Entries from December 2006 ↓

Tax law states that dividend vouchers must be issued to shareholders within a ‘reasonable time’ after paying the dividend. The penalty for not doing so is £60 per dividend paid.

Make sure a voucher is issued in good time, not only to avoid the penalties but also to stop the Taxman arguing that the payment was really a salary payment and thus subject to PAYE.

The VATman can coming knocking at any time. He especially targets cash businesses, particular trades (it was pubs and garages in 2006) and any businesses that are late with their VAT returns.

Should you get a knock on the door from the VATman here are your rights.

- He cannot demand answers to oral questions - ask him to put it all in writing.
- He has no right of entry to your premises unannounced - if he tries this on say it is inconvenient at the moment (e.g. you have customers to deal with) and to arrange a mutually convenient appointment in a few days time.

Here’s a quick summary of the tax treatment of different types of business gifts.

- Giving away free samples of your product is tax deductible.
- Gifts with a conspicuous advert of your business on it are tax deductible as long as they do not exceed £50 per person.
- However, gifts of food, alcohol, tobacco and vouchers are not allowable for tax even if below the £50 threshold.
- VAT can only be re-claimed on gifts if they cost you less than £50 (£58.75 inc VAT).

Below are some of our tips and some of the Taxman’s tips for getting your tax return right prior to submission. By following these you should draw less attention to yourself and hence reduce the chances of an investigation.

Our tips
1. Use the internet to file your return - this has in built checks to ensure only valid information is submitted
2. Compare the income / expenses to last year’s returns - if there are any major differences explain why in the additional information boxes.
3. Avoid entering round sum amounts, e.g. £1,000. This suggests to the Taxman that you have guessed at the figures rather than calculating them accurately.

Taxman’s tips
1. A “yes” tick has been entered in one of the questions 1 to 9 on page 2 of the tax return but the supplementary page has not been forwarded with the tax return.
2. Failure to complete the self-employed pages, particularly on page SE3 from box 3.74 onwards.
3. Detailing information on separate schedules instead of including the information on the return
4. Entering manuscript notes on the return i.e. “per accounts” and/or “information to follow” instead of entering actual figures on the form.
5. Failure to complete a separate supplementary page for each individual employment.
6. Entering the net figure of employee personal pension premiums instead of the gross figure at box 14.11 of the core return, i.e. claiming insufficient relief where higher rates of tax are payable.
7. Entering the figure of capital expenditure in Box 3.14 of the Self Employment pages instead of the figure of Capital Allowances, i.e. claiming excessive relief.
8. Failure to complete question 19 of the core return where a repayment is due. We will assume you wish to leave the overpaid amount on your record, to be set against future liabilities - you have the right to choose.
9. Entering your pay in box 1.8 but not entering any tax deducted in box 1.11 on the Employment pages.
10. If you fail to sign the return, it will be rejected immediately.

30 December 2006 - If you file your 2006 Tax Return via the Internet you must send it back by this date if you want the Revenue to consider collection of outstanding tax for the year through your tax code. This will only be possible where you owe less than £2,000.

1 January 2007 - Corporation tax due for companies with a tax liability for the trading year ending 31 March 2006.

31 January 2007 - Due date for payment of any residual self assessment liability for the year ending 5 April 2006, and due date for the first instalment on account for the year ending 5 April 2007.

31 January 2007 - Deadline for filing your self assessment tax return for the year ending 5 April 2006.

Follow this link for a summary of the Pre Budget Report.