Points to Ponder
This is now our Twenty Eighth newsletter – produced during April 2007 and issued in May 2007, to keep you up to date with some of the changes in Income tax, National Insurance and VAT along with compliance regulations for businesses. If you would like a copy of any past newsletters, please call and we can either send or e-mail them to you.
April News
1. Anti smoking regulations all at sea!
From 1st July 2007, smoking is banned in workplaces, pubs, clubs and enclosed public areas, and on vessels sailing on the (British) high seas and inland waterways. The debate is how this should be enforced and if the Coastguards will be the enforcement agency. Road-going commercial vehicles, including company-owned cars, must display “No Smoking” signs inside and out, but where will the cross channel ferries stick theirs?
One other regulation that has accompanied the smoking ban is that anti-litter regulations will be more rigorously enforced, with on the spot fines in excess of £100, and cigarette ends being specifically mentioned in the act. I shall be more than happy to see this regulation enforced at the bus stop outside the Gilders Road office!
2. Penalties increased for using your mobile fine while driving.
The present penalty is £30 if you are caught using your mobile without a hands-free system while driving but this is being increased to £60 for car drivers. The fines for drivers of all commercial vehicles, vans, lorries, coaches and buses, will be £1,200. A recent survey carried out by Direct Line Insurance found that using a mobile phone caused more accidents than drunk driving.
3. New rules on VAT invoices.
Pending final consultations, HMRC proposes to enforce EU invoicing regulations to bring UK traders in line with other European Countries. The main one is that all invoices must be numbered sequentially to give them a unique identification. This means no more a, b and c invoices with the same base number. Next the invoice must declare if it is issued under a VAT margin scheme, such as for secondhand goods and cross-boarder invoices must refer to the reason for any VAT exemption or reverse charge.
4. Undeclared Offshore Accounts
HMRC has successfully gained the right to request details of any UK residents holding offshore accounts. This is a blanket permission and ensures that the banks have to release details of everyone. The first bank to come under scrutiny is Barclays, with the same permission being gained for approaches to four other large UK banks. There is a small window for voluntary disclosures, which will result in smaller fines and penalties, but after that closes, the Revenue has made it clear that they will go for the highest fines that they can.
March News
This was dominated by the budget and, as has become the norm with this Chancellor, the true facts only crawl out of the woodwork long after he has finished his speech. As the small print is going to have a major impact on small businesses, Angela is holding over her updated newsletter for limited companies until the full force of Mr. Brown’s measures have been unravelled. The following are the main points covered in the March newsletter.
1. Managed Service Companies
Get out of these arrangements as soon as you can!
2. 2% off the basic rate of personal tax!
But not yet – not until April 2008 when the 10% tax band will also cease.
3. 2% off the rate of Corporation Tax!
But not for small companies.
4. National Insurance limits.
The ceiling for these is being raised.
5. Capital Allowances changes
The changes coming through are important for planning for expenditure on capital items, as depending on what qualifies for 100%, it may be better to buy on 6th April 2008, rather than a day earlier.
6. VAT on certain property alterations.
The rate of VAT for certain housing alterations for elderly people will be cut from 17.5% to 5%.
7. No Smoking – help for the addicted.
From 1st July 2007 for one year only, over-the-counter goods to help you stop smoking will be charged at 5% VAT instead of 17.5%.
8. VAT registration and deregistration levels.
From 1st April 2007, the turnover level at which you must register for VAT is raised to £64,000 with deregistration going up to £62,000.
9. Income Tax, Personal Tax, PAYE and VAT Payments
At the moment, HM Revenue & Customs deem to have received your payment when they get your cheque but this is going to change. Although the legislation has still to be drafted, they will only deem payment to have been made when the funds have cleared through their bank.
10. Penalties for incorrect returns
Once assent is given to this Finance Act, the rates of penalties will be set in stone. The answer? Get your returns right in the first place!
11. Inheritance Tax Thresholds
These are being increased but not substantially.
12. Charities and Gift Aid limits
If there’s anything left, you can now increase your donations that qualify for Gift Aid relief.
13. Remote Gaming Duty
For those who like a flutter “on-line”, the operators will soon be paying a 15% excise duty on their profits – expect to pay for their costs.
14. The Budget Basics – Petrol, Fags and Booze.
As usual – they’re going up. Petrol and diesel from 1st October 2007, tobacco products, beer and wine have already gone up, but the only good news is that the duty on spirits has remained unchanged.
Enough Budget News – now on to the rest.
15. Tax Credits
The time limit for making returns for your tax credits is being reduced. It will help us if you can try and let us have your records as soon as possible, and let us know if you receive tax credits.
16. Offshore Accounts
See current month update.
17. CIS Deductions – Some good news at last.
From the start of this new tax year, individuals and partnerships who both sub-contract themselves and use the services of subcontractors can net off the deductions they have suffered against those they collect from their subcontractors. To date, only limited companies have been allowed to do this. However, bearing in mind this could result in “nil” monthly amounts payable, it does not remove the need to make monthly returns.
18. CIS Change of Rate
From payments made after 6th April 2007, the rate of deduction will be 20%, not 18%. Please remember that the rate deducted is determined by the date on which that payment is made, not the date the work was carried out.
19. Inadequate Records
The majority of Revenue enquiries end in additional tax bills for anyone who does not have complete records.
20. Helpful or not?
In the final push towards the 31st January deadline for Self Assessment submissions, the Revenue made calls to 853,158 taxpayers to remind them to submit their returns on time. 200 employees cost us, the taxpayers, £350,000 to do this. Of the taxpayers called, 10% had already submitted their returns anyway. Did any of you hear from the Revenue?
21. Travel and subsistence and your mobile phone
A Revenue enquiry case decided that commuting costs are those incurred in getting to a position to be able to carry out work rather than costs incurred in actually carrying out that work. It’s a fine dividing line, but care must be taken not to cross it. Subsistence was glossed over in this case, as food is not normally allowed unless the work has been carried out in “unsocial” hours, but was disallowed anyway here, as the taxpayer hadn’t produced any receipts. The same happened with his mobile phone, as he had no bills to prove the calls were for business.
February News – in brief
1. Building work linked to planning applications – a back-door HMRC investigation (call Sue)
We have had several confirmed reports that HMRC is contacting householders who have had work carried out on their properties that required planning permission to find out who did the work and how they were paid.
2. Workers from the new EU states (call Sue)
Romania and Bulgaria have now joined but not everyone from these countries will be entitled to work.
3. Company directors working from home (call Angela or Sue)
To be able to claim your due “rent” for office space from your company, make sure you have a written agreement in place.
4. Interest on directors’ loans – is the company paying the tax? (Call Angela or Sue)
Many new companies are started by directors’ loans to buy initial equipment or stock etc. or the company agrees to buy the Goodwill of a former sole-tradership or partnership, with the purchase amount recorded in the accounts as a loan from the directors. The company is liable to pay interest on these loans but, just like a bank or Building Society, has to deduct tax on the interest and pay it over to the Revenue on a quarterly basis
5. Corporate Manslaughter Act (Call Sue)
Other News in brief.
Company details needed on your Website and e-mails (Call Sue)
Standing Order payments (Call Sue, Angela or Bernadette)
VAT Flat-rate Scheme (Call Sue)
Company Law Changes (Call Angela or Sue)
Worker status review service. (call Sue)
Is emigration really the answer?
Agency Staff and Worker Status (call Sue)
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