Last week we examined a case concerning share dealing losses which provides hope to all day traders. You need to warn your clients about the NMW rate rise on 1 April 2016 and about a change in VAT treatment on wholesale telecoms services which applies from 1 February 2016.
This is an
extract from our topical tax tips newsletter dated 21 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
National living wage
The national minimum wage (NMW) rate normally increases with effect from 1 October. Many employers will be geared up to include such changes in their annual pay reviews. However, the next rate change applies from 1 April 2016.
In his Summer Budget on 8 July 2015 George Osborne stole the opposition's clothes by announcing a “National Living Wage” of £7.20 per hour, to be gradually increased to £9 per hour by 2020. In fact the living wage is just another NMW rate, with all the same legal requirements. It must be paid to workers aged 25 and older for pay periods that fall on and after 1 April 2016.
The NMW for those workers is currently £6.70 per hour, so a 50p per hour increase is significant. It will push the weekly wage for a worker on 35 hours up from £234.50 to £252, and cost the employer an extra £19.91 per week including employer's NI. Where the worker is enrolled in a company pension under auto-enrolment the total cost to the employer will be higher.
You can help your clients identify which employees should receive a pay rise from 1 April, and budget for this extra cost. Remember company owner/directors don't have to pay themselves the NMW or living wage as long as they don't have a contract of employment with their company. Family members living in the employer's home also are not entitled to the NMW.
The employment allowance is increasing from 6 April 2016 from £2,000 to £3,000 for most employers. One-man companies won't qualify for the employment allowance in 2016/17.
The extra £1,000 of allowance will be available to off-set the additional employers' NIC payable on the compulsory wage increases for workers entitled to the living wage. However, the employment allowance can't be used to off-set the cost of pension contributions, or the actual wage increase itself.
This is an
extract from our topical tax tips newsletter dated 21 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The
full newsletter contained links to related source material for this
story and the
other two topical, timely and commercial tax tips. We've been
publishing this newsletter weekly since 2007; it's clearly written
and focused on precisely what accountants in general practice need to
know about each week. You can obtain future issues by registering here>>>
Tuesday, 26 January 2016
Tuesday, 19 January 2016
VAT MOSS, VAT flat rate scheme, Trust tax returns
This issue highlighted two VAT issues which affect small businesses; the ridiculous VAT MOSS rules, and the VAT flat rate scheme which should make life easier for small businesses but can trip them up. We also have news about incorrect penalties issued in respect of trust and estate tax returns.
This is an extract from our topical tax tips newsletter dated 14 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
VAT MOSS
All VAT MOSS returns must be submitted for calendar quarters, irrespective of the period for which the trader submits his domestic VAT returns. Thus the next VAT MOSS return must be submitted by 20 January 2015, for the quarter to 31 December 2015.
This is just another example of how the VAT MOSS rules are a bad-fit for micro-traders. HMRC are starting to realise this, as they have issued new guidance on VAT MOSS for small traders. These are businesses with annual turnover below the UK VAT registration threshold, so they aren't required to be registered for VAT in the UK. However, they must operate VAT MOSS. In theory just one international sale of an electronic service to a non-business consumer in another EU country brings the business within the VAT MOSS reporting regime.
HMRC say they have analysed the VAT MOSS returns submitted so far. From this incomplete data HMRC have concluded that some people registered for VAT MOSS may not be in business. A person who is not “in business” doesn't have to register for VAT MOSS as the supplies are not made in the course of a business. Problem solved!
No, the problem is not solved. HMRC can't accurately determine whether a trader is “in business” from three VAT MOSS returns, but they are writing to those people they believe aren't “in business” suggesting the trader should deregister from VAT MOSS. If your client receives such a letter he will be confused, as HMRC is constantly telling people to declare all of their income for tax purposes.
If you have advised your client to register for VAT MOSS, you will have already reviewed whether he is in business or not, and concluded that he is. If the international sales are merely part of a “hobby” and not part of a business, then you wouldn't have advised the individual to register for VAT MOSS.
For those small traders who decide to stay registered with VAT MOSS, a further concession is offered: they only have to retain one piece of evidence of where their customer is located. However, the trade needs to abide by the VAT laws of the country he is selling into. A concession applied by HMRC won't necessarily be recognised by another EU tax authority.
This is an extract from our topical tax tips newsletter dated 14 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
This is an extract from our topical tax tips newsletter dated 14 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
VAT MOSS
All VAT MOSS returns must be submitted for calendar quarters, irrespective of the period for which the trader submits his domestic VAT returns. Thus the next VAT MOSS return must be submitted by 20 January 2015, for the quarter to 31 December 2015.
This is just another example of how the VAT MOSS rules are a bad-fit for micro-traders. HMRC are starting to realise this, as they have issued new guidance on VAT MOSS for small traders. These are businesses with annual turnover below the UK VAT registration threshold, so they aren't required to be registered for VAT in the UK. However, they must operate VAT MOSS. In theory just one international sale of an electronic service to a non-business consumer in another EU country brings the business within the VAT MOSS reporting regime.
HMRC say they have analysed the VAT MOSS returns submitted so far. From this incomplete data HMRC have concluded that some people registered for VAT MOSS may not be in business. A person who is not “in business” doesn't have to register for VAT MOSS as the supplies are not made in the course of a business. Problem solved!
No, the problem is not solved. HMRC can't accurately determine whether a trader is “in business” from three VAT MOSS returns, but they are writing to those people they believe aren't “in business” suggesting the trader should deregister from VAT MOSS. If your client receives such a letter he will be confused, as HMRC is constantly telling people to declare all of their income for tax purposes.
If you have advised your client to register for VAT MOSS, you will have already reviewed whether he is in business or not, and concluded that he is. If the international sales are merely part of a “hobby” and not part of a business, then you wouldn't have advised the individual to register for VAT MOSS.
For those small traders who decide to stay registered with VAT MOSS, a further concession is offered: they only have to retain one piece of evidence of where their customer is located. However, the trade needs to abide by the VAT laws of the country he is selling into. A concession applied by HMRC won't necessarily be recognised by another EU tax authority.
This is an extract from our topical tax tips newsletter dated 14 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
Tuesday, 12 January 2016
Farmers and losses, SDLT supplement, HMRC communications
Business life doesn't stop in January so everyone can concentrate on completing their tax returns - although you may like it to. Clients are busy trying to make a profit, or at least striving to avoid a farming loss for the sixth year running. We explain why this is so important in this week's newsletter. Property owners need to act quickly to complete deals before the new SDLT supplement kicks in. We also have a timely warning about communications from HMRC.
This is an extract from the first of our topical tax tips newsletters for 2016. It went out on 7 January (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
HMRC communications
Where a taxpayer has appointed a tax agent HMRC is supposed to write to that agent, or at least copy-in the agent on any correspondence with the taxpayer. That rule is being broken again with “educational” letters being sent out by HMRC.
The letter we have seen is addressed to farmers, reminding them that subsidies paid by the EU are taxable income and should be included on their SA tax return. It goes on to say the farmer should check their tax returns to see if the right amount of income has been declared. This will alarm some clients, and no-doubt prompt phone calls to you.
Other communications, such as emails and texts supposedly from HMRC are obvious fakes. We know that HMRC doesn't offer taxpayers refunds by email but it does send reminders to complete tax and VAT returns. It's easy to be duped by the fraudsters.
Finally, where you or clients have been affected by the floods, and as a result need more time to complete tax returns or make tax payments, there is help available. Access that help by calling the HMRC flood helpline: 0800 904 7900. To arrange time to pay a tax debt call before the debt becomes due.
This is an extract from our topical tax tips newsletter dated 7 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
This is an extract from the first of our topical tax tips newsletters for 2016. It went out on 7 January (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
HMRC communications
Where a taxpayer has appointed a tax agent HMRC is supposed to write to that agent, or at least copy-in the agent on any correspondence with the taxpayer. That rule is being broken again with “educational” letters being sent out by HMRC.
The letter we have seen is addressed to farmers, reminding them that subsidies paid by the EU are taxable income and should be included on their SA tax return. It goes on to say the farmer should check their tax returns to see if the right amount of income has been declared. This will alarm some clients, and no-doubt prompt phone calls to you.
Other communications, such as emails and texts supposedly from HMRC are obvious fakes. We know that HMRC doesn't offer taxpayers refunds by email but it does send reminders to complete tax and VAT returns. It's easy to be duped by the fraudsters.
Finally, where you or clients have been affected by the floods, and as a result need more time to complete tax returns or make tax payments, there is help available. Access that help by calling the HMRC flood helpline: 0800 904 7900. To arrange time to pay a tax debt call before the debt becomes due.
This is an extract from our topical tax tips newsletter dated 7 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
Tuesday, 22 December 2015
Liquidate the company, Renewals allowance, Payrolling of benefits
The Government
issued another 645 pages of draft tax legislation and notes last week.
We have picked out two issues from the draft Finance Bill 2016 which may
be relevant to your clients: whether to liquidate their dormant
companies and the new renewals basis for items used in let residential
properties. HMRC has also set a ridiculous deadline of 21 December 2015
to inform them about payrolling of benefits.
This is an extract from our topical tax tips newsletter dated 17 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
Liquidate the company
Where a company is liquidated the proceeds received by the shareholders are treated as capital, after the costs of the liquidation are deducted. The shareholders pay CGT on those proceeds at: 18%, 28%, or 10% where entrepreneurs' relief applies. This is a huge tax saving compared to the dividend tax rates of: 7.5%, 32.5% and 38.1% which will apply to distributions from a company in 2016/17.
The Government wants to prevent business owners from achieving a “tax advantage” (tax saving), by liquidating their company and starting up the same or similar business in another vehicle. There are already anti-avoidance rules which can be used against such phoenixing, which are explained in HMRC's Company Tax Manual at CT36850.
The draft Finance Bill 2016 includes a new targeted anti-avoidance rule (TAAR) that goes further than the current rules. If the TAAR comes into effect as drafted it will tax the proceeds from the liquidation as income rather than as capital, where all these conditions are met:
a) a close company is wound-up and an individual (S) receives proceeds from the shares;
b) within two years of that distribution S continues to be, or becomes, involved in a similar trade or activity; and
c) one of the main purposes of the winding-up is to obtain a tax advantage.
Condition b) will apply where the same or similar business is continued as a company, or as a sole-trader or as partnership, even on a much diminished scale.
The TAAR is due to apply to distributions made on or after 6 April 2016. Thus to be sure of falling outside of the TAAR, the liquidation must be completed before that date. Liquidations can take many months. If your client has a company which he intends to liquidate to pay CGT on the funds it has accumulated, he needs to act fast to avoid being caught by this new TAAR.
Our tax experts can advise you on whether a proposed transaction involving a company's shares will be affected by the draft anti-avoidance rules in Finance Bill 2016.
This is an extract from our topical tax tips newsletter dated 17 December 2015 (5 days before we publish an extract on this blog). it was the last one of 2015. You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
This is an extract from our topical tax tips newsletter dated 17 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
Liquidate the company
Where a company is liquidated the proceeds received by the shareholders are treated as capital, after the costs of the liquidation are deducted. The shareholders pay CGT on those proceeds at: 18%, 28%, or 10% where entrepreneurs' relief applies. This is a huge tax saving compared to the dividend tax rates of: 7.5%, 32.5% and 38.1% which will apply to distributions from a company in 2016/17.
The Government wants to prevent business owners from achieving a “tax advantage” (tax saving), by liquidating their company and starting up the same or similar business in another vehicle. There are already anti-avoidance rules which can be used against such phoenixing, which are explained in HMRC's Company Tax Manual at CT36850.
The draft Finance Bill 2016 includes a new targeted anti-avoidance rule (TAAR) that goes further than the current rules. If the TAAR comes into effect as drafted it will tax the proceeds from the liquidation as income rather than as capital, where all these conditions are met:
a) a close company is wound-up and an individual (S) receives proceeds from the shares;
b) within two years of that distribution S continues to be, or becomes, involved in a similar trade or activity; and
c) one of the main purposes of the winding-up is to obtain a tax advantage.
Condition b) will apply where the same or similar business is continued as a company, or as a sole-trader or as partnership, even on a much diminished scale.
The TAAR is due to apply to distributions made on or after 6 April 2016. Thus to be sure of falling outside of the TAAR, the liquidation must be completed before that date. Liquidations can take many months. If your client has a company which he intends to liquidate to pay CGT on the funds it has accumulated, he needs to act fast to avoid being caught by this new TAAR.
Our tax experts can advise you on whether a proposed transaction involving a company's shares will be affected by the draft anti-avoidance rules in Finance Bill 2016.
This is an extract from our topical tax tips newsletter dated 17 December 2015 (5 days before we publish an extract on this blog). it was the last one of 2015. You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
Tuesday, 15 December 2015
Company cars and fuel, Tax free meals, Income verification
Last week we turned
our attention to employee benefits, in particular company cars and meals
taken while away from the normal workplace. The rules and rates for
taxation of both these benefits are changing from 6 April 2016, so you
need to inform your clients. We also shared news on the provision of tax
calculation statements by HMRC for mortgage purposes.
This is an extract from our topical tax tips newsletter dated 10 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
Company cars and fuel
As we predicted in our newsletter on 12 November 2015 the 3% supplement for diesel powered company cars is to be retained after 5 April 2016. As a result the taxable benefit for using a diesel company car will increase in 2016/17 rather than decrease as had been expected.
This announcement was made in the Autumn Statement on 25 November 2015, which will have been too late for many tax rates and tables books published this year. HMRC's online calculator for car and fuel benefit currently doesn't cover 2016/17, but that may updated in January 2016.
The percentage of list price used to calculate the taxable benefit for all company cars will increase by two percentage points from 2015/16 to 2016/17. This includes cars with CO2 emissions under 51g/km, which will be taxed at 7% of the list price, or 10% for a diesel car.
The maximum percentage of list price used for the benefit calculation is now set at 37%. That level will be achieved by diesel cars with CO2 emissions of 185g/km or more in 2016/17. Petrol cars will achieve the maximum at CO2 emissions of 200g/km or more.
As around 81% of company cars are diesel powered, you need to inform your clients of this change so they are prepared for higher tax and class 1A NIC liabilities in 2016/17. Look out for notices of coding for 2016/17 and check that the correct taxable benefit for the company car has been included.
If a taxpayer has a company car in most cases it is not economical to take free fuel for private use, as the fuel used will cost less than the tax payable on the fuel benefit. Instead of free fuel the taxpayer should claim the cost of fuel used on business journeys, from his employer, using the advisory fuel rates. Those advisory rates have been revised with effect from 1 December 2015, mostly downwards, but the old rates can be used for journeys taken before 1 January 2016.
This is an extract from our topical tax tips newsletter dated 10 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
This is an extract from our topical tax tips newsletter dated 10 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
Company cars and fuel
As we predicted in our newsletter on 12 November 2015 the 3% supplement for diesel powered company cars is to be retained after 5 April 2016. As a result the taxable benefit for using a diesel company car will increase in 2016/17 rather than decrease as had been expected.
This announcement was made in the Autumn Statement on 25 November 2015, which will have been too late for many tax rates and tables books published this year. HMRC's online calculator for car and fuel benefit currently doesn't cover 2016/17, but that may updated in January 2016.
The percentage of list price used to calculate the taxable benefit for all company cars will increase by two percentage points from 2015/16 to 2016/17. This includes cars with CO2 emissions under 51g/km, which will be taxed at 7% of the list price, or 10% for a diesel car.
The maximum percentage of list price used for the benefit calculation is now set at 37%. That level will be achieved by diesel cars with CO2 emissions of 185g/km or more in 2016/17. Petrol cars will achieve the maximum at CO2 emissions of 200g/km or more.
As around 81% of company cars are diesel powered, you need to inform your clients of this change so they are prepared for higher tax and class 1A NIC liabilities in 2016/17. Look out for notices of coding for 2016/17 and check that the correct taxable benefit for the company car has been included.
If a taxpayer has a company car in most cases it is not economical to take free fuel for private use, as the fuel used will cost less than the tax payable on the fuel benefit. Instead of free fuel the taxpayer should claim the cost of fuel used on business journeys, from his employer, using the advisory fuel rates. Those advisory rates have been revised with effect from 1 December 2015, mostly downwards, but the old rates can be used for journeys taken before 1 January 2016.
This is an extract from our topical tax tips newsletter dated 10 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
Tuesday, 8 December 2015
Tax relief for travel and subsistence, R&D advanced assurance, Payment of SA tax
The Autumn
Statement contained little to concern small businesses in the near
future. The proposed change to tax relief for travel and subsistence
costs will be relatively limited, as we explain below. There is a new
R&D advanced assurance procedure which small companies should know
about, and we revisit the issue of paying SA tax in January, because it
is so important.
This is an extract from our topical tax tips newsletter dated 3 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
Tax relief for travel and subsistence
In our newsletter on 15 September 2015 we outlined the proposed changes to tax relief for travel and subsistence costs. The Government says a restriction on this relief is needed to block abuse of the rules by a minority of employment agencies and umbrella companies, and personal service companies were set to be caught in the cross fire.
The good news is the Government listened to responses to the consultation paper, and has decided to restrict tax relief for travel and subsistence expenses only for workers engaged through employment agencies, such as an umbrella companies. This means those temporary workers won't be able to claim expenses for travelling to work, and won't be due a lunch allowance either. This change will take effect from 6 April 2016.
Individuals who contract through their own personal service companies may be caught by this change in the tax rules, but only where the contract they perform falls under the IR35 rules. Thus if IR35 doesn't apply, the contractor can carry on as before, claiming a reimbursement of travel and lunch costs from his own company.
This will be a big relief to many contractors, as the IR35 rules rarely apply to genuine contractors who are in business on their own account, and who can provide substitutes to complete their contracts. There is a lot more to IR35 that those two conditions. Our employment tax experts can help you advise clients on that complex piece of legislation.
You should also advise clients that the IR35 rules are under review and may be tightened up from April 2016 or from a later date.
This is an extract from our topical tax tips newsletter dated 3 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
This is an extract from our topical tax tips newsletter dated 3 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
Tax relief for travel and subsistence
In our newsletter on 15 September 2015 we outlined the proposed changes to tax relief for travel and subsistence costs. The Government says a restriction on this relief is needed to block abuse of the rules by a minority of employment agencies and umbrella companies, and personal service companies were set to be caught in the cross fire.
The good news is the Government listened to responses to the consultation paper, and has decided to restrict tax relief for travel and subsistence expenses only for workers engaged through employment agencies, such as an umbrella companies. This means those temporary workers won't be able to claim expenses for travelling to work, and won't be due a lunch allowance either. This change will take effect from 6 April 2016.
Individuals who contract through their own personal service companies may be caught by this change in the tax rules, but only where the contract they perform falls under the IR35 rules. Thus if IR35 doesn't apply, the contractor can carry on as before, claiming a reimbursement of travel and lunch costs from his own company.
This will be a big relief to many contractors, as the IR35 rules rarely apply to genuine contractors who are in business on their own account, and who can provide substitutes to complete their contracts. There is a lot more to IR35 that those two conditions. Our employment tax experts can help you advise clients on that complex piece of legislation.
You should also advise clients that the IR35 rules are under review and may be tightened up from April 2016 or from a later date.
This is an extract from our topical tax tips newsletter dated 3 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
Tuesday, 1 December 2015
PAYE debts, Tax payments or repayments, Non-resident landlords
Next week, once the dust has settled, we will analyse some of the most urgent tax changes announced in the Autumn Statement. In the meantime we have tips on how to deal with phantom PAYE debts, and a practical issue concerning the SA tax payments and repayments due in January. There are also new forms and new guidance for non-resident landlords.
This is an extract from our topical tax tips newsletter dated 26 November 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
Tax payments or repayments
Helping clients with their tax affairs involves more than just computing the numbers. Many individuals need support with budgeting to pay their tax liabilities, and reminders about when and how to pay.
January is probably the worst month in which to find the funds to pay tax bills. Many small businesses see a reduction in trade after Christmas, and the weather can discourage customers. New businesses may have to find 150% of their annual tax liability, if the individual was previously taxed under PAYE. These problems can lead to taxpayers reaching for their credit cards to pay the tax due.
If they do pay by credit card, there is a non-refundable fee of 1.5% of the amount paid. Payments by debit card don't attract a fee. But a debit card can't be used if the funds or overdraft facility don't already exist in the taxpayer's bank account.
A taxpayer facing a significant tax bill on 31 January 2016 may want to spread the bill over several credit cards. However, from 1 January 2016 HMRC will restrict the number times debit or credit cards can be used to pay the same tax bill. HMRC hasn't indicated the maximum number of card transactions which will be permitted against each tax bill.
If the taxpayer needs to spread their self-assessment tax bill over several months, the HMRC budget payment plan should be considered. But this requires forward planning as all self-assessment debts must be paid before starting on a budget payment plan.
When your client is really stuck for funds, they can to ask HMRC for a time to pay arrangement before the due date for the tax arrives (or you can do this for them), by calling the business payment service: 0300 200 3825.
Where your client is due a repayment of tax from their SA tax return, HMRC want to make that repayment electronically directly to the taxpayer's bank account. This is only possible if the bank account number and sort code have been accurately recorded on the SA tax form.
A new feature in the HMRC software for completing SA tax returns now checks that the bank sort code entered is a valid sort code, and that the format of the account number entered is correct. An error message will ask the preparer to check and amend the entries if a fault is detected.
This is an extract from our topical tax tips newsletter dated 26 November 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
This is an extract from our topical tax tips newsletter dated 26 November 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
Tax payments or repayments
Helping clients with their tax affairs involves more than just computing the numbers. Many individuals need support with budgeting to pay their tax liabilities, and reminders about when and how to pay.
January is probably the worst month in which to find the funds to pay tax bills. Many small businesses see a reduction in trade after Christmas, and the weather can discourage customers. New businesses may have to find 150% of their annual tax liability, if the individual was previously taxed under PAYE. These problems can lead to taxpayers reaching for their credit cards to pay the tax due.
If they do pay by credit card, there is a non-refundable fee of 1.5% of the amount paid. Payments by debit card don't attract a fee. But a debit card can't be used if the funds or overdraft facility don't already exist in the taxpayer's bank account.
A taxpayer facing a significant tax bill on 31 January 2016 may want to spread the bill over several credit cards. However, from 1 January 2016 HMRC will restrict the number times debit or credit cards can be used to pay the same tax bill. HMRC hasn't indicated the maximum number of card transactions which will be permitted against each tax bill.
If the taxpayer needs to spread their self-assessment tax bill over several months, the HMRC budget payment plan should be considered. But this requires forward planning as all self-assessment debts must be paid before starting on a budget payment plan.
When your client is really stuck for funds, they can to ask HMRC for a time to pay arrangement before the due date for the tax arrives (or you can do this for them), by calling the business payment service: 0300 200 3825.
Where your client is due a repayment of tax from their SA tax return, HMRC want to make that repayment electronically directly to the taxpayer's bank account. This is only possible if the bank account number and sort code have been accurately recorded on the SA tax form.
A new feature in the HMRC software for completing SA tax returns now checks that the bank sort code entered is a valid sort code, and that the format of the account number entered is correct. An error message will ask the preparer to check and amend the entries if a fault is detected.
This is an extract from our topical tax tips newsletter dated 26 November 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>
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