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Holiday Pay

There has been some panic whipped up in the media about employers having to pay vast amounts of back-dated holiday pay to employees who regularly get paid for overtime.

In general holiday pay is calculated according to an employee’s “normal pay”, which for years has been judged not to include overtime payments. However, in a recent Employment Tribunal (Fulton v Bear Scotland [2014] UKEATS/0047/13), the judge decided that both guaranteed and non-guaranteed overtime should…

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VAT Benchmarking

HMRC are currently writing to around 7,500 furniture retailers and car repair businesses asking the owners to check the figures reported on their VAT returns. If you receive one of those letters, don’t panic. HMRC do not believe your VAT return is wrong, they are just asking you to double check your sales and purchase figures.

The HMRC letter asks you to work out your VAT mark-up ratio by comparing the difference between your sales and purchases (i.e. gross profit),…

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Supporting the Sick

It is such a pain when a key employee is off sick. You are required to pay that person statutory sick pay (SSP) once he or she has been absent from work for four days. To add insult to injury you can’t reclaim any of the SSP paid since 6 April 2014. Payments of SSP made for periods before 6 April 2014 can be reclaimed from HMRC where the SSP exceeds 13% of the class 1 NI paid to HMRC for the month.

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RTI Reports and Penalties

Real time information (RTI) was supposed to make the reporting of PAYE easier for employers, but it has introduced more filing deadlines, and new penalties for missing those deadlines.

Every employer must now send a full payment submission (FPS) report every time they pay employees, on or before the payment date. There is some relaxation for certain employers who have fewer than ten employees.

If no payment has been made to employees in the tax month…

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Solicitors disclosure

As a qualified solicitor you need to be very careful not to make mistakes on your tax returns, as a tax investigation could do serious harm to your professional reputation. Taxpayers who make deliberate errors that lead to tax underpayments of £25,000 or more, may have the details of their name, address, amount of tax avoided and penalties paid, published on the internet by HMRC.

HMRC are currently targeting solicitors who have omitted income from their tax returns, and at the same time are offering a chance for solicitors…

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Shared parental leave and pay

Where a child is due to be born (or adopted) on or after 5 April 2015, its parents will be entitled to share the 52 weeks of maternity leave and 39 weeks of maternity pay or maternity allowance which is currently available only to the mother. This ability to share parental leave and pay will not apply in Northern Ireland until the Northern Ireland Assembly passes the relevant regulations.

As an employer you need to be ready to deal with claims from employees to share leave and pay, and…

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Incorporation of a business

When a business incorporates and transfers its trade and assets to a company controlled by the seller, the assets must be transferred at open market value for tax purposes. The assets may include “goodwill” which is defined as the business reputation or customer relationships, including the value of continuing contracts.

The transfer of the assets may generate a taxable capital gain in the hands of the seller, as the assets will have appreciated in value during the time they were used or created by the first business.

Capital gains tax…

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VAT Moss new guidance

On 1 January 2015 the VAT law changed for electronic services that are supplied digitally to non-business customers. Those customers must now pay VAT on the e-service at the rate that applies in the country where they receive the service. It’s up to the supplier to work out the VAT due, and pay that VAT to the local tax authority. There is no minimum threshold of sales below which VAT is not due.

The UK has set up the VAT-MOSS system to collect and pay over the overseas VAT…

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Let Property – Furniture and Fittings

When your property is fully furnished you can claim a wear and tear allowance (10% of the net rents), each year to cover the cost of replacing furniture and furnishings such as carpets and curtains. You can only claim capital allowances for furniture used inside a property which is let out commercially as furnished holiday accommodation for at least 140 days a year (other conditions also apply).

Before 6 April 2013, the taxman allowed landlords of unfurnished and partly furnished properties to claim for the cost of items provided…

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Let Property – Repairs or Improvements

If you let out residential property you need to know whether you can receive a tax deduction for the cost of replacing or repairing furniture and fittings provided inside that property. The cost of equipment used to maintain the outside of a property, or used in the communal areas of a building containing multiple dwellings, is always deductible.

When you fit something for the first time to a property, such as a fitted kitchen, that cost will form part of the capital cost of the building and will only…

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