HMRC Correspondence
Can you name a single person who would willingly speak to HMRC? No? We thought not. Speaking with HMRC can be time-consuming, confusing and pretty unpleasant. Well, that is, of course, if you can get through to them in the first place. In a recent study, it was discovered that one in four calls to HMRC go unanswered. That’s around 18 million calls per year. We aren’t blaming the good folks who work there, but we don’t like those odds.
The best reason to get an accountant at RS Accountancy, then? You will never have to speak to HMRC again. We will happily do it on your behalf.
What can a HMRC tax advisor do for you?
What kind of aspects of your business can we help with? Below are some of the areas of your company’s HMRC processes that we can take on for you, so you can focus on the parts of your business that are important to you:
Dividend documentation
Did you know that dividends up to £28,606 do not attract income tax? You may have already paid 20% corporation tax, but you can rest assured that the dividends being returned to you are free from any income tax to pay. This means that you have successfully extracted £39,206 income tax-free. Pretty good, right?
This is one of the reasons why having a limited company is so beneficial from a tax perspective. Whilst your friends are paying 32% or more on their employment, you are paying tax at just 20%, and this is set to decrease to 18% by 2020. Excellent news!
So, you might find that you have £2,914 left over. This is your money. Spend this as you wish. First, though, a word of caution. If you spend this money, you will have to pay 25% income tax on it; in this case, that’s £728.50. Any money taken out over and above £10,600 and £28,606 is liable to be charged an additional 25% for income tax. We recommend that our clients keep the money in the company if they can.
IR35 contract reviews and assessments
In April 2000, the government noticed that many IT contractors were leaving their regular employment to become self-employed. These newly self-employed IT contractors only had one customer: their original employer. So, when it came time to invoice, they would simply send an invoice onto their previous employer through a limited company, or what is known as a ‘personal service’ company. This turned out to be a pretty sweet deal for the IT contractor and the previous employer alike. The contractor was able to enjoy a lower rate of tax, whilst the previous employer benefited from not having to pay any Employer’s National Insurance.
Win/Win.
Well, that is until the government introduced IR53. The IR53 is a piece of tax legislation that was essentially designed to put an end to the tax benefits of being self employed. Since then, IR53 has fluctuated in the HMRC’s list of priorities, but now more than ever, it appears it is becoming a hot topic for the HMRC once again.
If you have a limited a company and only have one customer/client, you might fall prey to IR35. Don’t fear, though. We’re here to help. If you’re worried about IR35, contact one of our specialised HMRC experts to find out what your options are.
P11D
What is P11D and why is it important for business? Well, a P11D is a form that has to be submitted to HM Revenue & Customs. The form is for employees, both directors and non-directors, who have received a taxable benefit from their company. This could apply to one person in a company, or to anyone who has been paid any expenses excluding the national mileage allowance (45p per mile).
Let’s break it down. Here are some things that can be classed as a taxable benefit:
- A company car
- Private medical care
- Employee vouchers
- Interest-free load
- Travel and subsistence (excluding mileage allowance)
- Entertainment
Being clued up on all tax legislation is the key to good correspondence with HMRC. However, many businesses do not have the time and resources to spend hours, days, or even weeks tracking legislative developments and changes. Our team of HMRC tax advisors are highly specialised in all tax legislation, and that’s what makes us so good at what we do.