Entries from January 2006 ↓

A recent survey has found that one in three organisations in the UK do not have basic back up procedures. It was also discovered that of those firms that do back up many of them stored their back ups at their trading premises.

Apart from the Data Protection Act implications, a loss of business data can often lead to handicapping a business for days, weeks or even shutting it down permanently.

The amount of SDLT that Gordon Brown charged taxpyers in the last recorded year was more than capital gains tax and inheritance tax put together.

SDLT can be particularly costly on new leases but with planning the burden can be reduced.

Property sales – clearly identify plant from fixtures as these are not chargeable and can keep a transaction below higher tax thresholds.
Connected parties – transfers the asset stages to reduce the SDLT payable.
Consider the length and terms of leases to reduce triggering a higher than necessary tax bill.

Taxblogger is seeing Limited Liability Partnerships (LLPs) becoming more and more popular. Some notable tax advantages over Limited Companies exist:

- no company car tax bills;
- no employers national insurance payable;
- less tax to pay when you buy into one;
- you still benefit from limited liability (as for companies).

We think LLPs are only going to become more popular given that from April 2006 the nil rate band for companies (first £10,000 of profit) is being abolished thus taking away another tax benefit of limited companies.

For the official low down on LLPs see the Companies House website.

HMRC are to help public houses with their VAT returns. The taxman will be sending advice letters outlining common problems and mistakes pubs make on their VAT returns. In some cases these will be followed up with visits.

Do not necessarily worry if you receive such letters as it does not mean you are suspected of a fraud. However, as always, be careful as to how much information you give away if the VAT man visits you - he has been known to combine a fishing trip with a pint!

From 1 October 2005 the National Minimum wage increased to £5.05 per hour for workers age 22 and above, and £4.25 per hour for workers aged 18 to 21 (youth rate) and for workers currently on a Government approved accredited training scheme.

The rate that was introduced in October 2004 for workers under the age of 18 but over compulsory school age remains the same at £3.00 per hour.

If you use subcontractors in your business, you should check that the tax rules do not deem them to be employees of your business. If you pay subcontractors who are really employees you could get caught with a large tax bill if HMRC investigate you.

HMRC has launched an online employment status indicator. You answer the questions and the indicator will advise whether the individual in question should be treated as an employee or not.

As with most things, this is only the Taxman’s interpretation of the rules and is not necessarily correct. If you are in any doubt you should contact your accountant for their view.

A recent study of answers given by the Taxman to taxpayer telephone queries showed that the correct and full answer was only given 53% of the time!

The Taxman is not totally responsible for misinformation he gives out; e.g. he may not have all relevant background information to your situation. Hence, whilst it can be helpful to ask simple questions of the Taxman we would recommend asking your own accountant any complex queries.

Below is the current ranking of the more popular areas that the Taxman asks about in relation to companies (with previous rankings in brackets):

1 Associated companies (5)
2 Capital allowances (-)
3 Provisions (4)
4 Debtor/creditors (6)
5 Accruals (3)
6 Legal and professional (2)
7 Repairs (1)
8 Entertaining (8)
9 Stock (7)
10 Research and development (-)

Hence, it will pay to ensure there are no skeletons in any of these cupboards!

31 January is the deadline for Self Assessment returns and payments for 2005/6.

To ensure your return is with HMRC before the deadline, they are extending their opening hours in some of their Enquiry Centres around 31 January. Open the spreadsheet for details of your local office opening hours.

Young, male, living in East London and working in the building industry? The taxman is looking for you!

So says Simon Goldie of CIOT.

Young men living in Central or East London who work in the construction industry are the worst in Britain at filing their self-assessment tax returns. The tax authorities are targeting groups such as these to encourage them to file before 31 January 2006. In addition, they are increasingly using heavy financial penalties (up to £60 a day) if people do not file their returns.

Anne Redston, chair of Personal Taxes at the Chartered Institute of Taxation, said today “HMRC is getting increasingly sophisticated in its pursuit of taxpayers. When it comes to filing tax returns, they now know that women are better than men, people in East and Central London are worse than people in the rest of the UK, while those in Orkney are the best; of all groups, construction workers are bottom of the class for tax filing. They are using this analytical information to target taxpayers.”

She went on to say that “HMRC are also using the full range of penalties. Those who pushed their brown envelopes behind the breadbin should get them out now. Leaving it to the last minute could be an expensive mistake.”