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Newsletter
September 2007 |
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You may be
receiving this Newsletter for the first time and we trust it will be of
interest to you. We shall send this on a monthly basis unless you advise us
that you no longer wish to be on our mailing list. Please also
look at the News Page on our website as this can highlight other topics of
interest that arise. Our
newsletter this month covers the administration of dividends paid by small
companies, coping with current delays in the VAT registration process,
inheritance tax and business property and finally a note of tax free benefits
which can be provided to retired employees by their employers. The next
issue of our newsletter will be published on Thursday 4th October 2007. |
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Powers
of Attorney |
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The new
arrangements for Lasting Powers of Attorney come into force on 1
October. Do review your current arrangements and arrange for updates or new
Enduring Powers of Attorney to avoid additional cost and administration. Please do
not think that this is only relevant as we get older because accident and
serious illness can affect us all. Back to top |
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Dividends
- getting the paperwork right. |
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If you run
a small limited company and take part of your remuneration as a dividend,
make sure you attend to the administration - get the paperwork right! Dividends
are treated as part of your income and as long as you remain a basic rate
taxpayer there is no further tax to pay - in effect the company pays the
basic rate tax for you. If you are a higher rate tax payer you will be
assessed for the higher rate element in your annual self-assessment
calculation. When you
make a dividend payment you need to generate two pieces of printed evidence: 1.
Appropriate
minutes sanctioning the dividend and 2.
Dividend
vouchers setting out the amount of the dividend, tax deducted etc. If you
don't provide this basic evidence you may give the Revenue an excuse to
change the status of the payment. For
instance they may assert that the payment was not a dividend but a loan to
the director - this would create benefit-in-kind charges for
director/shareholders and a 25% corporation tax charge for the company. (The
25% tax charge is recoverable but potentially there could be a considerable
delay in receiving a refund.) Alternatively
if the dividend is a regular payment, say monthly, the Revenue may try to
argue that the payment is taxable as shareholder's salary. Assuming of course
that the shareholder is a salaried employee or director. This would create
unplanned National Insurance charges for the shareholder and the company, as
well as income tax charges, with or without penalties. If you need
assistance preparing the required minutes and dividend vouchers or general
advice and guidance please call. Click here for a call back from our office
regarding this article. |
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VAT
registration - coping with delays. |
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H M Revenue
& Customs are currently struggling to cope with the number of new
registrations for VAT - there are considerable delays. Businesses that have
sent in the VAT1 registration form may have to wait months before receiving
their VAT registration number. This
creates a difficult issue for these businesses. If you are required to
register by a certain date, you must account for VAT to be added to your
sales from this date - unless you sell goods or services that are normally
zero rated or if your trade does not normally issue VAT invoices, say a
hairdresser. However you cannot issue a VAT invoice until you are notified of
your VAT registration number. You will
also have to secure the co-operation of your customers. Two
possible strategies you could employ between the date you are required to
account for VAT and the receipt of your VAT number from HMRC are set out in
the following paragraphs. 1.
Increase your price to include VAT. Although you cannot charge VAT before
you are registered or show VAT as a separate item on any invoices you issue,
you can change your prices to include VAT. You will need to explain to your
customers that you will be sending them VAT invoices later - the following
words should be added to your invoice: "This
invoice is raised pending a VAT registration number. A full VAT invoice will
be issued on receipt of the VAT registration number." Once you
have your registration number you should send replacement invoices, showing
VAT, within 30 days. If you have asked for voluntary registration you will
need to start accounting for VAT from the registration date you asked for on
your application form, as long as you actually made supplies/provided
services from that date. 2.
Invoice net amount before VAT is added. An alternative
strategy is to issue your customers with an invoice that shows the net sale
value (before VAT is added). Agree that you will send a further VAT only
invoice when you are issued a registration number. This will require the
co-operation of your customers as they will be processing, and hopefully
paying, two invoices for each supply. (One for the net sales value and one
for the VAT.) If you need
our help in setting up a "coping" process, to bridge the period
before you receive your VAT number, do call. Finally do
not forget to revise your cash flow management so that you save the VAT added
to your sales ready for the payment of your first VAT return. Click here for a call back from our office
regarding this article. |
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Inheritance
Tax and business property. |
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Ordinarily
business property qualifies for a 100% exemption from inheritance tax. This
article highlights a particular problem for the estate of business property
owners when the time comes to consider inheritance tax - usually date of
death. The following comments only apply if you own the property personally
and the property is used by your company or a trading partnership of which
you are a member.
Accordingly
if you have given away your shares prior to your death it is likely that no
relief will be given. It would of
course be possible to transfer the property into the company's ownership
prior to your demise but this would trigger a stamp duty land tax charge and
thus limit the effectiveness of the plan. Of course
in the real world other taxes need to be taken into account when planning for
the acquisition and disposal of business property, particularly capital gains
tax. If you are considering the purchase or sale of commercial property and
would like to discuss strategies to minimise the inheritance tax and other
tax risks please contact us and make an appointment to meet. Click here for a call back from our office
regarding this article. |
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Post
retirement benefits. |
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On Budget
Day the Revenue clarified its position regarding the provision of continuing
benefits to retired employees. The following benefits will not be taxable.
The first tax year affected by this announcement is the year ending 5 April
2007. Non-taxable
benefits are: 1.
Continued provision by former employers of accommodation and related removal
expenses. 2. Welfare
counselling. 3.
Recreational benefits. 4. Annual
parties and similar functions costing up to £150. 5.
Equipment for disabled employees. 6. Writing
of wills costing up to £150. 7. Benefits
where the right to the continuing benefit arose on retirement BEFORE 6 April
1998. Click here for a call back from our office
regarding this article. |
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Tax
Diary September/October 2007 |
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1
September 2007
- Due date for corporation tax due for the year ended 30 November 2006. 19
September 2007
- PAYE and NIC deductions due for month ending 5 September 2007. (If you pay
your tax electronically the due date is 22 September 2007) 19
September 2007
- Filing deadline for the CIS300 monthly return for the month ending 5
September 2007. 19
September 2007
- CIS tax deducted for the month ending 5 September 2007 is payable by today. 1
October 2007 -
Due date for corporation tax due for the year ended 31 December 2006. 19
October 2007
- PAYE and NIC deductions due for month ended 5 October 2007. (If you pay
your tax electronically the due date is 22 October 2007) 19
October 2007
- Filing deadline for the CIS300 monthly return for the month ended 5 October
2007. 19
October 2007
- CIS tax deducted for the month ended 5 October 2007 is payable by today. Click here for a call back from our office
regarding this article. |
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DISCLAIMER
- PLEASE NOTE:
The ideas shared with you in this email are intended to inform rather than
advise. Taxpayers circumstances do vary and if you feel that tax strategies
we have outlined may be beneficial it is important that you contact us before
implementation. If you do or do not take action as a result of reading this
newsletter, before receiving our written endorsement, we will accept no
responsibility for any financial loss incurred. |
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Chapman
Higgs, Chapman
Higgs is a sole practitioner, registered for VAT under reference 669 8727 59.
The Principal of the firm is a member of the Institute of Chartered
Accountants in England and Wales (ICAEW) and the Chartered Institute of
Taxation. These bodies have their headquarters in the UK and their rules of
professional conduct can be obtained from their web sites. Authorised
and regulated by the Financial Services Authority. |
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