Nicolson Accountancy

VAT Flat Rate scheme

2012-02-06T16:06:00.000Z

Who can join the Flat Rate Scheme?

You can join the Flat Rate Scheme for VAT and so pay VAT as a flat rate percentage of your turnover if:

Your estimated VAT taxable turnover - excluding VAT - in the next year will be £150,000 or less. Your VAT taxable turnover is the total of everything that you sell during the year that is liable for VAT. It includes standard, reduced rate or zero rate sales or other supplies. It excludes the actual VAT that you charge, VAT exempt sales and sales of any capital assets.

Generally you don't reclaim any of the VAT that you pay on purchases, although you may be able to claim back the VAT on capital assets worth more than £2,000 - see the section in this guide on claiming back VAT on capital assets for the rules and restrictions.

Once you join the scheme you can stay in it until your total business income is more than £230,000.

Business Records Checks

2012-01-04T16:29:00.000Z

The beginning of the new calendar year has brought familiar communication problems for HM Revenue & Customs (HMRC).

Just yesterday, it was widely reported in the national media that HMRC had responded positively to pressure from both the Federation of Small Businesses and MPs and promised it would only be proceeding with ‘a limited number of Business Records Checks pilots’, whilst a further strategic review takes place. In a statement, HMRC said:

‘The purpose of the review is to consider the overall aims of Business Records Checks, examine whether the current approach is the best way of achieving the policy objectives, and identify what changes are needed to ensure that the objectives are achieved.’

HMRC was acting after receiving criticism of the burden it has been placing on small businesses with the launch of its Business Records Check initiative, against a backdrop of a sluggish economy and alleged big business ‘sweetheart deals’ with the likes of Goldman Sachs and Vodafone.

However, our Tax Investigation Insurers, Abbey Tax ReSource Consultancy Team has been in contact with the HMRC Coleraine office over the last two days and discovered the reality is very different. The Unit at HMRC Coleraine makes the appointments and co-ordinates all of the Business Records Checks across the UK for the 120 dedicated staff and, as far as that office is concerned, it is business as usual.

Abbey Tax ReSource Consultancy Team understands an internal HMRC email was sent to the team at Coleraine yesterday, drawing attention to the national statement, but that it did not instruct that any fewer visits should be booked. The Business Records Checks target is for 12,000 visits to be conducted by the end of this tax year; hardly a ‘limited number’ of ‘pilots’!

Furthermore, it is understood that the Coleraine Unit is being visited this Friday by an HMRC Head Office team, to see how the Unit is performing and to check on progress towards the target.

A recent VAT question

2011-12-08T09:51:00.000Z

Q – We have just bought a twin cab pick-up for the business. Will the VAT man allow the VAT incurred on the purchase to be reclaimed on the VAT return?

A – Twin cab pick-ups have many of the features of cars e.g. rear passenger seats and rear passenger windows but also commonly have a “pick-up” area to carry loads.However HMRC accept that any vehicle constructed to carry a “payload” of a tonne (1000kgs) or more is in fact not a car but a commercial vehicle. This is important because VAT incurred on the purchase of a car cannot be reclaimed if it is “available” for private use.

“Payload” is defined as the difference between a vehicle’s kerb weight and its maximum gross laden weight and so check the documentation carefully, as there are a few twin cabs which do not have a payload greater than a tonne.What is not commonly known however is that it is possible to “lower” a twin cab’s payload by adding certain accessories, thus converting the vehicle into a car? This is most likely to occur with twin cabs with a payload of 1000-1050kg.

HMRC however will ignore any accessory added other than a hard top. They will treat the addition of any hard top as having a generic weight of 45kg. So if the payload of the twin cab was 1010kg, the addition of a 45kg hard top would reduce the payload to 965kg. As such the twin cab would be a car with all the attendant rules restricting recovery of VAT on the purchase.

There is potentially another twist in the tail in respect of trying to recover all of the VAT on the purchase. As these vehicles so closely resemble cars and are quite often used as such, HMRC will not simply accept 100% business use and will often to try and restrict recovery by the extent of private use. There is no set figure for this and every claim will be accepted or not by the fact given to them.

As usual where there is potentially a lot of VAT at risk it pays to take advice.

Regional NIC holidays

2011-11-30T12:57:00.000Z

The Regional Employer National Insurance Contributions (NICs) Holidayoffers big reductions in employer NICs for new businesses who employ staff andmeet certain criteria in specific regions. The scheme is open to new businessesset up on or after 22 June 2010 in the North East, Yorkshire and the Humber,the North West, the East Midlands, the West Midlands, the South West, Scotland,Wales and Northern Ireland. Eligible new businesses can apply for a refund ofNICs that they have already paid.

The NICs holiday scheme is designed to encourage the creation of private sectorjobs in regions reliant on public sector employment by reducing the cost to newbusiness of employing staff.

Under the three-year scheme, eligible businesses can take a 12-month ‘NICsholiday’ for each of the first 10 employees they hire in their first year ofbusiness, up to a maximum of £5,000 per employee. This means new businesses whotake advantage of the scheme could save up to £50,000 in total.

We are automatically lodging applications for all clients who are eligible, and we will notify you of the saving nearer the time.

Audit Scotland and the recycling service

2011-11-22T22:43:00.000Z

"The Comhairle has the lowest recycling rate and the highest cost for recycling."

"There is no plan or strategic view on how to reduce either."

"The ambitions are unattainable."

{sanctimoniously} It was all working fine when I left. {/sanctimoniously}

British Accountancy Awards

2011-11-20T15:51:00.000Z

We are all delighted to be nominated as "Best independent firm - Scotland" in the 2011 British Accountancy Awards.

Unfortunately, we won't be able to attend due to the public sector strikes.

Thanks to all our staff for their hard work in getting us to this point, and may the best firm win.

Job vacancy

2011-10-18T00:14:00.002+01:00

We have a vacancy for an International Tax Accountant to assist us primarily with the preparation and control of foreign tax returns and payroll processing, along with many other activities.

The full details of the vacancy are on our website, and applicants will want to look at www.norway-tax.co.uk and www.dutch-tax.co.uk for an appreciation of what we are doing.

This is an exciting and rapidly growing aspect of our business, and we are seeking an appointee who can meet our needs.

Foreign VAT

2011-10-08T12:01:00.000+01:00

After many tears and much cursing, the computers are talking to each other, and we are now able to file merverdiavgift (MVA or VAT) Returns electronically into the Norwegian tax authority systems.

Paper VAT Returns

2011-08-07T20:47:00.001+01:00

From March 2012 all VAT registered business will have to file their VAT Returns electronically.

That means the end to the paper VAT 100 forms.

Registering electronically is not a problem, but you do need the date on which you originally registered for VAT to allow you to proceed.

If you have any questions or want any advice, please contact Angus for more information.

Tax Return penalties increased

2011-08-01T22:35:00.002+01:00

From January coming, the penalties for late filing of tax returns will increase and the ability to mitigate penalties where no tax is due will be removed.

In 31 January 2012, a late tax return will attract an automatic penalty of £100 (previously the lower of the tax due or £100).

After 3 months, this will increase by £10 per day up to a maximum of £900.

After 6 months, a further £300 or 5% of the tax due will be added.

Whereas in the past you could claim a refund whenever suited you, now you could owe the taxman when you claim a refund.

The answer is simple - submit your Tax Return on time.

Contact us for more information.

DIY Housebuilding

2011-07-19T01:30:00.000+01:00

D & Mrs E Sherratt v HMRC - TC01179
A DIY Housebuilders Claim was rejected by HMRC on the groundsthat the planning permission prohibited separate disposal ofthe house so it did not meet the definition of “dwelling” for thepurposes of the refund scheme. The appeal was dismissed.

It's always important to read and understand the VAT small print to make sure your claims can succeed.

Tax savings on incorporation

2011-06-18T13:23:00.000+01:00

Once again the balance between being a sole trader and incorporating your business as a limited company has come into focus.

In April 2011 the rate of Class 4 NIC paid by the self-employed went up 1% to 9%, meaning that all profits over £7,475 are taxed at 29% whilst small companies are paying tax at 20% on all their profits.

There is obviously a point at which it is more tax efficient to be a limited company - and that threshold is surprisingly low at under £10,000. At profit levels of £20,000 and above the tax saving is over £1,000 per annum and increases at a rate of around 10% of profits in excess of that amount, until you higher higher rates of Income Tax: at which point you should have already incorporated.

There are, of course, some people and business types where this might not be beneficial, or where further advice should be sought. These exceptions will potentially include anyone using farmers averaging; those spreading artistic income; where there are issues surrounding goodwill; and, where there are large claims for capital allowances.

Nevertheless, we will be reviewing all our clients' tax positions, and advising those who can benefit to incorporate without delay.

Example savings are shown below:

Profit	Saving
£10,000	£299
£20,000	£749
£30,000	£1,199
£40,000	£2,099
£50,000	£4,257
£75,000	£4,757

Mileage rates

2011-05-19T15:34:00.000+01:00

The Inland Revenue have increased the tax and NI free rate of Approved Mileage Allowance Payments.From 2011/12 the new rates are:-For the first 10,000 miles - 45p (up from 40p)For all subsequent miles - 25p (unchanged)

New tax codes

2011-04-07T02:18:00.001+01:00

From 6 April, if you have new employees without a P45 or a P46 you will have to use code 0T, rather than BR. This means that these employees will have no allowances, and although the effect is generally the same for most employees, higher paid employees will pay more tax.

If an employee leaves and you pay him or her arrears of holiday pay etc. then you should also use 0T, on a week 1/month 1 basis for these payments.

The new tax allowances and tax rates

2011-03-31T12:51:00.000+01:00

New Income Tax allowances

Income Tax Allowances	2010/11	2011/12
Personal Allowance
Up to age 65	6,475	7,745
Age 65 to 74	9,490	9,940
Age 75 and over	9.640	10.090
Income limit for age-related allowances	22,900	24,000
Married couple’s allowance
Age 75 of more	6,965	7,295
Minimum amount of MCA	2,670	2,800

New tax bands

Taxable bands and rates		2010/11	2011/12
Basic rate	20%	0-37,400	0-35,000
Higher rate	40%	37,401-150000	35,001-150,000
Additional rate	50%	Over 150,000	Over 150,000

Late filing of Tax Returns

2011-03-24T20:25:00.000Z

Beware, there is a new penalty regime in force for late filing of personal income tax returns for 2011/12.

The current regime is that the penalty for late filing is the lower of £100 and the tax due.

From this year the penalty will not be reduced if the tax payable is less than £100. In addition, if it is more than 3 months late, then a penalty of £10 per day for up to 90 days will apply, and thereafter it is a 5% surcharge.

This means that if you are due a refund, and don't claim it when you should, you could end up losing it all in penalties.

Our advice is very simple: get your Return lodged in plenty of time. We will now be expecting our clients to ensure that we everything required at least one month before the deadline if we are to meet the timescale.

CIS - plant as materials guidance

2011-02-07T20:40:00.000Z

Recent guidance from the Inland Revenue makes it clear that plant hire with an operator is now classed as labour and is subject to CIS deductions.

In future, only pure plant hire without an operator will be classed as materials and not subject to CIS deductions, but where there is any supply of labour associated with the hire of plant - however it might be classed - then CIS deductions will apply.

We are aware that many contractors have been wrongly omitting this from the CIS liabilities, but this area is leikly to see a crack donw in the coming months and years.

Tax investigations

2011-02-06T13:06:00.000Z

We have noticed a large increase in tax enquiries originating from one simple, but highly effective, check being made by the Inland Revenue.

It appears that the computers are now automatically comparing turnover per the accounts compared to turnover per the VAT Returns, and identifying non-registered traders, and those whose figures differ markedly between the two sources of information.

Taxpayers are therefore advised to ensure that the same information is used to compile the accounts and the VAT Returns, so as to minimise the chances of this happening.

Obviously there are some factors that could cause the figures to differ - such as cash accounting for VAT - but the Revenue seem to be looking at the most glaring examples first; where there is a major discrepancy.

Penalties are severe, and if you have made an honest mistake it is best to admit and quantify your error before the taxman does.

If you have a problem of this nature, please contact Angus for advice.

Can you avoid the 28% Capital Gains Tax liability?

2011-01-08T19:10:00.003Z

In his emergency Budget, the Chancellor announced that the 18% rate for CGT (Capital Gains Tax) would be restricted to only those who are basic rate taxpayers.

However, that doesn't mean that you need to pay 28% on all your gains, if you have some control over your tax affairs, and particularly the timing of income.

The simplest course of action is to ensure that you keep your income below the higher rate threshold of £37,400 for 2010/11, but if this is not possible, then consider making a pension contribution to reduce the taxable income in that year.

Gift Aid payments can also be carried back, if you elect to do so either on the Gift Aid certificate, or more simply, by including the claim on your tax return.

The CGT will then use the unused element of your basic rate band, which can result in a considerable saving, as shown below.

Example

David draws dividends of £40,000 (£36,000 net + tax credit) from his company annually, pays £1,000 in pension contributions, and a £1,000 Gift Aid donation annually.

He makes a taxable gain of £10,000 (after annual allowance) during the year. The gain would normally be taxable at 28% = a tax bill of £2,800.

After taking advice, David reduces his dividends to £30,000, and makes the Gift Aid carry-back election on his tax return. As he is not a higher rate tax payer, no further tax relief is due on his pension.

Details	£
Dividends	30,000
Gift Aid	-2,000
Taxable income	28,000
Basic rate threshold	37,400
Unused basic rate band	9,400

The end result is that £9,400 of the gain is taxed at 18% and the balance at 28%, resulting in a tax saving of £940 on capital gains tax.

If you want to discuss your tax planning opportunities, please contact Angus directly.

Are your business records complete and accurate?

2011-01-05T01:30:00.002Z

From our friends at Abbey Tax, who provide our clients with Tax Investigation Insurance....

HMRC published a Consultation Paper on 17th December announcing that theyintend to start a programme of Business Records Checks (BRCs) that will reviewboth the adequacy and accuracy of business records within the SME sector. Thetiming of the Consultation is not ideal with a closing date for comments of 28th February 2011 but this is something that could potentially affect almost every client and so does require consideration.

Asever with HMRC Consultations, the die appears to be already cast: the programmeof checks will happen starting in the second half of this yearwith HMRC projecting 50,000 reviews annually for the next 4 years. TheConsultation is merely concerned with how to implement theprogramme.

Additionally,the BRC programme will be accompanied by a tariff-based penaltyregime for failure to keep proper records. As practitioners will know,the maximum penalty for failure to maintain business records currently stands(and will remain) at £3,000, but the imposition of any penalty – let alone themaximum - has historically been quite rare. HMRC have said that they do notintend to have a regime which simply levies £3,000 every time there is afailure to keep proper records. The implication is that some level of penaltywill be charged, the question is merely how much.

Furthermore,HMRC state in their impact assessment that this initiative will bring in£600million over the four years. Are we the only cynics who have workedout that 4 x 50,000 x £3,000 comes to ... wait for it… £600million?!?

Wewill continue to update our clients during the consultation process andthereafter because, of course, the BRC is only Step 1 for clients with Step 2potentially being an intervention based on the conclusion of the BRC. Clearly,as well, we will be giving guidance as to how our fee protection insurance willrespond to BRCs and subsequent interventions.

For further information about how this could affect your business, contact Nicolson Accountancy today and we will provide you with solutions.

VAT errors

2010-10-12T20:54:00.000+01:00

The new procedures for dealing with and correcting VAT errors often need explaining.

However, they are actually quite straight forward.

You require to complete form VAT652 unless you meet certain qualifying conditions to self-correct.

If all the errors identified in the period are less than £10,000 - or if greater, 1% of turnover at Box 6 in the period in which the error arose - then you can adjust the next VAT Return for the identified errors.

Two key tips:

Ensure that you document the errors and how you are meeting the qualifying conditions for the adjustment, and
If you are using a computerised accounting programme, then ensure that the adjustment is not double counted by your software in both your next VAT Return and the VAT652 form and payment.

Managed Service Companies

2010-10-05T11:20:00.002+01:00

Managed Service Companies are expected to come under severe attack by the Inland Revenue over the coming months and years.

These are companies which advertised and operated the administration of a personal company of an individual, for a weekly or monthly fee.

There are currently an extensive number of tax cases at the moment, which if successful, will result in the dividends that directors of the personal companies have drawn being treated as salary. This could result in a very large tax bill for many individuals.

We have been warning about this for a few years, and have refused client requests to manage their affairs in such a way as would put them at risk of an Inland Revenue claim. Where these clients have come to us, we have put ensured that they are administered in a way that does not expose the directors to personal liability, and which is also much cheaper and transparent for the directors.

Directors of these companies need to be aware, that a few years back the Inland Revenue were granted powers to assess the tax due on the directors, even if the company was liquidated some years ago.

We strongly urge anyone who might be in this situation to seek specialist advice promptly to put their affairs in order.

Norwegian tax statements

2010-09-22T09:44:00.001+01:00

We have been advised by the Norwegian tax authorities that the annual statements showing tax due or tax overpaid will be issued on 22 October 2010.

You then have a period of three weeks to lodge an appeal against any assessments, although in practice this deadline is often waived for non-Residents.

We expect to receive electronic copies of all these statements when they are issued and we will be reviewing them carefully and contacting clients directly over the following week.

We deal with the tax affairs of about 100 clients working in Norway, and if you want more information, please contact Sue.

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

Mini-Budget changes

2008-05-18T12:41:00.005+01:00

The impact of the removal of the 10% tax rate has led the Chancellor of the Exchequer to announce that the Personal Allowance will be increased by £600, but the higher rate threshold has been reduced to compensate for this.

New software updates, tax coding notices and reprinted tax tables will be on the way to employers in time to implement the changes in October.

The revised limits are shown below.

	Before	After
Personal Allowances	£5,435	£6,035
Basic rate tax band	£36,000	£34,800
Higher rate tax threshold	£41,435	£40,835

Changes to VAT Threasholds

2008-05-01T14:47:00.004+01:00

With effect from 1 April 2008, the VAT Registration limit has increased to £67,000 and the de-Registration limit has increased to £65,000.

The limit for correcting VAT errors has changed from £2,000 in any quarter to the greater of £10,000 or 1% of the turnover (up to a maximum of £50,000).

Increase in National Minimum Wage

2008-03-05T13:16:00.002Z

From October 2008, the National Minimum Wage will increase from £5.52 to £5.73 (up by 3.8%).

The rate for 18-21 year olds will increase from £4.60 to £4.77 and for those under 18 from £3.40 to £3.53.

Capital Gains Tax

2008-01-24T12:11:00.003Z

The Treasury have today announced that the 18% flat-rate of Capital Gains Tax will be reduced to 10% on lifetime gains of up to £1m.

Whilst the loss of taper relief is significant for those selling their business, the lifetime limit of £1m should mean that few people in the Western Isles will reach this threashold, and will be unlikely to face the 18% rate.

At present it is unclear if the limit is lifetime or only from 1 April 2008, and if it is the former then there are opportunities for tax planning before that date.

Taxpayers should remember that all gains from all sources will be affected by this limit, and should take advice accordingly.

Corporation Tax inquiries

2007-11-26T16:32:00.000Z

The period for opening an investigation into a Corporation Tax return will be changed with effect from 31 March 2008.

Returns filed on time will have an inquiry window that expires 12 months after the date on which the Return is filed, rather than 12 months after the latest date for filing. This is to encourage earlier filing.

The rules for late submissions are unchanged. The inquiry window remains open until the next quarter day (31 March, 30 June, 30 September or 31 December) 12 months after the date of submission of the Return.

EU invoices

2007-11-12T12:35:00.000Z

With effect from 1 October 2007, invoices to businesses in other EU member states must be annotated to include any reason for any VAT exemption or any reverse charge.

For instance, a supply of goods or services to a company in France should include a statement such as, "This an intra-community supply".

Where the supplies are exempt, it should read something like, "This supply is exempt from VAT."

Similar rules also apply for the second-hand margins scheme, the reverse charge and the Tour Operators Margin Scheme.

New client win

2007-10-12T22:36:00.000+01:00

We are very pleased to announce that we have gained large clients in both the Middle-East and South-East Asia as a result of a drive into highly specialised areas of business.

Said Sue Nicolson, "We have worked closely with some multi-national companies over the past few years developing niche services. As a result of this, we have gained clients on the back of recommendations and the practice is growing rapidly as a result."

The most recent new clients in this particular area were previously advised by a "Big 4" firm, and Nicolson CA expect to need to recruit a number of additional staff as a result of this win.

Notes to editors: Details of the clients and the nature of the services are not being disclosed due to client confidentiality.

Postal strike

2007-10-04T13:09:00.001+01:00

HM Revenue and Customs has issued a statement concerning possible disruptions to VAT payments caused by the postal dispute.

In its statement, HMRC said that businesses “must ensure that all reasonable steps are taken to get their VAT Return and any payment to Revenue and Customs on time”.

It continued: “However, VAT Returns and payments that are delayed by postal disputes will be viewed sympathetically.”

On the issue of surcharges for late payments, HMRC said: “There will be no liability to surcharge where the recent postal dispute has been the cause of the delayed payment and you usually pay by cheque.”

HMRC is reminding businesses that VAT returns can be paid electronically using BACS, Direct Credit, CHAPS and Bank Giro. Any businesses wishing to pay this way should contact their banks.

If a return has already been sent through the post along with any payment, businesses are not expected to take a duplicate to their local VAT office, but should wait for the return and payment to be delivered in the normal manner.

Where there is a localised strike or disruption, HMRC said that:“You may, exceptionally, take your VAT Return and payment to your local office. If you do this please ensure that your return and payment are submitted to the local office in the pre-paid envelope which Revenue and Customs has provided with your return. We do not recommend you do this if you wish to lodge a repayment return.”

In the case of repayments, HMRC said that it “will allow affected businesses to fax their repayment returns to VCU”. The fax number is 01702 366839. This facility will be available only until HMRC considers that the need for it has passed. If a business faxes its return, it should not then send in the original.

Businesses experiencing late payments because cheques from customers are delayed in the post “must account for VAT at the normal time”.

New Table A for limited companies

2007-09-20T11:39:00.000+01:00

On 1 October 2007 the Companies (Tables A to F) (Amendment) Regulations 2007 (SI 2007/2541) will amend Table A.

Existing companies should review their articles to determine whether the version of Table A which applies to them does not prevent them from implementing the deregulatory provisions introduced in October 2007 by the Companies Act 2006.

There are 3 main points to note:

a private company with 1948 Table A will be required to hold an AGM.

a company which currently incorporates regulation 38 of Table A into its articles will need to give 21 days' notice of the passing of a special resolution at a general meeting instead of the 14 days required by the Act, in order to comply with its articles.

a company which currently incorporates regulation 36 of Table A into its articles will continue to hold 'extraordinary' general meetings, rather than general meetings.

Companies in these situations may wish to amend their articles to change the relevant provisions.

Pre-trading VAT

2007-09-18T12:07:00.000+01:00

When a business registers for VAT it is possible to reclaim all the Input VAT on services for the previous six months and goods for the previous three years.

There is one restriction which is that you cannot recover Input VAT on materials that have since been resold, or have been incorporated into another product.

Therefore it is not possible to reclaim Input VAT on trading stock that you have sold or - for instance - building materials that have been used prior to VAT Registration. The sole exception would be where a sales invoice covering these items is raised after VAT Registration and VAT is to be charged on these items.

Proposed new late filing penalties

2007-08-22T12:09:00.000+01:00

This consultation paper issued by Companies House sets out the following proposals for changes to the current late filing regime:

Penalties will be increased to take into account inflation between 1992 and 2007, so the lowest penalty increases from £100 to £150.
A faster increase in penalties for companies which file more than one month late (currently no penalties are levied until accounts are 3 months late and maximum penalties apply for accounts which are over 12 months late).
A doubling of the penalty for any company which files late, having also filed late the previous year.

These proposals will apply to all companies in the UK, and to LLPs (but through separate regulations).

The first two proposed changes are intended to come into force on 1 February 2009, applying to accounts filed under the Companies Acts 1985 and 2006. The third proposed change, that of doubling the penalty for repeat offenders, would only apply to accounts filed under the Companies Act 2006.

The proposed new penalty table will therefore be:

How late are the accounts delivered?	Penalty – private company	Penalty - PLC
Not more than one month	£150	£750
More than one month but less than 3 months	£375	£1,500
More than 3 months but less than 6 months	£750	£3,000
More than 6 months	£1,500	£7,500

Holiday pay

2007-08-21T16:05:00.000+01:00

From 1 October 2007, the statutory minimum annual holiday entitlement will rise from 4 weeks (20 days for those working a 5 day week) to 4.8 weeks (24 days).

From 1 April 2009, all workers, including those working part time, will be entitled to 5.6 times their usual working week - capped at a maximum of 28 days.

Employees will not have to work for a qualifying period. They will be entitled to the increased entitlement in full as soon as they start work. You will be able to restrict the rate at which they take leave in their first year of employment.

You can include time off for bank and public holidays in the entitlement.

Part-time workers must receive annual leave equal to 4.8 then 5.6 times their usual working week, regardless of what days of the week they usually work.

The changes will not apply to you if by 1 October 2007 you:

already pay all your full- and part-time employees for a minimum of 5.6 weeks of annual leave (though this figure can include bank and public holidays)
do not allow payment in lieu of taking holiday
allow the extra 1.6 weeks to be carried over for only one year - if you normally allow holiday to be carried over

You must calculate the increases proportionally, depending on when your leave year starts. You can round up partial days to the nearest full day or leave them as such. You will not be allowed to round down a partial day.

If both you and an employee agree to the arrangement, you will be allowed to carry over to the following year some or all of the additional holiday.

You must include the additional holiday when you work out average weekly working hours.

Fishing boats and fishing licences

2007-08-17T10:57:00.000+01:00

The sale of a fishing boat is zero rated so long as the vessel is: -

(1) Has a gross tonnage of over 15 tons, and
(2) Is neither designed nor adapted for recreational or pleasure purposes

VAT 1994, Sch 8 Group 8 Item 1 and Note 1A; SI 1995/3039

The sale of the licence or quote is standard rated.

Family controlled companies

2007-08-06T18:39:00.001+01:00

For Geoff and Diana Jones and their company Arctic Systems, the long-running battle with the taxman over how the couple advantageously split the spoils of the business is over.

But for the government, advisers and businesses in a similar position to the Joneses, the fun has only just begun. The five Law Lords unanimously threw out HM Revenue & Customs’ challenge to the Joneses’ business structure.

Put simply, Mrs Jones owned half of the company, while Mr Jones carried out the main thrust of its IT work. The government said the structure was a ‘settlement’, a term denoting that a tax arrangement had been put in place with the aim of giving a ‘bounty’ to his wife.

If she had not been his wife and at ‘arm’s length’ in her relation to him, the set-up would not have existed and thus could be set aside for tax purposes, HMRC argued.

The upshot of the House of Lords judgment was that, even though it agreed there was a settlement, there was an exemption under the rules for ‘gifts’ between one spouse and another, which this fell into.

The result was widely welcomed by advisers and representatives of the small business community, even if the result related only to husband and wife businesses.

‘The CIoT is delighted that, after such a long battle, the Lords has confirmed that HMRC were wrong to attack husband and wife businesses in this manner,’ said CIoT fellow Anne Redston.

Further criticism of HMRC also followed the Lords outcome. Questions were raised as to why the taxman had not treated the battle as a test case and covered the Joneses’ costs, which were picked up by the Professional Contractors’ Group.

Others suggested that the verdict had been widely anticipated. ‘The outcome raises questions about why HMRC decided to contest the case in the first place and create enormous uncertainty for several years as the legal process was unravelling,’ said Ernst & Young tax partner Patrick Stevens.

‘Even if there was some doubt about the correct interpretation of the law, it had not been challenged by HMRC for many years. It may have been far simpler for HMRC to change the legislation, if that was the desired result.’

But despite advisers warning the government against a ‘knee-jerk reaction’ to the outcome, the Treasury has already announced that it will introduce new tax legislation in the next finance bill to stop ‘unfair’ income-splitting arrangements by some family businesses.

‘It is the government’s view that individuals involved in these arrangements should pay tax on what is, in substance, their own income and that the legislation should clearly provide for this,’ the Treasury said.

Grant Thornton senior tax partner Mike Warburton had thought the government would hold off announcing what would amount to a clampdown on small business. ‘If they removed the exemption it would be done at significant political cost,’ he said. ‘[The government] would be saying there should be a tax on hard-working couples’ businesses.’

But a clampdown, it appears, is on the cards. Geoff Jones believes it would have been sensible for the government to ‘take some time’ over its decision and consult to reach an agreement with all parties.

‘It makes them look like sore losers,’ said Jones. ‘It’s a recipe for future conflict, where do you draw the line? We need to know where the line is.’

It is difficult to know precisely where the Treasury will draw the line. Its description of income-splitting structures could apply to a huge number of common tax planning arrangements.

Redston agrees that it will be difficult to distinguish between ordinary family businesses and those that the government believes abuse the system. The arguments will no doubt continue up to the next finance bill, and beyond.

HMRC’s swift revenge

The government’s reaction to HM Revenue & Customs losing the Arctic Systems case has been swift.

The Treasury said that it would introduce legislation to stop ‘unfair’ income-splitting arrangements by some family businesses.

When couples enter into a business agreement that they would not normally do with someone else, to minimise their tax liability, then it results in an ‘unfair outcome’ that increases the tax burden on other taxpayers, the Treasury said.

‘The government will therefore bring forward proposals for changes to legislation to ensure this is the case. In the meantime, HMRC will apply the law as elucidated by the House of Lords and will be providing guidance in due course.’

VAT Penalties

2007-08-06T18:31:00.000+01:00

In the past, if the honest tax payer made an error in excess of £1m VAT, or an amount which represented 30% or more of the correct tax for the return period, they were liable to a misdeclaration penalty. The taxpayer was automatically exculpated in full if they voluntarily disclosed the error to HMRC or if they had a ‘reasonable excuse’.

The joining of the revenue and VAT arms of HMRC has seen the introduction of a single set of penalties to cover income tax, PAYE, corporation tax, VAT and NI contributions. This was included in the finance bill 2007 and will shortly become law, coming into operation for return periods commencing after 31 March 2008. At the same time, we will see the introduction of the ‘compliance spectrum’, which grades error according to the behaviour of the taxpayer.

Taxpayers will have to convince an HMRC officer that their error is innocent to which no penalty should be charged. This puts a lot of power in the hands of the officer responsible for supervising the taxpayer’s affairs. I will leave you to decide whether this is a good thing. If this fails, taxpayers can no longer achieve automatic exculpation by having made a voluntary disclosure. Also the ‘reasonable excuse’ statutory defence disappears altogether. For professional advisors this means the end of settled case law.

It is expected that not many officers will accept mistakes as innocent errors. Additionally under the new starting point for negligent penalties is 30% of the amount of tax due (an increase from the old misdeclaration penalty of 15%), following which the taxpayer can plead that the penalty should be mitigated down - again not great news for taxpayers.

These changes mean taxpayers who makes a full unprompted disclosure of an error no longer has an automatic nil liability to a misdeclaration penalty. Inevitably there will be litigation on issues such as an officer’s decision on where the taxpayer’s conduct falls under the ‘compliance spectrum’ or the level of mitigation to be allowed following a disclosure in order to re-establish the scope of what is reasonable.

The regime captures VAT registered businesses regardless of the size or the error. While there will be rights of appeal, many will lament the loss of a system where honest errors were only penalised if significant and full disclosure or reasonable excuse defences meant even those penalties could be readily avoided.

Bus Service Operators' Grant

2007-06-29T18:33:00.000+01:00

The completion of these forms is quite straight forward, if you gather together all the necessary paperwork, and plan a bit in advance.

Section 1 require you to split the mileage by the relevant dates advised to you to cover the changes in the rebate rate announced in the budget. The eligible and dead Km's should be scheduled based upon the actual mileage on the route(s), so that the total can be reconciled back to the individual bus services.

Section 2 requires the full details of the of the total mileage travelled by all the vehicles during the period, along with the total fuel used. This is not just the service miles, and this tends to be the most common single error. The Department of Transport check the consumption rates and changes of more than 1 l/km tend to result in further enquiries.

Section 3 is the analysis of the service and dead kms by route, and must reconcile to Section 1.

Now sign the declaration and send the completed form to us - along with the supporting computations - for checking, signing and submission to the Department of Transport.

Top tips

Keep a note of the mileage of the buses throughout the year which allows you to compute the total mileage for Section 2
The conversion factor for miles to Kilometers is 1.6093
Don't use Tippex on the forms

Residential Renovations and VAT

2007-05-10T17:57:00.000+01:00

Nicolson, Chartered Accountants, are reminding those who are renovating houses that they may be eligible to have building works charged at 5%, rather than the full 17.5% rate.

You may wish to draw your builders attention to VAT Notice 708 which has the full detail, but the key points are summarised below:

➢ The supply (is charged at the 5% rate), in the course of the renovation or alteration of qualifying residential premises, of qualifying services related to the renovation or alteration.

➢ The supply of building materials (is charged at the 5% rate)

 if the materials are supplied by a person who, in the course of the renovation or alteration of qualifying residential premises, is supplying qualifying services related to the renovation or alteration, and

 those services include the incorporation of the materials in the premises concerned or their immediate site.

A qualifying building is one that is a single household dwelling that has not been lived in for the past three years.

The building materials which can be supplied by your builder at 5% include most fittings' incorporated' into the building is such a way that its fixing or removal would either require the use of tools, or would result in the need for remedial work to the building, or would result in substantial damage to the good themselves. This can include fitted wardrobes, boilers, storage heaters, flooring (but not carpets), as well as the more usual supplies. You cannot obtain a reduced rate on materials you buy and install yourself, nor on 'white goods' or carpets.

New CIS scheme - contractors need support

2007-02-26T18:00:00.000Z

Nicolson, Chartered Accountants, are leading the way in providing support to businesses needing assistance with the new CIS scheme.

Sue Nicolson said, "We act for many businesses who are either Contractors or Sub-Contractors and we quickly became aware of the difficulties posed by the new CIS scheme. We have researched the situation thoroughly and we have already assisted clients in setting up the proper arrangements to ensure that they comply with the numerous requirements of the Inland Revenue."

"Getting it wrong is not an option - the penalties are potentially horrendous. We are in a position to help all those who will be impacted by this scheme, providing telephone support, on-line verification on behalf of Contractors, and assistance in lodging returns on time to ensure that the risks are minimised."

"Contractors who want to benefit from our expertise can phone us to discuss what we can do for them - and avoid all the hassle."

Hits pass the 100,000 mark

2007-02-02T18:01:00.000Z

Nicolson, Chartered Accountants, are celebrating the success of their website with hits passing the 100,000 per annum mark.

Said Angus Nicolson, "We are delighted to see that our website is considered useful and informative by clients and non-clients alike, and the number of hits demonstrates that."

"We have also managed to optimise the site for search engines, so that we are in the top 20 in Google when you search for 'accountants', appearing before every other Scottish firm. We pride ourselves on understanding the advice we give to clients and we have long been leaders in IT, and our website demonstrates the depth of our understanding."

New premises

2006-09-14T18:01:00.000+01:00

As you may have heard, we will shortly be moving to new premises at 49-50 Bayhead, Stornoway. These premises were formerly the Kitchen Centre, and are being redesigned to our needs. The rapid expansion of the practice has required us to find additional space for our staff, and the new location gives us about 6 times more room. However, we promise not to lose the personal touch with clients.

The official opening will be announced nearer the time, but proposed moving date is the 22nd of September with us open for business from the Tuesday following.

Smokers beware

2006-08-14T18:02:00.000+01:00

The European Union have recently confirmed that employers can refuse to employ smokers without being guilty of discrimination.

Following enquiries by an MEP, the Commission ruled that the case of an Irish employer refuse to accept applications from smokers was not discrimination that was prohibited by the treaty, and consequently was permitted.

Sue Nicolson, HR Partner, said, " I would always advise employers to seek advice before taking any similar stance to ensure they comply with the legislation".

Scam alert - International Business & Trade Database

2006-06-12T18:02:00.001+01:00

Many businesses will have received an invoice from the "International Business & Trade Database" - this is not worth the paper it is printed on, and we recommend that you throw it in the bin.

The telltale signs of a scam are:

Letter posted in Prague (the company supposedly based in Zug, Switzerland)
Never heard of the database
Unsolicited request to advertise
You are asked to send funds to a bank in the Czech Republic
Large fee for advertising (£395)
Cancellation notice of 360 days required for the next years entry
No clue as to how to access the information that is supposedly in the public domain
Do a Google search!
Have a look at the poor spelling and poor coding on the website front page.
Finally, try and search for anything useful before deciding that BT or Yell are much better.

Holiday arrangements

2006-05-13T18:03:00.000+01:00

We will be away on holiday for the two weeks 15- 30 May 2006.

Whilst we sun ourselves on the beaches of Greece, you can phone the office and find out how to reach us in emergencies. And we do mean real emergencies :-)

Our email is occasionally monitored at holiday@nicolsonCA.co.uk.

Chancellor abolishes zero-rate band for Corporation Tax

2005-12-13T18:03:00.000Z

In his recent pre-Budget report, the Chancellor, Gordon Brown, signaled the abolition of the zero-rate band for Corporation Tax. Previously the first £10,000 of profits were effectively tax-free, now they face a tax charge of 19%.

Let's face it, this perk was just too good to be true, and it was only a matter of time before the Revenue realised just how much it was costing them.

But incorporation can still be highly beneficial to sole traders, as the following table shows:

Profits

Limited -

Old rules

Limited -

New rules

Sole trader *

£10,000 NIL £1,900 £1,334

£20,000 £2,375 £3,800 £4,334

£30,000 £4,750 £5,700 £7,334

£40,000 £7,125 £7,600 £10,448

£50,000 £9,500 £9,500 £14,548

£100,000 £19,000 £19,000 £35,048

* Assumes an individual under 60 on basic allowances only, and includes Class 4 NIC, but not Class 2. Based on 2005 rates.

The table clearly demonstrates the potential savings that can arise from incorporation, but you are advised to take specific advice before making any decisions.

Christmas and New Year holidays

2005-12-01T18:06:00.000Z

The office will be officially closed between Friday 23rd December and Wednesday 4th January 2006, inclusive.

However, we will be in between those times to deal with mail, payrolls and pressing issues, and you can phone the office and take pot luck on catching us. Probable hours are 11am to 3pm.

The office phones will be diverted to the mobile when we are closed, but we will not guarantee an instant response during the festive period.

Prestigious client win

2005-12-01T18:04:00.000Z

Stornoway Port Authority have announced that Nicolson, Chartered Accountants have been appointed as their auditors with effect from the year ended 31 December 2005.

The Port Authority, which is incorporated by Act of Parliament, is a public sector body with appointed and elected Directors to represent the views of harbour users, and to protect and improve the harbour and surroundings.

The press release issued by the Port Authority is as follows:

EXTERNAL AUDIT

Stornoway Port Authority announces the award of a contract for the provision of External Audit work to the firm of Nicolson Chartered Accountants of 34 Church Street, Stornoway.

Three local firms had returned tenders for the work, with the Board deciding, at a recent meeting to award the contract to the lowest compliant tender submitted.

Commencement of the new contract is effective as from the Financial Year ending 31 December 2005.

The press release can be found here.

Is it a car? Is it a van?

2005-07-18T17:56:00.000+01:00

The rules for taxation of cars and vans have been set for some time, but with the merger of Customs and the Inland Revenue, they have been clarified in an attempt to bring more vehicles within the charge to tax, and to reduce the number of vehicles where input VAT can be recovered.

The rules are complex for some vehicles, so what follows is a general summary of the position.

All vehicles are cars, unless:

They have a payload of over 1 tonne

There is seating in the load area, which does not affect the predominant use of the vehicle as being for the carriage of goods

They are clearly vans e.g. have no rear seats, metal side panels to the rear of the front seats, a load area which is unsuitable for carrying passengers.

The problem clearly arises with "car derived" vehicles, such as crew cab pick-ups. With a payload of less than 1 tonne they are cars and liable to punitive taxation; above that and they are vans, and have a benefit in kind of £500 per annum. All VAT on the purchase of a van can be recovered. No VAT can be recovered on the purchase of a car.

Customs are developing a list of qualifying car-derived vans. Unfortunately, this is not yet available, and the latest guidance is here.

Nicolson, CA, unveil unique tax investigation insurance scheme

2005-04-04T17:45:00.000+01:00

A firm of Stornoway Chartered Accountants has launched the first ever scheme to provide tax investigation insurance to all its clients.

Unveiling the scheme, Angus Nicolson said, "This is an opportunity for clients to obtain very low cost cover against all the fees they might incur in defending a tax, VAT or PAYE investigation up to a maximum of £75,000. We have been looking for such a scheme for a long time, and have already offered it to every client. Today, we are publicising the scheme, and offering new clients the opportunity to cover themselves against one of the most stressful events that can happen to a taxpayer."

Sue Nicolson added, "After a long hard look at the market, we were able to identify a scheme that allows us to offer a flat rate premium to every client, based not on their turnover, but on the type of taxpayer they are. We have been able to offer this - at less than a fifth of the cost of preparing an average Tax Return - because of the insurers view of the quality, consistency and nature of our operation, and consequently the risks for our clients.

The scheme is only open to clients of the firm. All existing clients have been offered the policy at a special reduced rate, and new clients will pay a standard annual charge of under £50 for individuals, directors and partners and under £150 for limited companies and partnerships.

Said Angus Nicolson, "We continue to offer new and innovate approaches to business advice, whilst never losing sight of our clients' core needs."

Note:

Further details of the scheme is available on request. The policy does not cover any penalties or underpaid tax arising from an investigation.

Annual holidays

2005-02-09T17:56:00.000Z

We are away on annual family holiday from Monday 12 September to Monday 27th September, inclusive.

During this period, calls to the office will be directed to an answering machine where further instructions are available. Alternatively, you can email us at holiday@nicolsonCA.co.uk which we will monitor occasionally.

We will be taking the office laptop on holiday with us, in case of emergency, but we will charge any work undertaken at a substantial premium. Download sppeds are very poor, so please only send small documents.

European decision will cost island business plenty

2005-01-04T17:53:00.000Z

Western Isles businesses are expected to pay an extra 16p per litre of petrol used by employees as a result of a case won by the European Commission in the European Court of Justice in March 2005. In essence, the decision will no longer allow employers to reclaim VAT on the fuel element of mileage allowances paid to employees.

Until now, UK businesses have been able to reclaim VAT on fuel used by employees for business travel. However, the European Court of Justice has decided that UK practice is in breach of European law and that businesses are not able to reclaim VAT on fuel used by employees for business travel.

Angus Nicolson of Nicolson, Chartered Accountants, says: "The decision is a serious blow to any business paying mileage allowances for employees, and shows a complete failure to understand how small business work.

"Businesses should immediately consider alternative arrangements to mileage allowances when meeting business fuel costs. This ECJ decision will cost UK businesses hundreds of millions of pounds a year in irrecoverable VAT.

"Until Customs announce their reaction to the decision and the action they will take, businesses are entitled to rely upon Customs current guidance."

Profits	Limited - Old rules	Limited - New rules	Sole trader *
£10,000	NIL	£1,900	£1,334
£20,000	£2,375	£3,800	£4,334
£30,000	£4,750	£5,700	£7,334
£40,000	£7,125	£7,600	£10,448
£50,000	£9,500	£9,500	£14,548
£100,000	£19,000	£19,000	£35,048