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Uncategorised

Please find below all the articles that have been categorised as 'Uncategorised'.

VAT – the annual accounting scheme

There are a number of VAT schemes aimed at smaller businesses that help to simplify reporting, and in turn reduce the amount of administration time spent on compliance. One is the annual accounting scheme (AAS). But what is this, and when might it be beneficial?

Under the AAS, HMRC permits a business to make one VAT return for a year-long period, instead of the usual four quarterly returns. The business makes advance payments toward the VAT liability for the year, and then reconciles any difference on the annual return….

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Latest news round up

IR35

TV presenter Adrian Chiles has cleared the first hurdle in his battle against HMRC’s insistence that his working arrangements with ITV and the BBC amounted to an employer-employee relationship in all but name. The First-tier Tribunal ruled that, considering all factors, Mr Chiles was clearly building a business via his company (Basic Broadcasting Ltd). It then considered whether the activities with the two broadcasters would lead to a conclusion that Mr Chiles was carrying on a business in his own right in the absence of the company. It…

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Holdover relief tax trap

Some small company owners bring in adult children to take over the day to day running of the business as they approach retirement. There are many strategies used in practice. One may be to appoint the children as directors, while maintaining overall control of the share capital. However, some owners may wish to hand over full control and exit the company altogether and gift the shares to the children as well.

This involves a transfer of value, i.e. the value of the shares being gifted. However, thanks…

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Does an employee loan always need reporting to HMRC?

Employee loans are an area where businesses often get confused. The first thing many owners will think of is the temporary corporation tax charge under s. 455. However, that only applies if the loanee is a participator of a close company. It doesn’t apply to regular employees – even directors – unless they also own/control at least 5% of the company’s share capital.

However, that isn’t the end of the tax issues. Employee loans can be a taxable benefit in kind (BIK) that need reporting on form…

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VAT – charged too much?

Suppose that a business has been paying its suppliers’ invoices for many years without really giving too much thought to the VAT being applied. The business engages an accountant to assist with its VAT returns due to an increase in business activity. The accountant immediately spots that one supplier has been incorrectly charging standard rate VAT instead of the correct reduced rate of 5%. On inspection, this is a long-term issue going back many years.

The business has a problem, because the VAT legislation requires VAT to…

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Latest news round up

On 7 January, HMRC announced that there would be no automatic late filing penalties provided that tax returns are filed by midnight on 28 February 2022. Anyone seeking to take advantage of the extra month should keep in mind that it is the penalty trigger, not the filing deadline itself, that has moved. This means that where a return is filed in February there will be no penalty, but the enquiry window will be extended to the relevant quarter day in 2023, i.e. 30 April.

There will…

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Home working and Capital Gains Tax (CGT)

Working from home was slowly becoming more common before the Covid-19 pandemic; however, the various lockdowns restrictions meant that it increased exponentially in 2020 and 2021. Many employees have indicated that they do not wish to return to the office full-time, and employers appear to be willing to acquiesce to requests hybrid working patterns. As a result, working from home is likely to be here to stay. Much of the tax related guidance surrounding homeworking that has come to the fore in the wake of the pandemic relates…

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Inheritance Tax (IHT) – a problem with taper relief

Making gifts of value during an individual’s lifetime is a tried and trusted way of reducing the exposure to IHT. Many people are aware of the so-called "seven-year rule", which provides that a potentially exempt transfer (PET) becomes fully exempt as long as the person making the gift is still alive on the seventh anniversary of the date the gift was made. Of these people, some will be aware that there is a partial relief where the person making the gift dies before the seventh anniversary, but after…

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Christmas: how does hospitality and gifts affect the VAT return?

The Omicron variant of Covid-19 saw new guidelines issued by the government in December. However, at the time of writing no lockdown, circuit breaker or otherwise, has been announced. As a result, many businesses will be going ahead with plans for hosting parties for staff and clients. Some may choose not to due to concerns, but may still give festive gifts, for example to the biggest spending customers during the previous year. All these things have VAT implications.

Starting with entertainment, the input tax incurred on any hospitality can…

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Latest news round up

A number of suggested reforms to the CGT have been accepted by the government. In May 2021, the Office of Tax Simplification published a report that included 14 recommendations. The government’s response was published on 30 November. While any major changes, such as aligning CGT rates with income tax were ruled out, five of the OTS recommendations have been accepted. Some of these are concerned with improvements to guidance or access to the CGT service, but some technical changes will also be made.

Firstly, the window for…

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