LEEDS ACCOUNTANTS: HM REVENUE AND CUSTOMS INFORMATION

If there was ever one benefit to having an accountant it is this – you don’t have to speak to HMRC. Let our leeds accountants do it on your behalf.

This is even truer today as we’ve learned of the HMRC telephone answering results last year. One in four calls (about 18 million) goes unanswered.

HMRC are recruiting an extra 3,000 customer service staff but given the last few years of HMRC cuts, it may not be enough.

At the same time as the government wants to raise more tax, they have been cutting HMRC staff which you would think results in less tax raised.

If you are like me and generally don’t like call centres, you will enjoy the fact that you won’t need to speak to HMRC again!

Payroll can be one of the biggest hassles for businesses

Maternity pay

Sick pay

Holiday pay

Student loan repayments

Our fees include director payroll and we can do employee payroll for a low monthly amount.

According to HMRC, as at 6 January, around 40% of 2014/15 tax returns were still outstanding – about 2 million tax returns.

The deadline of 31 January has passed but the biggest penalty is 28 February if you haven’t paid your tax (see earlier blogs).

The biggest reason why some people miss the deadline is that they don’t have all the information to hand and cannot complete their numbers.

It is worth knowing that you can submit your tax return as ‘provisional’.

HMRC operate on a system of ‘process now, check the numbers later’ so it is worth avoiding the fines, penalties and late submission and late payment of tax by sending in your tax return as ‘provisional’.

Where you estimate some numbers and you know that these numbers will change, it is generally a good idea to put this in the supplementary information box.

After you send the tax return as ‘provisional’ don’t forget to then submit it later!

We do personal tax returns as part of our overall service.

Dividends up to £28,606 do not attract income tax. So whilst you have already suffered 20% corporation tax and the dividends are coming to you after this, there is no more income tax to pay. Which means that you have successfully extracted £39,206 income tax free (but not corporation tax free).

This is why limited companies are so good from a tax perspective. Whilst your friends are paying 32% or more on their employment (you know, your “friends” who thought it was crazy to give up your own job to start your own business), you are paying tax at just 20% (and even this is going down to 18% by 2020!).

You may have noticed that there is still £2,914 left in the company. This is your money, you are allowed to take this.

However, there is one big catch. You will pay 25% income tax on this £2,914. In this case, £728.50. So for any money taken out over and above the £10,600 and £28,606, you will pay 25% income tax.So in this case, it may be better to keep it in the company if you don’t actually need it.

In April 2000, the government saw that a bunch of IT contractors were leaving their employment and setting up as self employed. Their only customer though was their original employer. They would invoice their previous employer through a limited company (a ‘personal service’ company).

The benefit of this was that the IT contractor enjoyed a lower rate of tax (you pay less tax as a limited company than you do as an employee) and the employer didn’t pay any Employers National Insurance.

Win/Win.

Except the government didn’t like it so introduced IR35, a piece of tax legislation that essentially killed the tax benefit of being self employed..

IR35 has gone up and down in HMRC’s list of priorities over the years but our friend George mentioned it in the budget speech last month. So, it looks like it will be hot on the radar.

If you have a limited company and only have one customer/client, you could fall into IR35. Feel free to contact me if you need some more info: Russell@rsaccountancy.co.uk

HMRC have released the 2014/15 benefits and expenses Form P11D plus updated guidance to go with it.

What does this mean and should you care?

A P11D is a form that is required to be submitted by 6 July 2015 to HM Revenue & Customs.

The form is for employees (directors and non-directors) who have received a taxable benefit from their company (this can apply for 1 person company) or if they have been paid expenses (but excluding mileage allowance at 45p per mile)

A taxable benefit could be:

Company car

Private medical

Employee vouchers

Interest free loan

Travel and subsistence (but not mileage allowance)

Entertainment

This form is in addition to your normal personal tax return.

If you need help with this email me at russell@rsaccountancy.co.uk

Firstly, unlike self-employment individuals, you can’t just take out what you want. It is illegal to take out dividends higher than your profits after tax which means that you need to keep the taxman’s money in the company. (There are legal ways around this though see next chapter on director loan accounts).

Also, whilst your profit and loss account may say that you have profits so feel free to take them out, your bank account may say a different thing. If your bank account hasn’t got any cash in it, you won’t be able to take the dividend.

Secondly, you need to keep up to date dividend documentation. This involves a record of a board meeting of the directors where they vote for a dividend and a dividend voucher to the shareholder. If you would like a template of this feel free to email me at russell@rsaccountancy.co.uk

There’s another catch and this is where it gets strange. You can keep all of your business documentation digitally, you don’t need the paper copy EXCEPT dividend documentation. This must be kept in paper form. I have no idea why, that’s just the way it is!

There’s another catch and this is where it gets strange. You can keep all of your business documentation digitally, you don’t need the paper copy EXCEPT dividend documentation. This must be kept in paper form. I have no idea why, that’s just the way it is!

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