Nicolson Accountancy

New tax mandates

2010-08-19T10:26:00.003+01:00

The Inland Revenue have just announced that they are moving staff from the central agent authorisation team in Longbenton, Newcastle, to "higher priority work".

The new expected timetables are expected to be:

Form	Please allow
Form 64-8 for Self Assessment	2 weeks
All other forms 64-8	6 weeks
Self Assessment registrations	8 weeks
Self-employment registrations	8 weeks

This is hardly helpful for those newly registering as self-employed, and who are concerned to make sure that they meet all the requirements.

We are able to undertake most registrations and authorisations on line, reducing these turnaround times very significantly, so if you are thinking of starting self-employment, come and see us as early as possible, and we will ensure you comply with your obligations.

Norwegian Tax Returns

2010-08-03T11:38:00.002+01:00

The ability to file Norwegian Tax Returns electronically on-line has been suspended whilst the submitted returns are processed and refunds or demands issued.

We expect that statements will be issued in September or October, and we should receive notification of the issue of the statement electronically around that time. We will contact clients immediately this information is available.

We expect the portal to reopen after statements have been issued, but in the interim, all returns require to be submitted manually.

For more information, contact Sue Nicolson.

Post-Budget tax planning

2010-06-29T21:29:00.004+01:00

The reduction in the Annual Investment Allowance from £100,000 to £25,000 - increased from £50,000 by Alasdair Darling only in March - is a major blow for small business who need to make significant capital purchases, as any fishing boat owner will testify.

However, some more tax planning opportunities have opened up and we have identified two distinct opportunities for new and existing businesses. We will be contacting all clients in then first instance when the finalised legislation is enacted, to suggest ways to save potentially large sums of money.

This blog has moved

2010-03-07T12:48:00.002Z

This blog is now located at http://news.nicolsonaccountancy.co.uk/. You will be automatically redirected in 30 seconds, or you may click here. For feed subscribers, please update your feed subscriptions to http://news.nicolsonaccountancy.co.uk/atom.xml.

Tax-free meal expenses

2010-01-13T20:45:00.009Z

With the need to complete P11Ds looming, it is important that all employers understand just what expenses they can pay tax-free without having to make any reports to the Inland Revenue.

The rules are simple, but must be properly applied by the employer to avoid a detailed inspection of all claims for up to six years.

Breakfast rate
The employee can receive £5 per day if they leave home before 6am and buys a meal away from home. But, only if they do not usually leave for work before 6am.

One meal rate
If the employee is away from their home or usual workplace for at least five hours and buys a meal then they can claim a £5 allowance.

Two meal rate
If the employee is away from their home or usual workplace for at least ten hours and buys a meal then they can claim a £10 allowance.

Late evening meal
If the employee has to work later than 8pm, having worked their normal hours and buys their meal, then they can claim £15; but only if they do not normally work late.

Combined allowances
It is entirely permissible to combine allowances. So if you normally work 9-5, and on one day have to work 5am to 9pm on a clients premises, then you are entitled to the Breakfast rate, the two meal rate and the Late evening meal rate or £30 per day.

To apply to pay these allowances, then employers need to complete form P11DX to be allowed by the Inland Revenue to administer the scheme.

For more advice, then please contact Angus.

VAT rate changes in Sage

2009-12-29T12:37:00.001Z

With the Standard Rate of VAT changing back on 1 January, Sage users may find the following short movie very helpful in reminding them how to change the VAT Rate on their system.

If you have any questions about your system, then please contact us directly.

New PAYE penalties

2009-12-28T15:52:00.002Z

The new penalties for late payment of PAYE and CIS will come into force on 5 April 2010, and will affect the PAYE due on 19 May 2009.

In essence the penalties will arise if you are late in making any payments of PAYE, but if there is only one late payment in the year then the penalty will be waived.

The penalty increases with each default up to a maximum of 4% of the PAYE paid late.

Virtually every employer will be affected, so you need to make sure that your procedures are changed to make the payments on time.

We will be working with our clients over the coming months to help you make these payments by BACS on the exact day that they are due.

In the meantime, we are urging employers to make sure that everything to do with employment, contractors and PAYE is fully up to date well ahead of the deadline.

The precise rules, and the very limited grounds for appeal against penalties, are detailed here.

Abolition of cheques

2009-12-17T09:19:00.001Z

So the long forecast demise of cheques will now happen in 2018. Probably.

It is clear that private consumers are expected to move to the use of cards and other similar methods over the next number of years. Whilst that may be fine for the vast majority, there are still many, many people who do not want or cannot get a debit card.

They will either have to stick to cash; the banks will have to devise new payment methods; or third party providers are going to have to find solutions.

For smaller businesses the situation is potentially much more serious, as we receive the vast majority of payments (by number) by cheque.

How are smaller businesses going to cope with making and receiving payments?

In the expectation of the change, we have been working hard over the past 18 months to develop alternatives for small and medium-sized business, and this concluded the very expensive process with us becoming a BACS Approved Bureau just recently.

There are only 20 or so Scottish based bureau, and we are now able to help our clients by making payments direct out of their bank accounts to suppliers and employees. We will shortly be able to provide debit facilities too, allowing suppliers to collect money due to them from customers.

There is no doubt that this is going to be a growth area over the next few years, and we already process over £20m annually in payments for clients across the UK.

For more information contact Angus, or visit our payroll provider website.

VAT rate returns to 17.5%

2009-12-12T15:11:00.002Z

The standard rate of VAT will return to the rate of 17.5% from 1 January 2010.

For most traders the process will simply be a reverse of the steps you took when the VAT rate was reduced to 15%. Our instructions covering the change in December 2008 can be accessed here.

However, there are some potential problems areas, and the following simple guidance can be followed.

The VAT rate that applies is based on the earliest of

The date of the supply of the goods or services
The date on the invoice being issued
The date that payment is received

So if you can persuade your customers to place an order - or even better to pay for the goods -before 1 January 2010 then you can charge them 15% VAT.

There is one anti-avoidance provision that you need to be aware of. If the goods or services are not delivered by 30 April 2010, then VAT at 17.5% should be charged, and an additional VAT only invoice will need to be issued.

If your services are delivered across the change date, then you have overlapping or continuous supplies, and you should contact Angus for specific VAT advice.

All traders who issue quotations should make sure that their paperwork clearly states that VAT will be charged at the relevant rate.

Scam email

2009-10-14T09:43:00.002+01:00

If you receive an email that looks like this, please ignore it as it is a scam to obtain your credit card details. (I have removed the hyperlink)

-------

From: HM Revenue and Customs [no-reply@hmrc.gov.uk]

Taxpayer ID: tom-00000222351832UK
Tax Type: INCOME TAX
Issue: Unreported/Underreported Income (Fraud Application)

Please review your tax statement on HM Revenue and Customs (HMRC) website (click on the link below):

review tax statement for taxpayer id: tom-00000222351832UK

HM Revenue and Customs

Seafarers' Earnings Deductions

2009-09-30T21:46:00.001+01:00

From September 2009, new rules have come into force, as a result of Tribunal decisions, which extend the range of duties which can qualify for SED.

Following the decision in Pride of South America, any duties considered to form part of "exploiting mineral resources by means of a well" were considered to be part of an offshore installation and hence SED was not available.

A recent case, Spowage, has modified that decision with effect from 2008/09 onwards to allow SED where the "exploiting" of "mineral resources" occurs at a distance from the well, and in such a way as to clearly not form part of the well operation.

This means that diving support vessels, pipeline inspection services and similar trades will qualify for SED where they occur away from the wellhead. Clearly activities on or adjacent to the wellhead are unlikely to qualify.

Further clarification is available on the Inland Revenue website, or by contacting Angus.

New Minimum Wage rates

2009-09-25T14:42:00.002+01:00

From 1 October 2009, the following minimum pay rates will apply:

NMW Rate	Current rate	New rate
Main rate for workers aged 22 and over	£5.73	£5.80
Rate for workers aged 18-21	£4.77	£4.83
Rate for workers aged 16-17 and over compulsory school age	£3.53	£3.57
Accommodation offset rate(Weekly maximum)	£31.22	£31.57
Accommodation offset rate(Daily)	£4.46	£4.51

If you need help or advice on implmenting the NMW, then please contact Sue.

iXBRL compliance

2009-08-01T15:51:00.002+01:00

The new format for compulsory filing of Corporation Tax returns from 1 April 2011 will be in iXBRL.

We are proud to be able to confirm that we are already iXBRL compliant and will be able to file all corporate tax returns electronically from that date.

We already file over 90% of Returns electronically, with only Charitable companies and some newly incorporated companies not being filed in that matter.

Annual Investment Allowance

2009-05-20T22:52:00.000+01:00

The Budget has seen the re-introduction of first year allowances (FYAs) for purchases of qualifying plant and machinery. Allowances of 40% will be available to companies, partnerships and individuals carrying on qualifying activities in excess of the annual investment allowance (see below) subject to the following:

the expenditure must be incurred in the year to 31 March 2010 (for companies) and 5 April 2010 (partnerships and individuals).
the expenditure must not relate to specific proscribed assets, including for example, long life assets, cars and assets for leasing.

Unusually, there appears to be no restriction on the amount of the expenditure or the size of business incurring the costs.

The annual investment allowance (AIA), introduced last year, allows businesses (or groups, where related businesses carry on similar activities) to claim a 100% deduction from taxable profits for £50,000 of expenditure on eligible plant and machinery.

Confusingly, the definition of eligible plant and machinery for AIA purposes differs quite significantly from that for qualifying plant and machinery for FYAs.

Inland Revenue bank accounts

2009-04-21T12:44:00.000+01:00

During 2009 the Bank of England will no longer handle the Inland Revenue transactions.

The bank accounts will in future be operated by the Royal Bank of Scotland and by Citibank.

If you make electronic payments to the Inland Revenue, you will need to update your records to ensure that the payment goes to the correct bank account.

Full details will be being issued in the near future.

VAT - electronic filing

2009-04-06T12:41:00.002+01:00

From 1 April 2010 electronic filing of VAT Returns will be mandatory for all businesses with a turnover in excess of £100,000.

All businesses registering for VAT after that date will have to file electronically, no matter what there turnover is.

We already file almost 90% of client VAT Returns electronically, so if you need to discuss this further, please feel free to get in touch.

Employer compliance review - CIS

2009-02-21T17:56:00.001Z

We have recently been involved in a dispute with the Inland Revenue over the non-deduction of CIS by a contractor when paying a supplier.

The Inland Revenue asserted that the supplier was a sub-contractors in terms of the legislation and consequently CIS deductions should have been applied.

The Inland Revenue were seeking the tax that should have been deducted as well as interest and penalties.

By quoting specific legislation, we were able to show that to the satisfaction of the Inspector, as the amounts had been fully declared in the accounts of the 'subcontractors', that our client had no additional liability.

Contractors are advised to be aware of their responsibilities in this area, to avoid problems arising in the first place.

National Insurance changes

2009-01-20T19:05:00.013Z

From April 2009 there will be a significant change in the structure of National Insurance contributions with a new band introduced.

Description	NI Rate	This year	Next year
Lower earnings limit	No NI payable	First 90 pw	First 95 pw
Earnings threshold ("ET")	No NI payable but earnings recorded	Up to 105 pw	Up to 110 pw
Upper accruals point	Full NI Liability	n/a	Up to 770 pw
Upper earnings limit ("UEL")	Full NI Liability	Up to 770 pw	Up to 844 pw
Employees rate between ET and UEL		11%	11%
Employees rate above UEL		1%	1%
Employers rate above ET		12.8%	12.8%

Obviously it is imperative that your payroll software is updated, but if you don't use a computer program, then why not speak to us about letting us take the strain?

Our costs are very cheap, and the peace of mind we offer is absolute, and if we also prepare your accounts then we can offer an even better deal. Contact us today to discuss your requirements.

Christmas closing

2008-12-23T10:55:00.001Z

The office will close at 1pm on Tuesday 23rd and re-open on Monday 5th January.

We would like to wish all our clients best wishes for Christmas and a happy and prosperous New Year.

VAT changes

2008-11-25T18:55:00.004Z

The change in the Standard Rate of VAT from 17.5% to 15% is temporary - it lasts from 1 December 2008 to 31 December 2009.

But how do you change your computer system to reflect the change in the legislation from next week?

We have a worksheet available to explain the temporary changes you need to implement to correctly record your VAT liabilities.

At the moment, we only cover Sage and Quickbooks, but TAS Books will be added later this week, and other programs may be added later. If you have specific questions, please contact Angus.

Seafarers Earnings Deduction

2008-11-07T10:29:00.010Z

The following letter was received from the Inland Revenue this week:

Following representations, I want to clarify what we are doing in revising our guidance and the treatment of claims.

SED has never been available for people working on 'offshore installations' rather than ships. Broadly, the legislation provides that there are two tests both of which must be met for a vessel to be an 'offshore installation'. A vessel must be involved in the exploration or exploitation of mineral resources and standing or stationary whilst doing so. Construction, construction support, well service and dive support vessels that do not meet either of these tests will continue to be ships for the purposes of SED.

HMRC's revised guidance will reflect discussion with stakeholders about the interpretation of the Pride South America decision to ensure that it is implement in a clear and practical manner. HMRC will publish revised guidance in February 2008.

HMRC appreciates that some people may wonder whether they must submit their 2007-08 tax returns before we publish our revised guidance. All 2007-08 tax returns must be filed within the relevant deadlines.

Anyone who decides that they want to see HMRC's revised guidance before deciding whether they are entitled to claim SED can submit their return without a claim to SED. They can then amend their 2007-08 tax return in the usual way to include a claim to SED. People have 12 months from 31 January after the end of the tax year to correct their tax return. For the 2007-08 return, people have until 31 January 2010 to make an amendment.

If someone wishes to consider making a claim to SED for 2007-08 before the guidance is revised they can refer to the legislation on which HMRC's guidance for SED is based. It is publicly available as follows:

The legislation for SED is in sections 378 to 385 of the Income Tax (Earnings and Pensions) Act 2003
The definition of 'offshore installation' is in section 1001 of the Income Tax Act 2007
The Special Commissioner's decision in the Pride South America case is available on the Finance and Tax Tribunals website

Seafarers 183 day rule change

2008-09-24T15:03:00.005+01:00

A recent tax case that was heard by the Commissioners earlier this year (known as "Pride of South America") has confirmed that the Inland Revenue are widening the definition of what they will classify as offshore installations for Foreign Earnings Deduction purposes.

Construction, construction support, well service and dive support vessels will now no longer be considered ships for a FED claim.

A Tax Return submitted after 14 January 2008 which includes a claim for FED covering a period serving on these vessels types could be investigated by the Inland Revenue.

We are waiting for further information from the Inland Revenue to allow us to better advise our clients, and an update will appear here as soon as the information is available.

National Minimum Wage

2008-09-15T09:31:00.003+01:00

From 1 October 2008 the following NMW rates apply:-

Workers aged 22 and over - £5.73 per hour
Workers aged 18-21 - £4.77 per hour
Workers aged 16-17 - £3.53 per hour

Directors NI400

2008-08-14T13:45:00.005+01:00

There are special rules for directors National Insurance. In practice this only affects the employee contributions, as there is no upper limit on employer contribution, as the table below demonstrates.

Annual lower threshold	£5,435
Annual upper threshold	£40,040
Employees liability below lower limit	NIL
Employees liability between thresholds	11%
Employees liability above upper threshold	1%
Employers liability above lower threshold	12.8%

Before the rules were changed in the 1990’s, directors and other higher paid employees could declare their annual salary in one month, reaching the upper limit and limiting the amount of National Insurance they had to pay. The rules are clearly stated at paragraph 5 in the Inland Revenue booklet CA44.

Using the tables shown above, declaring a salary of £120,000 in one month, rather than £10,000 per month would result in an employees NI liability of £4,606.15 rather than £6,025.80.

The current rules require directors to work on a cumulative basis for their period of directorship. There are slightly different rules if you start or cease to be a director during the year.

Using the above example for Month 1:

Gross salary	£10,000
Lower threshold	£5,435
NI due on	£4,565
Employees NI due at 11%	£502.15

In Month 2 the calculation is slightly different:

Gross salary to date	£20,000
Lower threshold	£5,435
NI due on	£14,565
Employees NI due at 11%	<£1,602.15
Less: Already suffered	£502.15
Due this month	£1,100.00

Which is 11% of the gross salary for the month.

By Month 6 the upper limit is passed:

Gross salary to date	£60,000
Upper threshold	£40,040
NI due on	£19,960
Employees NI due at 1%*	£199.60
Less: Already suffered*	£99.60
Due this month	£100.0

(* Plus £40,040-£5,435 @ 11% = £3,806.55)

In Month 6 this is equivalent to 1% of the gross salary for the month.

Showing the NI liability graphically demonstrates that employers and directors pay the same employees NI, but that directors pay it earlier.

Scottish Charitable Companies

2008-06-12T11:26:00.004+01:00

With effect from 1 April 2008, section 1175 and Part 1 of Schedule 9 of the Companies Act 2006 came into force.

This has the effect of removing the special rules regarding the audit of small charities that existed under the Companies Act 1985. For financial years beginning on or after 1 April 2008, small Scottish charitable companies are subject to the external scrutiny requirements set out in the Charities Accounts (Scotland) Regulations 2006.

In practical terms, small charitable companies will be subject to the independent examination/audit thresholds as set out in the 2006 Account Regulations. Only where a charitable company is a large company and over the audit threshold set out in the Companies Act 2006 would they be required to have an audit under that legislation as well as the 2006 Accounts Regulations.

This change is effective for accounting periods starting on or after 1 April 2008.

The table below shows the external scrutiny requirements for Scottish charitable companies under both the Companies Act 1985 and the new regime under the Companies Act 2006.

External Scrutiny

Companies Act 1985

Companies Act 2006

Independent examination by a qualified person

Gross income £90,000 or less and gross assets of not more than £2.8m

Gross income less than £500,000 and gross assets not more than £2.8m

Accountant's report in accordance with the Companies Act 1985

Gross income more than £90,000 but not more than £250,000 and gross assets not more than £1.4m

Not applicable

Audit

Gross income £90,000 or less and gross assets over £2.8m

Gross income more than £90,000 but not more than £250,000 and gross assets more than £1.4m

Gross income more than £250,000

Gross income of £500,000 or more

Gross assets more than £2.8m