a buy to let house would be an investment and not a business property.  […]

Auto Enrolment – Not an employer

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Auto enrolment does not apply if a company is not considered an employer by The Pension Regulator. Reasons for not being an employer include: Director only company, none of the directors have an employment contract No longer employ any staff Ceased trading, Although you will not have any auto enrolment duties you must inform The […]

Director made to pay his company’s PAYE bill

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A director paid staff and suppliers but not HMRC.  HMRC accused the taxpayer of negligence and issued a personal liability notice for the company’s unpaid National Insurance.  The taxpayer appealed but the appeal was dismissed.  The first tier tribunal found that the director was liable to his now defunct company’s liabilities to HMRC.

VAT has to be right

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A recent case reminds us of the importance of getting VAT right.  The taxpayer concluded that his eBay sales of adult motorbike protective clothing were mostly exempt from VAT as protective equipment.  Supplies that are exempt from VAT doesn’t count towards the VAT threshold so the tax payer didn’t register for VAT.  HMRC checked the […]

Late filing penalties – another tax payer win

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In a recent tax case the taxpayer failed to file a tax return on time.  The tax payer tried to file on time but failed to obtain an electronic user ID and password from HMRC in time. Instead they filed a paper tax return which was more than six months late by then.  HMRC charged […]

Auto Enrolment – New Employers

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From the 1 October 2017 all new employers will immediately have legal duties due to Auto Enrolment. These duties will apply from the first day an employee starts working for you. Please visit The Pension Regulator website to find out about your duties as a new employer. If you fail to comply with these duties then […]

Grow your business – Part 13 – RESOLVE COMPLAINTS

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If your customers have complaints that are appropriately resolved, they can become better customers than those who haven’t complained. Authorise your people to fix problems without any “run around”, just as they do at Ritz Carlton Hotels. Give your people the authority to send a customer a bottle of wine, flowers or whatever is appropriate […]

Reclaiming input tax

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A recent tax case highlighted the requirement that purchases must be actually paid for in order to secure tax relief.  This is true in income tax, corporate tax and VAT. For VAT purposes, if a purchase invoice remains unpaid for more than six months after the due date and VAT input tax has been reclaimed […]

Childcare compensation

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HMRC have admitted that some people have not been able to set up tax-free childcare through their childcare account.  Contact us if this could affect you.  Details published by HMRC are here:  https://www.gov.uk/government/publications/childcare-service-compensation David Wilsdon

New SA302 process

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HMRC has been working with the Council of Mortgage Lenders and has made changes so that lenders will accept self-served copies of the tax calculation (SA302). It has also liaised with software companies to ensure their packages offer a print facility. As a result, agents will be able to print the tax calculation and HMRC […]

HMRC 2 Step Verification

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Businesses that need to access online HMRC tax accounts should prepare for an additional layer of security that becomes compulsory later this month. It will be mandatory for businesses to use HMRC’s 2-step verification (2SV). The procedure combines the taxpayer login details with a mobile or landline. After the initial login, a security code is […]

Grow your business – Part 12 – SURVEY YOUR CUSTOMERS

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Undertaking a survey of your customers should go beyond the issue of customer satisfaction. You want to enhance your understanding of your customers’ needs and wants, recognise your weaknesses and identify new opportunities to expand your business. Some customers may be reluctant to give you their real, unbiased opinions if you conduct your own survey, […]

When is a van not a van?

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Most people know there is a tax charge (benefit in kind) if your company or employer provide you with a vehicle which you can use for private use.  The amount of tax is a lot less for vans than for cars.  A van is a vehicle where its primary construction is for the conveyance of […]

Making Tax Digital for business delayed

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The Government has responded to pressure from accountants and other interested parties and announced the delay of Making Tax Digital for Business to 2020 at the earliest. Quarterly VAT reporting using the new system will be mandatory from 2019. In a further U-turn, three million small businesses and buy to let landlords below the VAT […]

Grow your business – Part 11 – OUTSOURCING

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More and more businesses are outsourcing various functions in order to focus on their main areas of expertise. Ask yourself these questions: What are we doing that is not one of our core proficiencies? What do we do that we don’t do well? What could we potentially outsource? As an example, many companies have outsourced […]

New government childcare schemes

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Working parents can start applying for two new Government childcare schemes that are now launched. This new scheme is designed for working families, including the self-employed, in the UK. For every £8 you pay in, the government will add an extra £2, up to £2,000 per child, or £4,000 per year for disabled children under […]

Is your company carrying out research and development?

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Many companies are still missing out on valuable tax breaks for expenditure on research and development (R&D).  HMRC have recently updated their guidance on claiming R&D tax credit relief and have reminded companies that it is possible to obtain advance assurance that the R&D activities are eligible to make a claim. For small businesses the […]

Trivial benefits

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This is a reminder that from 6 April 2016, benefits are exempt from tax and NICs if all the following conditions are satisfied: · the cost of providing the benefit   does not exceed £50; · the benefit is not cash or a cash voucher; · the employee is not entitled to the benefit as part […]

Grow your business – Part 10 – APPLY THE LATEST TECHNOLOGY

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Technology is a major driver of business profits. Here is a list of innovations you may want to implement in your business: 1. Document management systems (going paperless) 2. Electronic workflow 3. Multiple monitors 4. Portals 5. “Cloud” computing 6. Customer relationship management (CRM) software There are significant benefits to going paperless: Increase in productivity […]

PAYE tax codes

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From 6 April 2017 HMRC will be updating tax codes on a much more regular basis.  For some employees this could mean a new tax code every month.  The aim of this change is to ensure employees pay the correct tax, or benefit from tax relief and refunds, during the tax year. If we prepare […]

Working in the “GIG” economy

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The House of Commons Work and Pensions Committee has recently published a report calling on the Government to close the loopholes that allow “bogus” self-employment practices, which burden the welfare state but reduce the tax contributions needed to sustain it. This follows the Matthew Taylor inquiry which took evidence during February and March 2017 from […]

Thinking of winding up your company?

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Up until 6 April last year, the distribution of cash to shareholders on the winding up of a trading company by a liquidator, was usually taxed as a capital gain, potentially taxed at just 10% with the benefit of entrepreneurs’ relief. However, last year’s Finance Act introduced a targeted anti-avoidance rule that may tax such […]

Reporting expenses and benefits provided to employees

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HMRC have recently updated their toolkit dealing with the reporting of expenses and benefits provided to employees and directors in the light of significant recent changes in this area. HMRC toolkits are designed to help minimise the risk of errors in returns and computations and their use, although voluntary, will be taken into consideration in […]

HMRC beats Glasgow Rangers in Supreme Court

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A scheme using Employee Benefit Trusts (EBTs) as a means of remunerating directors and staff whilst avoiding tax has been defeated by HMRC in a recent Supreme Court case. Such schemes had been used by many employers to avoid PAYE and national insurance contributions (NICs) and involved complicated trust structures and “loans” to the employees. […]

The Apprenticeship Levy

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From 5 April 2017 HMRC has introduced an apprenticeship levy. The levy is charged at 0.5% of the businesses total payroll cost and applies to all businesses operating payroll.   Each business receives a £15,000 allowance each tax year which means that they do not have to pay the levy until 0.5% of their payroll […]

Auto Enrolment Rates Increase

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The current minimum pension contributions for employees inside Auto Enrolment are 2%, with the employer being required to contribute at least 1%.   From 6 April 2018 the minimum contributions will increase to 5%, with the employer required to contribute at least 2%.   This will increase further to 8% from 6 April 2019 onwards, […]

Staying under the VAT threshold with multiple businesses

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A business is either registered for VAT or not registered for VAT.  A business cannot have some activities registered and some not. Similarly, the VAT threshold (2017-18 £85,000) cannot be avoided by artificially splitting a business into separate parts and arguing each part is under the threshold. However it can be possible for two people […]

Gone phishing

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HMRC are warning that a large scale scam email is at large: “Customers are strongly advised to lookout for a new phishing scam. If you get an email with the subject, “Your 2016 Tax Report”, with an attachment, do not open it. Please forward it to phishing@hmrc.gsi.gov.uk and then delete it. For more advice, please […]

Charities Commission shows its teeth

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The Charities Commission have publicised an inquiry they are holding into a charity that has repeatedly missed accounts filing deadlines.  The failure to file accounts on time is cited as evidence of mismanagement and misconduct; and reason to examine all financial and governance aspects of the charity.  Whether “naming and shaming” is really the most […]

VAT on e-books likely to be reduced

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Currently in the UK most physical books are sold with 0% VAT and most e-books are sold with 20% VAT.   Until Brexit has actually completed, the UK remains part of the EU wide VAT system.  It is therefore of interest that MEPs are to vote on a EU Commission proposal to reduce the rate of […]

HMRC lose case on daily penalties

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HMRC have lost a recent tax penalties case heard by the First Tier Tribunal (FTT) on 24 April 2017.  HMRC had applied daily penalties of £10 per day for late filing of a personal tax return.  HMRC could not provide evidence that the tax payer had been properly warned of such penalties. As with all […]

Workers – IR35 and Employment Intermediaries

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If any of your company’s income is caught by the Intermediaries Legislation (known as IR35) you will need to make a “deemed salary” calculation. Also if any of your company’s workers regularly work under the control of one of your customers then this has to be reported to HMRC under the Employment Intermediaries legislation.  There […]

Pensions – personal or company?

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For owner managers of dividend paying companies there is a marginal tax saving of 1% by making a company (employer) pension contribution compared to a personal pension contribution. For example if your company could pay £12500 into a pension scheme there is no tax charge on you.  There is simply £12500 going into your pension […]

National Minimum Wage update

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All National Minimum Wage / National Living Wage rates revised from 1 April 2017.  This is in addition to the rise on 1 October 2016. The new rates from 1 April 2017 will be: Year 25 and over £7.50 0 21 to 24 £7.05 18 to 20 £5.60 Under 18 £4.05 Apprentice £3.50 Some tips […]

Public Sector IR35

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Public sector bodies paying limited companies for workers now have to assess whether IR35 rules apply to that company.  If so then payments made on or after 6 April 2017 (regardless of invoice date) will have PAYE and NI deducted by the public sector body (or by the agency if they use one).  The payment […]

No national insurance rise for the self-employed after all

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Philip Hammond has announced that the planned national insurance rise for the self employed has been scrapped at least for the current parliament.  He has said he will announce how extra funds will be raised in the autumn statement. Meanwhile Theresa May has said the government await the Taylor report on the future of employment.  […]

Budget Update: Corporation Tax Rates

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The Chancellor announced that the Government is committed to continue to have the lowest corporate tax rate of the G20 major trading nations.  As already announced the corporation tax rate reduces to 19% from 1 April 2017 and then to 17% from 1 April 2020.   The Government is also keen to continue to encourage […]

Budget Update: Start of Digital Reporting Delayed for Smaller Businesses

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The Government is committed to the “Making Tax Digital” (MTD) project which is scheduled to start in April 2018 with the first quarterly updates being submitted by the self-employed and property landlords in July 2018. However, the Chancellor has now announced that there will be a one year deferral in the start date to 2019 […]

Budget Update: Tax Free Dividend Allowance to be Reduced to £2,000

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The Chancellor has announced measures to limit the rise in tax-driven incorporation. The £5,000 tax free dividend allowance will be reduced to just £2,000 from 6 April 2018. Mr Currently, once the dividend allowance has been used the remaining dividends are taxed at 7.5%, 32.5% and then 38.1% depending upon whether the dividends fall into […]

A note on national insurance and the dividend tax

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The main national insurance rates for small business for the current tax year (up to 5 April 2017) are summarised as follows: A sole trader pays 9% national insurance on profits above £8,060 (reducing to 2% on profits above £43,000) Partners in any partnership, including limited liability partnerships (LLP) also 9% national insurance on profits […]

Salary sacrifice – changes ahead

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Salary sacrifice arrangements are where employees give up some part of their salary in return for an employer provided benefit.  These are often tax efficient as the benefit chosen is often a no or low tax benefit in kind. We posted more details on salary sacrifice as a FAQ here. Changes announced in 2016 Budget […]

Tax Free Childcare Accounts To Start 6 April 2017

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New tax-free childcare accounts were announced in 2014 to replace the employer-provided childcare voucher scheme. Introduction has been delayed by legal disputes with organisations involved in administering the existing scheme, but the new accounts will at last be introduced on a trial basis in early 2017. The new scheme will then be rolled out across […]

Don’t Forget “Rent A Room” Relief

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From 6 April 2016 Rent A Relief has increased from £4,250 to £7,500. This is an annual allowance which can be deducted from rent received from lodgers where you rent out part of your main residence. Where income from lodgers exceeds £7,500 a year only the excess is taxable or this can to calculated on […]

Should you charge VAT when supplying a charity?

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Generally speaking VAT registered business have to charge 20% VAT on all supplies (sales) that they make.  For certain categories of supplies (e.g. energy saving for residential property) the reduced rate of 5% applies.  For yet other goods (e.g. most uncooked food) the zero rate applies. When supplying another VAT registered business, the VAT charged […]

New 16.5% VAT Flat Rate for service-based businesses

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It was announced in the Autumn Statement that from 1st April 2017, “businesses with limited costs, such as many labour-only businesses” will have their VAT flat rate percentage increased to 16.5%. HMRC refers to such businesses as “a limited cost traders”. For such businesses this will remove the benefit of being on the Flat Rate […]

How to ensure your office party is tax free

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Paying for directors and staff entertainment generally creates a taxable benefit on the individual.  However annual parties can be paid for tax free.  The criteria includes there being a cap on costs of £150 per head.  This can include food, drink, travel and accommodation.  The total cost of the party including VAT, is divided by […]

We can often reduce HMRC penalties

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Where additional tax is payable as the result of an HMRC enquiry and it is shown that the additional tax is due to poor accounting records, the maximum penalty that can be imposed is 30% of the additional tax for failure to take reasonable care. Where the error is deliberate, the penalty will be between […]

Artificial or Contrived? Not us!

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New rules are soon to come in to effect for all registered qualified accountants and tax advisers to reduce aggressive tax avoidance.  The rules are summarised as: “Members must not create, encourage or promote tax planning arrangements or structures that i) set out to achieve results that are contrary to the clear intention of Parliament […]

Living wage update

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The current UK Living Wage is £8.45 an hour The current London Living Wage is £9.75 an hour These are voluntary rates – more information at http://www.livingwage.org.uk/ The current National Living Wage (legal minimum for most workers) is £7.20 per hour.  All current legal minimum wage rates are here.

Charities Against Fraud – new website and how to report an serious incident

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The Charity Commission and others have established the Charity Sector Counter Fraud Group (CSCFG) to help improve the charity sector’s resilience to fraud.  As part of this project they have set up a new website http://charitiesagainstfraud.org.uk/ Trustees should report any fraud in their charity to the police immediately, and also to the Charity Commission, under […]

Uber case – does this affect you?

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The crux of the recently highly publicised Uber case is the question of who is supplying the end client. Uber argued it was the drivers supplying the end client:  Client buys service (transport) from driver; driver buys service from Uber (logistics).  (Uber just an agent) The Employment Tribunal found that it was Uber supplying the […]

Low and ultra low emmision cars

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Tax relief for businesses on cars is restricted.  Cars purchased are generally excluded from the 100% annual investment allowance enjoyed on most equipment purchases.  Cars leased often have an element of the lease cost disallowed for tax purposes restricting the tax relief. Rules for special relief for less polluting cars have been revised and extended.  […]

Do you need to register for VAT outside of the UK?

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If you supply goods or services to businesses outside of the UK you need to consider carefully your UK VAT position.  We have a factsheet VAT on International Transactions and would be happy to have a further discussion on this (contact us here). But having sorted out the UK situation, that is not the end […]

Quarterly reporting by employment intermediaries

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Ever since 6 April 2015 employment agencies and other intermediaries have been required to make quarterly reports of payments made directly to workers or via partnerships, LLPs and companies where no tax has been deducted from the payments. These requirements apply if you supply a person rather than supply a service.  If your client needs […]

VAT reclaim on cars

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There is a general rule barring VAT claims for input tax relating to cars.  However two recent cases have highlighted that a company can in certain circumstances claim back VAT input tax on cars bought and used solely in the business.  This will be unusual and will be very much the exception to the rule. […]

Splitting the income of married couples

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Where a married couple hold savings accounts and other investments in joint names, the income from those investments is split 50:50 for tax purposes, unless there is an election to allocate the income in accordance with their beneficial interests. This is particularly important where the couples’ marginal tax rates are different now that there are […]

Is it time to tame your tax return? (ignore if already completed your 2016 tax return)

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A story about clients that who wait until the last minute to provide tax records: “Most tax practices have clients who delay supplying tax compliance information until a few days before the deadline. There are several reasons for this, including reluctance to engage with taxpayer responsibilities, lack of organisational skills, unavailability of ready funds, fear […]

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