Tax Return Deadline is Approaching

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It comes around almost as fast as Christmas, and here we are again. The 31 January 2017 marks the deadline for filing of the 2015/16 Self-Assessment Tax Return (SATR).

Individuals who are required to submit a SATR include, the self-employed and some landlords, investors, company directors, high earners and people who have worked overseas.

Those taxpayers who fail to file their Return online by midnight on Tuesday 31 January will be subject to an automatic penalty of £100. This applies even if there is no tax to pay, or the tax is paid on time.

Tax Returns which are not filed after a further three months will be subject to daily penalties, and additional penalties will apply to Returns which remain unfiled after six and 12 months, adding up to a potential penalty of £1,600 or more.

Penalties and interest charges also apply for the late payment of tax, and these will continue to be applied until HM Revenue & Customs receives payment.

Green & Co can help with all your tax planning needs, including filing your Tax Return – please contact us for further assistance.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Digital Tax Reporting – The Story So Far

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In 2015 the Government announced its commitment to bringing our tax system into the 21st century by introducing digital technology and dispensing with the annual tax return.  The new system would involve digital quarterly reporting with a view to making tax simpler and easier to manage for the taxpayer.  The Financial Secretary to the Treasury, Jane Ellison MP, has said that the new tax system will help businesses put “people and profit, not paperwork, first.”

Over the past 18 months  consultations have been taking place to establish exactly how HMRC are going to implement the changes and what effect it will have both on the Treasury and taxpayer. The Federation of Small Businesses (FSB) says that, following what it calls “real dialogue with the business community”, HMRC have listened to their representations and have announced the following considerations:

  • Landlords and businesses with a turnover of less than £10,000 to be exempt from digital reporting and quarterly returns.
  • The introduction of quarterly digital updates for other small businesses to be deferred.
  • Reporting to be based on a cash accounting scheme, whereby tax is paid on the money a business actually receives, rather than on invoices raised.
  • Help, both practical and financial, to be made available to ease the transition to digital accounting, but where a business cannot make the move, for whatever reason, it will not be forced to do so.

The FSB has welcomed the announcement and estimates that around half of Britain’s 5.4million small businesses could now be outside the scope of the initial moves into digital accounting.  The consultations are on-going, but it is hoped that the new digital tax system will be in place by 2020.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Free Research & Development Seminar


Has your company spent money developing a new product or software? Have you made any advances in science and/or technology? If so you could be eligible for R&D uplift as high as 130% on your development expenses! Projects don’t have to succeed to claim.

Green & Co Accountants and Tax Advisors are running a seminar on the research and development tax relief system and how it may benefit your business. We are very lucky to have one of the HM Revenue & Customs most experienced R&D Tax Specialists presenting and he will provide an overview of the R&D schemes, the key aspects of making a claim and an analysis of qualifying expenditure.

Some of the many projects that have saved their companies substantial amounts of tax include:

  • Logistics company that developed a bespoke IT system
  • Signage company that produced a quicker drying ink
  • Building block manufacturer that improved a process to recycle materials
  • Bed manufacturer that developed an innovative spring system within mattresses
  • Software to help users of mobile phones choose music
  • Software managing claims for insurers
  • Learning management system for mobiles
  • System to monitor black boxes in hire vans
  • Device to prevent underground train rollback
  • System to share information between schools
  • HR system to trace joiners, movers and leavers within large organisations
  • Construction company that developed a fire retardant solution for timber treatment

“Many small business owners have never had access to information about claiming tax credits, and those that have were often not aware that their business qualified,” explained Barrie Kenyon, Partner Designate at Green & Co Accountants.  “The Seminar explains what makes a business eligible and how to go about making a claim.”

Eventbrite - Research & Development Seminar

Dividends – What Isn’t Changing?


The way they are taxed may be changing, but the other rules and procedures surrounding dividend payments have not. Here is a brief re-cap of the key actions and considerations to bear in mind when making dividend payments:

  • There must be distributable reserves in the business that cover the dividend payments. This is company law and must be adhered to. The distributable profits cannot be ascertained simply by checking the financial statements and the Companies Act outlines the necessary adjustments to accounting profit and defines distributable profits.
  • The dividend must be declared. Typically this should be done at a meeting held by the directors, but private companies are able to pass an ordinary resolution in writing. Further procedures for declaring dividends may be set out in the company’s Articles of Association.
  • Dividend vouchers should be drawn up for every dividend voted containing all the necessary entries. A single voucher can be produced which covers a tax year and it is now possible to produce electronic vouchers. Again, the Articles of Association should be adhered to if any procedures are outlined within them.
  • The date of the dividend is important, especially as the taxation is changing. Whether the dividend is final or interim will affect the date of payment and again, the company’s Articles may outline any applicable procedures.

Best practice concerning dividend payments is paramount as, in the event of an enquiry, HMRC can challenge the tax status of payments made.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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Don’t Put Off Until January What You Can Do In July…


It’s February again, and many an accountant and tax advisor is heaving a sigh of relief that another self-assessment deadline has passed. The month of January often puts extra pressure on accounting professionals as they endeavour to submit eleventh-hour returns before the end of the month to help their clients avoid penalties and interest on tax paid late.

Of course, you don’t have to wait until the end of January to complete your accounts or file your self assessment return.  It can be done any time after the start of the new tax year and your accountant would undoubtedly prefer to receive your books sooner rather than later.

Most businesses should be in a position to provide the information to prepare accounts after 3-4 months following their year-end, and there are advantages to completing your accounts and self-assessment return early in the tax year:

  1. You can keep a closer eye on how your business is doing and take steps to rectify any issues which crop up. This could include chasing aged debtors, resolving disputes or even deciding when to purchase fixed assets to maximise tax allowances.
  2. If there are any queries on your books, you will have a better chance of answering them if transactions for that year are still fairly fresh in your mind.
  3. You will know how much your tax liability will be that much earlier. so that you can budget better for payment. If your profits are less than in the previous year, you can also make a claim to reduce your payments on account to a level which is more in line with your liability.
  4. HMRC have a time window during which they can question anything on your return. This window is twelve months following the date of submission – so the earlier you get your return filed the sooner the window is closed.

Don’t worry – submitting your return earlier in the year doesn’t mean you also have to pay your tax earlier.  You still don’t have to settle your liability until 31st January following the end of the tax year.

So why not make a New Tax-Year resolution to get your bookwork done, your accounts prepared and your return filed as early as possible.  You will make your accountant so happy!

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Government Online Services Outdated


According to a new study by technology company EMC, UK businesses are spending the equivalent of a working month a year struggling to use governmental digital services.

Business leaders estimate that five hours each week could be saved if the services were brought into line with the types of modern applications now common in the sector. Over half of those surveyed felt that the online services lack the ease of use and features that they are used to with popular apps such as Facebook and Amazon.

The results showed a generation of digitally-savvy young business minds, with more than half of 18 – 34 year olds calling for more online services in digital support.

James Norman, of EMC UK and Ireland says, ‘There is an obvious demand for a more digitally-focused government and while some progress has been made with government digital services, there is still more that can be done in application transformation. ‘Businesses need a more efficient way of interacting with government and improving the accessibility of online services is one of them. Creating a digital foundation made of data and not paper will be critical for the business growth in the future.’

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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Changes To HMRC Debt Recovery Scheme


Following concerns over the announcement that HM Revenue & Customs had been given the power to enforce direct debt recovery, an amendment has been made to the Finance Bill to protect the more vulnerable tax payer.

The amendment states that HMRC must consider whether an individual might be “at a particular disadvantage” as far as dealing with their tax affairs and/or communicating with officers from the Revenue.  It expects that HMRC will engage in face-to-face meetings with individuals before a case can even be considered for further action, and this should enable the officer concerned to assess whether the taxpayer might be deemed as vulnerable.

Those on low incomes, who are confused by, or lack the understanding to deal with, their tax affairs (including tax credits claims) will be dealt with by a specialist unit, assisted by volunteers.  HMRC agree that the direct debt recovery scheme was invoked to deal with those who have the funds but refuse to the settle their tax liabilities, rather than targeting the disadvantaged.

The move has been welcomed by the Low Incomes Tax Reform Group (LITRG), who have been instrumental in bringing about the amendment, although they still have concerns about HMRC having the power to recover debts directly from individual bank accounts without a court order.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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Is It Time To Ditch Your Fuel Charge Benefit?


The car benefit charge multiplier increased from £21,700 to £22,100 on 6 April 2015 and, with effect from 6 April 2016, will increase again in line with the retail prices index. The equivalent benefit for vans is £594 and, again, will increase in line with the retail prices index.

This means, for example, if your company car has CO2 emissions between 120-124 you will incur a fuel benefit charge of £3,990 for a petrol car (£22,100 x 19%) or £4,862 for a diesel car (£22,100 X 22%)

For a higher rate taxpayer the cost in terms of extra tax is either £1,596 or £1,945 respectively. As the multiplier is to increase, so will the benefit. The higher the Co2 emissions for the car, the higher the benefit, so for a car with emissions between 140-144 the benefit increases to £5,083 and £5,746, or extra higher rate tax of £2,033 and £2,298.

If the amount you would spend on private fuel is below the tax you pay on the benefit then it is time to have a rethink on how you claim the fuel you use for business purposes and so avoid any benefit.

Green & Co can offer advice to ensure that the most tax advantageous method is implemented. Please contact us for further information.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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MAPs For Compliance – Mileage Claims


HMRC’s approved mileage allowance payments (MAPs) are the mileage rates which can be claimed in a variety of circumstances for tax compliance.

Since 2011 the rates have remained unchanged; in each tax year 45p per mile can be claimed on the first 10,000 business miles carried out. For business miles in excess of 10,000, 25p per mile applies. These are the rates for cars and vans and apply regardless of how many vehicles are used in the tax year.

The MAPs will apply if you’re self-employed and you claim the flat rate for mileage instead of the actual costs incurred in buying and running your vehicle. However, once you use the flat rate for a vehicle, you must continue to do so as long as you use that vehicle in your business.

For those employees who carry out qualifying business journeys in their own vehicles, the MAPs can be claimed. If your employer pays in excess of these you will incur a P11D benefit. The MAPs are not to be used for business miles carried out in a company car, however, as lower rates apply where an employee pays for the fuel used in their company car. These rates are updated by HMRC each quarter.

MAPs are used in other areas of tax and it is important to monitor the rates in case of a change.

Should you require any further information please contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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Family Home Allowance – The New Inheritance Tax Relief

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Currently, Inheritance tax is paid if a person’s estate (their property, money and possessions) is over £325,000. This is known as the inheritance tax threshold. Any assets that are above this amount incur an Inheritance Tax charge of 40%. Married couples or civil partners are able to double their allowance up to £650,000 before tax is payable.

However, from April 2017, an additional “family home allowance” is being introduced for people owning a home. It will eventually be worth an extra £175,000 per person – meaning the tax free band can be up to £1m for couples. It can even be transferred between married couples and civil partners if one dies before it is introduced in 2017.

The existing £325,000 nil rate band is frozen at its current level until 2021.

In order to qualify for the family home allowance, the property must have been the main family home at some point and be left to one or more direct descendants, including children, step children, adopted children, foster children and even grandchildren. However, it will not include other family members such as nieces and nephews.

If there is more than one property in the estate, only one will qualify for the new allowance. If a home is sold or downsized any time from 8th July 2015, the family home allowance will still be allowable as long as assets of an equivalent value are passed to the descendants instead.

For estates with a net value of more than £2m, the family home nil rate band is withdrawn at £1 for every £2 over the £2m threshold.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.